Schroder Income Growth Fund plc
Annual Report and Financial Statements
for the year ended 31 August 2024
Annual Report and Financial Statements
for the year ended 31 August 2024
2
Schroder
Income Growth Fund plc
Performance Summary
Total Returns (including dividends reinvested) to 31 August 2024
Schroder Income Growth Fund plc
Investment objectives
The principal objectives of Schroder Income Growth Fund plc (the “Company”) are to provide real growth of income in excess of the rate of
inflation, and capital growth as a consequence of the rising income.
What does the Company seek to achieve?
l Benefit from consistent rising income
SCF has delivered reliable dividend growth for shareholders in each of the last 29 years, allowing investors to capture the significant power
of long-term compounding.
l Rely on decades of deep expertise
Managed by Schroders’ Head of UK Equities, Sue Noffke, with support from an investment team with over 65 years of combined experience.
l Capture long-term capital growth
Strong long-term performance through successful stock-picking, with the team repeatedly adding value across the market cap spectrum.
Some of the financial measures above 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 72, together with supporting calculations where appropriate.
Net asset value (“NAV”)
per share*
19.0%
(31 August 2023: 4.2%)
Share price
17.7%
(31 August 2023: –3.0%)
Dividends per share
14.20p
(31 August 2023: 13.80p)
Dividend growth
for the year
2.9%
(31 August 2023: 4.6%)
The Investment Objective of the Company is set out above. For details on the Company’s Investment Policy please see the KID. This report includes the investment
policy which you should read in conjunction with the KID before investing; these are also available on the Schroders’ website.
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up
and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise. Performance data
does not take into account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued and redeemed. Relevant risks as
associated with this Company are shown on page 76 and should be carefully considered before making any investment.
Performance Summary
Total Returns (including dividends reinvested) to 31 August 2024
Schroder Income Growth Fund plc
Investment objectives
The principal objectives of Schroder Income Growth Fund plc (the “Company”) are to provide real growth of income in excess of the rate of
inflation, and capital growth as a consequence of the rising income.
What does the Company seek to achieve?
l Benefit from consistent rising income
SCF has delivered reliable dividend growth for shareholders in each of the last 29 years, allowing investors to capture the significant power
of long-term compounding.
l Rely on decades of deep expertise
Managed by Schroders’ Head of UK Equities, Sue Noffke, with support from an investment team with over 65 years of combined experience.
l Capture long-term capital growth
Strong long-term performance through successful stock-picking, with the team repeatedly adding value across the market cap spectrum.
Some of the financial measures above 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 72, together with supporting calculations where appropriate.
Net asset value (“NAV”)
per share*
19.0%
(31 August 2023: 4.2%)
Share price
17.7%
(31 August 2023: –3.0%)
Dividends per share
14.20p
(31 August 2023: 13.80p)
Dividend growth
for the year
2.9%
(31 August 2023: 4.6%)
The Investment Objective of the Company is set out above. For details on the Company’s Investment Policy please see the KID. This report includes the investment
policy which you should read in conjunction with the KID before investing; these are also available on the Schroders’ website.
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up
and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise. Performance data
does not take into account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued and redeemed. Relevant risks as
associated with this Company are shown on page 76 and should be carefully considered before making any investment.
Schroder
Income Growth Fund plc
1
Schroder Income Growth Fund plc
1
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 7
Investment Approach and Process 11
Active Ownership 13
Investment Portfolio 15
10-Year Financial Record 16
Business Review 17
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement
Committee Report 38
Nomination Committee Report 39
Remuneration Committee Report 41
Directors’ Remuneration Report 42
Statement of Directors’
Responsibilities 45
Financial
Independent Auditor’s Report 48
Statement of Comprehensive
Income 53
Statement of Changes in Equity 54
Statement of Financial Position 55
Notes to the Financial Statements 56
Other Information
(Unaudited)
Annual General Meeting –
Recommendations 68
Notice of Annual General Meeting 69
Explanatory Notes to the
Notice of Meeting 70
Definitions of Terms and Alternative
Performance Measures 72
Shareholder Information 74
Risk Disclosures 76
Information about the Company 77
Scan this QR code on your
smartphone camera to
sign-up to receive regular
updates on Schroder
Income Growth Fund plc
Share price discount
to NAV per share
10.4%
(31 August 2023: 8.9%)
Share price
299.00p
(31 August 2023: 267.50p)
Revenue earnings per share
11.64p
(31 August 2023: 13.14p)
Net revenues after taxation
£8.08m
(31 August 2023: £9.13m)
Ongoing charges ratio*
0.79%
(31 August 2023: 0.77%)
Gearing*
12.2%
(31 August 2023: 13.7%)
Financial Governance Other Information (Unaudited) Introduction Strategic Report
This is not a sustainable product for the purposes of the FCA rules. References to the consideration of sustainability factors and ESG integration should not
be construed as a representation that the Company seeks to achieve any particular sustainability outcome.
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 7
Investment Approach and Process 11
Active Ownership 13
Investment Portfolio 15
10-Year Financial Record 16
Business Review 17
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement
Committee Report 38
Nomination Committee Report 39
Remuneration Committee Report 41
Directors’ Remuneration Report 42
Statement of Directors’
Responsibilities 45
Financial
Independent Auditor’s Report 48
Statement of Comprehensive
Income 53
Statement of Changes in Equity 54
Statement of Financial Position 55
Notes to the Financial Statements 56
Other Information
(Unaudited)
Annual General Meeting –
Recommendations 68
Notice of Annual General Meeting 69
Explanatory Notes to the
Notice of Meeting 70
Definitions of Terms and Alternative
Performance Measures 72
Shareholder Information 74
Risk Disclosures 76
Information about the Company 77
Scan this QR code on your
smartphone camera to
sign-up to receive regular
updates on Schroder
Income Growth Fund plc
Share price discount
to NAV per share
10.4%
(31 August 2023: 8.9%)
Share price
299.00p
(31 August 2023: 267.50p)
Revenue earnings per share
11.64p
(31 August 2023: 13.14p)
Net revenues after taxation
£8.08m
(31 August 2023: £9.13m)
Ongoing charges ratio*
0.79%
(31 August 2023: 0.77%)
Gearing*
12.2%
(31 August 2023: 13.7%)
Financial Governance Other Information (Unaudited) Introduction Strategic Report
This is not a sustainable product for the purposes of the FCA rules. References to the consideration of sustainability factors and ESG integration should not
be construed as a representation that the Company seeks to achieve any particular sustainability outcome.
2
Schroders
Capital Global Innovation Trust plc
3
Strategic Report
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 7
Investment Approach and Process 11
Active Ownership 13
Investment Portfolio 15
10-Year Financial Record 16
Business Review 17
Strategic Report
Strategic Report
Chairman’s Statement 4
Investment Manager’s Review 7
Investment Approach and Process 11
Active Ownership 13
Investment Portfolio 15
10-Year Financial Record 16
Business Review 17
4
Schroder Income Growth Fund plc
I am pleased to present the annual results of Schroder Income Growth
Fund plc for the year ended 31 August 2024. Despite significant
volatility, UK equities rose over the period. An improving inflationary
outlook, positive corporate earnings and a more favourable interest
rate environment lay behind this outcome. It is a particular pleasure to
note that the NAV and share price exceeded the FTSE All-Share Index
over the period. Your Company’s NAV rose by 19%, the share price by
17.7% and the FTSE All-Share Index by 17% over the period.
Revenue and dividends
Your Company was able to increase its dividend for the 29th year
running and continues to enjoy AIC “Dividend Hero” status. Dividends
per share for the year of 14.20p represent a 2.9% increase on the
previous year, in accordance with your Company’s aim to increase the
payment in line with inflation over the longer term. In this respect,
we define the medium term as five years and the longer term as
ten years.
Earnings per share fell by 11.5% to 11.64p. The dividend of 14.20p
was 82% covered by earnings. After payment of the fourth interim
dividend on 31 October 2024, the revenue reserve will be £5.7 million,
representing 8.25p per ordinary share or seven months of the annual
dividend. Investment trusts hold an advantage over open-ended
funds in their ability to smooth dividend payments through careful
management of reserves.
Income earned by the Company came under pressure during the
year for two main reasons. Firstly, the mining sector’s contribution to
income has continued to decline, with profits and dividends
significantly lower than in previous years. Secondly, and more
importantly, companies are increasingly allocating capital towards
share buy backs instead of dividend distributions. This shift is seen
across a broader range of companies and sectors compared to the
prior year, which was dominated by mining, banking, and oil
companies. Last year, 17 of the portfolio’s holdings (approx. 38%
of the Company) undertook share buy backs, that number rose to
29 holdings (approx. 60% of the Company) this year. While this has
reduced the portfolio’s income, the decision to prioritise share buy
backs over dividends is a reflection of favourable stock valuations and
the potential to enhance future per share returns.
Your Company was able to increase the dividend in real terms this
year by drawing on revenue reserves. While this is the second year in
a row where your Company has experienced lower earnings, such
outcomes have arisen from time to time in the last 29 years of your
Company’s history. Your Company has continued to fulfil its primary
goal of “real growth of income” above the levels of inflation over the
longer term.
Your Board remains committed to raising the level of dividends you
receive at a rate that exceeds inflation. We also want to provide you
with a total return, defined as capital plus income, which is
competitive when compared to the FTSE All-Share Index. This cannot
be achieved by simply buying the highest yielding stocks in the
market since history proves such investments are generally
disappointing, not least because they often take unsustainable risks
simply to maintain dividend levels. Your Investment Manager feels
very strongly that this would not be in shareholders’ interests and
your Board wholeheartedly agrees with this view.
The obvious consequences of these dividend ambitions are that
revenue reserves are likely to be further drawn down. This should not
be of particular concern to shareholders as there are ample capital
reserves to support dividend growth over the longer term. It also
seems logical if companies choose to focus on total returns, that is
capital plus dividends, that we take a similar approach. In adopting
a total return mentality, we are simply aligning with what pension
funds, insurers and charities have done for decades. Your Board
would stress that this does not amount to any dilution of its primary
aim, which is increasing dividends paid to shareholders above the
rate of inflation over the longer term.
Performance
During the year under review, your Company returned 19% in NAV
total returns. Share price total returns over the period were 17.7%
which compares to 17% for the FTSE All-Share Total Return Index. The
bias towards mid and small-sized companies has proved beneficial, as
their returns have surpassed those of the FTSE 100 Index. The
outperformance during the period was a result of stock selection in
two sectors, namely financials and consumer staples.
The current investment team took the helm on 1 July 2011, since then
the share price has risen by 166.5% and NAV by 174.1%, both well
ahead of the FTSE All-Share Index total return of 138.1%.
For more details on the drivers of performance please refer to the
Investment Manager’s Review.
Chairman’s Statement
Your Company has now
raised its dividend for an
unbroken 29 years,
throughout multiple market
cycles. It has been able to do
this through stock selection
and careful management of
its reserves.
I am pleased to present the annual results of Schroder Income Growth
Fund plc for the year ended 31 August 2024. Despite significant
volatility, UK equities rose over the period. An improving inflationary
outlook, positive corporate earnings and a more favourable interest
rate environment lay behind this outcome. It is a particular pleasure to
note that the NAV and share price exceeded the FTSE All-Share Index
over the period. Your Company’s NAV rose by 19%, the share price by
17.7% and the FTSE All-Share Index by 17% over the period.
Revenue and dividends
Your Company was able to increase its dividend for the 29th year
running and continues to enjoy AIC “Dividend Hero” status. Dividends
per share for the year of 14.20p represent a 2.9% increase on the
previous year, in accordance with your Company’s aim to increase the
payment in line with inflation over the longer term. In this respect,
we define the medium term as five years and the longer term as
ten years.
Earnings per share fell by 11.5% to 11.64p. The dividend of 14.20p
was 82% covered by earnings. After payment of the fourth interim
dividend on 31 October 2024, the revenue reserve will be £5.7 million,
representing 8.25p per ordinary share or seven months of the annual
dividend. Investment trusts hold an advantage over open-ended
funds in their ability to smooth dividend payments through careful
management of reserves.
