• 176214 Schroders Income Growth - Annual Report Pt1
• 176214 Schroders Income Growth - Annual Report Pt2
• 176214 Schroders Income Growth - Annual Report Pt3
• 176214 Schroders Income Growth - Annual Report Pt4

Schroder Income Growth
Fund plc
Report and Accounts
For the year ended
31 August 2022
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page a

Investment objectives
The Company’s principal investment objectives are to provide
real growth of income, being growth of income in excess of
the rate of inflation, and capital growth as a consequence of
the rising income.
Investment policy
The investment policy of the Company is to invest primarily in
UK equities but up to 20% of the portfolio may be invested in
equities listed on recognised stock exchanges outside the UK.
If considered appropriate, the Company may use equity
related instruments such as convertible securities and up to
10% of the portfolio may be invested in bonds. In addition, up
to 20% of total income may be generated by short-dated call
options written on holdings in the portfolio. Put options
comprising short-term exchange-traded instruments on
major stock market indices of an amount up to the value of
the Company’s borrowings may also be utilised.
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page b

Strategic Report
Contents
Strategic Report
Financial Highlights 2
10 Year Financial Record 3
Chairman’s Statement 4
Manager’s Review 6
Investment Portfolio 9
Strategic Review 10
Governance
Board of Directors 19
Directors’ Report 21
Audit and Risk Committee Report 24
Management Engagement Committee Report 26
Nomination Committee Report 27
Remuneration Committee Report 29
Directors’ Remuneration Report 30
Statement of Directors’ Responsibilities in
respect of the Annual Report and Accounts 32
Financial
Independent Auditor’s Report 33
Income Statement 39
Statement of Changes in Equity 40
Statement of Financial Position 41
Notes to the Accounts 42
Annual General Meeting
Annual General Meeting – Recommendations 55
Notice of Annual General Meeting 56
Explanatory Notes to the Notice of Annual General Meeting 57
Definitions of Terms and Performance Measures 59
Shareholder Information Inside back cover
Governance Financial
Annual General Meeting
Annual Report and Accounts
for the year ended 31 August 2022
1
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 1

Financial Highlights
Other financial information
31 August 31 August
2022 2021 % Change
Shareholders’ funds (£’000) 205,100 219,915 (6.7)
NAV per share (pence) 295.26 316.59 (6.7)
2
NAV per share total return* (2.7)
Share price (pence) 289.00 316.50 (8.7)
2
Share price total return* (4.7)
Share price discount* (%) 2.1 0.0
Gearing* (%) 13.5 7.9
Year ended Year ended
31 August 31 August
2022 2021 % Change
Net revenue return after taxation (£’000) 9,697 8,370 15.9
Revenue return per share (pence) 13.96 12.08 15.6
Dividends per share (pence) 13.2 12.8 3.1
Consumer Prices Index (“CPI”)
1
121.8 112.1 8.7
Ongoing Charges* (%) 0.74 0.79
1
Source: Office for National Statistics.
2
Does not include any adjustment for dividends paid.
*Alternative performance measures.
Total returns for the year ended 31 August 2022.
(Total returns include the impact of dividends paid. Details of the
calculations are given on page 59).
2
Schroder Income Growth Fund plc
-2.7%
Net asset value
(“NAV”) per share total return*
-4.7%
Share price total return*
+3.1%
Dividend growth for the year
Some of the financial measures below are classified as Alternative Performance Measures, 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 page 59, together with supporting
calculations where appropriate.
(2021: +1.6%)
(2021: +37.0%)(2021: +34.4%)
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 2

At 31 August 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Shareholders’ funds (£’000) 171,616 188,936 188,165 196,490 216,718 216,740 204,458 170,324 219,915 205,100
NAV per share (pence) 249.85 275.06 273.94 286.06 315.51 315.54 297.66 246.71 316.59 295.26
Share price (pence) 251.25 266.50 269.75 257.00 293.63 301.00 273.00 242.00 316.50 289.00
Share price premium/
(discount) to NAV per share* (%) 0.6 (3.1) (1.5) (10.2) (6.9) (4.6) (8.3) (1.9) 0.0 (2.1)
Gearing* (%)
1
3.3 9.6 9.5 8.4 5.8 8.3 15.5 9.5 7.9 13.5
For the year ended
31 August 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Net revenue return after
taxation (£’000) 7,003 7,428 7,761 8,299 9,107 8,767 9,744 8,042 8,370 9,697
Revenue return per share
(pence) 10.20 10.82 11.30 12.08 13.26 12.76 14.19 11.69 12.08 13.96
Dividends per share (pence) 9.80 10.10 10.30 10.60 11.20 11.80 12.40 12.60 12.80 13.20
Ongoing charges* (%)
2
1.00 0.93 0.99 1.00 0.95 0.93 0.87 0.86 0.79 0.74
Performance
3
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
NAV total return* 100.0 125.2 143.1 147.8 160.3 183.1 190.5 186.9 162.2 217.9 211.7
Share price total
return* 100.0 131.4 144.8 152.2 151.0 179.4 191.9 181.5 168.8 231.3 220.4
FTSE All-Share Index
total return 100.0 118.9 131.2 128.1 143.1 163.7 171.3 172.1 150.3 190.8 192.7
1
Borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
2
Ongoing charges represents the management fee and all other operating expenses excluding finance costs and transaction costs, expressed as a
percentage of the average daily net asset values during the year.
3
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 August 2012.
*Alternative Performance Measures.
Annual Report and Accounts
for the year ended 31 August 2022
3
Strategic Report
Ten-Year Financial Record
NAV/share price/FTSE All-Share Index total returns for
the ten years ended 31 August 2022
Dividends per share versus the rate of inflation for the
ten years ended 31 August 2022
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 August 2012.
3
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NAV Total Return
Share Price Total Return
FTSE All-Share Total Return
CPI/RPI
Dividends per share
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Source: Morningstar/Office for National Statistics. Rebased to 100 at
31August 2012. The Retail Prices Index (“RPI”) was used as the measure of
inflation up to 31 August 2013 and the Consumer Prices Index (“CPI”)
thereafter.
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 3

Revenue and
dividends
I am pleased to report that
the Company was able to
increase its dividend for the
27th year running.
Dividends per share for the
year of 13.2p represent a
3.1% increase on the
previous year. Given the
high and accelerating level
of inflation during the year,
the Company was unable to
increase the dividend in real
terms, however it has continued to fulfil its primary objective
of ‘real growth of income’ above the levels of inflation over the
last five and ten years. The income earned by the Company
recovered over the last year as companies gradually began to
increase their dividends. Earnings per share for the Company
increased by 15.6% to 13.96 pence per share.
A transfer of £527,000 will be made to the Company’s revenue
reserve, allowing £7.96 million to be carried forward, which
amounts to 87% of this year’s total proposed dividends.
Performance
During a volatile period for global equity markets the
Company returned -2.7% in NAV and -4.7% in share price
terms. This compares to a return of 1.0% for the FTSE All Share
Total Return index. The largest detractors to performance
during the period were underweights to banks and energy
companies which benefitted from rising interest rates and
elevated energy prices, respectively. For more details of
performance please refer to the Manager’s Review.
Share price discount
The Company’s share price discount to NAV has averaged
1.1% during the year and ended the year at 2.1%. The
Company was not able issue any shares during the period and
did not buy back any shares.
Board Succession
As outlined in the last annual report I have reached my nine
year tenure on the board and I will be retiring at the
forthcoming AGM and not standing for re-election. Following
a recommendation from the Nomination Committee, the
board has appointed Mr Ewen Cameron Watt as Chairman. He
has been a non executive director since 2017 and senior
independent director since 2021 and will use his significant
experience and expertise to chair the board. We recommend
that shareholders vote in favour of his election at the AGM. His
biography can be found on page 19.
Following a rigorous selection process using an external
search agency, the board is very pleased to have announced
the appointment of Ms June Aitken, as a non-executive
director, effective from 1January 2023. June is an experienced
investment trust director who will bring extensive experience
and a broad skillset to the board.
Ms Victoria Muir will assume the position of senior
independent director following the AGM.
Gearing
The Company has in place a £32.5 million revolving credit
facility with Sumitomo Mitsui Banking Corporation Europe
Limited (“SMBC”), expiring on 23 September 2023. The
drawdown on the loan facility has averaged £29.0 million
during the year and we estimate that this has contributed 1.6p
per share to the revenue return, but this was offset by a
greater 3.1p per share negative impact on the capital return.
As at 7 November 2022, the level of gearing was 11.3%.
Annual General Meeting and results
webinar
The AGM will be held at 12.00 pm on Thursday, 15 December
2022. We encourage shareholders to either cast their votes by
proxy, or to attend in person. The AGM will provide an
opportunity for shareholders to ask questions of the board
and the Manager although, as per previous years, the
Manager’s presentation will also be posted as a separate
webinar in order to make it accessible to a wider number of
shareholders many of whom who find coming to London
difficult. The Manager’s webinar will be broadcast on
24 November 2022 at 3pm, and all shareholders are
encouraged to sign up, to hear the fund manager’s view, and
to ask questions of your Manager. To sign up please visit
https://registration.duuzra.com/form/SCFAnnualResults.
In addition, the board would like to invite shareholders to get
in touch via the Company Secretary with any questions or
comments in advance of the AGM. To email, please use:
amcompanysecretary@schroders.com or write to us at the
Company’s registered office address (Company Secretary,
Schroder Income Growth Fund plc, 1 London Wall Place,
London EC2Y 5AU).
Outlook
Unfortunately the headwinds laid out in the Company’s
interim results have strengthened. A toxic combination of
rising inflation, interest rates and squeezed incomes make a
global slowdown and UK recession fairly inevitable.
Furthermore, heavy losses in fixed income markets have
raised the cost of capital for companies.
Central bank policy is seeking to combat inflation risk through
slowing monetary growth and, higher interest rates. These
are not a great combination for equity investment returns.
At the same time, currency weakness has made the UK equity
market ever more attractive as a destination for overseas
corporations looking to grow their UK operations through
acquisition. This weakness has also helped UK companies with
significant overseas profits increase cash flows and dividends
when measured in sterling.
4
Schroder Income Growth Fund plc
Chairman’s Statement
1
As at 9 November 2021
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 4

Deep fundamental research is vital in identifying companies
that can withstand the current headwinds and deliver positive
long-term returns to investors. Your manager’s long track
record of navigating market cycles and the considerable
resources it has available should give investors comfort at this
time. The continued stewardship of Sue Noffke, which now
exceeds a decade of managing the Company’s portfolio,
should provide investors with further reassurance.
The board will continue to work closely with your Portfolio
Manager to deliver the Company’s long-term objective of real
dividend growth over the long term, as well as capital growth.
While this will undoubtedly be difficult in an environment of
sustained elevated inflation your board remains confident of
achieving this outcome for shareholders in the long-term as
the economic environment stabilises. I wish the Company all
success in the future.
Bridget Guerin
Chairman
9 November 2022
Annual Report and Accounts
for the year ended 31 August 2022
5
Strategic Report
Chairman’s Statement
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 5

The net asset value per share total return in the 12 months to
31 August 2022 was –2.7%. This compares to 1.0% from the
FTSE All Share Total Return Index. The share price total return
was –4.7% (source: Schroders/Morningstar).
Revenue after tax for the Company rose 15.9%, which
exceeded our earlier expectations. Income benefitted from
several factors, including the earnings growth of portfolio
holdings and a boost from the strong dollar for international
businesses. Nearly all of the holdings generated income in the
12-month period (the exceptions being National Express and
newly formed Haleon which demerged from GSK in July) as
the impact of the pandemic restrictions eased, enabling
companies in the leisure, hospitality and real estate sectors to
return to more normal operations.
For the second consecutive year, large payments made by
mining holdings BHP Billiton, Rio Tinto and Anglo American
were the most significant contributors to portfolio income
over the period. Special dividends were again a feature from
Rio Tinto and Anglo American but at reduced levels compared
to the prior period. Income from Shell increased more than
threefold as we built our position over the period, together
with a significant 44% increase in dividend payments
compared to the prior year when the company cut payments
significantly. A diverse range of holdings saw dividend growth
in excess of 20%. This included companies where the passing
of the pandemic had reopened operations (property
businesses student accommodation provider Unite and SME
business unit provider Workspace) or enabled management
to reduce their cautious approach to payments (construction
and infrastructure group Balfour Beatty). Meanwhile, a
number of portfolio holdings resumed strong dividends
having previously cut them, such as oil and gas giant Shell,
Asian life insurance company Prudential and interdealer
broker TP ICAP. Other holdings which had significant dividend
increases from growth in their businesses included private
capital investors 3i, private equity investment firm
Intermediate Capital Group, international employment
recruiter SThree, pet care business Pets at Home, diversified
miner BHP Billiton and payments provider Paypoint. A
number of other holdings increased dividend payments by
10% or more, including luxury fashion house Burberry, food
retailer Tesco, biopharma company AstraZeneca, speciality
chemical business Johnson Matthey, diversified miner Anglo
American and power generator Drax. A small number of
holdings saw dividend payments fall. These included Bunzl,
where the comparison of 2021 was inflated by a catch-up
dividend payment from the prior year, GSK, which rebased its
dividend payment down after the demerger of Haleon, and
Unilever, where the dividend in sterling fell due to Euro
weakness against sterling earlier in the period. The remainder
of the Company’s holdings posted income gains in the range
up to 10%.
Market background
UK equities were more resilient than many other world
markets over this 12-month period, which represented a
particularly challenging time for global equities more broadly.
Shortages and supply chain issues were an enduring theme as
activity bounced back sharply following pandemic lockdowns.
This contributed to inflation hitting multi-decade highs in
many developed economies, exacerbated by soaring energy
and food costs following Russia’s invasion of Ukraine.
In response, all the major developed central banks increased
interest rates materially, led by the Bank of England. In late
2021 it, became the first of the G7 monetary authorities to
hike rates. The US Federal Reserve, however, has taken the
most aggressive approach, with a series of large interest rate
increases and after making an early start to unwinding
quantitative easing (QE) measures, through quantitative
tightening (QT).
The prospect of rising interest rates heavily influenced the
investor mindset, perhaps best illustrated by a clear
preference for large companies capable of returning cash to
them today as dividends. The UK’s more mature and slower
growing banking, oil and tobacco sectors all performed very
well, which has helped underpin the valuation of the broader
UK equity market. Healthcare was another notable bright spot
and dollar strength was a positive for most of these sectors
given significant overseas earnings.
In contrast, fears around the impact of rising energy bills on
consumer discretionary spending weighed heavily on
retailers, travel and leisure, construction and other
domestically focused companies. These trends contributed to
the marked underperformance of UK small and mid-cap
equities versus large caps, to an extent rare in history. This
area of the market is also home to many fast-growing
companies in new and emerging industries, whose valuations
have come under particular pressure amid rising interest
rates.
Portfolio performance
The NAV per share total return underperformed the FTSE
All-Share Index total return over the period, with sector
allocation the main driver of negative relative returns.
One of the main drivers of underperformance over the period
was being underexposed, relative to the index, to the strongly
performing oil and banking sectors. The strength of the
economic recovery from the Covid-induced recession initially
boosted demand for oil and gas producers, while the Russia
Ukraine conflict exacerbated prices further. Not owning oil
company BP, which strongly outperformed, was detrimental.
Bond yields rose as expectations for interest rate rises
increased, supporting banks. Subsequently, not owning large
Asian-focused bank HSBC notably weighed on relative
performance, albeit that our position in another Asian bank,
Standard Chartered, which also performed strongly, partly
mitigated this. Not holding tobacco stocks, such as British
American Tobacco, whose defensive characteristics were
rewarded, also weighed on performance.