Income earned by the Company came under pressure during the
year for two main reasons. Firstly, the mining sector’s contribution to
income has continued to decline, with profits and dividends
significantly lower than in previous years. Secondly, and more
importantly, companies are increasingly allocating capital towards
share buy backs instead of dividend distributions. This shift is seen
across a broader range of companies and sectors compared to the
prior year, which was dominated by mining, banking, and oil
companies. Last year, 17 of the portfolio’s holdings (approx. 38%
of the Company) undertook share buy backs, that number rose to
29 holdings (approx. 60% of the Company) this year. While this has
reduced the portfolio’s income, the decision to prioritise share buy
backs over dividends is a reflection of favourable stock valuations and
the potential to enhance future per share returns.
Your Company was able to increase the dividend in real terms this
year by drawing on revenue reserves. While this is the second year in
a row where your Company has experienced lower earnings, such
outcomes have arisen from time to time in the last 29 years of your
Company’s history. Your Company has continued to fulfil its primary
goal of “real growth of income” above the levels of inflation over the
longer term.
Your Board remains committed to raising the level of dividends you
receive at a rate that exceeds inflation. We also want to provide you
with a total return, defined as capital plus income, which is
competitive when compared to the FTSE All-Share Index. This cannot
be achieved by simply buying the highest yielding stocks in the
market since history proves such investments are generally
disappointing, not least because they often take unsustainable risks
simply to maintain dividend levels. Your Investment Manager feels
very strongly that this would not be in shareholders’ interests and
your Board wholeheartedly agrees with this view.
The obvious consequences of these dividend ambitions are that
revenue reserves are likely to be further drawn down. This should not
be of particular concern to shareholders as there are ample capital
reserves to support dividend growth over the longer term. It also
seems logical if companies choose to focus on total returns, that is
capital plus dividends, that we take a similar approach. In adopting
a total return mentality, we are simply aligning with what pension
funds, insurers and charities have done for decades. Your Board
would stress that this does not amount to any dilution of its primary
aim, which is increasing dividends paid to shareholders above the
rate of inflation over the longer term.
Performance
During the year under review, your Company returned 19% in NAV
total returns. Share price total returns over the period were 17.7%
which compares to 17% for the FTSE All-Share Total Return Index. The
bias towards mid and small-sized companies has proved beneficial, as
their returns have surpassed those of the FTSE 100 Index. The
outperformance during the period was a result of stock selection in
two sectors, namely financials and consumer staples.
The current investment team took the helm on 1 July 2011, since then
the share price has risen by 166.5% and NAV by 174.1%, both well
ahead of the FTSE All-Share Index total return of 138.1%.
For more details on the drivers of performance please refer to the
Investment Manager’s Review.
Chairman’s Statement
Your Company has now
raised its dividend for an
unbroken 29 years,
throughout multiple market
cycles. It has been able to do
this through stock selection
and careful management of
its reserves.
Discount management
Your Company’s share price discount to NAV averaged 9.6% during
the year and ended the financial year at 10.4%. Your Board continues
to monitor the discount of the share price to NAV and when
appropriate buys back shares. During the year under review, and for
the first time since 2008, your Company repurchased 38,000 ordinary
shares to be held in treasury. Since the year end, your Company
repurchased a further 8,000 ordinary shares to be held in treasury. We
will continue to buy back shares where such action materially
enhances asset value per share.
For some time now, the investment trust industry has suffered from an
inability on behalf of regulators to address the contradictions arising
from the application of packaged retail and insurance-based
investment products (“PRIIPs”) and Consumer Duty regulation. The UK
adopted a seemingly unique application of European-wide regulation
in counting investment trusts as PRIIPs. In practice this means that the
costs of listed companies should be accounted in the total costs
disclosed by your Company. Yet such costs are obviously incorporated
into the price at which the shares in your portfolio are bought and sold,
in other words there is clear double counting involved. In turn, and via
cost disclosure, investment trusts appear to be very expensive vehicles
(open-ended funds do not adopt the same practice). This may be
reasonable in dealing with unlisted companies where valuations are
smoothed over time but is clearly wrong for regularly priced assets.
Your Board is therefore pleased to see the post-election introduction
of an interim exemption from the PRIIPs cost disclosure regime. We
look forward to working with stakeholders to help design a more
relevant disclosure regime.
Gearing
Your Company has put in place a £30 million revolving credit facility
with The Bank of Nova Scotia, London Branch for a year, effective
from 20 September 2024. The average gearing level over the year
was 13.5% and at the end of your Company’s financial year the level
of gearing was 12.2%. Even during a period of higher interest rates in
2023/4, gearing has enhanced returns by 2.6%.
Continuation vote in 2025
Shareholders will have the opportunity to vote on the continuation of
the Company at the Annual General Meeting (“AGM”) in 2025 and
every five years thereafter.
AGM
Your Company’s 2024 AGM will be held at 12.30pm on Wednesday,
11 December 2024 at Schroders’ office at 1 London Wall Place,
London, EC2Y 5AU. Your Board strongly encourages shareholders to
attend and participate in the meeting. Shareholders will also have the
opportunity to listen to a presentation from the Investment Manager
and light refreshments will be served.
Please note that all voting will be by poll, and we encourage all
shareholders to exercise their votes by means of registering them
with the Company’s registrar ahead of the meeting, online or by
completing paper proxy forms, and to appoint the Chairman of the
meeting as their proxy. Information on voting can be found in the
Notice of Meeting on pages 69 to 71. In the event that shareholders
have a question for their Board, please email
amcompanysecretary@schroders.com in advance of the AGM.
For regular news about your Company, shareholders are also
encouraged to sign up to the Manager’s investment trusts update,
which can be found at http://www.schroders.com/trust-updates/.
Results webinar
Please join the Investment Manager for a webinar in which they will
report on the year ended 31 August 2024 and outline their thoughts
on the future direction of your Company’s portfolio. The presentation
will be followed by a live Q&A session. The webinar will take place on
Wednesday, 27 November 2024 at 2.00pm. Register for the event at
https://www.schroders.events/SCF24 or via the QR code below:
Outlook
Global equity markets have been performing well, with indices
reaching all-time highs. There is an increasing belief in a soft
economic landing, as consumer demand remains resilient, inflation
has fallen, and central banks have started to implement rate cuts.
However, challenges persist, such as geopolitical events in the Middle
East and Ukraine, as well as the highly divisive US election campaign.
The outlook for the UK equity market is cautiously optimistic despite
ongoing challenges. Interest rates are expected to fall further.
However, inflation remains a concern, though there is an expectation
that it will moderate, especially if energy prices remain stable. It is
early days to assess the full impact of the recent UK Budget. Whilst
projections from the Office of Budget Responsibility and Institute of
Fiscal Studies do not suggest a step change in UK growth, such
growth has limited relationship to share price performance for
a globally diversified corporate sector. Corporate responses and the
cost of capital in general tend to be more important in determining
share prices. Your Investment Manager believes more than ever that
resilient business models and strong balance sheets selling at
attractive values are the best routes to inflation beating share price
returns. As a Board we agree.
The UK equity market continues to offer attractive value to investors,
particularly given its lower valuations compared to global peers. The
market’s dividend yield, currently around 3.5%, and many companies
with geographically diversified revenues make it appealing for investors.
This is reflected in bid activity which has reached its highest level since
2018, indicating increased interest and investment. Furthermore, a
broader range of UK companies are also engaging in share buy backs
and there have been successful capital raisings, signalling confidence
and potential growth. With inflation moderating from the peak of a few
years ago, small and mid-sized companies (“SMEs”) are expected to
benefit. There has been a deliberate increase in exposure to SMEs in
your portfolio, and we expect their improved performance in recent
quarters has further to go.
The US Presidential Election and its aftermath are much in mind as
I write this statement. US stock market returns and a strong dollar
have dominated the portfolio investment landscape since inflation
peaked in late 2021. Any prolonged threat to the apparent
attractiveness of the US and stability of her institutional framework
could clearly dent confidence. I can only repeat that the choices made
by corporations, their balance sheet strength, and the cost of capital
are central to your Investment Manager’s choice of investments.
It is against this backdrop that your Company seeks to continue to
deliver its investment objective of growing dividends and providing
capital growth. While delivering real dividend growth to you purely
from income received over the year will be challenging, both your
Investment Manager and your Board are keenly focused on
Schroder Income Growth Fund plc 5
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Your Company’s share price discount to NAV averaged 9.6% during
the year and ended the financial year at 10.4%. Your Board continues
to monitor the discount of the share price to NAV and when
appropriate buys back shares. During the year under review, and for
the first time since 2008, your Company repurchased 38,000 ordinary
shares to be held in treasury. Since the year end, your Company
repurchased a further 8,000 ordinary shares to be held in treasury. We
will continue to buy back shares where such action materially
enhances asset value per share.
For some time now, the investment trust industry has suffered from an
inability on behalf of regulators to address the contradictions arising
from the application of packaged retail and insurance-based
investment products (“PRIIPs”) and Consumer Duty regulation. The UK
adopted a seemingly unique application of European-wide regulation
in counting investment trusts as PRIIPs. In practice this means that the
costs of listed companies should be accounted in the total costs
disclosed by your Company. Yet such costs are obviously incorporated
into the price at which the shares in your portfolio are bought and sold,
in other words there is clear double counting involved. In turn, and via
cost disclosure, investment trusts appear to be very expensive vehicles
(open-ended funds do not adopt the same practice). This may be
reasonable in dealing with unlisted companies where valuations are
smoothed over time but is clearly wrong for regularly priced assets.
Your Board is therefore pleased to see the post-election introduction
of an interim exemption from the PRIIPs cost disclosure regime. We
look forward to working with stakeholders to help design a more
relevant disclosure regime.
Gearing
Your Company has put in place a £30 million revolving credit facility
with The Bank of Nova Scotia, London Branch for a year, effective
from 20 September 2024. The average gearing level over the year
was 13.5% and at the end of your Company’s financial year the level
of gearing was 12.2%. Even during a period of higher interest rates in
2023/4, gearing has enhanced returns by 2.6%.
Continuation vote in 2025
Shareholders will have the opportunity to vote on the continuation of
the Company at the Annual General Meeting (“AGM”) in 2025 and
every five years thereafter.
AGM
Your Company’s 2024 AGM will be held at 12.30pm on Wednesday,
11 December 2024 at Schroders’ office at 1 London Wall Place,
London, EC2Y 5AU. Your Board strongly encourages shareholders to
attend and participate in the meeting. Shareholders will also have the
opportunity to listen to a presentation from the Investment Manager
and light refreshments will be served.
Please note that all voting will be by poll, and we encourage all
shareholders to exercise their votes by means of registering them
with the Company’s registrar ahead of the meeting, online or by
completing paper proxy forms, and to appoint the Chairman of the
meeting as their proxy. Information on voting can be found in the
Notice of Meeting on pages 69 to 71. In the event that shareholders
have a question for their Board, please email
amcompanysecretary@schroders.com in advance of the AGM.
For regular news about your Company, shareholders are also
encouraged to sign up to the Manager’s investment trusts update,
which can be found at http://www.schroders.com/trust-updates/.
Results webinar
Please join the Investment Manager for a webinar in which they will
report on the year ended 31 August 2024 and outline their thoughts
on the future direction of your Company’s portfolio. The presentation
will be followed by a live Q&A session. The webinar will take place on
Wednesday, 27 November 2024 at 2.00pm. Register for the event at
https://www.schroders.events/SCF24 or via the QR code below:
Outlook
Global equity markets have been performing well, with indices
reaching all-time highs. There is an increasing belief in a soft
economic landing, as consumer demand remains resilient, inflation
has fallen, and central banks have started to implement rate cuts.
However, challenges persist, such as geopolitical events in the Middle
East and Ukraine, as well as the highly divisive US election campaign.
The outlook for the UK equity market is cautiously optimistic despite
ongoing challenges. Interest rates are expected to fall further.