Other notable detractors included our large holding in Pets at
Home, one of the portfolio’s top performers over the prior
financial year, which suffered from a derating in its shares
despite continued, strong operational delivery. Concern that
the stock was a “Covid winner”, which would struggle to
sustain growth levels, was exacerbated by the announcement
of senior management changes. We remain optimistic about
the company’s longer term prospects given the strong track
record of growth in its retail business and significant
opportunity for its vets practice division. Household spending
6
Schroder Income Growth Fund plc
Manager’s Review
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 6

Annual Report and Accounts
for the year ended 31 August 2022
Strategic Report
on pets has also shown resilience in prior recessions which
adds to our confidence in the holding given the current
squeeze on household incomes.
Our decision to invest in betting and gaming group company
888 has proved costly over the past year. Share price
weakness has been acute as the market has focused on the
extent and cost of the debt associated with the group’s
acquisition of William Hill’s UK assets. We believe the deal has
strategic merit as it diversifies the business by geography and
product, with scope for cost savings and the potential for
revenue synergies as cross-selling opportunities exist
between gaming (888) and sports (William Hill).
On the positive side, our position in power generation
company Drax performed strongly. Drax has switched its
focus from coal to biomass renewable fuels and has longer-
term attractions of the potential to deploy carbon capture and
storage technology to become a leading carbon negative
energy business.
Our longstanding position in education content provider
Pearson contributed to performance as, under the new CEO,
strategy was better articulated and executed. Meanwhile,
defence services business QinetiQ experienced share price
volatility during the 12-month period. The shares fell sharply
in the autumn of 2021, due to disclosure of an uncharacteristic
problem contract that emanated from supply chain issues.
Following engagement with the company, we believed that
the negative sentiment and share price reaction was
overdone and we added to our position. The subsequent
share price recovery on a larger holding generated a positive
impact. Lastly, not holding closed-ended investment vehicles,
such as Scottish Mortgage Investment Trust, was also a
positive.
Five top/bottom relative performers
Weight Relative
Portfolio relative to perfor-
weight index mance Impact
Security (%)
1
(%)
1
(%)
2
(%)
3
Drax 2.1 2.0 56.1 0.6
Standard Chartered 2.2 1.7 32.8 0.5
Pearson 2.6 2.3 14.2 0.4
QinetiQ 2.0 1.9 1.8 0.4
Scottish Mortgage IT – -0.6 -42.1 0.3
Weight Relative
Portfolio relative to perfor-
weight index mance Impact
Security (%)
1
(%)
1
(%)
2
(%)
3
HSBC 0.2 -3.9 41.6 -1.3
BP – -3.0 54.3 -1.3
888 (Gibraltar) 1.0 0.9 -70.7 -1.1
Pets At Home 2.8 2.7 -35.7 -1.1
British American
Tobacco – -2.9 34.8 -0.8
Source: Schroders, Factset, for Schroder Income Growth investment
portfolio, 12 months to end August 2022.
1. Average weights over period.
2. Total return of the stock relative to the FTSE All-Share TR over the
period.
3. Contribution to performance relative to the FTSE All-Share TR.
The securities shown above are for illustrative purposes only and are not
to be considered a recommendation to buy or sell.
Portfolio activity
Turnover in the portfolio has been influenced by our view of
increased and enduring inflation risks and associated rises in
bond yields, as well as higher interest rates and the squeeze
on consumer incomes, which have led us to establish new
positions in stocks we believe are set to benefit from this
environment, as well as adding to holdings which we believe
will prove resilient in this situation.
Significant additions were made mainly in our banks and oil &
gas allocations, financed by reductions in the portfolio’s
exposure to the mining sector and certain consumer
discretionary areas which, in our view, were potentially
vulnerable to the squeeze on consumer incomes from higher
interest rates and inflationary pressures.
Starting with banks, we initiated new positions in UK domestic
bank, Lloyds, and Asian bank, Standard Chartered, at the start
of the period and added to them early in 2022. Lloyds is
well-capitalised and focused on lower-risk mortgage lending.
Furthermore, like all UK banks, Lloyds has provisioned very
conservatively through the pandemic and retains a strong
capital position. We believe the company is well placed to
benefit from higher interest rates. Asian-focused bank,
Standard Chartered, is exposed to US interest rate rises. We
believe Standard Chartered currently trades at an attractive
valuation, which we would expect to be lifted as profitability
improves. We continued to add to the Company’s position in
the banking sector over the period as it became clear that
central banks were on a sustained trend of raising interest
rates to combat persistent inflationary pressures. We
subsequently broadened our holdings to include another
attractively-valued and well-capitalised domestic bank,
Natwest, as well as large, diversified Asian banking business,
HSBC.
Having cut positions in oil majors in the autumn of 2019 and
start of 2020 on the belief that they would struggle to manage
the energy transition while supporting shareholder returns,
we have continued to reassess the situation and have become
Manager’s Review
7
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 7

more optimistic. In 2019, BP and Shell were heavily committed
to paying dividends and buying back stock from shareholders.
Additionally, they had ongoing obligations to service their
significant debt levels. At that time, combining these
commitments with the significant required investments in
renewable energy sources did not seem, in our view, to add
up. We constantly review the investment case for companies
and are always open to changing our minds. This is often on
the basis of valuations, which are now more appealing than
prior to the pandemic. We have subsequently rebuilt the
portfolio’s position size in Shell, following a reassessment of
the number of significant changes to the company and the
outlook for the both the oil price and demand. Dividends were
rebased to more sustainable levels in 2020 and improved
disclosures give us a sense of what is required to implement
their transition strategies. The oil price has strengthened from
the lows of early 2020, which enables investment, has boosted
cashflows and reduced debt. Shell has a good mix of
downstream and gas assets – the integrated gas and
marketing business puts the company in a good place to
monetise the recovery in demand from Covid and the
dislocations between emerging markets and developed
markets through its trading activities. Dividends are now
growing, supplemented by capital returns to shareholders in
the form of share buy backs.
Within the mining sector, we exited our position in BHP, as the
stock had performed better around its delisting from the
premium segment of the UK market in order to consolidate its
listing on the Australian Index. The past three years have seen
strong operational and share price performance across the
sector. In our view, future shareholder returns and valuations
appear more attractive in oils and banks.
As mentioned earlier, we also made reductions in certain
consumer discretionary areas which, in our view, were
potentially vulnerable to the squeeze on consumer incomes
from higher interest rates and inflationary pressures. These
included exits from positions in housebuilder Taylor Wimpey
and builders merchant Travis Perkins. Additionally, we were
unconvinced by the rationale and details of an acquisition of
another property business proposed by Workspace and exited
our position, reinvesting proceeds into our existing position in
private patient practice property company Assura.
Meanwhile, corporate activity again featured as a driving
rationale for stocks exiting the portfolio - we sold our holding
in Avast following receipt of a bid from US peer
NortonLifeLock, while a take-private transaction removed
publishing and risk business Daily Mail and General Trust,
which has been held in the portfolio for some years.
Outlook
More recently we have seen a continuation of the appreciation
of the US dollar against most major currencies including the
pound to add to existing inflation worries. The decline in
sterling allied to rising rates will translate into higher import
and borrowing costs for many UK companies, with energy, in
particular, priced in dollars. While the UK government’s
energy packages should cushion the impact on households
and businesses for a period, and have a helpful knock-on
effect on the inflation rate we acknowledge the current
unprecedented squeeze on consumer incomes that a
combination of higher inflation, energy and mortgage costs is
having on consumers.
The UK is not alone in harbouring recessionary fears, as both
the US and Europe are also showing signs of economic
deterioration. Ultimately, these challenges will fade at some
point in the future and we remain focused on companies’
long-term fundamental prospects and their income
generation ability. It is worth highlighting that the UK market
includes many companies which are overseas earners, whose
profits, dividends, revenues and valuations could all
potentially benefit from a falling pound. Meanwhile, we
continue to have a section of the portfolio invested in
domestically-focused areas, composed of companies which
have significant opportunities to benefit from weaker
competition going out of business.
Investment policy
Regardless of external conditions, our aims and our
investment approach remain constant: to construct a
diversified portfolio of mispriced opportunities capable of
delivering both real growth of income and attractive capital
returns.
The market volatility in 2022 has been yet another reminder of
the importance of diversification when constructing
portfolios. We remain bottom-up stock pickers looking for
idiosyncratic investment opportunities in individual
companies. We continue to see an attractive opportunity set
of mispriced assets in the UK equity market, as the market as
a whole has been, and continues to be, out of favour with
international investors. Subsequently, we will continue to
utilise our ability to use gearing to potentially enhance
returns.
Schroder Investment Management Limited
9 November 2022
The securities referred to above are for illustrative purposes only
and are not to be considered a recommendation to buy or sell.
8
Schroder Income Growth Fund plc
Manager’s Review
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Annual Report and Accounts
for the year ended 31 August 2022
9
Strategic Report
Companies in bold represent the 20 largest investments, which by value account for 68.3% (2021: 67.7%) of total investments.
All companies are headquartered in the UK unless otherwise stated.
All investments are equities, listed on a recognised stock exchange.
Investment Portfolio
as at 31 August 2022
£'000 %
Financials
Empiric Student Property 6,764 2.9
Standard Chartered 6,418 2.8
Lloyds Bank 5,933 2.6
Assura 5,898 2.5
Legal & General 5,237 2.3
Prudential 4,768 2.1
Direct Line 4,477 1.9
Unite 3,705 1.6
HSBC 3,579 1.6
3i Group 3,454 1.5
Natwest Group 3,271 1.4
Intermediate Capital 2,889 1.3
M&G 2,540 1.1
TP ICAP 2,373 1.0
Petershill Partners 1,443 0.6
Total Financials 62,749 27.2
Consumer Services
RELX 8,777 3.8
Pearson 7,558 3.3
Tesco 7,061 3.0
Pets At Home 6,368 2.8
Whitbread 4,399 1.9
Hollywood Bowl 3,879 1.7
888 (Gibraltar) 1,701 0.7
National Express 1,092 0.5
Cazoo 97 0.0
Total Consumer Services 40,932 17.7
Healthcare
AstraZeneca 18,138 7.8
GSK (GlaxoSmithKline) 8,360 3.6
ConvaTec 4,222 1.9
Haleon 1,961 0.9
Total Healthcare 32,681 14.2
£'000 %
Basic Materials
Anglo American 9,081 3.9
Rio Tinto 7,068 3.1
Johnson Matthey 4,855 2.1
Total Basic Materials 21,004 9.1
Oil and Gas
Shell 19,983 8.6
Total Oil and Gas 19,983 8.6
Industrials
Balfour Beatty 5,061 2.2
QinetiQ 4,792 2.1
Bunzl 3,641 1.6
Paypoint 2,426 1.1
SThree 2,255 1.0
Spectris 1,162 0.5
Total Industrials 19,337 8.5
Utilities
Drax 5,440 2.4
National Grid 5,248 2.3
SSE 3,596 1.6
Total Utilities 14,284 6.3
Consumer Goods
Unilever 7,159 3.1
Burberry 5,350 2.3
Total Consumer Goods 12,509 5.4
Telecommunications
BT 7,018 3.0
Total Telecommunications 7,018 3.0
Total Investments 230,497 100.0
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10
Schroder Income Growth Fund plc
Business model
The Company is a listed investment trust, that has outsourced
its operations to third party service providers. The board has
appointed the Manager, Schroder Unit Trusts Limited 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 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 above. The investment and promotion
processes set out in the diagram are described in more detail
below.
Investment process
The investment approach is based on Schroders’ belief that
stock markets are inefficient. The Manager believes it can
exploit such inefficiencies by conducting its own research,
through disciplined portfolio construction, and taking a
long-term view.
The Company’s lead manager, Sue Noffke, has been a
member of Schroders’ UK Equity team for over 20years and
has been managing the Company’s portfolio since 2010. The
investment team employs a rigorous and disciplined
investment process aiming to deliver consistent
outperformance with low volatility against set objectives.
Stock research
The manager and the rest of Schroders’ UK Equity team work
closely with Schroders’ specialist industry analysts who
conduct independent fundamental research. As one of the
largest UK investors, Schroders has substantial access to
companies’ management teams. The research focuses on
factors that influence a company’s ability to create value for
shareholders over the long-term and looks beyond short-term
profits to a company’s profits potential and to the quality of
those profits. The focus is not exclusively on growth, value, or
earnings momentum factors but on each company’s
individual ability to create value for shareholders.
Stock selection/portfolio construction
The decision to buy or sell a security lies with the manager,
and bottom-up (that is based on analysis of individual
companies rather than general market or sector trends) stock
selection is therefore the primary influence on portfolio
performance. When assessing stocks for inclusion in the
portfolio and in managing existing investments, the Manager
places a greater emphasis on the sustainability and the
potential growth of a company’s dividend rather than a high
initial yield. The size of each holding is determined on the
basis of investment conviction and an assessment of the risks
and volatility associated with it, rather than its market value.
Portfolio construction is supported by a robust system of risk
controls. Proprietary risk tools help the manager and the
board to understand the factors contributing to risk and to
avoid unintended risk.
The Manager may invest up to 20% of assets in overseas
stocks and this is utilised in three main ways: for added
diversification where overseas equities are cheaper than their
•
Responsible for
overall strategy and
oversight including
risk management
• Activities centred
on the creation of
shareholder value
Investor
Value
• Manager implements
the investment strategy
by following an
investment process
• Support by strong
research and risk
environment
• Regular reporting and
interaction with the
board
• Set objectives,
strategy and KPIs
• Appoint Manager
and other service
providers to achieve
objectives
• Marketing and sales
capability of the
Manager
• Support from the
corporate broker with
secondary market
intervention to support
discount/premium
management
Board is focused on
ensuring:
• that the fees
and ongoing
charges remain
competitive
• that the vehicle
remains attractive
to investors
Investment
Strategy
Promotion
Competitiveness
Board
• Oversee portfolio
management
• Monitor achievement
of KPIs
• Oversee the use of
gearing
• Oversee discount/
premium management
and the provision of
liquidity through share
issuance
Oversight
The Strategic Report sets out the Company’s strategy for delivering the investment objective (set out on the
inside front cover), the business model, the risks involved and how the board manages and mitigates those
risks. It also details the Company’s purpose, values and culture, and how it interacts with stakeholders.
Strategic Review
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Annual Report and Accounts
for the year ended 31 August 2022
11
Strategic Report
Strategic Review
equivalents in the UK; when attractive dividends are available;
and for exposure to sectors that are not well represented in
the UK equity market.
Review/sell discipline
The management of a relatively concentrated portfolio
requires a rigorous sell discipline enforced by competition for
capital. The Manager will sell a holding if its share price
reaches a level where there appear to be better opportunities
elsewhere or if a material change in a company’s
circumstances makes the original investment case no longer
valid. Given the long-term approach, portfolio turnover tends
to be low.
Integration of ESG into the investment process
As managers of the Company, we are stewards of capital,
focusing on the long-term prospects of the assets in which we
invest. We analyse each investment’s ability to create, sustain
and protect value to ensure that it can deliver returns in line
with our shareholders’ objectives.
We view ourselves as responsible investors. Responsible
investment considers companies’ citizenship and their
contribution to society in the context of achieving investment
objectives. We appreciate that many shareholders want to use
their investment to support more responsibly run businesses,
and that many investors have concerns over specific activities
to which they do not want their investment exposed.