However, inflation remains a concern, though there is an expectation
that it will moderate, especially if energy prices remain stable. It is
early days to assess the full impact of the recent UK Budget. Whilst
projections from the Office of Budget Responsibility and Institute of
Fiscal Studies do not suggest a step change in UK growth, such
growth has limited relationship to share price performance for
a globally diversified corporate sector. Corporate responses and the
cost of capital in general tend to be more important in determining
share prices. Your Investment Manager believes more than ever that
resilient business models and strong balance sheets selling at
attractive values are the best routes to inflation beating share price
returns. As a Board we agree.
The UK equity market continues to offer attractive value to investors,
particularly given its lower valuations compared to global peers. The
market’s dividend yield, currently around 3.5%, and many companies
with geographically diversified revenues make it appealing for investors.
This is reflected in bid activity which has reached its highest level since
2018, indicating increased interest and investment. Furthermore, a
broader range of UK companies are also engaging in share buy backs
and there have been successful capital raisings, signalling confidence
and potential growth. With inflation moderating from the peak of a few
years ago, small and mid-sized companies (“SMEs”) are expected to
benefit. There has been a deliberate increase in exposure to SMEs in
your portfolio, and we expect their improved performance in recent
quarters has further to go.
The US Presidential Election and its aftermath are much in mind as
I write this statement. US stock market returns and a strong dollar
have dominated the portfolio investment landscape since inflation
peaked in late 2021. Any prolonged threat to the apparent
attractiveness of the US and stability of her institutional framework
could clearly dent confidence. I can only repeat that the choices made
by corporations, their balance sheet strength, and the cost of capital
are central to your Investment Manager’s choice of investments.
It is against this backdrop that your Company seeks to continue to
deliver its investment objective of growing dividends and providing
capital growth. While delivering real dividend growth to you purely
from income received over the year will be challenging, both your
Investment Manager and your Board are keenly focused on
Schroder Income Growth Fund plc 5
Introduction Strategic Report Governance Financial Other Information (Unaudited)
6
Schroder Income Growth Fund plc
positioning the portfolio to optimise total returns. Your Investment
Manager has made significant changes to the portfolio in response to
the evolving environment and the ongoing oversight and experience
of the team should give investors some comfort.
Your Company has now raised its dividend for an unbroken 29 years,
throughout multiple market cycles. It has been able to do this
through stock selection and careful management of its reserves. This
has enabled the delivery of increases in income regardless of the
economic backdrop. While there may still be some challenges that lie
ahead, your Company’s total reserves remain healthy. Your Board will
not hesitate to use these reserves if necessary to continue to deliver
on your Company’s investment mandate of raising dividends, even if
such increases lag the growth rate of inflation in the short-term.
Ewen Cameron Watt
Chairman
11 November 2024
Chairman’s Statement
continued
positioning the portfolio to optimise total returns. Your Investment
Manager has made significant changes to the portfolio in response to
the evolving environment and the ongoing oversight and experience
of the team should give investors some comfort.
Your Company has now raised its dividend for an unbroken 29 years,
throughout multiple market cycles. It has been able to do this
through stock selection and careful management of its reserves. This
has enabled the delivery of increases in income regardless of the
economic backdrop. While there may still be some challenges that lie
ahead, your Company’s total reserves remain healthy. Your Board will
not hesitate to use these reserves if necessary to continue to deliver
on your Company’s investment mandate of raising dividends, even if
such increases lag the growth rate of inflation in the short-term.
Ewen Cameron Watt
Chairman
11 November 2024
Chairman’s Statement
continued
Schroder Income Growth Fund plc
7
Introduction Strategic Report Governance Financial Other Information (Unaudited)
The NAV total return in the 12 months to 31 August 2024 was 19%.
This compares to 17% from the FTSE All-Share Total Return Index. The
share price return was 17.7%. Total income for the Company fell by
7.2% compared to the same period last year. Gearing was a positive
contributor, net of costs, over the 12-month period
1
.
Revenue after tax for your Company decreased by 11.5% versus the
same period last year. Investment income declined by 7.7% compared
to the same period last year. There are two material factors behind
the fall.
Firstly, there was a decline in income received from the mining sector.
The portfolio had lower aggregate exposure to this area in the
current year compared to the prior one. However, the ongoing
unwind in commodity prices, from the peak levels experienced in the
Company’s 2022 year, has led to reduced profits and dividends, both
ordinary and special, from mining companies. Portfolio income from
this sector fell by two thirds this year compared to the prior year, and
in absolute terms, income from this sector is only one eighth of the
peak 2022 level. Increased allocations to financial companies,
including banks, made up for some, but not all, of the shortfall from
the mining sector.
Secondly, there has been a further shift in capital allocation by
companies to reward shareholders through share buy backs rather
than dividend distributions. This year some 29 of the Company’s
holdings, representing over 60% of the portfolio constituents,
conducted share buy backs. This compares with 17 of the portfolio’s
holdings in the prior year. This is a significant, 70% increase, and
encompasses a broader range of companies across a wide range of
sectors and all sizes, compared to the prior year which was
dominated by mining, banks and oil companies. From one
perspective it could be considered disappointing that this shift of
capital allocation by corporates has reduced the portfolio’s income
from what it might otherwise have been. However, your Investment
Manager takes the view that the companies held in the portfolio have
the resources, strong profitability and balance sheets, and the
inclination, to reward shareholders. Your Investment Manager views
decisions by boards to favour share buy backs over dividends as a
general acknowledgment of the favourable valuations at which their
shares trade. All other things being equal, a share buy back enhances
a company’s future earnings and dividends per share as profits and
income are spread over a reduced number of shares. Share buy
backs offer attractive returns when benchmarked against other uses
of capital, such as investment in projects, research and development,
staff, facilities or acquisitions. A share buy back also offers an
enhancement to capital returns for shareholders.
Holdings with the strongest dividend growth, of 15% or more, include
oil company, Shell , investment company, 3i , financial services
infrastructure business, TP ICAP , financial services provider,
XPS Pensions , banks including Standard Chartered and Lloyds ,
insurance company, Prudential , and budget hotels group,
Whitbread . Holdings delivering high single digit dividend growth
include construction and infrastructure company Balfour Beatty ,
distributor Bunzl , healthcare company GSK , Asian focused bank
HSBC , defence services business QinetiQ and data and information
services business RELX . Several, but not all, of these holdings
combined strong dividend growth with a share buy back; a greater
number of holdings than in the past.
A wider selection of sectors grew their dividends by low single digits or
maintained their dividends. Some companies are in a growth phase,
including healthcare providers AstraZeneca , and Convatec , or have
embarked on capital expansion or development programmes such as
telecoms company BT , and property company Assura . However,
several others opted to combine modest or no dividend growth with
a share buy back programme. These included private assets investor
Intermediate Capital Group (now called ICG ), media company ITV ,
speciality chemicals company Johnson Matthey , insurance providers
Legal and General , retailer and veterinary practice group Pets at
Home, and consumer products company Unilever .
Holdings which experienced weaker trading maintained their
dividends, luxury goods company Burberry , and specialty chemical
business Victrex . SSE , a power utility company, reduced its dividend
by over one third as it seeks to balance income to shareholders with
the capital required to take advantage of the many investment
opportunities afforded by the energy transition whilst maintaining
a strong balance sheet.
Investment Manager’s Review
We see decisions by Boards to favour
share buy backs over dividends as
a general acknowledgment of the
favourable valuations at which their
shares trade. All other things being
equal, a share buy back enhances
a company’s future earnings and
dividends per share as profits and
income are spread over a reduced
number of shares.
Sue Noffke
1
For more information on gearing please refer to the Alternative Performance Measures section of the accounts.
Any reference to regions/countries/sectors/stocks/securities is for illustrative purposes only and not a recommendation to buy or sell any financial instruments or
adopt a specific investment strategy.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
The NAV total return in the 12 months to 31 August 2024 was 19%.
This compares to 17% from the FTSE All-Share Total Return Index. The
share price return was 17.7%. Total income for the Company fell by
7.2% compared to the same period last year. Gearing was a positive
contributor, net of costs, over the 12-month period
1
.
Revenue after tax for your Company decreased by 11.5% versus the
same period last year. Investment income declined by 7.7% compared
to the same period last year. There are two material factors behind
the fall.
Firstly, there was a decline in income received from the mining sector.
The portfolio had lower aggregate exposure to this area in the
current year compared to the prior one. However, the ongoing
unwind in commodity prices, from the peak levels experienced in the
Company’s 2022 year, has led to reduced profits and dividends, both
ordinary and special, from mining companies. Portfolio income from
this sector fell by two thirds this year compared to the prior year, and
in absolute terms, income from this sector is only one eighth of the
peak 2022 level. Increased allocations to financial companies,
including banks, made up for some, but not all, of the shortfall from
the mining sector.
Secondly, there has been a further shift in capital allocation by
companies to reward shareholders through share buy backs rather
than dividend distributions. This year some 29 of the Company’s
holdings, representing over 60% of the portfolio constituents,
conducted share buy backs. This compares with 17 of the portfolio’s
holdings in the prior year. This is a significant, 70% increase, and
encompasses a broader range of companies across a wide range of
sectors and all sizes, compared to the prior year which was
dominated by mining, banks and oil companies. From one
perspective it could be considered disappointing that this shift of
capital allocation by corporates has reduced the portfolio’s income
from what it might otherwise have been. However, your Investment
Manager takes the view that the companies held in the portfolio have
the resources, strong profitability and balance sheets, and the
inclination, to reward shareholders. Your Investment Manager views
decisions by boards to favour share buy backs over dividends as a
general acknowledgment of the favourable valuations at which their
shares trade. All other things being equal, a share buy back enhances
a company’s future earnings and dividends per share as profits and
income are spread over a reduced number of shares. Share buy
backs offer attractive returns when benchmarked against other uses
of capital, such as investment in projects, research and development,
staff, facilities or acquisitions. A share buy back also offers an
enhancement to capital returns for shareholders.
Holdings with the strongest dividend growth, of 15% or more, include
oil company, Shell , investment company, 3i , financial services
infrastructure business, TP ICAP , financial services provider,
XPS Pensions , banks including Standard Chartered and Lloyds ,
insurance company, Prudential , and budget hotels group,
Whitbread . Holdings delivering high single digit dividend growth
include construction and infrastructure company Balfour Beatty ,
distributor Bunzl , healthcare company GSK , Asian focused bank
HSBC , defence services business QinetiQ and data and information
services business RELX . Several, but not all, of these holdings
combined strong dividend growth with a share buy back; a greater
number of holdings than in the past.
A wider selection of sectors grew their dividends by low single digits or
maintained their dividends. Some companies are in a growth phase,
including healthcare providers AstraZeneca , and Convatec , or have
embarked on capital expansion or development programmes such as
telecoms company BT , and property company Assura . However,
several others opted to combine modest or no dividend growth with
a share buy back programme. These included private assets investor
Intermediate Capital Group (now called ICG ), media company ITV ,
speciality chemicals company Johnson Matthey , insurance providers
Legal and General , retailer and veterinary practice group Pets at
Home, and consumer products company Unilever .
Holdings which experienced weaker trading maintained their
dividends, luxury goods company Burberry , and specialty chemical
business Victrex . SSE , a power utility company, reduced its dividend
by over one third as it seeks to balance income to shareholders with
the capital required to take advantage of the many investment
opportunities afforded by the energy transition whilst maintaining
a strong balance sheet.
Investment Manager’s Review
We see decisions by Boards to favour
share buy backs over dividends as
a general acknowledgment of the
favourable valuations at which their
shares trade. All other things being
equal, a share buy back enhances
a company’s future earnings and
dividends per share as profits and
income are spread over a reduced
number of shares.
Sue Noffke
1
For more information on gearing please refer to the Alternative Performance Measures section of the accounts.
Any reference to regions/countries/sectors/stocks/securities is for illustrative purposes only and not a recommendation to buy or sell any financial instruments or
adopt a specific investment strategy.