We adopt an approach of integration
As a result of the above, we choose to adopt the model of ESG
integration. Our investment approach explicitly considers ESG
factors as a source of alpha generation. In our view, ESG and
industrial trends are intrinsically linked. Today, companies
face competitive pressures from a wider range of sources, on
a larger scale and at a faster pace. We identify the key ESG
issues of each company we invest in, and analyse and
examine the management of these in order to determine the
risk profile of an investment. This helps inform our
assessment of both upside opportunity and downside
protection.
To us, effective ESG integration means conducting a rigorous
bottom up examination of a company’s ESG performance and
incorporating that analysis into investment decisions rather
than outsourcing that analysis to third parties.
Extensive engagement with portfolio companies
As part of our process, we meet with company management
teams in advance of investing, as well as meeting with the
management of all portfolio companies at least once a year. In
many cases we meet with them more than this, as well as
engaging with board members. In addition, we will attend
meetings with the majority of management teams of
companies in the FTSE 350 over the course of a year as we
regularly review the investment cases of companies not held
in the portfolio. Our work here is aided by our internal
resource of over 20 dedicated ESG specialists.
We have always taken pride in our level of engagement with
companies. Our brand, as well as extensive analytical resource
affords us the ability to regularly engage with companies on
all aspects of corporate strategy, including ESG matters.
The chart below shows an illustration of the main
engagement issues the investment team have had with UK
companies over the past three years.
Source: Schroders. Most significant engagement topics over 3 years to 31 December 2021. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Schroders Engagement
Extensive resources ensure we engage fully on ESG matters with UK companies
Schroder UK Equity team ESG engagements – past 3 years
Most significant engagement topics
0
50
100
150
200
250
300
Climate Change Remuneration Corporate Strategy Governance oversight Human Capital
Management
Environmental
Policy/Strategy
Other - Environmental &
Social
Engagement
examples:
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The below table shows the number of company meetings and
resolutions the Company voted on in the last one and three
years.
2022
1
2020-22
Number % Number %
Meetings 46 140
Resolutions 861 2473
Votes with
management 840 97.6 2381 97.9
Votes against
management 21 2.4 6 2.1
Did not vote 0 0 0
1
Calendar years. 2022 to 31 August.
Where we vote against, in the majority of cases this has been
to oppose the re-election of a director or to oppose the
remuneration report. We will oppose the re-election of a
director for a number of reasons including ‘over-boarding’,
where we believe a director holds too many board positions at
once so are unable to dedicate sufficient time to each. In the
case of remuneration, we push for management teams to
have firm alignment with shareholders.
ESG in practice
A number of topics come up consistently in our engagements
with all companies. Executive remuneration would be an
example here. We engage to ensure that executive pay is of an
appropriate quantum, is aligned with the interest of
shareholders and incorporates ESG metrics in an appropriate
way. During Covid this has been an area of even higher
scrutiny, particularly for companies whose businesses have
been materially impacted by the pandemic. For those that
took government support we opposed bonus payments until
this support had been repaid.
Climate priority engagements
A particular focus for engagement in 2022 has been Climate.
The investment team conducted a number of engagements
with portfolio companies over the course of the year to
understand approaches to net zero and encourage best
practice.
Individual case studies
In addition to topics that come up consistently across the
portfolio, there are other company specific engagements that
occur on an ad hoc basis in response to events. A number of
these are outlined below.
Johnson Matthey – governance and
environmental opportunity
Johnson Matthey has been a long term holding and multi year
engagement on governance and environmental
opportunities.
We believe Johnson Matthey has significant potential to grow
earnings due to the growing demand for low carbon
environmental technologies and clean air legislation in the
automotive sector. We think the market under appreciated
the longevity of earnings from their automotive catalyst
business, particularly in Asia where emissions standards
continue to tighten. Governments in countries such as India
and China are looking to improve air quality by implementing
policies similar to those in place in Europe. This drives demand
for Johnson Matthey’s automotive catalysts. In addition, for
many years the business has had a significant presence in
technologies used in the hydrogen supply chain. Hydrogen is
increasingly recognised as being a key component of the
transition to a world powered by low carbon energy sources.
We have had many engagements with the board, executive
management team and operational management over the
course of 2021/22.
Our patience in the opportunity for the company to provide
environmental technologies was somewhat rewarded when it
was announced in April 2022 that US industrial conglomerate
‘Standard Industries’ had taken a strategic stake in the
company and the shares responded positively.
This is a case of a company where our work suggested an
under appreciated opportunity in environmental technology
and our active engagement with the company has been a part
of unlocking this.
BT – engagement and push for WDI disclosure
We have engaged multiple times with BT over the course of
the year on subjects such as company strategy and
governance. While in general being a leader on sustainability
issues (particularly strong in areas of supply chain
management and approach to net zero), the company still
have areas to improve. One example is that they did not
participate in the Workforce Disclosure Initiative this year
(which Schroders are a supporter of). In our engagement with
the company, we have made clear our support for WDI, and
have encouraged the company to disclose next year.
Voting against BHP’s unification in Australia
BHP Group was a long term holding in the Trust which was
sold during the year. In 2022 the company announced its
intention to unify its corporate structure in Australia. This
would mean losing its Premium listing on the London Stock
Exchange and thus it would no longer be eligible for inclusion
in the FTSE 100 index and would not be bound by the standard
of regulation and corporate governance standards of a
Premium listing. Despite understanding the rationale for the
company to want to do this, we did not think it was in the
interest of our clients to lose a high quality, world leading
company from the UK stock market. We therefore expressed
this view to the company and voted against the unification. In
the end the company won the vote, but again it is a
demonstration that we believe it is important to stand up for
what we believe is in the best interests of our clients.
Sustainability at Schroders
Over 20 years of ESG integration
Our policies on sustainability are based on what we have
learned from more than 20 years of integrating ESG analysis
for our clients. The below chart shows a number of milestones
hit over the last 20 years of ESG integration at Schroders.
Dedicated team of ESG specialists
As a result of the above, we are fortunate to have access to a
dedicated team of over 20 ESG specialists. Their role is to
12
Schroder Income Growth Fund plc
Strategic Review
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Annual Report and Accounts
for the year ended 31 August 2022
13
Strategic Report
Strategic Review
research ESG themes within sectors, as well as to analyse and
engage with individual companies on these issues. We engage
with the output of this team regularly to allow us to integrate
these factors into our investment process.
No ‘one size fits all’ approach
As with many issues, there is a desire from some corners of
the industry for a ‘one size fits all’ scoring system to apply to
ESG issues. As a result, there are a number of third party
providers trying to provide ‘ESG’ benchmarks. While this is
good in theory, in practice we see a number of flaws to this
approach.
Our view is that these systems run the risk of oversimplifying
a topic that is too complex to be captured in a single number.
We see plenty of evidence that the tick box approach does not
work, from the returns generated by technology companies
with unconventional governance structures to the failure of
companies which on paper had all the right committees and
governance structures in place.
Internal accreditation
In 2019 Schroders rolled out an internal ESG accreditation
process. Each investment manager can apply to be ‘accredited’
by submitting a document articulating how they integrate ESG
into their investment process. Schroders’ Sustainable
Investment Team awards accreditation based on this
submission fulfilling a number of criteria. The award is then
annually reviewed against this consistent criteria.
There are 3 sustainability categories to distinguish each
product/fund approach:
The managers of the investment Company achieved
Schroders Integrated accreditation status in 2019, and had
this renewed in 2020, 2021 and 2022. The award submission
detailed the Manager’s use of Schroders proprietary tools
CONTEXT and SustainEx to deepen our ESG analysis.
Investment restrictions and spread of
investment risk
Risk in relation to the Company’s investments is spread as a
result of the Manager investing the Company’s portfolio with
a view to ensuring that the portfolio retains an appropriate
balance to meet the Company’s investment objectives. The
key restrictions imposed on the Manager include: (i)no more
than 15% of the Company’s total net assets, at the date of
acquisition, may be invested in any one single company; (ii)no
– Negative screening
beyond Schroders
exclusions for cluster
munitions,
anti-personnel mines,
biological and
chemical weapons
– Sustainability is a
cornerstone of the
investment process
– The fund aims to
avoid controversial
business practices
– Sustainability is a
building block of the
investment process and
can be clearly evidenced
– Currently held by
the managers of
the Company
(awarded in 2019)
Sustainability at Schroders
A continuously evolving approach
Source: Schroders, September 2022.
1
Carbon Disclosure Project.
2
UN Principles for Responsible Investing.
3
UN Global Compact.
4
Strategy and Governance module.
5
For certain businesses acquired during the course of 2020 and 2021 we have not yet integrated
ESG factors into investment decision-making. There are also a small number of strategies for which ESG integration is not practicable or now possible, for example passive index tracking or legacy businesses or investments
in the process of or soon to be liquidated, and certain joint venture businesses are excluded.
'Issues such as climate change, resource scarcity, population growth and corporate failure have put responsible investment at the forefront of
esults for our
clients.'
Peter Harrison, Group Chief Executive, Schroders plc
1998 2001 2006 2007 2008 2011 2016 2017 2019 2020 2021 2022
Published corporate
governance policy
Published first socially
responsible policy
Became a CDP
1
signatory
Became a UNPRI
2
signatory
Top 5 in 2017
AODP Global
Climate 50 Asset
Manager Index
Developed responsible
fixed income policy
6 years of
A+ UNPRI
rating
4
Became a
UNGC
3
signatory
Developed
responsible real
estate investment
policy
Acquired majority
stake in
BlueOrchard
Launched first
sustainable
strategy
Launched SustainEx &
Climate Progress
Dashboard
Linked ESG to
revolving credit
facility
Business
operating on a
carbon-
neutral basis
+
Achieved
full ESG
integration
5
Science-based
targets
validated by
SBTi
Launched
CONTEXT
Natural Capital
Research
partnership
#1 in ShareAction
European RI asset
management survey
CEO letter to
FTSE350
companies on
climate change
First dedicated
ESG resource
Founding
Signatory to
Net Zero Asset
Managers
Initiative
Became a
member of
the UN Race
to Net Zero
Initiative
Published
Engagement
Blueprint
Published
Climate
Transition
Action Plan
Became a Natural Capital
Investment Alliance
member
Acquired 75%
shareholding in
Greencoat Capital
Partnership with
Akaria Natural
Capital
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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 investment
companies or investment trusts which are listed on the Official
List of the London Stock Exchange; (iii)no more than 15% of
the Company’s gross assets may be invested in other
investment companies or investment trusts which are listed
on the Official List of the London Stock Exchange; (iv)no more
than 15% of the Company’s total net assets may be invested in
open-ended funds; and (v) no more than 25% of the
Company’s total net assets may be invested in the aggregate
in unlisted investments and holdings representing 20% or
more of the equity capital of any company.
The investment portfolio on page 9 demonstrates that, as at
31 August 2022, the Manager invested in 44 UK equity
investments spread across nine industry sectors. The board
believes that the diversity of the stocks, along with the above-
mentioned restrictions imposed on the Manager, achieve the
objective of spreading investment risk.
Promotion
The Company promotes its shares to a broad range of
investors who have the potential to be long-term supporters
of the investment strategy. The Company 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.
Promotion is focused via three channels:
– Discretionary fund managers. The Manager promotes the
Company via both London and regional sales teams.
– Execution-only investors. The Company promotes its
shares via engaging with platforms, via the press, and
through its webpages. Platforms have experienced
strong growth in recent times and are an important focus
for the Manager.
These activities consist of investor meetings, one-on-one
meetings, regional road shows and attendance at conferences
for professional investors. 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 advisers and
execution-only platforms, advertising in the trade press,
maintaining relationships with financial journalists and the
provision of digital information on Schroders’ website. The
board also seeks active engagement with investors, and
meetings with the Chairman are offered to professional
investors where appropriate.
Shareholders are also encouraged to sign up to the Manager’s
Investment Trusts update, to receive information on the
Company directly https://www.schroders.com/en/uk/private-
investor/fund-centre/funds-in-focus/investment-trusts/
schroders-investment-trusts/never-miss-an-update/
Details of the board’s approach to discount management and
share issuance may be found in the Annual General Meeting
Recommendations on page55.
Key performance indicators
The board reviews performance using a number of key
measures, to monitor and assess the Company’s success in
achieving its objective. Further comment on performance can
be found in the Chairman’s statement. The following KPIs are
used:
– NAV performance;
– Share price performance;
– Share price discount/premium; and
– Ongoing charges ratio.
Some KPIs are Alternative Performance Measures (APMs), and
further details can be found on page 2 and definitions of these
terms on page 59.
Purpose, values and culture
The Company’s purpose is to create long-term shareholder
value.
The Company’s culture is driven by its values: Transparency,
Engagement and Rigour, with collegial 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 to structure the Company’s operations with
regard to all its stakeholders and take account of the impact of
the Company’s operations 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.
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; and
greenhouse gas and energy usage reporting.
Corporate and Social Responsibility
Diversity
As at 31August 2022, the board comprised two men and two
women. 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
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Annual Report and Accounts
for the year ended 31 August 2022
15
Strategic Report
Strategic Review
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. The board also considers the diversity and inclusion
policies of its service providers.
The board is cognisant of the new Disclosure Guidance and
Transparency Rules (DTR) to improve transparency on the
diversity of company boards and feels well positioned for
these guidelines. The board consists two men and two
women, with Victoria Muir appointed senior independent
director following the AGM.
Financial crime policy
The Company continues to be committed to carrying out its
business fairly and 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.
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.
Relations with shareholders
Shareholder relations are given high priority by both the
board and the Manager and are detailed further in
“Promotion” on page 14.
In addition to the engagement and meetings held during the
year described on page 23, the chairs of the board and
committees and the other directors, usually attend the AGM
and are available to respond to queries and concerns from
shareholders. The board is keen to hear from shareholders
and can do so by writing to the Company Secretary (Company
Secretary, Schroder Income Growth Fund plc, 1London Wall
Place, London EC2Y 5AU), or emailing
amcompanysecretary@schroders.com.
Responsible investment
The Company delegates to its Manager the responsibility for
taking environmental, social and governance (“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
the Strategic Review on pages 10 to 18, a description of
the Manager’s policy, and its engagement
with investee companies on these
matters, can be found on the Schroders website at
https://www.schroders.com/en/sustainability/active-
ownership/.
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 is
compliant with the UK Stewardship Code and its compliance
with the principles therein is reported on its website.
The board has received reporting from the Manager on the
application of its policy.
The board’s commitment to stakeholders – section172
Companies Act 2006 statement
The board has identified its key stakeholders as the
Company’s shareholders and service providers. The board
notes the Company has no employees and the impact of its
own operations on the environment and local community is
through the impact its service providers have.
Engagement with key stakeholders assists the board in
meeting the obligation for directors to act in a way that
promotes the success of the Company, taking into account
their interests. This statement outlines this engagement
and the impact on decision making where appropriate, and
cross-refers to the decisions made by the board during the
year, detailed elsewhere in this report.
As detailed in “Promotion” on page14 and “Relations with
Shareholders” on page15, the Company engages with its
shareholders. The board considered feedback by
shareholders, relayed by the Manager and the corporate
broker, when making decisions relating to share issuance,
dividend decisions and review of board composition.
Further details on shareholder engagement are included in
the Chairman’s Statement.
As detailed in “Purpose, Values and Culture” on page14, the
board engages with service providers, and receives regular
reporting, either directly, or through the Manager or
Company Secretary, on performance and other matters.
Relevant engagement is detailed in the Chairman’s
Statement, Managers’ Review, Audit and Risk Committee
and Management Engagement Committee Report.