8
Schroder Income Growth Fund plc
Investment Manager’s Review
continued
Market background
Global economic activity generally surprised to the upside in 2024
despite central banks maintaining tight monetary policy over most of
the period. Across most developed markets inflation pressures
moderated sufficiently for central banks to pause their interest rate
tightening cycle which had started in late 2021 and early 2022. Bond
and equity markets have throughout the year looked for signs that
inflation is under sufficient control for central banks to move to
cutting interest rates. Whilst markets got ahead of themselves on that
score, as central banks only began to cut interest rates in June for
Europe, August for the UK, and September for the USA, the growth
and inflation trade-off for much of the period proved conducive to
a favourable economic environment – where growth slows but there
is no recession. This has enabled most equity markets to make a
series of new highs, and bond yields to decline. Some market volatility
over the summer months in response to data from the US indicating
a sharper than expected slowdown in the labour market and forward
indicators of demand, caused bond yields to fall sharply and a
rotation within equity markets globally favouring defensive sectors,
such as consumer staples and utilities, rather than cyclical sectors
such as industrials and commodities.
Whilst US stock market returns have continued to be strongest
globally, powered by a heady cocktail of fiscal stimulus supporting
economic growth and investor enthusiasm for technology and Artificial
Intelligence (“AI”), UK equities have over this 12-month period broadly
kept pace with the returns from other global equity markets. Sterling
has strengthened against both the US dollar and the Euro over the
period. In sterling terms US Equities (S&P500) have delivered total
returns of 22.1% over the period, the world equity index (FTSE All
World), which has a large weight in US equities, returned 19.5% and
UK Equities (FTSE All-Share Index) returned 17%.
Within the UK market, small and mid-sized companies delivered
improved relative performance to larger companies, outperforming
by 1.7%, over the 12 months. This contrasts with the prior three years
where mid-sized companies had lagged the returns from larger
companies by a cumulative 19%. This improved performance is the
result of increased levels of bid interest across this area of the market
from private equity, overseas and domestic companies looking to
acquire attractively priced, unique, or complementary, assets at
discount prices. The levels of activity in this area of the market have
increased to historically high levels
2
.
The narrow leadership of US large cap and technology driven parts
of the market dominated for much of the year, but there has been
a broadening out towards the end of the period. Despite ongoing
enthusiasm for AI and Magnificent Seven
3
technology stocks. The
Magnificent Seven peaked in July 2024 and since then it has
underperformed the broader Russell 2000 index by 12%.
The exception on economic momentum has been China, with
widespread weakness and deflation stemming from problems in the
property sector, demographic headwinds and high youth
unemployment. Stimulus measures had been lacking until the most
recent package announced in September.
Almost half of the world’s population will have had the chance to vote
in national elections during 2024. The backdrop of inflation and cost
of living pressures has not favoured incumbents and led to a swing to
the right across many European countries with a knock-on effect of
rolling back on green policies and immigration. An earlier than had
been expected election in the UK returned a large majority for the
central left Labour Party, whilst at the same time seeing a rise in votes
from the nationalist Reform Party. Continuing conflict between Russia
and Ukraine and an escalation of tensions in the Middle East have not
to date dented investors’ risk appetite for financial assets.
Portfolio performance
Pleasingly, the NAV total return outperformed the FTSE All-Share
Index, with gearing being the main driver of positive relative returns.
The Company generated a total return of 19% over the 12-month
period against 17% for the FTSE All-Share Index. Stock and sector
selection was a modest positive to relative returns. A bias towards mid
and small sized companies was a positive tailwind as their returns
exceeded the returns on the main FTSE 100 Index of 16.9% with
returns of 19.6% for the FTSE mid 250 Index (ex-investment trusts)
and 24.1% for the FTSE Smaller Companies (ex-investment trusts)
Index.
Outperformance was the result of stock selection in the financials and
consumer staples sectors, as well as favourable stock selection and
positioning in the energy sector. Stock selection in the utilities,
industrials and telecoms sectors also contributed positively.
Collectively this was able to more than offset the negative
contribution from disappointing stock selection principally in the
consumer discretionary sector.
The combination of your Company’s underweight positioning and
stock selection in the consumer staples area was positive for portfolio
performance. Companies in these areas continued to experience
issues associated with an unwind from the pandemic boost to volumes
of household goods and alcohol. Not owning Reckitt Benckiser, and
being underweight in Diageo , was positive for relative performance.
Both companies underperformed in an environment of higher interest
rates, and each experienced operational issues. Diageo had weaker
trading in Latin America as consumers down traded and distributors
cut back on ordering. Reckitt Benckiser was hit with management
change and issues with its infant formula business which is expected
to result in a large litigation settlement in the USA.
Stock selection was also positive in the financial sector, particularly
asset managers. Longstanding positions in ICG and 3i Group
continued to deliver encouraging operational results and strong
share price performance. ICG, a private assets business, traded
strongly, particularly in its debt funds, while returns on the investment
company improved. 3i Group, another private asset company,
performed well. 3i Group’s largest asset is European discount retailer
Action, which continued to benefit from consumers choosing cheaper
options to offset cost of living pressures and higher mortgage rates.
Action has an attractive pipeline of store roll outs which should
further enhance growth.
Your Company’s holding in defence services business, QinetiQ , was
a top performer in the period. The company has reoriented its capital
allocation policy towards organic growth opportunities, away from
acquisitions. It has also allocated capital to share buy backs which are
accretive to dividend growth and earnings per share at the current
low share price. Your Investment Manager is pleased with these
moves having engaged extensively with the company over these
issues.
At a sector level the main negative was stock selection in the
consumer discretionary area. Two holdings suffered setbacks,
a tougher backdrop in luxury goods for Burberry and regulatory
scrutiny of the veterinary market for pet care provider Pets at Home .
Stock selection was also negative in the basic materials and real
estate sectors.
Burberry was the single biggest detractor to performance. Global
luxury sales weakened after a strong period over the pandemic and
initial re-opening. Additionally, a change in chief designer unsettled
customers while strategy missteps included the pursuit of a brand
elevation into a weaker market and a store refurbishment program.
Profits remain under considerable pressure in the short-term and
2
Source: Bloomberg, August 2024. There have been 31 proposed, pending, or completed transactions in the FTSE 250 this year. This represents a 10-year peak and
almost 4x compared to last year, and 29% more than 2019.
3
The Magnificent Seven stocks are a group of high-performing and influential companies in the U.S. stock market: Alphabet, Amazon, Apple, Meta Platforms,
Microsoft, NVIDIA, and Tesla.
Investment Manager’s Review
continued
Market background
Global economic activity generally surprised to the upside in 2024
despite central banks maintaining tight monetary policy over most of
the period. Across most developed markets inflation pressures
moderated sufficiently for central banks to pause their interest rate
tightening cycle which had started in late 2021 and early 2022. Bond
and equity markets have throughout the year looked for signs that
inflation is under sufficient control for central banks to move to
cutting interest rates. Whilst markets got ahead of themselves on that
score, as central banks only began to cut interest rates in June for
Europe, August for the UK, and September for the USA, the growth
and inflation trade-off for much of the period proved conducive to
a favourable economic environment – where growth slows but there
is no recession. This has enabled most equity markets to make a
series of new highs, and bond yields to decline. Some market volatility
over the summer months in response to data from the US indicating
a sharper than expected slowdown in the labour market and forward
indicators of demand, caused bond yields to fall sharply and a
rotation within equity markets globally favouring defensive sectors,
such as consumer staples and utilities, rather than cyclical sectors
such as industrials and commodities.
Whilst US stock market returns have continued to be strongest
globally, powered by a heady cocktail of fiscal stimulus supporting
economic growth and investor enthusiasm for technology and Artificial
Intelligence (“AI”), UK equities have over this 12-month period broadly
kept pace with the returns from other global equity markets. Sterling
has strengthened against both the US dollar and the Euro over the
period. In sterling terms US Equities (S&P500) have delivered total
returns of 22.1% over the period, the world equity index (FTSE All
World), which has a large weight in US equities, returned 19.5% and
UK Equities (FTSE All-Share Index) returned 17%.
Within the UK market, small and mid-sized companies delivered
improved relative performance to larger companies, outperforming
by 1.7%, over the 12 months. This contrasts with the prior three years
where mid-sized companies had lagged the returns from larger
companies by a cumulative 19%. This improved performance is the
result of increased levels of bid interest across this area of the market
from private equity, overseas and domestic companies looking to
acquire attractively priced, unique, or complementary, assets at
discount prices. The levels of activity in this area of the market have
increased to historically high levels
2
.
The narrow leadership of US large cap and technology driven parts
of the market dominated for much of the year, but there has been
a broadening out towards the end of the period. Despite ongoing
enthusiasm for AI and Magnificent Seven
3
technology stocks. The
Magnificent Seven peaked in July 2024 and since then it has
underperformed the broader Russell 2000 index by 12%.
The exception on economic momentum has been China, with
widespread weakness and deflation stemming from problems in the
property sector, demographic headwinds and high youth
unemployment. Stimulus measures had been lacking until the most
recent package announced in September.
Almost half of the world’s population will have had the chance to vote
in national elections during 2024. The backdrop of inflation and cost
of living pressures has not favoured incumbents and led to a swing to
the right across many European countries with a knock-on effect of
rolling back on green policies and immigration. An earlier than had
been expected election in the UK returned a large majority for the
central left Labour Party, whilst at the same time seeing a rise in votes
from the nationalist Reform Party. Continuing conflict between Russia
and Ukraine and an escalation of tensions in the Middle East have not
to date dented investors’ risk appetite for financial assets.
Portfolio performance
Pleasingly, the NAV total return outperformed the FTSE All-Share
Index, with gearing being the main driver of positive relative returns.
The Company generated a total return of 19% over the 12-month
period against 17% for the FTSE All-Share Index. Stock and sector
selection was a modest positive to relative returns. A bias towards mid
and small sized companies was a positive tailwind as their returns
exceeded the returns on the main FTSE 100 Index of 16.9% with
returns of 19.6% for the FTSE mid 250 Index (ex-investment trusts)
and 24.1% for the FTSE Smaller Companies (ex-investment trusts)
Index.
Outperformance was the result of stock selection in the financials and
consumer staples sectors, as well as favourable stock selection and
positioning in the energy sector. Stock selection in the utilities,
industrials and telecoms sectors also contributed positively.
Collectively this was able to more than offset the negative
contribution from disappointing stock selection principally in the
consumer discretionary sector.
The combination of your Company’s underweight positioning and
stock selection in the consumer staples area was positive for portfolio
performance. Companies in these areas continued to experience
issues associated with an unwind from the pandemic boost to volumes
of household goods and alcohol. Not owning Reckitt Benckiser, and
being underweight in Diageo , was positive for relative performance.
Both companies underperformed in an environment of higher interest
rates, and each experienced operational issues. Diageo had weaker
trading in Latin America as consumers down traded and distributors
cut back on ordering. Reckitt Benckiser was hit with management
change and issues with its infant formula business which is expected
to result in a large litigation settlement in the USA.
Stock selection was also positive in the financial sector, particularly
asset managers. Longstanding positions in ICG and 3i Group
continued to deliver encouraging operational results and strong
share price performance. ICG, a private assets business, traded
strongly, particularly in its debt funds, while returns on the investment
company improved. 3i Group, another private asset company,
performed well. 3i Group’s largest asset is European discount retailer
Action, which continued to benefit from consumers choosing cheaper
options to offset cost of living pressures and higher mortgage rates.
Action has an attractive pipeline of store roll outs which should
further enhance growth.
Your Company’s holding in defence services business, QinetiQ , was
a top performer in the period. The company has reoriented its capital
allocation policy towards organic growth opportunities, away from
acquisitions. It has also allocated capital to share buy backs which are
accretive to dividend growth and earnings per share at the current
low share price. Your Investment Manager is pleased with these
moves having engaged extensively with the company over these
issues.
At a sector level the main negative was stock selection in the
consumer discretionary area. Two holdings suffered setbacks,
a tougher backdrop in luxury goods for Burberry and regulatory
scrutiny of the veterinary market for pet care provider Pets at Home .
Stock selection was also negative in the basic materials and real
estate sectors.
Burberry was the single biggest detractor to performance. Global
luxury sales weakened after a strong period over the pandemic and
initial re-opening. Additionally, a change in chief designer unsettled
customers while strategy missteps included the pursuit of a brand
elevation into a weaker market and a store refurbishment program.
Profits remain under considerable pressure in the short-term and
2
Source: Bloomberg, August 2024. There have been 31 proposed, pending, or completed transactions in the FTSE 250 this year. This represents a 10-year peak and
almost 4x compared to last year, and 29% more than 2019.
3
The Magnificent Seven stocks are a group of high-performing and influential companies in the U.S. stock market: Alphabet, Amazon, Apple, Meta Platforms,
Microsoft, NVIDIA, and Tesla.
Schroder Income Growth Fund plc
9
Introduction Strategic Report Governance Financial Other Information (Unaudited)
mean that the dividend is suspended. However, the CEO has been
replaced and your Investment Manager believes the brand is more
valuable than the market is currently implying. Your Investment
Manager continues to hold a position in the shares for the longer
term.
Also in the retail sector, Pets at Home, the UK’s leading pet care
business was the second largest detractor. The shares fell on news of
the Competition and Markets Authority (“CMA”) announcing an initial
review of the veterinary sector in September 2023 which focused on
transparency of ownership and pricing dynamics in the veterinary
market. In March 2024, the CMA announced that it will be consulting
with a view to launching a full investigation into the UK veterinary
sector noting five areas of potential concern, which could take
18 months. Your Investment Manager has not seen evidence of
abusive charging practices within the business and do not expect
any substantive adverse outcomes for the group’s business from
the review.
Your Company did not own the strongest performing company in the
industrial sector, Rolls- Royce, whose share price rose as orderbooks
strengthened with a strong post-Covid recovery in civil and defence
aerospace end markets. Prudential was affected by the same China
macroeconomic concerns that caused your Company’s holding in
Burberry to underperform, together with investor disappointment
in the company’s organic investment in growth which is capital
consumptive compared to allocating capital to shareholders through
more in dividends and share buy backs. This year, Whitbread has
lagged the rise in the market and is one of the portfolio’s top
detractors to performance in the period. Last year it was a top
contributor. The company has struggled to better last year’s strong
trading which was boosted by pent up post-Covid leisure travel.
Whitbread is the market leading budget hotels operator in the UK
with a dominant brand and footprint, and a strong balance sheet
which enables a continued roll out of new sites in the UK and drives
the less mature German business to profitability.
Portfolio activity
During the period your Investment Manager sold out of four
positions and added six new holdings
Exited and trimmed positions
Your Company exited its longstanding holding in Tesco . The shares
had performed strongly during Covid and the subsequent inflationary
period, as well as benefitting from consolidation within the
supermarket sector. Whilst retaining a significant investment in Shell ,
your Investment Manager reduced the portfolio’s exposure to the oil
sector through the complete sale of its holding in BP . The reduction
in oil sector exposure follows share price strength over the past four
years. Proceeds were reallocated to other areas of the market.
Elsewhere, Paypoint’s acquisition of Love2Shop aims to diversify the
business away from the group’s slower growing legacy businesses,
but your Investment Manager’s view is that this brings greater
regulatory scrutiny and risks. As a result, your Company exited the
position. Your Investment Manager also sold your Company’s holding
in mid-cap precision instrumentation and controls company Spectris
where conviction in its strategy has waned.
Unusually, your Company bought, then exited, a position in Diageo ,
a multinational beverage company, during the period. Over the past
three years, Diageo shares have underperformed due to higher
inflation and interest rates which created headwinds to sales growth
and valuation. Your Investment manager viewed the de-rating of the
shares as an opportunity to initiate a modest position. However,
having monitored our investment thesis since buying it has become
clearer that the spirits industry faces greater headwinds to near term
growth from destocking than your Investment Manager had
expected. Your Investment Manager saw better opportunities to
deploy capital elsewhere in the market so exited, although we will
continue to review the investment case for the stock.
Your Investment Manager reduced the portfolio’s position size in the
longstanding holding in data and information services business RELX .
The shares had been unsettled early in 2023 from fears that the
impact from AI would be negative on their business and growth, but
the market reassessed the view later in the year to become
increasingly convinced that it would be a positive for its growth.
Similarly, the market had re-rated education and workplace skills
company Pearson as new management had sought to reinvigorate
the company with strategic initiatives to spur growth. Your Investment
Manager remains positive for the prospects of both companies for
the longer term, but have allocated some proceeds to other parts of
the portfolio. Positions in leisure operator Hollywood Bowl were
trimmed back early in the period after strong trading and share price
performance.
New holdings and additions
Of the six new additions, two are in the domestically focused areas of
commercial property and housebuilding. A new position was added in
property business British Land whose shares trade at a material
discount to net asset value. The company has a well invested portfolio
in diverse high quality business segments including retail and office
space that are well located, and your Investment Manager views good
prospects for occupancy and rental growth. Your Investment
Manager expects the shares to benefit as interest rates fall later
in 2024. Your Investment Manager added a position in national
housebuilder, Taylor Wimpey . Recent data suggests that the
housing market appears to have bottomed ahead of expected
interest rate cuts which will make mortgages more affordable.
Valuations of housebuilding stocks are low, and a Labour government
offers prospects of an easing in planning which should support
volumes.
Two further new holdings are in the healthcare space, Haleon and
Smith & Nephew , whilst your Investment Manager also added to the
longstanding position in biopharma company GlaxoSmithKline
(“GSK”) on weakness.
Your Investment Manager took advantage of a placing of part of
Pfizer’s holding in Haleon to establish a position in this consumer
healthcare business. The group has been trading strongly since it
was spun off from GlaxoSmithKline and your Investment Manager
believes it has good long-term prospects. The independent business
has established its growth credentials to a greater degree, the
balance sheet has strengthened, the shares had cheapened due to
a combination of better growth and weaker share price from the
overhang of the stock held by GSK and Pfizer who wish to exit their
positions. Additionally, your Investment Manager has wanted to add
to more defensive earnings in the portfolio. Also new to the portfolio
is international med-tech business Smith and Nephew. The valuation
has compressed, relative to the company’s own history and to
international peers, while the outlook has improved. Sales growth has
recently accelerated, positive operational leverage and cost benefits
from restructuring programmes should boost margins and
profitability and lead to an improved valuation.
Your Investment Manager initiated a new position in global
automotive distributor Inchcape , which is taking share in the
automotive market from independents who are struggling with debt
and increasingly onerous demands from automotive manufacturers.
Inchcape is the leader in their markets, generates attractive returns
on capital, has a long growth runway and your Investment Manager
believes the shares are mispriced because the market
underappreciates the resilience and quality of this business.
A new position was added in Computacenter , a provider of IT ‘value
added reseller’ services to help large corporates manage their
technology infrastructure. Increasing complexity of technology
The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
mean that the dividend is suspended. However, the CEO has been
replaced and your Investment Manager believes the brand is more
valuable than the market is currently implying. Your Investment
Manager continues to hold a position in the shares for the longer
term.
Also in the retail sector, Pets at Home, the UK’s leading pet care
business was the second largest detractor. The shares fell on news of
the Competition and Markets Authority (“CMA”) announcing an initial
review of the veterinary sector in September 2023 which focused on
transparency of ownership and pricing dynamics in the veterinary
market. In March 2024, the CMA announced that it will be consulting
with a view to launching a full investigation into the UK veterinary
sector noting five areas of potential concern, which could take
18 months. Your Investment Manager has not seen evidence of
abusive charging practices within the business and do not expect
any substantive adverse outcomes for the group’s business from
the review.
Your Company did not own the strongest performing company in the
industrial sector, Rolls- Royce, whose share price rose as orderbooks
strengthened with a strong post-Covid recovery in civil and defence
aerospace end markets. Prudential was affected by the same China
macroeconomic concerns that caused your Company’s holding in
Burberry to underperform, together with investor disappointment
in the company’s organic investment in growth which is capital
consumptive compared to allocating capital to shareholders through
more in dividends and share buy backs. This year, Whitbread has
lagged the rise in the market and is one of the portfolio’s top
detractors to performance in the period. Last year it was a top
contributor. The company has struggled to better last year’s strong
trading which was boosted by pent up post-Covid leisure travel.
Whitbread is the market leading budget hotels operator in the UK
with a dominant brand and footprint, and a strong balance sheet
which enables a continued roll out of new sites in the UK and drives
the less mature German business to profitability.
Portfolio activity
During the period your Investment Manager sold out of four
positions and added six new holdings
Exited and trimmed positions
Your Company exited its longstanding holding in Tesco . The shares
had performed strongly during Covid and the subsequent inflationary
period, as well as benefitting from consolidation within the
supermarket sector. Whilst retaining a significant investment in Shell ,
your Investment Manager reduced the portfolio’s exposure to the oil
sector through the complete sale of its holding in BP . The reduction
in oil sector exposure follows share price strength over the past four
years. Proceeds were reallocated to other areas of the market.
Elsewhere, Paypoint’s acquisition of Love2Shop aims to diversify the
business away from the group’s slower growing legacy businesses,
but your Investment Manager’s view is that this brings greater
regulatory scrutiny and risks. As a result, your Company exited the
position. Your Investment Manager also sold your Company’s holding
in mid-cap precision instrumentation and controls company Spectris
where conviction in its strategy has waned.
Unusually, your Company bought, then exited, a position in Diageo ,
a multinational beverage company, during the period. Over the past
three years, Diageo shares have underperformed due to higher
inflation and interest rates which created headwinds to sales growth
and valuation. Your Investment manager viewed the de-rating of the
shares as an opportunity to initiate a modest position. However,
having monitored our investment thesis since buying it has become
clearer that the spirits industry faces greater headwinds to near term
growth from destocking than your Investment Manager had
expected. Your Investment Manager saw better opportunities to
deploy capital elsewhere in the market so exited, although we will
continue to review the investment case for the stock.
Your Investment Manager reduced the portfolio’s position size in the
longstanding holding in data and information services business RELX .
The shares had been unsettled early in 2023 from fears that the
impact from AI would be negative on their business and growth, but
the market reassessed the view later in the year to become
increasingly convinced that it would be a positive for its growth.
Similarly, the market had re-rated education and workplace skills
company Pearson as new management had sought to reinvigorate
the company with strategic initiatives to spur growth. Your Investment
Manager remains positive for the prospects of both companies for
the longer term, but have allocated some proceeds to other parts of
the portfolio. Positions in leisure operator Hollywood Bowl were
trimmed back early in the period after strong trading and share price
performance.
New holdings and additions
Of the six new additions, two are in the domestically focused areas of
commercial property and housebuilding. A new position was added in
property business British Land whose shares trade at a material
discount to net asset value. The company has a well invested portfolio
in diverse high quality business segments including retail and office
space that are well located, and your Investment Manager views good
prospects for occupancy and rental growth. Your Investment
Manager expects the shares to benefit as interest rates fall later
in 2024. Your Investment Manager added a position in national
housebuilder, Taylor Wimpey . Recent data suggests that the
housing market appears to have bottomed ahead of expected
interest rate cuts which will make mortgages more affordable.
Valuations of housebuilding stocks are low, and a Labour government
offers prospects of an easing in planning which should support
volumes.
Two further new holdings are in the healthcare space, Haleon and
Smith & Nephew , whilst your Investment Manager also added to the
longstanding position in biopharma company GlaxoSmithKline
(“GSK”) on weakness.
Your Investment Manager took advantage of a placing of part of
Pfizer’s holding in Haleon to establish a position in this consumer
healthcare business. The group has been trading strongly since it
was spun off from GlaxoSmithKline and your Investment Manager
believes it has good long-term prospects. The independent business
has established its growth credentials to a greater degree, the
balance sheet has strengthened, the shares had cheapened due to
a combination of better growth and weaker share price from the
overhang of the stock held by GSK and Pfizer who wish to exit their
positions. Additionally, your Investment Manager has wanted to add
to more defensive earnings in the portfolio. Also new to the portfolio
is international med-tech business Smith and Nephew. The valuation
has compressed, relative to the company’s own history and to
international peers, while the outlook has improved. Sales growth has
recently accelerated, positive operational leverage and cost benefits
from restructuring programmes should boost margins and
profitability and lead to an improved valuation.
Your Investment Manager initiated a new position in global
automotive distributor Inchcape , which is taking share in the
automotive market from independents who are struggling with debt
and increasingly onerous demands from automotive manufacturers.