Principal decisions taken during the year were: (1) dividend
decisions (2) strategy and (3) board changes. For each of
these decisions the board took into account feedback from
shareholders, either directly or through service providers
and advisers. The board also took into account the views of
its service providers, including the Manager. The board is
pleased to report its engagements were constructive and
led to positive outcomes, as detailed in the Chairman’s
Statement and committee reports.
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16
Schroder Income Growth Fund plc
Strategic Review
Principal risks and uncertainties
The board 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. Both the principal risks and the
monitoring system are also subject to robust assessment at least annually. The last assessment took place in October 2022.
Although the board believes that it has a robust framework of internal control 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.
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.
Emerging risks and uncertainties
During the period, the board also discussed and monitored a number of risks which could affect the valuations of investee
companies. Two particular market risks were considered, political risk and climate change risk. The board receives updates
from the portfolio managers, Company Secretary and other service providers on other potential risks that could affect the
Company.
Political risk includes the impact of geopolitical risk, regional tensions, trade wars and sanctions against companies. During the
period, the board noted that the invasion of Ukraine impacted political tensions, supply chains, interest rates and in particular
higher inflation in the UK and globally. The board is also mindful that changes to financial and public policy could impact the
Company in the future.
Climate change risk includes how climate change could affect the Company’s investments, and potentially shareholder returns.
The board notes the Manager has integrated ESG considerations, including climate change, into the investment process. The
board will continue to monitor this.
The board considers that both political risks and climate risks referred to above are covered in the risk matrix under market
risks.
Risk Mitigation and management
Strategic
The Company’s investment objectives may
become out of line with the requirements of
investors, resulting in a wide discount of the
share price to underlying NAV per share.
The appropriateness of the Company’s investment remit is periodically
reviewed and success of the Company in meeting its stated objectives is
monitored.
Share price relative to NAV per share is monitored and the use of buy back
authorities is considered on a regular basis.
The marketing and distribution activity is actively reviewed.
Proactive engagement with shareholders.
The Company’s cost base could become
uncompetitive, particularly in light of open-
ended alternatives.
The ongoing competitiveness of all service provider fees is subject to
periodic benchmarking against its competitors.
Annual consideration of management fee levels.
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.
Review of the Manager’s compliance with the agreed investment
restrictions, investment performance and risk against investment objectives
and strategy; relative performance; the portfolio’s risk profile; and
appropriate strategies employed to mitigate any negative impact of
substantial changes in markets.
Annual review of the ongoing suitability of the Manager, including resources
and key personnel risk.
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Annual Report and Accounts
for the year ended 31 August 2022
17
Strategic Report
Strategic Review
Risk Mitigation and management
Market
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 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.
Currency
Currency risk is the risk that changes in
foreign currency exchange rates impact
negatively the value or level of dividend of
the Company’s investments.
The Manager monitors the impact of foreign currency movements on the
portfolio and is able to rebalance the portfolio towards stocks which are less
impacted by changes in foreign currency exchange rates if required.
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the
depositary.
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 reviewed.
Gearing
The Company utilises a credit facility. This
arrangement increases 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.
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 shareholders’ funds.
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.
The confirmation of compliance with relevant laws and regulations by key
service providers.
Shareholder documents and announcements, including the Company’s
published annual report are subject to stringent review processes.
Procedures have been established to safeguard against disclosure of inside
information.
Service provider
The Company has no employees and has
delegated certain functions to a number of
service providers, principally the Manager,
depositary and registrar. Failure of controls
and poor performance of any service
provider could lead to disruption,
reputational damage or loss.
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
services provided are monitored.
Audited internal controls reports from key service providers, including
confirmation of business continuity arrangements, are reviewed annually.
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.
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.
In addition, the board received presentations from the Manager, the
registrar and the safekeeping agent and custodian on cyber risk.
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18
Schroder Income Growth Fund plc
Strategic Review
Viability statement
The directors have assessed the viability of the Company over
a five year period, taking into account the Company’s position
at 31August 2022 and the potential impacts of the principal
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.
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 16 and 17 and in particular
the impact of a significant fall in UK equity markets on the
value of the Company’s investment portfolio. The directors
have 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 and on that basis
consider that five years is an appropriate time period. 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.
Whilst the Company’s articles of association require that a
proposal for the continuation of the Company be put forward
at the AGM in 2025, the Directors have no present reason to
believe such a resolution will not be passed by shareholders.
The Directors have 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. On that
basis consider that five years is an appropriate time period.
The directors also considered a stress test in which the
Company’s NAV dropped by 50% and noted that, based on the
assumptions in the test, the Company would continue to be
viable over a five year period. Based on the Company’s
processes for monitoring operating costs, the board’s view
that the Manager has the appropriate depth and quality of
resource to achieve superior returns in the longer term, the
portfolio risk profile, limits imposed on gearing, counterparty
exposure, liquidity risk and financial controls, 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. The board have considered
climate risk, political risk and external market factors in their
assessment. 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 the period assessed by the directors, being
the period to 30November 2023 which is 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
9 November 2022
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.
No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment
which has been in place 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.
A full analysis of the financial risks facing the Company is set out in note 19 to the accounts on pages 50 to 53.
176214 Schroders Income Growth - Annual Report Pt1.qxp_176214 Schroders Income Growth - Annual Report Pt1 10/11/2022 11:26 Page 18

Board of Directors
Bridget Guerin
Status: independent non-executive Chairman
Length of service: 10 years – appointed as a director on 1 June 2012 and
Chairman in December 2019
Experience: Bridget Guerin was the managing director of Matrix Money
Management Limited, an asset management and distribution firm, from its
launch in 1999 until March 2011. She is an independent non-executive director of
Mobeus Income & Growth VCT plc and of Invesco Perpetual UK Smaller
Companies Investment Trust plc. From 2000 until 2009 she was a director of
Matrix Group Limited and sat on the Board of Charles Stanley Group plc between
2012 and 2020.
Contribution: Bridget brings her executive experience and marketing knowledge.
Committee membership: Audit and Risk, Management Engagement,
Nomination and Remuneration Committees (chairman of the Management
Engagement Committee)
Current remuneration: £36,000 per annum
Shares held: 18,852*
Ewen Cameron Watt
Status: senior independent non-executive director
Length of service: 5 years – appointed a director in December 2017
Experience: Ewen Cameron Watt was a managing director at Blackrock, where he
spent the majority of his career (including predecessor companies). From 2011 to
2016, he was chief investment strategist at Blackrock Investment Institute. Prior
to joining Blackrock, he held senior investment roles in the UK and Hong Kong,
including as portfolio manager from 1995 to 2010 and head of Asian research for
SG Warburg from 1990 to 1995. Ewen is also an independent adviser to a number
of endowments and pension funds. He began his career as an analyst at EB Savory
Miln in 1978.
Contribution: Ewen brings his extensive financial services and investment
experience.
Committee membership: Audit and Risk, Management Engagement,
Nomination and Remuneration Committees (chairman of the Nomination
Committee)
Current remuneration: £26,000 per annum
Shares held: 13,000*
David Causer
Status: independent non-executive director
Length of service: 11years – appointed a director in December 2008
Experience: David Causer is a chartered accountant and a member of The
Securities Institute. He has held a number of senior positions within financial
organisations including Finance Director of Mercury Asset Management Group plc
and a managing director of Merrill Lynch Investment Managers until 2001. He was
finance director of The British Red Cross Society until December 2007.
Committee membership: Audit and Risk, Management Engagement and
Nomination and Remuneration Committees (chairman of the Audit and Risk
Committee)
Current remuneration: £29,000 per annum
Shares held: 43,750*
Annual Report and Accounts
for the year ended 31 August 2022
19
Governance
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20
Schroder Income Growth Fund plc
Fraser McIntyre
Status: independent non-executive director
Length of service: 3 years – appointed as a director on 17 December 2019
Experience: Fraser McIntyre has nearly 30 years of experience in financial
services, including asset management, investment banking and audit. He started
his career auditing financial services companies before working in the prime
brokerage/equity divisions of two banks. He has been COO at several multi-billion
dollar hedge funds where he was responsible for overseeing all operational areas
of the business, including finance and accounting, operations, risk, legal and
compliance. He has sat on a number of fund and management company boards
whose investments covered a wide range of asset classes across traditional and
alternative strategies.
Fraser is a Chartered Accountant. He has held a variety of executive positions
within the financial services sector, most recently as Chief Operating Officer of
Cantab Capital LLP which became part of GAM.
Contribution: Fraser brings his experience in financial services, including asset
management, investment banking and audit.
Committee membership: Audit and Risk, Management Engagement,
Nomination and Remuneration Committees (chairman of the Audit and Risk
Committee)
Current remuneration: £31,000 per annum
Shares held: 7,704*
Victoria Muir
Status: independent non-executive director
Length of service: 3 years – appointed a director on 23 July 2019
Experience: Victoria Muir is a Chartered Director and a Fellow of the Institute of
Directors. She has held a variety of executive positions within the financial
services sector, most notably as an executive director of Royal London Asset
Management Ltd and some of its sister companies, before pursuing a career as a
non-executive director. She is chair of Invesco Select Trust plc, and a director of
Premier Miton Global Renewables Trust plc and its subsidiary PMGR Securities
2025 plc. Victoria has over 25 years of experience in financial services, including
asset management and inter-dealer broking. Her experience covers a broad
range of products and services including investment trusts, segregated accounts,
pension funds, insurance products, VCTs and hedge funds and a wide breadth of
asset classes across both traditional and alternative investments.
Contribution: Victoria brings her experience in financial services, particularly
asset management with a focus on distribution, strategy and governance.
Committee membership: Audit and Risk, Management Engagement,
Nomination and Remuneration Committees (chairman of the Remuneration
Committee)
Current remuneration: £26,000 per annum
Shares held: 3,500*
*Shareholdings are as at 9 November 2022 and include the holdings of connected persons. Full details of directors’ shareholdings are set out in the
Directors’ Remuneration Report on page 30.
Board of Directors
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Annual Report and Accounts
for the year ended 31 August 2022
21
Governance
Directors’ Report
The directors submit their report and the audited financial
statements of the Company for the year ended 31 August
2022.
Directors and officers
Chairman
The Chairman is an independent non-executive director who
is responsible for leadership of the board and ensuring its
effectiveness in all aspects of its role. The Chairman’s other
significant commitments are detailed on page 19. She has no
conflicting relationships.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the board and is responsible for
assisting the Chairman 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.
Role and operation of the board
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
discount of the Company’s shares to underlying NAV;
promotion of the Company; and services provided by third
parties. Additional meetings of the board are arranged as
required.
The board is the Company’s governing body; it sets the
Company’s strategy and is collectively responsible to
shareholders for its long-term success. The board is
responsible for appointing and subsequently monitoring the
activities of the 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 Strategic Review on pages 10 to 18 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 Chairman 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.
The board is satisfied that it is of sufficient size with an
appropriate balance of diverse skills and experience,
independence and knowledge of the Company, its sector and
the wider investment trust industry, to enable it to discharge
its duties and responsibilities effectively and that no individual
or group of individuals dominates decision making.
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.
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. The Manager also provides general marketing
support for the Company and manages relationships with key
investors, in conjunction with the Chairman, other board
members or the corporate broker as appropriate. The
Manager has delegated investment management, accounting
and company secretarial services to another wholly owned
subsidiary of Schroders plc, Schroder Investment
Management Limited. The Manager has appropriate
professional indemnity insurance cover in place.
The Schroders Group manages £773.4 billion (as at 30 June
2022) 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.
For the period from 1 September 2020 to 28 February 2021,
the Manager was entitled to a management fee at a rate of
0.65% per annum on the first £200 million of the Company’s
assets under management, net of current liabilities other than
short-term borrowings, less any cash up to the level of
borrowings (“chargeable assets”) and a management fee of
0.55% on subsequent amounts. This was payable quarterly in
arrears. From 1 March 2021, a management fee was charged
176214 Schroders Income Growth - Annual Report Pt2.qxp_176214 Schroders Income Growth - Annual Report Pt2 10/11/2022 11:28 Page 21

22
Schroder Income Growth Fund plc
Directors’ Report
at 0.45% per annum of chargeable assets. A further fee of
£150,000 per annum is payable to cover administration and
company secretarial fees.
The management fee payable in respect of the year ended
31 August 2022 amounted to £1,054,000 (2021: £1,184,000).
Details of all amounts payable to the Manager are set out in
note4 on page44.
The board has reviewed the performance of the Manager
during the year under review and continues to consider that it
has the appropriate depth and quality of resource to deliver
the Company’s investment objectives over the longer term.
Thus, the board considers that the Manager’s appointment
under the terms of the AIFM agreement, details of which are
set out above, is in the best interests of shareholders as a
whole.
Depositary
HSBC Bank plc, which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority, carries out
certain duties of a depositary specified in the AIFM Directive
including, in relation to the Company, as follows:
– safekeeping of the assets of the Company which are
entrusted to it;
– cash monitoring and verifying the Company’s cash
flows; and
– oversight of the Company and the Manager.
The Company, the Manager and the depositary may
terminate the depositary agreement at any time by giving
90days’ notice in writing. HSBC Bank plc may only be removed
from office when a new depositary is appointed by the
Company.
Registrar
Equiniti Limited 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.
Revenue and dividend policy
The net revenue return for the year, before finance costs and
taxation, was £9,912,000 (2021: 8,458,000). After deducting
finance costs and taxation the amount available for
distribution to shareholders was £9,693,000 (2021:
£8,370,000) equivalent to net revenue of 13.96p (2021: 12.08p)
per ordinary share.
The directors of the Company intend to continue to pay
dividends at the end of January, April, July and October in each
year. Although it is intended to distribute substantially all net
income after expenses and taxation, the Company may retain
up to a maximum of 15% of the Company’s gross income in
each year as a revenue reserve to provide consistency in
dividend policy.
For the year ended 31August 2022, the directors have declared
four interim dividends, totalling 13.20 (2021: 12.80)pence per
ordinary share.
Compliance with the AIC Code of
Corporate Governance
The board of the Company has considered the principles and
provisions of the AIC Code of Corporate Governance (the “AIC
Code”). The Code addresses the Principles and Provisions set
out in the UK Corporate Governance Code (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
Financial Reporting Council, provides more relevant
information to shareholders.
The Financial Conduct Authority requires all UK listed
companies to disclose how they have complied with the
provisions of the Code. This statement, together with the
Statement of Directors’ Responsibilities, viability statement
and going concern statement set out on pages 32 and 18
respectively indicates how the Company has complied with
the principles of good governance of the Code and its
requirements on internal control. The Strategic Report and
Directors’ Report provide further details on the Company's risk
management, governance and diversity policies.
The Company has complied with the Principles and Provisions
of the AIC Code. The remuneration policy and remuneration of
non-executive directors are reviewed by the Remuneration
Committee and approved by the board.
The Chairman has served on the board for more than nine
years but is still considered independent and will retire from
the board at the AGM. Further details can be found on page 29
of the Nomination Committee report. The board takes an
approach to chairman tenure to help the Company manage
succession planning, whilst at the same time still address the
need for regular refreshment and diversity.
The AIC Code is available on the AIC website
(www.theaic.co.uk). It includes an explanation of how the AIC
Code adapts the Principles and Provisions set out in the UK
Code to make them relevant for investment companies.
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 Committee, Nomination
Committee, Remuneration Committee and Management
Engagement Committee are incorporated and form part of
the Directors’ Report.
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Annual Report and Accounts
for the year ended 31 August 2022
23
Governance
Directors’ Report
Other required Directors’ Report
disclosures under laws, regulations, and
the AIC Code
Status
The Company carries on business as an investment trust. Its
shares are listed and admitted to trading on the premium
segment of the main market of 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.