Inchcape is the leader in their markets, generates attractive returns
on capital, has a long growth runway and your Investment Manager
believes the shares are mispriced because the market
underappreciates the resilience and quality of this business.
A new position was added in Computacenter , a provider of IT ‘value
added reseller’ services to help large corporates manage their
technology infrastructure. Increasing complexity of technology
The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.
10
Schroder Income Growth Fund plc
requirements of businesses driven by new advances in areas such as
AI makes the services of companies such as Computacenter
increasingly valuable to corporates. Your Investment Manager views
attractive organic growth opportunities in the future into new markets
such as the US, which is likely to be supplemented by bolt-on
acquisitions. Your Investment Manager initiated the position following
a de-rating of the shares, which lead us to believe that the long-term
growth prospects are not reflected in today’s valuation.
Further portfolio activity saw us adding to existing holdings in Asian
and Emerging Markets focused bank Standard Chartered , power
generation company Drax and defence services business QinetiQ on
share price weakness.
Outlook
In financial markets the mood is buoyant with stocks in the US,
Eurozone, Japan and the UK at record highs. Market optimism is based
on an expectation of a soft economic landing together with monetary
easing by central banks as the perceived risks from inflationary
pressures continue to ease. There are of course risks around this
scenario. Markets currently see limited risk of a resurgence in
inflationary pressures and are pricing in significant further monetary
easing over the next 12 to 18 months. Any shortfall to these market
expectations in magnitude or timing could cause disappointment.
Market valuations of UK equities in our view have more cushion to
absorb disappointment than the more highly valued US equity
market. Your Investment Manager does however acknowledge that
the US markets set the tone globally. UK economic data on growth
and inflation are no longer outliers. The OECD recently upgraded
UK GDP growth expectations for 2024 to 1.1%, ranking joint second
in the G7. UK CPI inflation in August 2024 was 2.2%, down from
6.7% in August 2023 and 9.9% in August 2022.
Your Investment Manager acknowledges the role of the large fiscal
stimulus that has aided the US economy to grow more robustly than
other developed economies in recent years as well as the role that
the US dollar plays in terms of the world’s reserve currency to enable
such stimulus at a time that the fiscal deficit continues to increase. All
politicians, in all countries, face tough choices given the extent of
budget deficits and debt near or at record levels post the huge
pandemic surplus stimulus packages. Budget watchdogs, and the
currency markets, have noted countries where spending pledges are
or have been either unfunded or unrealistically costed. The rise of the
price of gold and the decline in the US dollar is a part reflection of the
vulnerability of the global economy to financial shocks given the level
of debt. Additionally, the ongoing conflicts in the Middle East and
between Russia and Ukraine mean that defence and security
spending is likely to remain in focus.
There has been significant attention paid recently to structural reforms
that could revitalise the prospects for the UK equity market. This has
concerned changes to listing rules to create a more attractive
environment to be a UK PLC. There is also focus on whether more UK
pension fund capital could be allocated to UK assets. If implemented
effectively both of these policy initiatives should be positive for the
prospect for UK equities. Some of this improving narrative may be
behind the moderation of UK equity outflows and the improved
performance of UK equities over the last 12 months. Despite the
recent uptick, there is still a significant valuation disconnect between
UK equities and other global markets. Your Investment Manager
continues to see incoming M&A interest exploit these valuation
inefficiencies. As active investors, this external interest validates our
view that there are a significant number of mispriced assets on the UK
equity market and your Investment Manager will continue to try and
exploit these in the portfolio.
From a shareholder return perspective, your Investment Manager
continues to see the trend of corporates returning surplus cash to
shareholders through share buy backs rather than via faster growth
of ordinary dividends or special dividends. Despite resulting in a more
muted outlook for income generation, this behaviour should be
viewed positively as it is an indication that boardrooms see their own
shares as presenting an attractive investment opportunity. This
further underpins our confidence that the future return prospects for
the UK equity market and the portfolio are strong.
During the summer months, UK takeover activity softened from the
April peak when almost 40 UK listed companies were under offer, as
strategic acquirers re-entered the market following a period where
private equity had been dominant. A combination of multiple key
economies undergoing elections and broader ongoing geopolitical
uncertainty has contributed to elevated caution among potential
acquirers.
Comments on capital allocation shift
Your Investment Manager observes a capital allocation shift away from
dividends, both ordinary and special, towards a combination of
ordinary dividends and share buy backs which has been steadily
increasing over the past three years. Your Investment Manager views
this as more likely a secular rather than a cyclical trend. UK public
companies are in aggregate in reasonably robust financial health with
strong balance sheets combined with decent levels of profitability and
cash generation. Your Investment Manager notes that aggregate
levels of dividend cover have been rebuilt post the Covid pandemic
stresses to levels in excess of that seen in the years following the
global financial crisis.
This capital allocation shift now more closely aligns the UK equity
market with international markets and enables companies to pursue
growth projects or value accretive share buy backs to a greater extent
than previously. Across the whole market, the FTSE All Share, dividend
payments are covered more than twice over by profits, the same level
as European markets, albeit behind the three times dividend cover of
the US market, which has favoured share buy backs over dividend
distribution. A shift by the UK equity market to embrace share buy
backs to a similar extent as is prevalent in the US stock market may
prove to be more supportive of future relative capital returns for UK
Equities than for future dividend growth. From an income perspective,
UK equities continue to offer the highest yield of major international
equity markets (3.6% at the end of August 2024), twice covered by
profits, and supplemented by significant share buy backs which take
the total shareholder distribution yield close to 6%, double that of the
USA and ahead of that of Europe.
Your Investment Manager is excited about the future total returns,
from capital and dividends, that the portfolio has the potential to
offer.
Investment policy
Regardless of external conditions, your Investment Manager’s
investment approach remains constant: to construct a diversified
portfolio of mispriced opportunities capable of delivering both real
growth of income and attractive capital returns. The market volatility
during the last 12 months has been yet another reminder of the
importance of diversification when constructing portfolios. Your
Investment Manager remains a bottom-up stock picker looking for
idiosyncratic investment opportunities in individual companies. It
continues to see an attractive opportunity set of mispriced assets in
the UK equity market as the market has been, and continues to be,
out of favour with international investors. Subsequently, your
Investment Manager will continue to utilise its ability to use gearing to
potentially enhance returns.
Schroder Investment Management Limited
11 November 2024
requirements of businesses driven by new advances in areas such as
AI makes the services of companies such as Computacenter
increasingly valuable to corporates. Your Investment Manager views
attractive organic growth opportunities in the future into new markets
such as the US, which is likely to be supplemented by bolt-on
acquisitions. Your Investment Manager initiated the position following
a de-rating of the shares, which lead us to believe that the long-term
growth prospects are not reflected in today’s valuation.
Further portfolio activity saw us adding to existing holdings in Asian
and Emerging Markets focused bank Standard Chartered , power
generation company Drax and defence services business QinetiQ on
share price weakness.
Outlook
In financial markets the mood is buoyant with stocks in the US,
Eurozone, Japan and the UK at record highs. Market optimism is based
on an expectation of a soft economic landing together with monetary
easing by central banks as the perceived risks from inflationary
pressures continue to ease. There are of course risks around this
scenario. Markets currently see limited risk of a resurgence in
inflationary pressures and are pricing in significant further monetary
easing over the next 12 to 18 months. Any shortfall to these market
expectations in magnitude or timing could cause disappointment.
Market valuations of UK equities in our view have more cushion to
absorb disappointment than the more highly valued US equity
market. Your Investment Manager does however acknowledge that
the US markets set the tone globally. UK economic data on growth
and inflation are no longer outliers. The OECD recently upgraded
UK GDP growth expectations for 2024 to 1.1%, ranking joint second
in the G7. UK CPI inflation in August 2024 was 2.2%, down from
6.7% in August 2023 and 9.9% in August 2022.
Your Investment Manager acknowledges the role of the large fiscal
stimulus that has aided the US economy to grow more robustly than
other developed economies in recent years as well as the role that
the US dollar plays in terms of the world’s reserve currency to enable
such stimulus at a time that the fiscal deficit continues to increase. All
politicians, in all countries, face tough choices given the extent of
budget deficits and debt near or at record levels post the huge
pandemic surplus stimulus packages. Budget watchdogs, and the
currency markets, have noted countries where spending pledges are
or have been either unfunded or unrealistically costed. The rise of the
price of gold and the decline in the US dollar is a part reflection of the
vulnerability of the global economy to financial shocks given the level
of debt. Additionally, the ongoing conflicts in the Middle East and
between Russia and Ukraine mean that defence and security
spending is likely to remain in focus.
There has been significant attention paid recently to structural reforms
that could revitalise the prospects for the UK equity market. This has
concerned changes to listing rules to create a more attractive
environment to be a UK PLC. There is also focus on whether more UK
pension fund capital could be allocated to UK assets. If implemented
effectively both of these policy initiatives should be positive for the
prospect for UK equities. Some of this improving narrative may be
behind the moderation of UK equity outflows and the improved
performance of UK equities over the last 12 months. Despite the
recent uptick, there is still a significant valuation disconnect between
UK equities and other global markets. Your Investment Manager
continues to see incoming M&A interest exploit these valuation
inefficiencies. As active investors, this external interest validates our
view that there are a significant number of mispriced assets on the UK
equity market and your Investment Manager will continue to try and
exploit these in the portfolio.
From a shareholder return perspective, your Investment Manager
continues to see the trend of corporates returning surplus cash to
shareholders through share buy backs rather than via faster growth
of ordinary dividends or special dividends. Despite resulting in a more
muted outlook for income generation, this behaviour should be
viewed positively as it is an indication that boardrooms see their own
shares as presenting an attractive investment opportunity. This
further underpins our confidence that the future return prospects for
the UK equity market and the portfolio are strong.
During the summer months, UK takeover activity softened from the
April peak when almost 40 UK listed companies were under offer, as
strategic acquirers re-entered the market following a period where
private equity had been dominant. A combination of multiple key
economies undergoing elections and broader ongoing geopolitical
uncertainty has contributed to elevated caution among potential
acquirers.
Comments on capital allocation shift
Your Investment Manager observes a capital allocation shift away from
dividends, both ordinary and special, towards a combination of
ordinary dividends and share buy backs which has been steadily
increasing over the past three years. Your Investment Manager views
this as more likely a secular rather than a cyclical trend. UK public
companies are in aggregate in reasonably robust financial health with
strong balance sheets combined with decent levels of profitability and
cash generation. Your Investment Manager notes that aggregate
levels of dividend cover have been rebuilt post the Covid pandemic
stresses to levels in excess of that seen in the years following the
global financial crisis.
This capital allocation shift now more closely aligns the UK equity
market with international markets and enables companies to pursue
growth projects or value accretive share buy backs to a greater extent
than previously. Across the whole market, the FTSE All Share, dividend
payments are covered more than twice over by profits, the same level
as European markets, albeit behind the three times dividend cover of
the US market, which has favoured share buy backs over dividend
distribution. A shift by the UK equity market to embrace share buy
backs to a similar extent as is prevalent in the US stock market may
prove to be more supportive of future relative capital returns for UK
Equities than for future dividend growth. From an income perspective,
UK equities continue to offer the highest yield of major international
equity markets (3.6% at the end of August 2024), twice covered by
profits, and supplemented by significant share buy backs which take
the total shareholder distribution yield close to 6%, double that of the
USA and ahead of that of Europe.
Your Investment Manager is excited about the future total returns,
from capital and dividends, that the portfolio has the potential to
offer.
Investment policy
Regardless of external conditions, your Investment Manager’s
investment approach remains constant: to construct a diversified
portfolio of mispriced opportunities capable of delivering both real
growth of income and attractive capital returns. The market volatility
during the last 12 months has been yet another reminder of the
importance of diversification when constructing portfolios. Your
Investment Manager remains a bottom-up stock picker looking for
idiosyncratic investment opportunities in individual companies. It
continues to see an attractive opportunity set of mispriced assets in
the UK equity market as the market has been, and continues to be,
out of favour with international investors. Subsequently, your
Investment Manager will continue to utilise its ability to use gearing to
potentially enhance returns.