It is not intended that the Company should have a limited life
but the directors consider it desirable that the shareholders
should have the opportunity to review the future of the
Company at appropriate intervals. Accordingly, the articles of
association contain provisions requiring the directors to put a
proposal for the continuation of the Company to shareholders
at the Annual General Meeting (“AGM”) in 2025 and thereafter
at five yearly intervals.
Share capital and substantial share interests
As at 9 November 2022, the Company had 69,463,343
ordinary shares of 10 pence each in issue. No shares are held
in treasury. Accordingly, the total number of voting rights in
the Company at the date of this report is 69,463,343. Details of
changes to the Company’s share capital during the year under
review are given in note 13 to the accounts on page 48.
The Company has received notifications in accordance with
the Financial Conduct Authority’s (“FCA”) Disclosure Guidance
and Transparency Rule 5.1.2R of the following interests in 3%
or more of the voting rights attached to the Company’s issued
share capital.
As at
31 August % of total
2022 voting rights
Charles Stanley & Co. Limited 3,446,355 4.98
There have been no notified changes to the above holdings
since the 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 auditor is 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 auditor is aware of that information.
Directors’ attendance at meetings
The number of scheduled and ad hoc 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.
Manage-
Audit ment
and Risk Engagement Nomination Remuneration
Board Committee Committee Committee Committee
Bridget Guerin 5/5 2/2 1/1 2/2 1/1
Ewen Cameron Watt 5/5 2/2 1/1 2/2 1/1
Fraser McIntyre 5/5 2/2 1/1 2/2 1/1
Victoria Muir 5/5 2/2 1/1 2/2 1/1
The board is satisfied that the Chairman and each of the other
non-executive directors commits sufficient time to the affairs
of the Company to fulfil their duties.
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
provision and was in place throughout the year under review
and to the date of this report.
By order of the board
Schroder Investment Management Limited
Company Secretary
9 November 2022
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24
Schroder Income Growth Fund plc
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 webpages, www.schroders.co.uk/incomegrowth.
All directors are members of the committee. Fraser McIntyre is the chairman of the committee. 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.
Ongoing risk review
Half year
report
Audit
planning
Audit
Annual
report
Post-audit
review
Approach
The committee’s key roles and responsibilities are set out below.
Risks and Internal Controls Financial Reports and Valuation Audit
Principal risks
To establish a process for identifying,
assessing, managing and monitoring
emerging and principal risks of the
Company.
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 review the half year report.
Audit results
To discuss any matters arising from the
audit and recommendations made by the
auditor.
Emerging risks and uncertainties
To ensure a robust assessment of the
Company’s emerging and principal risks
and procedures are in place to identify
emerging risks, and an explanation of
how these are being managed or
mitigated.
Going concern
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-yearly financial
statements.
Auditor appointment, independence
and performance
To make recommendations to the board,
in relation to the appointment, re-
appointment, effectiveness and removal
of the external auditor, to review their
independence, and to approve their
remuneration and terms of engagement.
Reviewing the audit plan and
engagement letter.
The below table sets out how the committee discharged its duties during the year. The committee met twice during the year. Further
details on attendance can be found on page 23. An evaluation of the committee’s effectiveness and review of its terms of reference
was completed during the year.
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Service provider controls
Reviewing the operational controls
maintained by the Manager, depositary
and registrar.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Effectiveness of the independent audit
process and auditor performance
Evaluated the effectiveness of the
independent audit firm and process prior
to making a recommendation that it
should be re-appointed at the
forthcoming AGM. Evaluated the
auditor’s performance against agreed
criteria including: qualification;
knowledge, expertise and resources;
independence policies; effectiveness of
audit planning; adherence to auditing
standards; and overall competence was
considered, alongside feedback from the
Manager on the audit process.
Professional scepticism of the auditor
was questioned and the committee was
satisfied with the auditor’s replies.
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Annual Report and Accounts
for the year ended 31 August 2022
25
Governance
Audit and Risk Committee Report
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Internal controls and risk
management
Consideration of several key aspects of
internal control and risk management
operating within the Manager,
depositary and registrar, including
assurance reports and presentations on
these controls.
Calculation of the investment
management fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Auditor independence
Ernst & Young LLP has provided audit
services to the Company since it was
appointed on 17May 2019.
The auditors are required to rotate the
senior statutory auditor every five years.
There are no contractual obligations
restricting the choice of external
auditors.
This is the third year that the senior
statutory auditor, Matthew Price has
conducted the audit of the Company’s
financial statements.
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 annual report
and accounts
Consideration of the draft annual report
and accounts and the letter from the
Manager in support of the letter of
representation to the auditor.
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.
Principal risks
Reviewing the principal risks faced by the
Company and the system of internal
control.
Valuation and existence of holdings
Quarterly review of portfolio holdings
and assurance reports.
Meetings with the auditor
Met the auditors without representatives
of the Manager present. Representatives
of the auditors attended the committee
meeting at which the draft annual report
and accounts was considered.
Fair, balanced and understandable
Reviewed the annual report and accounts
to ensure that it was fair, balanced and
understandable.
Provision of non-audit services by the
auditor
The committee has reviewed the FRC’s
Guidance on Audit Committees and has
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
Reviewing the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
Ernst & Young LLP indicated to the
committee their willingness to continue
to act as auditor.
Recommendations made to, and approved by, the board:
The committee recommended that the board approve the report and accounts.
The committee recommended that the going concern assumption be adopted in the report and accounts and the explanations set out in the
viability statement.
As a result of the work performed, the committee has concluded that the report for the period ended 31 August 2022, 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32.
Having reviewed the performance of the auditors as described above, the committee considered it appropriate to recommend the firm’s re-
appointment. Resolutions to re-appoint Ernst & Young LLP as auditor to the Company, and to authorise the directors to determine their
remuneration will be proposed at the AGM.
Fraser McIntyre
Chairman of the Audit and Risk Committee
9 November 2022
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26
Schroder Income Growth Fund plc
The committee undertook a detailed review of the
Manager’s performance and agreed that it has 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 and agreed they remained fit for purpose.
The committee engaged with the Manager and
secured a reduction in the AIFM fee rate during the
year.
The committee reviewed the other services provided by
the Manager and agreed they were satisfactory.
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
Manager, registrar, and depositary and custodian’s
internal controls.
Oversight of the Manager
The committee:
• reviews the Manager’s performance, over the short-
and long-term, against the reference index, peer
group and the market.
• considers the reporting it has received from the
Manager throughout the year, and the reporting
from the Manager to the shareholders.
• assesses management fees on an absolute and
relative basis, receiving input from the Company’s
broker, including peer group and industry figures, as
well as the structure of the fees.
• reviews the appropriateness of the Manager’s
contract, including terms such as notice period.
• assesses whether the Company receives appropriate
administrative, accounting, company secretarial and
marketing support from the Manager.
Oversight of other service providers
The committee reviews the performance and
competitiveness of the following service providers on at
least an annual basis:
• Depositary and custodian
• Corporate broker
• Registrars
• Lender
The committee also receives a report from the
Company Secretary on ancillary service providers, and
considers any recommendations.
The committee noted the Audit and Risk Committee’s
review of the auditor.
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. Bridget Guerin is the chairman of the
committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/incomegrowth.
Approach
Recommendations made to, and approved by, the board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best
interests of shareholders as a whole.
• That the Company’s service providers’ performance remained satisfactory.
Application during the year
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Annual Report and Accounts
for the year ended 31 August 2022
27
Governance
Nomination Committee Report
Selection and induction
• Committee prepares a job
specification for each role,
which is shared with an
independent recruitment firm.
For the Chairman and the
chairs of committees, the
committee also considers
current board members.
• Job specification outlines the
knowledge, professional skills,
personal qualities and
experience requirements.
• Potential candidates are
assessed against the
Company’s diversity policy.
• 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.
Board evaluation
• Committee assesses each director
annually and considers whether an
external evaluation should take place.
• Evaluation focuses on whether each
director continues to demonstrate
commitment to their role and provides a
valuable contribution to the board during
the year, 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.
Succession
• Having considered diversity,
the need for regular
refreshment and orderly
succession, the board’s policy is
that directors’ tenure will be for
no longer than nine years, with
the exception of the Chairman,
who should not serve longer
than 12 years, in ordinary
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.
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. Ewen Cameron Watt is the
chairman of the committee. Its terms of reference are available on the Company’s webpages,
www.schroders.co.uk/incomegrowth.
Approach
Oversight of directors
For application see page 28
Selection
Induction
Annual
evaluation
Annual review
of succession
policy
Application
of succession
policy
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28
Schroder Income Growth Fund plc
Succession
• The committee reviewed the
succession policy and agreed it
was still fit for purpose.
• The committee have
considered the need for
succession and MrsGuerin will
retire from the board at the
upcoming AGM. Mr Cameron
Watt will be appointed as
Chairman and stand for
re-election at the upcoming
AGM.
• The committee appointed
MsMuir as senior independent
director following the AGM.
Board evaluation
• The board evaluation was undertaken in
August 2022.
• The committee also reviewed each
director’s time commitment and
independence to ensure that each director
remained free from conflict and had
sufficient time available to discharge each
of their duties effectively.
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 19 and 20.
All directors were considered to be
independent in character and judgement.
• Based on its assessment, the committee
provided individual recommendations for
each director’s re-election.
Selection and induction
• The committee prepared a job
specification for the
independent non executive
director role. The job
specification outlined the
knowledge, professional skills,
personal qualities and
experience requirements, with
potential candidates to be
assessed against the
Company’s diversity policy.
• A recruitment firm was chosen
following a rigorous selection
process.
• The committee shared the job
specification with independent
recruitment firm, Cornforth
Consulting Limited who have
no other connections with the
company or individual
directors.
• The committee was presented
with the long list of candidates
and invited them for interview.
This list was narrowed and then
invited for a second interview
and recommendation to the
board.
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 all be recommended for re-election by shareholders at the AGM, except Mrs Guerin who will not put
herself forward for re-election.
Application during the year
Nomination Committee Report
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Governance
Annual Report and Accounts
for the year ended 31 August 2022
29
Remuneration Committee Report
The Remuneration Committee is responsible for the making recommendations to the board about the remuneration of the
directors. All directors are members of the committee. Victoria Muir is the chairman of the committee. Its terms of reference
are available on the Company’s webpages, www.schroders.co.uk/incomegrowth.
Approach Application during the year
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 remuneration framework, as set out in the Directors’
Remuneration Report, was unchanged during the year.
The committee reviews the ongoing appropriateness and
relevance of the remuneration policy.
The committee concluded that the remuneration policy
remained appropriate and relevant.
The committee reviews director remuneration annually and
make recommendations on the fees paid to non-executive
directors in light of directors’ workloads, levels of
responsibility and industry norms.
The committee reviewed directors’ fees, using external
benchmarking, and determined they remained appropriate.
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.
The Remuneration Report will be put to shareholders for
approval at the forthcoming Annual General Meeting. The
Remuneration Policy is next due to be put to shareholders in
2023.
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.
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30
Schroder Income Growth 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 shareholders
approved the Directors’ Remuneration Policy at the 2020 AGM
and the current policy provisions will apply until the policy is next
considered by shareholders at the 2023 AGM. Additionally, an
ordinary resolution to approve this report will be put to
shareholders at the forthcoming AGM.
At the AGM held on 17 December 2020, 98.33% of the votes
cast (including votes cast at the Chairman’s discretion) in
respect of approval of the Directors’ Remuneration Policy were
in favour while 1.67% were against. 80,492 votes were
withheld.
At the AGM held on 16 December 2021, 98.72% of the votes
cast (including votes cast at the Chairman’s discretion) in
respect of approval of the Directors’ Remuneration Report for
the year ended 31 August 2021 were in favour, while 1.28%
were against. 71,486votes were withheld.
Directors’ remuneration policy
The determination of the directors’ fees is the responsibility of
the Remuneration Committee, which makes
recommendations to 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. This
aggregate level of directors’ fees is currently set at £150,000.
per annum and any increase in this level requires approval by
the board and the Company’s shareholders. The Chairman of
the board and the chairman of the Audit and Risk Committee
each receives 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.
Any director who performs services which in the opinion of
the directors are outside the scope of the ordinary duties of a
director, may be paid additional remuneration to be
determined by the directors, subject to the previously
mentioned fee cap.
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.
Fees paid to directors
The following amounts were paid by the Company to directors for their services in respect of the year ended 31 August 2022
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 page 2, under the heading “Financial highlights”.
Change in
annual fee
over
years ended
Fees Taxable benefits
1
Total 31 August
2022 2021 2022 2021 2022 2021 2022 2021 2020
Director £ £ £ £ £ £ % % %
Bridget Guerin (Chairman) 36,000 34,000 253 – 36,253 34,000 6.6 0.0 0.0
Ewen Cameron Watt 26,000 24,000 157 – 26,157 24,000 9.0 0.0 0.0
David Causer
2
– 8,601 – 1,043 – 9,644 n/a 0.0 0.0
Fraser McIntyre 31,000 27,539 116 106 31,116 27,645 12.6 0.0 0.0
Victoria Muir 26,000 24,000 – – 26,000 24,000 8.3 0.0 0.0
Total 119,000 118,140 526 1,149 119,526 119,289
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 17 December 2020.
The information in the above table has been audited.
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Annual Report and Accounts
for the year ended 31 August 2022
31
Governance
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, subject to COVID-19 restrictions. During such
restrictions, interested parties are invited to email the
Company Secretary on amcompanysecretary@schroders.com
to arrange access to these.
The board did not consult with any individual shareholders
before setting this remuneration policy, although feedback
from the Company’s Manager and corporate broker on
shareholder views was considered. Any specific 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, 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 31 August 2022.
Consideration of matters relating to
directors’ remuneration
Directors’ remuneration was last reviewed by the
Remuneration Committee in November 2021. The members
of the committee and board at the time that remuneration
levels were considered were as set out on pages19 and 20.
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 provided by the Manager and corporate
broker was taken into consideration.
Expenditure by the Company on
remuneration and distributions to
shareholders
The table below compares the remuneration payable to
directors to distributions paid to shareholders during the year
under review and the prior financial year. In considering
these figures, shareholders should take into account the
Company’s investment objectives.
Year Year
ended ended
31August 31August
2022 2021 %
£’000 £’000 change
Remuneration payable
to directors 120 119 0.8
Distributions – dividends
for the year 9,170 8,883 3.2
Performance graph
A graph showing the Company’s share price total return
compared with the FTSE All-Share Index total return, over the
last ten years, is set out below. The FTSE All-Share Index has
been selected as an appropriate comparison based on the
composition of the Company’s investment portfolio.
Directors’ share interests
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
31 August 1 September
2022 2021
Bridget Guerin 18,852 18,852
Ewen Cameron Watt 10,000 10,000
Fraser McIntyre 7,704 7,419
Victoria Muir 3,500 3,500
The information in the above table has been audited. Since the year end Mr
Cameron Watt has purchased 3,000 shares in the Company.
Victoria Muir
Chairman of the Remuneration Committee
9 November 2022
3
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0
Directors’ Remuneration Report
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32
Schroder Income Growth Fund plc
Statement of Directors’ Responsibilities in respect
of the Annual Report and Accounts
The directors are responsible for preparing the annual report,
and the financial statements in accordance with applicable
law and regulation.
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
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;
– state whether applicable UK Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the financial statements;
– make judgements and accounting estimates that are
reasonable and prudent; and
– prepare the financial statements on the 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.
The directors 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 Company’s webpages. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
The directors consider that the annual report and accounts,
taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess
the Company’s position and performance, business model
and strategy.