Schroder Investment Management Limited
11 November 2024
Schroder Income Growth Fund plc
11
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Investment process
Your Company’s investment team look beyond today’s highest
dividend payers to provide attractive levels of yield and future income
growth. By utilising a barbell approach to income generation,
diversification is achieved by allocating towards mispriced
opportunities in capital growth and income. Your Manager aims to
balance the companies with a sustainably high yield with those that
offer a lower dividend but with greater growth prospects.
Your Manager seeks to identify and invest in mispriced situations
through fundamental research. While macroeconomic outcomes are
difficult to predict precisely, your Manager monitors the risk to the
Company’s holdings using their experience gained over multiple
economic cycles. Your Manager maintains a focus on constructing
a diversified portfolio consisting of their highest conviction stock picks
for the long term, within the constraints of delivering the Company’s
required income objective.
Your Company’s investment approach is based on your Managers’
belief that stock markets are inefficient, whilst your Manager believes
it can exploit such inefficiencies by conducting primary research,
through disciplined portfolio construction, and taking a long-term
view. Your Company’s lead Manager, Sue Noffke, is head of
UK equities, head of the Prime UK equity team, has been a member
of Schroders’ UK Equity team for over 30 years and has been
managing your Company’s portfolio since 2011. Your Company’s
investment team employs a rigorous and disciplined investment
process aiming to deliver consistent outperformance with low
volatility against set objectives.
The investment team’s edge is built on several pillars:
1. Experience and stability. The team has over 67 years’
experience investing in the UK equity market.
2. A rigorously implemented, repeatable process. The
foundations of the investment process have been stable since
2006, though significant incremental enhancements have been
made.
3. A pragmatic rather than ideological investment style.
A focus on building style neutral portfolios allows the team to
hunt for opportunities in all corners of the market.
4. Behavioural. The team’s time horizon allows them to embrace
short term uncertainty when they are confident in the long-term
destination.
5. The depth of Schroders resources available. The team are
members of the UK Equity community and regularly collaborate
with global colleagues.
6. Active Ownership. The team’s long holding periods helps them
to affect change where appropriate, prevent bad outcomes and
ensure alignment of incentives.
1. Experience and Stability
Your Manager believes that just as investment returns compound,
knowledge also does. The investment team has over 67 years of
investment experience that gives them an important edge. The
Portfolio Managers, led by Sue Noffke, have worked together since
2015. They have built a deep understanding of UK businesses,
industries, management teams and competitive dynamics. This
knowledge is shared across the team continually, in a collaborative
way of working. Consequently, the entire team benefits from the
experience of investing through various cycles, interest rate regimes,
inflation and valuation environments. The team use this knowledge to
build its investment edge. For example, deciding when trends are
structural rather than cyclical, spotting changes in competitive
dynamics and backing proven management teams.
2. Rigorously implemented, repeatable process
The investment process is built on the belief that a collaborative,
team-based approach is key to avoiding rash decisions. All buy and
sell decisions must be unanimous across the portfolio managers.
Unanimity creates a high hurdle for buy decisions and a shared
responsibility for all holdings. Performance is therefore worn
collectively, creating psychological safety. Every week, the investment
team hold two portfolio construction meetings where existing
positions and new ideas are debated. The team review portfolios,
reflect on company meetings and examine mistakes for learning
opportunities. A key aspect of the team’s edge is both recognising
and avoiding the situations and environments we struggle to
perform in.
3. Pragmatic rather than ideological investment style
The investment team believes that the industry terms ‘value’ and
‘growth’ create inefficiencies to take advantage of, and to deliver the
best risk adjusted returns. Style neutrality allows the team to focus on
where the opportunities are and act independently of whichever
‘factor’ is in favour. Mispricing can occur in a high growth company on
high headline multiples of earnings and cash flows, or a mature
business priced below market multiples. There are examples of both
types of company in your Company’s portfolio. Over the years the
team have had success identifying mispricings where fundamentally
sound companies encounter a serious but temporary problem. They
are unafraid to take a contrarian view when backed by research. Over
80% of your Company’s active return comes from stock selection
1
.
It believes that style neutrality helps deliver consistent alpha
generation which gives our clients a smoother experience, reducing
the chances of selling prematurely.
4. Behavioural
Your investment team have a behavioural advantage that has been
exploited over many years. The average holding period for your
Company’s holdings is around five years
2
compared with a sustained
shortening of holding periods within the market. Your investment
team is prepared to invest where the next three to six months looks
uncertain, but the five-year outlook is positive. These are
opportunities your Company steps into when confident in the
destination, believing that under researched mid-caps represent
some of the best opportunities. Over time, an outsized portion of the
alpha generated by the underlying portfolio of Schroder Income
Growth Fund plc has come from mid-cap companies. As a result, your
Company has increased its mid cap analyst resource. Furthermore, its
two dedicated team analysts have roving roles, freeing them to find
the best opportunities rather than be constrained by sector.
5. Schroders resources
Being part of Schroders is a significant benefit to your investment
team, enhancing its edge. They are members of the UK Equity
Community, a group of 14 investors focused on UK equities.
Colleagues share their research, disseminate information that
matters and provide alternative viewpoints to challenge existing
views. Beyond the UK Equity Community, the team also have access to
your Investment Manager’s extensive resource of equity analysts,
portfolio managers, and sustainability experts across the world. As
your Manager’s portfolios’ are style neutral, they regularly collaborate
across the spectrum of investment teams, this provides valuable
insight into UK businesses’ global competitors.
Investment Approach and Process
1
As at 30 August 2024.
2
10-years to 31 December 2023.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Investment process
Your Company’s investment team look beyond today’s highest
dividend payers to provide attractive levels of yield and future income
growth. By utilising a barbell approach to income generation,
diversification is achieved by allocating towards mispriced
opportunities in capital growth and income. Your Manager aims to
balance the companies with a sustainably high yield with those that
offer a lower dividend but with greater growth prospects.
Your Manager seeks to identify and invest in mispriced situations
through fundamental research. While macroeconomic outcomes are
difficult to predict precisely, your Manager monitors the risk to the
Company’s holdings using their experience gained over multiple
economic cycles. Your Manager maintains a focus on constructing
a diversified portfolio consisting of their highest conviction stock picks
for the long term, within the constraints of delivering the Company’s
required income objective.
Your Company’s investment approach is based on your Managers’
belief that stock markets are inefficient, whilst your Manager believes
it can exploit such inefficiencies by conducting primary research,
through disciplined portfolio construction, and taking a long-term
view. Your Company’s lead Manager, Sue Noffke, is head of
UK equities, head of the Prime UK equity team, has been a member
of Schroders’ UK Equity team for over 30 years and has been
managing your Company’s portfolio since 2011. Your Company’s
investment team employs a rigorous and disciplined investment
process aiming to deliver consistent outperformance with low
volatility against set objectives.
The investment team’s edge is built on several pillars:
1. Experience and stability. The team has over 67 years’
experience investing in the UK equity market.
2. A rigorously implemented, repeatable process. The
foundations of the investment process have been stable since
2006, though significant incremental enhancements have been
made.
3. A pragmatic rather than ideological investment style.
A focus on building style neutral portfolios allows the team to
hunt for opportunities in all corners of the market.
4. Behavioural. The team’s time horizon allows them to embrace
short term uncertainty when they are confident in the long-term
destination.
5. The depth of Schroders resources available. The team are
members of the UK Equity community and regularly collaborate
with global colleagues.
6. Active Ownership. The team’s long holding periods helps them
to affect change where appropriate, prevent bad outcomes and
ensure alignment of incentives.
1. Experience and Stability
Your Manager believes that just as investment returns compound,
knowledge also does. The investment team has over 67 years of
investment experience that gives them an important edge. The
Portfolio Managers, led by Sue Noffke, have worked together since
2015. They have built a deep understanding of UK businesses,
industries, management teams and competitive dynamics. This
knowledge is shared across the team continually, in a collaborative
way of working. Consequently, the entire team benefits from the
experience of investing through various cycles, interest rate regimes,
inflation and valuation environments. The team use this knowledge to
build its investment edge. For example, deciding when trends are
structural rather than cyclical, spotting changes in competitive
dynamics and backing proven management teams.
2. Rigorously implemented, repeatable process
The investment process is built on the belief that a collaborative,
team-based approach is key to avoiding rash decisions. All buy and
sell decisions must be unanimous across the portfolio managers.
Unanimity creates a high hurdle for buy decisions and a shared
responsibility for all holdings. Performance is therefore worn
collectively, creating psychological safety. Every week, the investment
team hold two portfolio construction meetings where existing
positions and new ideas are debated. The team review portfolios,
reflect on company meetings and examine mistakes for learning
opportunities. A key aspect of the team’s edge is both recognising
and avoiding the situations and environments we struggle to
perform in.
3. Pragmatic rather than ideological investment style
The investment team believes that the industry terms ‘value’ and
‘growth’ create inefficiencies to take advantage of, and to deliver the
best risk adjusted returns. Style neutrality allows the team to focus on
where the opportunities are and act independently of whichever
‘factor’ is in favour. Mispricing can occur in a high growth company on
high headline multiples of earnings and cash flows, or a mature
business priced below market multiples. There are examples of both
types of company in your Company’s portfolio. Over the years the
team have had success identifying mispricings where fundamentally
sound companies encounter a serious but temporary problem. They
are unafraid to take a contrarian view when backed by research. Over
80% of your Company’s active return comes from stock selection
1
.
It believes that style neutrality helps deliver consistent alpha
generation which gives our clients a smoother experience, reducing
the chances of selling prematurely.
4. Behavioural
Your investment team have a behavioural advantage that has been
exploited over many years. The average holding period for your
Company’s holdings is around five years
2
compared with a sustained
shortening of holding periods within the market. Your investment
team is prepared to invest where the next three to six months looks
uncertain, but the five-year outlook is positive. These are
opportunities your Company steps into when confident in the
destination, believing that under researched mid-caps represent
some of the best opportunities. Over time, an outsized portion of the
alpha generated by the underlying portfolio of Schroder Income
Growth Fund plc has come from mid-cap companies. As a result, your
Company has increased its mid cap analyst resource. Furthermore, its
two dedicated team analysts have roving roles, freeing them to find
the best opportunities rather than be constrained by sector.
5. Schroders resources
Being part of Schroders is a significant benefit to your investment
team, enhancing its edge. They are members of the UK Equity
Community, a group of 14 investors focused on UK equities.
Colleagues share their research, disseminate information that
matters and provide alternative viewpoints to challenge existing
views. Beyond the UK Equity Community, the team also have access to
your Investment Manager’s extensive resource of equity analysts,
portfolio managers, and sustainability experts across the world. As
your Manager’s portfolios’ are style neutral, they regularly collaborate
across the spectrum of investment teams, this provides valuable
insight into UK businesses’ global competitors.
Investment Approach and Process
1
As at 30 August 2024.
2
10-years to 31 December 2023.
12
Schroder Income Growth Fund plc
6. Active Ownership
Active Ownership at Schroders means engaging with companies to
encourage responsible behaviour and enhance our investment edge.
Your Company’s average 5 year holding period means it can build
meaningful relationships with management and the board of
directors
1
. Through these long-term relationships your investment
team believes your Company’s proposals are given more serious
consideration. Moreover, engagements are investor-led. Your
investment team do not outsource matters of sustainability and proxy
voting to a separate sustainability team. They prefer to engage
directly. Active Ownership is focused on aligning the interests of
management teams and stakeholders with shareholders. This can
prevent bad outcomes and gives an alternative insight into company
culture. Your Company is prepared to invest in “progress not
perfection”.
Investment Approach and Process
continued
1
10-years to 31 December 2023.
6. Active Ownership
Active Ownership at Schroders means engaging with companies to
encourage responsible behaviour and enhance our investment edge.