Each of the directors, whose names and functions are listed
on pages 19 and 20, confirm that to the best of their
knowledge:
– the Company’s financial statements, which have been
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 “The
Financial Reporting Standard applicable in the UK and
Republic of Ireland” and applicable law), give a true and
fair view of the assets, liabilities, financial position and
loss of the Company; and
– the Strategic Report 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 risks and uncertainties that it faces.
By order of the board
Bridget Guerin
Chairman
9 November 2022
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Annual Report and Accounts
for the year ended 31 August 2022
33
Financial
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
Opinion
We have audited the financial statements of Schroder Income Growth Fund plc (“The Company”) for the year ended 31August
2022 which Income Statement, Statement of Changes in Equity, Statement of Financial Position, and the related notes1 to 20,
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 FRS 102 ‘The Financial Reporting Standard
applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
– give a true and fair view of the company’s affairs as at 31 August 2022 and of its loss 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.
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.
Independence
We are 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 the FRC’s Ethical Standard were not provided to the company and we remain independent
of Company in conducting the audit.
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 will include the following procedures:
– We confirmed our understanding of the Company’s going concern assessment process and engaged with the Directors and
the Company Secretary to determine if all key factors were considered in their assessment.
– We inspected the Directors’ assessment of going concern, including the revenue forecast, for the period to 30 November
2023 which is at least 12 months from the date the financial statements will be authorised for issue.
– We reviewed the factors and assumptions, including the impact of the COVID-19 pandemic, as applied to the revenue
forecast and the liquidity assessment of the investments. We considered the appropriateness of the methods used to
calculate the revenue forecast and the liquidity assessment and determined, through testing of the methodology and
calculations, that the methods, inputs and assumptions utilised are appropriate to be able to make an assessment for the
Company.
– We considered the mitigating factors included in the revenue forecasts that are within the control of the Company. We
reviewed the Company’s assessment of the liquidity of investments held and evaluated the Company’s ability to sell those
investments in order to cover working capital requirements should revenue decline significantly.
– In relation to the Company’s borrowing arrangements, we inspected the Directors’ assessment of the risk of breaching the
debt covenants as a result of a reduction in the value of the Company’s portfolio. We recalculated the Company’s compliance
with debt covenants in the scenarios assessed by the Directors and performed reverse stress testing in order to identify
what factors would lead to the Company breaching the financial covenants.
– We reviewed the Company’s going concern disclosures included in the annual report in order to assess that the disclosures
were appropriate and in conformity with the reporting standards.
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
covered by the directors to 30 November 2023, which is at least 12 months from when the financial statements are authorised
for issue.
In relation to the Company’s reporting on how they have 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
company’s ability to continue as a going concern.
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34
Schroder Income Growth Fund plc
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
Overview of our audit approach
Key audit matters
– Risk of incomplete or inaccurate revenue recognition, including the classification of special
dividends as revenue or capital items in the Income Statement
– Risk of incorrect valuation or ownership of the investment portfolio
Materiality
– Overall materiality of £2.05m which represents 1% of shareholders’ funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for the company. This enables us to form an opinion on the financial statements. We take into account size, risk profile,
the organisation of the company and effectiveness of controls, including controls and changes in the business environment
when assessing the level of work to be performed. All audit work was performed directly by the audit engagement team.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has
determined that the impact of climate change could affect the Company’s investments and the overall investment process. This
is explained in the principal risks section on page 18 and which forms part of the “Other information,” rather than the audited
financial statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially
inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appear to be
materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial
statements as set out in note 1(a) and conclusion that there was no material impact of climate change on the valuation of the
investments. We also challenged the directors’ considerations of climate change in their assessment of going concern and
viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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. These matters included 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 our opinion thereon, and we do not provide a separate opinion
on these matters.
Risk Our response to the risk Key observations
communicated to the
Audit and Risk Committee
Incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or
capital items in the Income Statement
As Described in the Audit and Risk
Committee Report (page 24); Accounting
policies (page 42);
The total revenue for the year to 31 August
2022 was £10.96 million (2021: £9.43
million), consisting primarily of dividend
income from listed equity investments.
The Company received special dividends
amounting to £2.20 million (2021: £2.70
million). Of which £0.50 million was classed
as revenue (2021: £0.87 million), and £1.71
million (2021: £1.83 million) was classed as
capital.
We performed the following procedures:
We obtained an understanding of the
Manager’s and Administrator’s processes
and controls surrounding revenue
recognition and classification of special
dividends by performing walkthrough
procedures.
For all dividends received, we recalculated
the dividend income by multiplying the
investment holdings at the ex-dividend
date, traced from the accounting records,
by the dividend per share, which was
agreed to an independent data vendor. We
also agreed all exchange rates to an
external source where applicable and, for a
sample of dividends received, we agreed
the amounts to bank statements
To test completeness of recorded income,
we verified that dividends had been
The results of our procedures
identified no material
misstatements in relation to the
risk of incomplete or inaccurate
revenue recognition, including
classification of special
dividends as revenue or capital
items in the Income Statement.
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Annual Report and Accounts
for the year ended 31 August 2022
35
Financial
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
Risk Our response to the risk Key observations
communicated to the
Audit and Risk Committee
The investment income receivable by the
Company during the year directly affects
the Company’s revenue return. There is a
risk of incomplete or inaccurate
recognition of revenue through the failure
to recognise proper income entitlements
or to apply an appropriate accounting
treatment.
The directors may be required to exercise
judgement in determining whether income
receivable in the form of special dividends
should be classified as ‘revenue’ or ‘capital’
in the Income Statement
recorded for each investee company held
during the year with reference to investee
company announcements obtained from
an independent data vendor.
For all accrued dividends, we reviewed the
investee company announcements to
assess whether the entitlement arose prior
to 31 August 2022. We agreed the dividend
rate to corresponding announcements
made by the investee company
recalculated the amount receivable and
agreed the subsequent cash receipts to
post-year end bank statements.
We performed a review of the income and
acquisition and disposal reports produced
by the Administrator to identify all special
dividends received and accrued. The
Company received 3 special dividends
above our testing threshold. For these
dividends, we assessed that the
classification of either revenue or capital
for the payments was consistent with the
underlying motives and circumstances for
the special dividends.
Risk of incorrect valuation or ownership
of the investment portfolio
As described in the Audit and Risk
Committee’s Report (page 24); Accounting
policies (page 42).
The valuation of the investment portfolio at
31August 2022 was £230.50 million (2021:
£234.81million) consisting entirely of listed
equities.
The valuation of investments held in the
investment portfolio is the key driver of the
Company’s net asset value and total return.
Incorrect investment pricing, or failure to
maintain proper legal title of the
investments held by the Company, could
have a significant impact on the portfolio
valuation and the return generated for
shareholders.
The fair value of listed investments is
determined using quoted market bid
prices at close of business on the reporting
date.
We obtained an understanding of the
Administrator’s processes and controls
surrounding investment valuation and
legal title by performing walkthrough
procedures.
For all listed investments in the portfolio,
we compared the market prices and
exchange rates applied to an independent
pricing vendor and recalculated the
investment valuations as at the year end.
We inspected a stale pricing report to
determine whether there were any stale
prices at year end, to identify prices that
have not changed one week before and
after the year end and verified whether the
listed price is a valid fair value.
We compared the Company’s investment
holdings at 31 August 2022 to independent
confirmations received directly from the
Company’s Custodian and Depositary.
The results of our procedures
identified no material
misstatements in relation to the
risk of incorrect valuation or
ownership of the investment
portfolio.
There have been no changes to the areas of audit focus raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
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36
Schroder Income Growth Fund plc
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
We determined materiality for the company to be £2.05m (2021: £2.20m), which is 1% (2021: 1%) of shareholders’ funds. We
believe that shareholders’ funds provides us with materiality aligned to the key measure of the Company’s performance.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the company’s overall control environment, our
judgement was that performance materiality was 75% (2021: 75%) of our planning materiality, namely £1.54m (2021: £1.65m).
We have set performance materiality at this percentage due to our past experience of working with the key service providers
which therefore indicates a lower risk of misstatements, both corrected and uncorrected.
Given the importance of the distinction between revenue and capital for investment trusts, we have also applied a separate
testing threshold for the revenue column of the Income Statement which is calculated as 5% of net revenue before tax. We
determined this to be £0.49m (2021: £0.42m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of
£0.10m (2021: £0.11m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in this 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 the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
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 directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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 directors’ report.
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
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Annual Report and Accounts
for the year ended 31 August 2022
37
Financial
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
Corporate Governance Statement
We have reviewed 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 by the Listing Rules.
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:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 18;
– Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the
period is appropriate set out on page 2;
– Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and
meets its liabilities set out on page 18;
– Directors’ statement on fair, balanced and understandable set out on page 32;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 16;
– The section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 16; and;
– The section describing the work of the audit committee set out on page 24
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 32, 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.
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.
Explanation as to what extent the audit was considered 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 irregularities, including fraud. 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 or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of
the company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined
that the most significant are United Kingdom Generally Accepted Accounting Practice, the Companies Act 2006, the Listing
Rules, UK Corporate Governance Code, the Association of Investment Companies’ Code and Statement of Recommended
Practice, Section 1158 of the Corporation Tax Act 2010 and The Companies (Miscellaneous Reporting) Regulations 2018.
– We understood how the Company is complying with those frameworks through discussions with the Audit and Risk
Committee and Company Secretary, review of board minutes and the Company’s documented policies and procedures.
– We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might
occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to incomplete
or inaccurate revenue recognition through incorrect classification of special dividends as revenue or capital in the Income
Statement. Further discussion of our approach is set out in the key audit matter above.
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38
Schroder Income Growth Fund plc
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved review of the Company Secretary’s reporting to the directors with respect to the application of the
documented policies and procedures and review of the financial statements to ensure compliance with the reporting
requirements of the Company.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
– Following the recommendation from the Audit and Risk committee, we were appointed by the Company on 5 July 2019 to
audit the financial statements for the year ending 31 August 2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is four years, covering the
years ending 31 August 2019 to 31 August 2022.
– The audit opinion is consistent with the additional report to the Audit and Risk Committee.
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.
Matthew Price (Senior statutory auditor)
for and on behalf of
Ernst & Young LLP, Statutory Auditor
London
9 November 2022
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Annual Report and Accounts
for the year ended 31 August 2022
39
Financial
Income Statement
for the year ended 31 August 2022
2022 2021
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments held at
fair value through profit or loss 2 – (16,596) (16,596) – 47,565 47,565
Net foreign currency (losses)/gains – (1) (1) – 5 5
Income from investments 3 10,954 1,707 12,661 9,432 1,832 11,264
Other interest receivable and similar income 3 8 – 8 – – –
Gross return/(loss) 10,962 (14,890) (3,928) 9,432 49,402 58,834
Investment management fee 4 (527) (527) (1,054) (592) (592) (1,184)
Administrative expenses 5 (523) – (523) (382) – (382)
Net return/(loss) before finance costs
and taxation 9,912 (15,417) (5,505) 8,458 48,810 57,268
Finance costs 6 (202) (202) (404) (88) (88) (176)
Net return/(loss) before taxation 9,710 (15,619) (5,909) 8,370 48,722 57,092
Taxation 7 (13) – (13) – – –
Net return/(loss) after taxation 9,697 (15,619) (5,922) 8,370 48,722 57,092
Return/(loss) per share 9 13.96p (22.49)p (8.53)p 12.08p 70.33p 82.41p
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 42 to 54 form an integral part of these accounts.
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40
Schroder Income Growth Fund plc
Statement of Changes in Equity
for the year ended 31 August 2022
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserves reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 August 2020 6,904 8,270 2,011 1,596 34,936 105,137 11,470 170,324
Issue of new shares 42 1,179 – – – – – 1,221
Net return on ordinary
activities – – – – – 48,722 8,370 57,092
Dividends paid in the year 8 – – – – – – (8,722) (8,722)
At 31 August 2021 6,946 9,449 2,011 1,596 34,936 153,859 11,118 219,915
Net (loss)/return on ordinary
activities – – – – – (15,619) 9,697 (5,922)
Dividends paid in the year 8 – – – – – – (8,893) (8,893)
At 31 August 2022 6,946 9,449 2,011 1,596 34,936 138,240 11,922 205,100
The notes on pages 42 to 54 form an integral part of these accounts.
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Annual Report and Accounts
for the year ended 31 August 2022
41
Financial
Statement of Financial Position
at 31 August 2022
2022 2021
Note £’000 £’000
Fixed assets
Investments at fair value 10 230,497 234,811
Current assets
Debtors 11 2,737 2,796
Cash at bank and in hand 2,305 7,718
5,042 10,514
Current liabilities
Creditors: amounts falling due within one year 12 (30,439) (25,410)
Net current liabilities (25,397) (14,896)
Total assets less current liabilities 205,100 219,915
Net assets 205,100 219,915
Capital and reserves
Called-up share capital 13 6,946 6,946
Share premium 14 9,449 9,449
Capital redemption reserve 14 2,011 2,011
Warrant exercise reserve 14 1,596 1,596
Share purchase reserve 14 34,936 34,936
Capital reserves 14 138,240 153,859
Revenue reserve 14 11,922 11,118
Total equity shareholders’ funds 205,100 219,915
Net asset value per share 15 295.26p 316.59p
These accounts were approved and authorised for issue by the board of directors on 9 November 2022 and signed on its behalf
by:
Bridget Guerin
Chairman
The notes on pages 42 to 54 form an integral part of these accounts.
Registered in England and Wales as a public company limited by shares
Company registration number: 03008494
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42
Schroder Income Growth Fund plc
1. Accounting Policies
(a) Basis of accounting
Schroder Income Growth Fund plc (“the Company”) is registered in England and Wales as a public company limited by shares.
The Company’s registered office is 1 London Wall Place, London EC2Y 5AU.
The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Accounting Standards, including
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.
In preparing these financial statements the directors have considered the impact of climate change risk as an emerging risk as
set out on pages 16 and 17, and have concluded that it does not have a material impact on the Company’s investments. In line
with UK GAAP investments are valued at fair value, which for the Company are quoted prices for the investments in active
markets at the Balance Sheet date and therefore reflect market participants view of climate change risk.
The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation
of investments and derivative financial instruments held at fair value through profit or loss. The directors believe that the
Company has adequate resources to continue operating until 30 November 2023, which is at least 12 months from the date the
financial statements were authorised for issue. In forming this opinion, the directors have taken into consideration: the controls
and monitoring processes in place; the Company’s low 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 any potential impact of the COVID-19 pandemic, other geopolitical events and climate change on going concern.
Further details of directors’ considerations regarding this are given in the Chairman’s Statement, Portfolio Managers’ Review,
Going Concern Statement, Viability Statement and under the Emerging Risks and uncertainties heading on page 16.
The Company has not presented a statement of cash flows, as it is not required for an investment trust which meets certain
conditions; in particular that substantially all of the Company’s investments are highly liquid and carried at market value.
The accounts are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 31 August
2021.
Other than the directors’ assessment of going concern and the accounting treatment of special dividends, no significant
judgements, estimates or assumptions have been required in the preparation of the accounts for the current or preceding
financial year.
(b) Valuation of investments
The Company’s investments are classified as fair value through profit and loss in accordance with FRS 102. Upon initial
recognition the investments are measured at the transaction price, 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 for
investments traded in active markets.
Investments that are unlisted or not actively traded are valued using a variety of techniques to determine their fair value; all such
valuations are 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 the management fee or finance costs allocated to capital, are included in the
Income Statement and dealt with in capital reserves within “Gains and losses on sales of investments”. Increases and decreases
in the valuation of investments held at the year end, are included in the Income Statement and dealt with in capital reserves
within “Investment holding gains and losses”.
Foreign exchange gains and losses on cash and deposit balances are included in the Income Statement and in capital reserves
within “Gains and losses on sales of investments”.
(d) Income
Dividends receivable from equity shares 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.
Dividends from overseas companies are included gross of any withholding tax.
Notes to the accounts
for the year ended 31 August 2022
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Notes to the accounts
for the year ended 31 August 2022
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.
Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of
interest.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to revenue with the following exceptions:
– The management fee is allocated 50% to revenue and 50% 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 an investment are written off to capital at the time of acquisition or
disposal. 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 47.
(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 in accordance with FRS 102.
Finance costs are allocated 50% to revenue and 50% to capital in line with the board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
(g) Financial instruments
Cash at bank and in hand may comprise cash and demand deposits 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 accounted for in accordance with FRS 102.
Deferred tax is provided on all timing differences that have originated but not reversed by the accounting 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.
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) Foreign currency
In accordance with FRS 102, the Company is required to determine a functional currency, being the currency in which the
Company predominantly operates. The board has determined that sterling is the Company’s functional currency and the
presentational currency of the accounts.
Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction.
Monetary assets, liabilities and investments held at fair value, denominated in foreign currencies at the year end are translated
at the rates of exchange prevailing at the year end.
(k) Dividends payable
Dividends on equity shares are recognised as a deduction of equity when the liability to pay the dividends arises. Consequently,
interim dividends are recognised when paid and final dividends when approved in the general meeting.
Annual Report and Accounts
for the year ended 31 August 2022
43
Financial
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44
Schroder Income Growth Fund plc
2. (Losses)/gains on investments held at fair value through profit or loss
2022 2021
£’000 £’000
Gains on sales of investments based on historic cost 6,923 12,533
Amounts recognised in investment holding gains and losses in the previous year in
respect of investments sold in the year (10,239) 1,834
(Losses)/gains on sales of investments based on the carrying value at the previous
balance sheet date (3,316) 14,367
Net movement in investment holding gains and losses (13,280) 33,198
(Losses)/gains on investments held at fair value through profit or loss (16,596) 47,565
3. Income
2022 2021
£’000 £’000
Income from investments:
UK dividends 9,406 8,196
UK special dividends 496 721
Overseas dividends 909 380
Scrip dividends 143 135
10,954 9,432
Other interest receivable and similar income:
Deposit interest 8 –
Underwriting commission – –
Other income – –
8 –
Total income 10,962 9,432
Capital:
Special dividends allocated to capital 1,707 1,832
4. Investment management fee
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 527 527 1,054 592 592 1,184
The basis for calculating the management fee is set out in the Directors’ Report on page 22.
5. Administrative expenses
2022 2021
£’000 £’000
Administration expenses 350 235
Directors’ fees 119 118
Auditor’s remuneration for the audit of the Company’s financial statements
1
54 29
523 382
1
Includes £9,000 (2021: £5,000) irrecoverable VAT.
Notes to the accounts
for the year ended 31 August 2022
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Annual Report and Accounts
for the year ended 31 August 2022
45
Financial
6. Finance costs
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 202 202 404 88 88 176
7. Taxation
2022 2021
£’000 £’000
(a) Analysis of charge in the year:
Irrecoverable overseas tax 13 –
Tax charge for the year 13 –
(b) Factors affecting tax charge for the year
The tax assessed for the year is higher (2021: lower) than the Company’s applicable rate of corporation tax for the year of 19.0%
(2021: 19.0%).
The factors affecting the current tax charge for the year are as follows:
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) on ordinary activities before taxation 9,710 (15,619) (5,909) 8,370 48,722 57,092
Net return/(loss) on ordinary activities before taxation
multiplied by the Company’s applicable rate of
corporation tax for the year of 19.0% (2021: 19.0%) 1,845 (2,968) (1,123) 1,590 9,257 10,847
Effects of:
Capital loss/(return) on investments – 3,153 3,153 – (9,038) (9,038)
Tax relief on overseas tax suffered – – – (4) – (4)
Income not chargeable to corporation tax (1,978) (324) (2,302) (1,726) (348) (2,074)
Unrelieved expenses 133 139 272 140 129 269
Irrecoverable overseas tax 13 – 13 – – –
Tax charge for the year 13 – 13 – – –
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £8,589,000 (2021: £8,229,000) based on a main rate of corporation tax
of 25% (2021: 25%). In its 2021 budget, the UK government announced that the main rate of corporation tax (for all profits except
ring fence profits) for the fiscal year beginning on 1 April 2023 would increase to 25%.
The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the
composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no
asset has been recognised in the accounts.
Given the Company’s 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.
Notes to the accounts
for the year ended 31 August 2022
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Schroder Income Growth Fund plc
8. Dividends
2022 2021
£’000 £’000
(a) Dividends paid and declared
2021 fourth interim dividend of 5.3p (2020: 5.1p) 3,682 3,521
First interim dividend of 2.5p (2021: 2.5p) 1,737 1,732
Second interim dividend of 2.5p (2021: 2.5p) 1,737 1,732
Third interim dividend of 2.5p (2021: 2.5p) 1,737 1,737
Total dividends paid in the year 8,893 8,722
2022 2021
£’000 £’000
Fourth interim dividend declared of 5.7p (2021: 5.3p) 3,959 3,682
All dividends paid and declared to date have been paid, or will be paid, out of revenue profits.
(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 £9,697,000 (2021: £8,370,000).
2022 2021
£’000 £’000
First interim dividend of 2.5p (2021: 2.5p) 1,737 1,732
Second interim dividend of 2.5p (2021: 2.5p) 1,737 1,732
Third interim dividend of 2.5p (2021: 2.5p) 1,737 1,737
Fourth interim dividend of 5.7p (2021: 5.3p) 3,959 3,682
Total dividends of 13.2p (2021: 12.8p) per share 9,170 8,883
9. Return/(loss) per share
2022 2021
£’000 £’000
Revenue return 9,697 8,370
Capital (loss)/return (15,619) 48,722
Total (loss)/return (5,922) 57,092
Weighted average number of ordinary shares in issue during the year 69,463,343 69,279,644
Revenue return per share 13.96p 12.08p
Capital (loss)/return per share (22.49)p 70.33p
Total (loss)/return per share (8.53)p 82.41p
Notes to the accounts
for the year ended 31 August 2022
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Annual Report and Accounts
for the year ended 31 August 2022
47
Financial
10. Investments at fair value
2022 2021
£’000 £’000
Opening book cost 187,930 173,482
Opening investment holding gains 46,881 11,849
Opening fair value 234,811 185,331
Analysis of transactions made during the year
Purchases at cost 69,738 73,435
Sales proceeds (57,456) (71,520)
(Losses)/gains on investments held at fair value (16,596) 47,565
Closing fair value 230,497 234,811
Closing book cost 207,135 187,930
Closing investment holding gains 23,362 46,881
Closing fair value 230,497 234,811
All investments are listed on a recognised stock exchange.
Sales proceeds amounting to £57,456,000 (2021: £71,520,000) were received from disposal of investments in the year. The book
cost of these investments when they were purchased was £50,533,000 (2021: £58,987,000). These investments have been
revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The following transaction costs, comprising stamp duty and brokerage commission were incurred during the year:
2022 2021
£’000 £’000
On acquisitions 352 379
On disposals 24 36
376 415
11. Debtors
2022 2021
£’000 £’000
Dividends and interest receivable 2,718 2,678
Securities sold awaiting settlement – 85
Taxation recoverable 5 19
Other debtors 14 14
2,737 2,796
The directors consider that the carrying amount of debtors approximates to their fair value.
12. Creditors: amounts falling due within one year
2022 2021
£’000 £’000
Bank loan 30,000 25,000
Other creditors and accruals 439 410
30,439 25,410
The bank loan comprises £30 million (2021: £25 million) drawn down on the Company’s revolving credit facility with SMBC Bank
International plc. The The facility was extended for a further 364 day period, effective 24 August 2022.
The facility is unsecured but is subject to covenants and restrictions which are customary for a facility of this nature, all of which
have been complied with during the year. Further details of this facility are given in note 19(a)(i) on page 50.
Notes to the accounts
for the year ended 31 August 2022
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Schroder Income Growth Fund plc
The directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
13. Called-up share capital
2022 2021
£’000 £’000
Ordinary shares allotted, called-up and fully paid:
Ordinary shares of 10p each
Opening balance of 69,463,343 (2021: 68,038,343) shares 6,946 6,904
Issue of nil (2021: 425,000) new shares – 42
Total of 69,463,343 (2021: 69,463,343) shares 6,946 6,946
14. Reserves
Year ended 31 August 2022
Capital reserves
Gains and Investment
Capital Warrant Share losses on holding
Share redemption exercise purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve
2
investments
2
losses
3
reserve
4
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 9,449 2,011 1,596 34,936 106,978 46,881 11,118
Losses on sales of investments based on the
carrying value at the previous balance sheet date – – – – (3,316) – –
Net movement in investment holding gains
and losses – – – – – (13,280) –
Transfer on disposal of investments – – – – 10,239 (10,239) –
Realised exchange loss on currency balances – – – – (1) – –
Management fee and finance costs allocated
to capital – – – – (729) – –
Special dividends allocated to capital – – – – 1,707 – –
Dividends paid – – – – – – (8,893)
Retained revenue for the year – – – – – – 9,697
Closing balance 9,449 2,011 1,596 34,936 114,878 23,362 11,922
Notes to the accounts
for the year ended 31 August 2022
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Annual Report and Accounts
for the year ended 31 August 2022
49
Financial
Year ended 31 August 2021
Capital reserves
Gains and Investment
Capital Warrant Share losses on holding
Share redemption exercise purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve
2
investments
2
losses
3
reserve
4
Reserves £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 8,270 2,011 1,596 34,936 93,288 11,849 11,470
Gains on sales of investments based on the
carrying value at the previous balance sheet date – – – – 14,367 – –
Net movement in investment holding gains
and losses – – – – – 33,198 –
Transfer on disposal of investments – – – – (1,834) 1,834 –
Realised exchange gains on currency balances – – – – 5 – –
Issue of new shares 1,179 – – – – – –
Management fee and finance costs allocated
to capital – – – – (680) – –
Special dividends allocated to capital – – – – 1,832 – –
Dividends paid – – – – – – (8,722)
Retained revenue for the year – – – – – – 8,370
Closing balance 9,449 2,011 1,596 34,936 106,978 46,881 11,118
The Company’s Articles of Association permit dividend distributions out of realised capital profits.
1
These reserves are not distributable.
2
These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends.
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 distributed as dividends or used to repurchase the Company’s own shares.
15. Net asset value per share
2022 2021
Net assets attributable to shareholders (£’000) 205,100 219,915
Shares in issue at the year end 69,463,343 69,463,343
Net asset value per share 295.26p 316.59p
16. Transactions with the Manager
Under the terms of the AlFM Agreement, the Manager is entitled to receive a management fee. Details of the basis of the
calculation are given in the Directors’ Report on page 22. 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 calculation and therefore incur no fee.
The management fee payable in respect of the year ended 31 August 2022 amounted to £1,054,000 (2021: £1,184,000) of which
£259,000 (2021: £265,000) was outstanding at the year end. Effective from 1 March 2021, the Manager is entitled to receive a
further fee of £150,000 per annum, plus VAT, to cover administration and company secretarial costs. The secretarial fee payable
for the year amounted to £180,000 (2021: £90,000) including VAT, of which £45,000 (2021: £45,000) 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.
Notes to the accounts
for the year ended 31 August 2022
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Schroder Income Growth Fund plc
17. Related party transactions
Details of the remuneration payable to directors are given in the Directors’ Remuneration Report on page 30 and details of
directors’ shareholdings are given in in the Directors’ Remuneration Report on page 30. Details of transactions with the Manager
are given in note 16 above. There have been no other transactions with related parties during the year (2021: nil).
18. 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 financial instruments to be categorised into a hierarchy consisting of the three levels below.
Level 1 – valued using unadjusted quoted prices in active markets for identical assets.
Level 2 – valued using observable inputs other than quoted prices included within Level 1.
Level 3 – valued using inputs that are unobservable.
Details of the valuation techniques used by the Company are given in note 1(b) on page 42.
At 31 August 2022, all investments in the Company’s portfolio are categorised as Level 1 (2021: same).
19. Financial instruments’ exposure to risk and risk management policies
The Company’s objectives are set out on the inside front cover of this report. In pursuing these objectives, 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 direct exposure to foreign exchange risk on monetary items. 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 may comprise the following:
– investments in equity shares which are held in accordance with the Company’s investment objectives;
– short-term debtors, creditors and cash arising directly from its operations; and
– loans drawn on a facility, 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 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. Any amount drawn on the facility would normally be for a one month period, at the end of which the drawdown
may be rolled over, adjusted or repaid, and the interest rate is re-set. These amounts have been included in the analysis below,
although the exposure to interest rate changes is not significant as any drawings can be repaid at the end of the one month
period under the terms of this flexible arrangement.
The Company has also arranged a £5m overdraft facility with HSBC Bank plc, but this was not utilised during the current or
comparative year.
Notes to the accounts
for the year ended 31 August 2022
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Annual Report and Accounts
for the year ended 31 August 2022
51
Financial
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:
2022 2021
£’000 £’000
Exposure to floating interest rates:
Cash at bank and in hand 2,305 7,718
Creditors falling due within one year: bank loan (30,000) (25,000)
Total exposure (27,695) (17,282)
Cash balances earn interest at a floating rate based on the Sterling Overnight Index Average (2021: LIBOR).
The Company extended its £32.5 million credit facility with SMBC Bank International plc for a further 364 day period, effective
from 24 August 2022.
Interest payable is calculated at the aggregate of the compounded daily Risk Free Rate (“RFR”), plus a margin. Amounts are
normally drawn down on the facility for a one month period, at the end of which it may be rolled over or adjusted. At 31 August
2022, the Company had drawn down £30 million (2021: £25 million), for a one month period at an interest rate of 2.52% (2021:
0.88%) per annum.
The above year end amounts are not representative of the exposure to interest rates during the current or comparative year as
the level cash balances and drawings on the facility have fluctuated. The maximum and minimum exposure during the year was
as follows:
2022 2021
£’000 £’000
Minimum debit interest rate exposure during the year – net debt (17,972) (11,240)
Maximum debit interest rate exposure during the year – net debt (27,695) (19,298)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2021: 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 balance sheet date which are exposed to interest rate
movements, with all other variables held constant.
2022 2021
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 (127) 127 (48) 48
Capital return (150) 150 (126) 126
Total return after taxation (277) 277 (174) 174
Net assets (277) 277 (174) 174
Given the increase in UK interest rates, the interest rate sensitivity has been updated to 1.0%. The prior year disclosure has been
updated to 1.0% to show a direct comparison in the sensitivity. In the prior year report, the sensitivity was calculated using 0.5%,
which was representative of the market at 31 August 2021. As disclosed in the prior year annual report, an increase of 0.5%
reduced total return after taxation by £87,000 (a decrease of 0.5% had an equal and opposite effect).
In the opinion of the directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest
rate changes as the level of cash balances and drawings on the facility will fluctuate.
(ii) Other price risk
Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value
of investments.
Notes to the accounts
for the year ended 31 August 2022
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Schroder Income Growth Fund plc
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 31 August comprised the following:
2022 2021
£’000 £’000
Investments held at fair value through profit or loss 230,497 234,811
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 9. The portfolio principally comprises securities of companies listed
on the London Stock Exchange and accordingly there is a concentration of exposure to economic conditions in the UK. However
it should be noted that many of these companies conduct much of their business overseas. Furthermore, up to 20% of the
portfolio may be listed on overseas stock exchanges.
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% (2021: 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 equity investments and includes the impact on the management fee but assumes that all other variables are held
constant.
2022 2021
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 (104) 104 (106) 106
Capital return 45,996 (45,996) 46,856 (46,856)
Total return after taxation and net assets 45,892 (45,892) 46,750 (46,750)
Change in net asset value 22.4% (22.4%) 21.3% (21.3%)
(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 liquidity 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. The facility is also available to provide liquidity at short notice. The board’s policy is for the
Company to remain fully invested in normal market conditions. The facility may be used to manage working capital
requirements and to gear the Company as appropriate.
Notes to the accounts
for the year ended 31 August 2022
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Annual Report and Accounts
for the year ended 31 August 2022
53
Financial
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2022 2021
Three Three
months months
or less Total or less Total
£’000 £’000 £’000 £’000
Creditors: amounts falling due within one year
Securities purchased awaiting settlement – – – –
Other creditors and accruals 424 424 406 406
Bank loan – including interest 30,063 30,063 25,018 25,018
30,487 30,487 25,424 25,424
(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.
2022 2021
Balance Maximum Balance Maximum
sheet exposure sheet exposure
£’000 £’000 £’000 £’000
Fixed assets
Investments held at fair value through
profit or loss 230,497 – 234,811 –
Current assets
Debtors – dividends and interest receivable
and other debtors 2,737 2,737 2,796 2,796
Cash at bank and in hand 2,305 2,305 7,718 7,718
235,539 5,042 245,325 10,514
No debtors are past their due date and none have been written down or deemed to be impaired.
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried at fair value or the amount in the Statement of Financial Position is a
reasonable approximation of fair value.
Notes to the accounts
for the year ended 31 August 2022
176214 Schroders Income Growth - Annual Report Pt3.qxp_176214 Schroders Income Growth - Annual Report Pt3 10/11/2022 11:30 Page 53

20. 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:
2022 2021
£’000 £’000
Debt
Bank loan 30,000 25,000
Equity
Called-up share capital 6,946 6,946
Reserves 198,154 212,969
205,100 219,915
Total debt and equity 235,100 244,915
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the 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.
2022 2021
£’000 £’000
Borrowings used for investment purposes, less cash 27,695 17,282
Net assets 205,100 219,915
Gearing 13.5% 7.9%
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 dividend to be paid, in excess of that which is required to be distributed.
54
Schroder Income Growth Fund plc
Notes to the accounts
for the year ended 31 August 2022
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Annual Report and Accounts
for the year ended 31 August 2022
55
Annual General Meeting
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will
be held on Thursday, 15 December 2022 at 12.00 p.m. The
formal Notice of Meeting is set out on page 56.
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 7 are all ordinary resolutions
Resolution1 is a required resolution. Resolution2 concerns the
Directors’ Remuneration Report, on pages 30 and 31.
Resolutions3 to 5 invite shareholders to re-elect each of the
directors for another year, apart from Bridget Guerin who is
retiring from the board. The re-elections have been
recommended by the Nomination Committee on pages 27 and
28 (their biographies are set out on pages 19 and 20).
Resolutions 6 and 7 concern the re-appointment and
remuneration of the Company’s auditor, discussed in the Audit
and Risk Committee Report on pages 24 and 25.
Special business
Resolution 8: approval of the Company’s dividend
policy (ordinary resolution)
In line with corporate governance best practice the board is
putting the Company’s dividend policy to shareholders for
approval. No change to the Company’s dividend policy is
proposed at this time.
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
pre-emption 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
£1,389,266 (being 20% of the issued share capital 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 pre-emptive basis up to a maximum aggregate
nominal amount of £1,389,266 (being 20% of the Company’s
issued share capital as at the date of the Notice of the AGM).
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. Shares issued under this authority will only be issued at a
premium to the NAV (cum income) per share after taking into
account the costs of issue, and will not result in any dilution of
NAV per share.
If approved, both of these authorities will expire at the
conclusion of the AGM in 2023 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 16 December 2021, the Company was
granted authority to make market purchases of up to
10,412,555 ordinary shares of 10p each for cancellation. No
shares have been bought back under this authority and the
Company therefore has remaining authority to purchase up to
10,412,555 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 NAV 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. If renewed,
the authority to be given at the 2022 AGM will lapse at the
conclusion of the AGM in 2023 unless renewed, varied or
revoked earlier.
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 above resolutions
to be proposed at the forthcoming AGM, as they intend to do
in respect of their own beneficial holdings.
176214 Schroders Income Growth - Annual Report Pt4.qxp_176214 Schroders Income Growth - Annual Report Pt4 10/11/2022 11:39 Page 55

56
Schroder Income Growth Fund plc
Notice of Annual General Meeting
By order of the board
for and on behalf of
Schroder Investment Management Limited Registered office:
Company Secretary 1 London Wall Place
London EC2Y 5AU
9 November 2022
Registered Number: 03008494
Notice is hereby given that the Annual General Meeting of
Schroder Income Growth Fund plc will be held on Thursday,
15 December 2022 at 12.00 p.m. at 1 London Wall Place,
London EC2Y 5AU to consider the following resolutions of
which resolutions 1 to 10 will be proposed as ordinary
resolutions and resolutions 11 and 12 will be proposed as
special resolutions:
1. To receive the Report of the Directors and the audited
Accounts for the year ended 31August 2022.
2. To approve the Directors’ Remuneration Report for the
year ended 31August 2022.
3. To approve the re-election of Ewen Cameron Watt as a
director of the Company.
4. To approve the re-election of Fraser McIntyre as a director
of the Company.
5. To approve the re-election of Victoria Muir as a director of
the Company.
6. To re-appoint Ernst & Young LLP as auditors to the
Company.
7. To authorise the directors to determine the remuneration
of Ernst and Young LLP as auditors to the Company.
8. To approve the Company’s dividend policy, as set out on
page22 of the Annual Report and Accounts for the year
ended 31August 2022.
9. To consider, and if thought fit, pass the following
resolution as an ordinary resolution:
“THAT in substitution for all existing authorities 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
£1,389,266 (being 20% of the issued ordinary share
capital, excluding shares held in treasury, at the date of
this Notice) 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 9 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 £1,389,266
(representing 20% of the aggregate nominal amount of
the share capital in issue at the date of this Notice); 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 Companies Act 2006 (the “Act”) to make market
purchases (within the meaning of Section 693 of the Act)
of ordinary shares of 10p each in the capital of the
Company (“Share”) 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 10,412,555, representing 14.99% of the
Company’s issued ordinary share capital as at the
date of this Notice;
(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 10p, 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 2023 (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.”
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Annual Report and Accounts
for the year ended 31 August 2022
57
Annual General Meeting
Explanatory Notes to the Notice of Annual General
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. Shareholders are encouraged to
appoint the Chairman as proxy.
If you wish to appoint a person other than the Chairman
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 0800 032 0641 or +44(0) 121 415 0207 for
overseas callers, 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. Shareholders may also appoint a
proxy to vote on the resolutions being put to the meeting
electronically at www.sharevote.co.uk. Shareholders who
are not registered to vote electronically, will need to enter
the Voting ID, Task ID and Shareholder Reference
Number set out in their personalised proxy form.
Alternatively, shareholders who have already registered
with Equiniti’s Shareview service can appoint a proxy by
logging onto their portfolio at www.shareview.co.uk
using their user ID and password. Once logged in, click
“view” on the “My Investments” page, click on the link to
vote, then follow the on-screen instructions. The on-
screen instructions give details on how to complete the
appointment process. Please note that to be valid, your
proxy instructions must be received by Equiniti no later
than 12.00 p.m. on 13December 2022. If you have any
difficulties with online voting, you should contact the
shareholder helpline on 0800 032 0641 (or +44(0) 121 415
0207 for overseas callers).
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 13 December 2022, or
6.30 p.m. two days prior to the date of an adjourned
meeting, 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 13 December 2022 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
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58
Schroder Income Growth Fund plc
Explanatory Notes to the Notice of Annual General
Meeting
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.
5. Copies of the terms of appointment of the non-executive
directors and a statement of all transactions of each
director and of his/her 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 and re-election are set out on pages 19 and 20 of
the Company’s annual report and accounts for the year
ended 31August 2022.
7. As at 9 November 2022, 69,463,343 ordinary shares of
10 pence each were in issue (no shares were held in
treasury). Therefore the total number of voting rights of
the Company as at 9 November 2022 was 69,463,343.
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 Company’s
webpages, www.schroders.co.uk/incomegrowth.
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 Annual General Meeting 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. The Company’s privacy policy is available on its webpages
http://www.schroders.co.uk/incomegrowth.
Shareholders can contact Equiniti for details of how
Equiniti processes their personal information as part of
the AGM.
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Annual Report and Accounts
for the year ended 31 August 2022
59
Annual General Meeting
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 Alternative
Performance Measures (“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.
Consumer Prices Index (“CPI”)
The Consumer Prices Index is a measure that examines the
weighted average of prices of a basket of consumer goods
and services, such as transportation, food and medical care.
It is calculated by taking price changes for each item in the
predetermined basket of goods and averaging them.
Changes in the CPI are used to assess price changes
associated with the cost of living. The CPI is one of the most
frequently used statistics for identifying periods of inflation
or deflation.
Reference index
The index against which it is deemed most appropriate to
measure the Company’s performance. The reference index
is the FTSE All-Share Index.
Net asset value (”NAV”) per share
The NAV per share of 295.26p (2021: 316.59p) represents the
net assets attributable to equity shareholders of
£205,100,000 (2021: £219,915,000) divided by the number of
shares in issue of 69,463,343 (2021: 69,463,343).
The change in the NAV amounted to -6.7% (2021: +28.3%)
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 definitions and calculations
are given below.
Total return*
The combined effect of any dividends paid, together with the
rise or fall in the NAV per share or share price. 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 31 August 2022 is
calculated as follows:
NAV at 31/8/21 316.59p
NAV at 31/8/22 295.26p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.3p 07/10/2021 299.36 1.0177 1.0177
2.5p 30/12/2021 303.36 1.0082 1.0261
2.5p 07/04/2022 317.39 1.0079 1.0342
2.5p 07/07/2022 295.28 1.0085 1.0429
NAV total return, being the closing NAV,
multiplied by the cumulative factor, expressed as a
percentage change in the opening NAV –2.7%
The NAV total return for the year ended 31 August 2021 is
calculated as follows:
NAV at 31/8/20 246.71p
NAV at 31/8/21 316.59p
NAV on Cumulative
Dividend XD date XD date Factor factor
5.1p 08/10/2020 250.66p 1.0203 1.0203
2.5p 24/12/2020 277.78p 1.0091 1.0296
2.5p 01/04/2021 290.90p 1.0086 1.0385
2.5p 08/07/2021 305.71p 1.0082 1.0470
NAV total return, being the closing NAV,
multiplied by the cumulative factor, expressed as a
percentage change in the opening NAV +34.4%
The share price total return for the year ended 31 August
2022 is calculated as follows:
Share price at 31/8/21 316.50p
Share price at 31/8/22 289.00p
Share price
on Cumulative
Dividend XD date XD date Factor factor
5.3p 07/10/2021 300.00p 1.0177 1.0177
2.5p 30/12/2021 300.00p 1.0083 1.0261
2.5p 07/04/2022 305.00p 1.0082 1.0346
2.5p 07/07/2022 286.50p 1.0087 1.0436
Share price total return, being the
closing share price, multiplied by the
cumulative factor, expressed as a percentage
change in the opening share price -4.7%
Definitions of Terms and Performance Measures
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60
Schroder Income Growth Fund plc
Definitions of Terms and Performance Measures
The share price total return for the year ended 31 August 2021
is calculated as follows:
Share price at 31/8/20 242.00p
Share price at 31/8/21 316.50p
Share price
on Cumulative
Dividend XD date XD date Factor factor
5.1p 08/10/2020 242.00p 1.0211 1.0211
2.5p 24/12/2020 273.50p 1.0093 1.0306
2.5p 01/04/2021 292.00p 1.0086 1.0394
2.5p 08/07/2021 305.00p 1.0082 1.0479
Share price total return, being the closing
share price, multiplied by the cumulative
factor, expressed as a percentage change
in the opening share price +37.0%
Discount/premium*
The amount by which the share price of an investment trust is
lower (discount) or higher (premium) than the NAV per share.
The discount or premium is expressed as a percentage of the
NAV per share. The discount at the year end was 2.1% (2021:
0.0%), as the closing share price at 289.00p (2021: 316.50p) was
2.1% (2021: 0.0%) lower than the closing NAV of 295.26p (2021:
316.59p).
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. This
represents borrowings used for investment purposes, less
cash, expressed as a percentage of net assets. The gearing
figure at the year end is calculated as follows:
2022 2021
£’000 £’000
Borrowings used for investment
purposes, less cash 27,695 17,282
Net assets 205,100 219,915
Gearing 13.5% 7.9%
Leverage*
For the purpose of the Alternative Investment Fund Managers
(AIFM) Directive, 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 £1,577,000
(2021: £1,566,000), expressed as a percentage of the average
daily net asset values during the year of £212,256,000 (2021:
£198,074,000).
*Alternative Performance Measures.
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Shareholder Information
Webpage and share price information
The Company has dedicated webpages, which may be found
at www.schroders.co.uk/incomegrowth. The webpages have
been designed to be utilised as the Company’s primary
method of electronic communication with shareholders. It
contains details of the Company’s ordinary share price and
copies of annual reports and accounts 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,
Equiniti’s Shareview service 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 IFAs 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
First interim dividend paid 31 January
Second interim dividend paid 30 April
Half year results announced April/May
Third interim dividend paid 31 July
Financial year end 31 August
Fourth interim dividend paid 31 October
Annual results announced November
Annual General Meeting December
Alternative Investment Fund Managers
Directive (“AIFMD”) disclosures
Certain pre-sale, regular and periodic disclosures required by
the AIFM Directive may be found either in this annual report
or on the Company’s webpages.
The Company’s leverage policy and details of limits on
leverage required under the AIFM Directive are published on
the Company’s webpages.
Leverage
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 webpages and within this report.
The Company is also required to periodically publish its actual
leverage exposures. As at 31 August 2022 these were:
Maximum Actual
Leverage exposure exposure exposure
Gross method 200.0% 129.20%
Commitment method 200.0% 112.20%
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 also be found in the Company’s AIFMD
information disclosure document published on the Investor
Relations section of Schroders’ website www.schroders.com.
Publication of key information document (“KID”)
by the AIFM
Pursuant to the Packaged Retail and Insurance Based
Investment Products (“PRIIPs”) 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.
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Directors
Bridget Guerin
Ewen Cameron Watt
Fraser McIntyre
Victoria Muir
Advisers
Alternative investment fund manager
(the “Manager”)
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 6501
Registered office
1 London Wall Place
London EC2Y 5AU
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending bank
Sumitomo Mitsui Banking Corporation
99 Queen Victoria Street
London EC4V 4EH
Corporate broker
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Independent auditor
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: 0800 032 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.
Shareholder enquiries
General enquiries about the Company should be addressed to
the Company Secretary at the Company’s registered office.
Dealing codes
ISIN: GB0007915860
SEDOL: 0791586
Ticker: SCF
Global intermediary identification number (GIIN)
T34UKV.99999.SL.826
Legal entity identifier (LEI)
549300X1RTYYP7S3YE39
www.schroders.co.uk/incomegrowth
The Company’s privacy notice is
available on its webpages.
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