Your Company’s average 5 year holding period means it can build
meaningful relationships with management and the board of
directors
1
. Through these long-term relationships your investment
team believes your Company’s proposals are given more serious
consideration. Moreover, engagements are investor-led. Your
investment team do not outsource matters of sustainability and proxy
voting to a separate sustainability team. They prefer to engage
directly. Active Ownership is focused on aligning the interests of
management teams and stakeholders with shareholders. This can
prevent bad outcomes and gives an alternative insight into company
culture. Your Company is prepared to invest in “progress not
perfection”.
Investment Approach and Process
continued
1
10-years to 31 December 2023.
Schroder Income Growth Fund plc
13
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Our approach
In your Manager’s view, environmental, social and governance (“ESG”) factors and industry trends are intrinsically linked. Your Manager identifies
the key ESG issues of each company it invests in and analyses and examines the management of these to determine the risks and opportunities
of an investment. A range of inputs to help identify these including proprietary analysis done by the team based on information published by
the companies themselves, output from proprietary internal tools, work done by internal analysts as well as input from external providers such
as MSCI or Sustainalytics. Your Manager conducts a rigorous bottom-up examination of a company’s ESG performance and incorporates that
analysis into investment decisions rather than outsourcing to third parties. In exploring new investment ideas your Manager may engage with
management teams to better understand their business, corporate strategy and their alignment with shareholders. Once invested, your
Manager will engage on identified issues.
Extensive engagement with portfolio companies
Regular engagement with the board, executive management, investor relations and sustainability professionals of a portfolio company is a key
feature of your Manager’s approach. Your Manager meets with the management of all portfolio companies at least once a year, in many cases,
more frequently. These engagements are led by the investment team in most instances as they have the knowledge of, and relationships with,
the companies. Your Manager also benefits from engagements led by other Schroders’ teams. Your Manager is not afraid to be robust with
management teams where needed. To achieve the goals with engagements, your Manager works closely with Schroders’ Sustainable
Investment team, consisting of over 40 dedicated specialists. Engagement is usually directly with management teams and, where necessary as
a form of escalation, the team will use voting rights against management to encourage change. Once your Manager engages with companies,
its findings will be documented in its proprietary tool called ActiveIQ, which helps keep track of the progress made and monitor the success of
previous engagements with the company. Your Manager reviews engagement progress quarterly and where an engagement may be stalling,
your Manager will discuss next steps and how to take this forward. The chart below shows examples of companies engaged with during
calendar year 2023 within Schroders’ Engagement Blueprint themes.
Source: Schroders, data from 1 January to 31 December 2023. For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Logos are
the property of the companies shown. List is not exhaustive and shows selected engagements held in the Company’s portfolio. Engagement is collaborative at
Schroders; your investment team, other investment teams and Schroders’ Sustainable Investment team may lead engagements. Engagement topics are grouped by
Engagement Blueprint theme. For more information refer to https://mybrand.schroders.com/m/3222ea4ed44a1f2c/original/schrodersengagement-blueprint.pdf;
our vision for active ownership at Schroders.
Active Ownership
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Our approach
In your Manager’s view, environmental, social and governance (“ESG”) factors and industry trends are intrinsically linked. Your Manager identifies
the key ESG issues of each company it invests in and analyses and examines the management of these to determine the risks and opportunities
of an investment. A range of inputs to help identify these including proprietary analysis done by the team based on information published by
the companies themselves, output from proprietary internal tools, work done by internal analysts as well as input from external providers such
as MSCI or Sustainalytics. Your Manager conducts a rigorous bottom-up examination of a company’s ESG performance and incorporates that
analysis into investment decisions rather than outsourcing to third parties. In exploring new investment ideas your Manager may engage with
management teams to better understand their business, corporate strategy and their alignment with shareholders. Once invested, your
Manager will engage on identified issues.
Extensive engagement with portfolio companies
Regular engagement with the board, executive management, investor relations and sustainability professionals of a portfolio company is a key
feature of your Manager’s approach. Your Manager meets with the management of all portfolio companies at least once a year, in many cases,
more frequently. These engagements are led by the investment team in most instances as they have the knowledge of, and relationships with,
the companies. Your Manager also benefits from engagements led by other Schroders’ teams. Your Manager is not afraid to be robust with
management teams where needed. To achieve the goals with engagements, your Manager works closely with Schroders’ Sustainable
Investment team, consisting of over 40 dedicated specialists. Engagement is usually directly with management teams and, where necessary as
a form of escalation, the team will use voting rights against management to encourage change. Once your Manager engages with companies,
its findings will be documented in its proprietary tool called ActiveIQ, which helps keep track of the progress made and monitor the success of
previous engagements with the company. Your Manager reviews engagement progress quarterly and where an engagement may be stalling,
your Manager will discuss next steps and how to take this forward. The chart below shows examples of companies engaged with during
calendar year 2023 within Schroders’ Engagement Blueprint themes.
Source: Schroders, data from 1 January to 31 December 2023. For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Logos are
the property of the companies shown. List is not exhaustive and shows selected engagements held in the Company’s portfolio. Engagement is collaborative at
Schroders; your investment team, other investment teams and Schroders’ Sustainable Investment team may lead engagements. Engagement topics are grouped by
Engagement Blueprint theme. For more information refer to https://mybrand.schroders.com/m/3222ea4ed44a1f2c/original/schrodersengagement-blueprint.pdf;
our vision for active ownership at Schroders.
Active Ownership
14
Schroder Income Growth Fund plc
Our voting record
The table below shows the number of company meetings and
resolutions the Company voted on in the last one and three years.
2024 2022-24 1
Number (%) Number (%)
Meetings 48 144
Resolutions 988 2800
Votes with management 975 98.7 2748 98.1
Votes against management 13 1.3 52 1.9
Did not vote 0 0.0 0 0.0
1
Company financial year (12m to 31 August).
Where your Manager votes against management on behalf of the
Company, in most cases this has been to oppose the re-election of
a director or to oppose the remuneration report. Your Manager will
oppose the re-election of a director for several reasons including
‘over-boarding’, where it believes a director holds too many board
positions at once so are unable to dedicate sufficient time to each. In
the case of remuneration, your Manager pushes for management
teams to have firm alignment with shareholders.
Our engagement in action
A key area of your Manager’s engagement in recent years has been
encouraging companies to reassess their capital allocation priorities
given widespread depressed share prices in the UK equity market.
Your Manager has seen several companies in the last 12 months that
we have engaged with heavily over the years act to demonstrate
value in their portfolio.
QinetiQ is one such example. They provide essential defence services
to the UK Ministry of Defence and its allies, including military training,
cyber security and equipment testing. Their shares de-rated over the
last two years due to spending delays in the US caused by continuing
resolutions on the Federal budget deficit. This resulted in deferral of
QinetiQ’s revenue and raised concerns around their US focussed
acquisition strategy.
Your Manager believed that the cheap share price and negative
sentiment at QinetiQ meant that capital could be more effectively
allocated to share repurchases rather than any further acquisitions.
Acquisitions have been a key part of QinetiQ’s strategy. Your Manager
therefore engaged with the executive team and the Chairman to
share our views and they followed that with an announcement in their
January 2024 trading update that they were starting a £100 million
buy back programme. At their full year results in May, they then
formally de-emphasised the merger & acquisition component of their
growth strategy and announced a change of chief financial officer.
Your Manager was pleased with this outcome and so our voting
actions have not changed. However, your Manager continues to
monitor progress in QinetiQ’s US business and the management
team’s ongoing capital allocation decisions.
Climate related disclosures
On 30 June 2024, the Company’s AIFM produced a product level
disclosure consistent with the Task Force on Climate-Related Financial
Disclosures for the period 1 January 2023 to 31 December 2023. This
can be found here: https://api.schroders.com/document-store/TCFD-
GB72399M-Schroder%20Income%20Growth%20Fund.pdf
Active Ownership
continued
Our voting record
The table below shows the number of company meetings and
resolutions the Company voted on in the last one and three years.
2024 2022-24 1
Number (%) Number (%)
Meetings 48 144
Resolutions 988 2800
Votes with management 975 98.7 2748 98.1
Votes against management 13 1.3 52 1.9
Did not vote 0 0.0 0 0.0
1
Company financial year (12m to 31 August).
Where your Manager votes against management on behalf of the
Company, in most cases this has been to oppose the re-election of
a director or to oppose the remuneration report. Your Manager will
oppose the re-election of a director for several reasons including
‘over-boarding’, where it believes a director holds too many board
positions at once so are unable to dedicate sufficient time to each. In
the case of remuneration, your Manager pushes for management
teams to have firm alignment with shareholders.
Our engagement in action
A key area of your Manager’s engagement in recent years has been
encouraging companies to reassess their capital allocation priorities
given widespread depressed share prices in the UK equity market.
Your Manager has seen several companies in the last 12 months that
we have engaged with heavily over the years act to demonstrate
value in their portfolio.
QinetiQ is one such example. They provide essential defence services
to the UK Ministry of Defence and its allies, including military training,
cyber security and equipment testing. Their shares de-rated over the
last two years due to spending delays in the US caused by continuing
resolutions on the Federal budget deficit. This resulted in deferral of
QinetiQ’s revenue and raised concerns around their US focussed
acquisition strategy.
Your Manager believed that the cheap share price and negative
sentiment at QinetiQ meant that capital could be more effectively
allocated to share repurchases rather than any further acquisitions.
Acquisitions have been a key part of QinetiQ’s strategy. Your Manager
therefore engaged with the executive team and the Chairman to
share our views and they followed that with an announcement in their
January 2024 trading update that they were starting a £100 million
buy back programme. At their full year results in May, they then
formally de-emphasised the merger & acquisition component of their
growth strategy and announced a change of chief financial officer.
Your Manager was pleased with this outcome and so our voting
actions have not changed. However, your Manager continues to
monitor progress in QinetiQ’s US business and the management
team’s ongoing capital allocation decisions.
Climate related disclosures
On 30 June 2024, the Company’s AIFM produced a product level
disclosure consistent with the Task Force on Climate-Related Financial
Disclosures for the period 1 January 2023 to 31 December 2023. This
can be found here: https://api.schroders.com/document-store/TCFD-
GB72399M-Schroder%20Income%20Growth%20Fund.pdf
Active Ownership
continued
Schroder Income Growth Fund plc
15
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Investment Portfolio
as at 31 August 2024
Companies in bold represent the 20 largest investments, which by value account for 66.9% (2023: 66.6%) of total investments. All companies are
headquartered in the UK unless otherwise stated.
All investments are equities, listed on a recognised stock exchange.
Financials
HSBC 11,127 4.3
3i Group 8,138 3.1
Lloyds Bank 7,859 3.0
Standard Chartered 7,542 2.9
Legal & General 6,406 2.5
Intermediate Capital 6,082 2.4
M&G 5,260 2.0
Empiric Student Property 4,845 1.9
TP ICAP 4,449 1.7
Natwest 3,835 1.5
Prudential
1
3,816 1.5
Assura 3,018 1.2
British Land REIT 2,480 1.0
Total Financials 74,857 29.0
Consumer Services
RELX 6,923 2.7
Pearson 5,979 2.3
Pets at Home 5,359 2.1
Hollywood Bowl 4,930 1.9
Inchcape 4,415 1.7
Whitbread 4,076 1.6
XPS 4,041 1.5
Haleon 2,887 1.1
ITV 1,685 0.7
Evoke 914 0.3
Total Consumer Services 41,209 15.9
Healthcare
AstraZeneca 18,613 7.2
GSK (GlaxoSmithKline) 12,267 4.7
ConvaTec 4,993 1.9
Smith & Nephew 2,593 1.0
Total Healthcare 38,466 14.8
Utilities
National Grid 7,709 3.0
SSE 7,264 2.8
Drax 6,113 2.4
Total Utilities 21,086 8.2
Industrials
QinetiQ 8,933 3.5
Bunzl 5,514 2.1
Balfour Beatty 5,378 2.1
Total Industrials 19,825 7.7
Basic Materials
Glencore
2
8,202 3.2
Anglo American 5,071 2.0
Johnson Matthey 4,668 1.8
Victrex 1,049 0.4
Total Basic Materials 18,990 7.4
Consumer Goods
Unilever 9,848 3.8
Cranswick 4,140 1.6
Taylor Wimpey 2,904 1.1
Burberry 1,625 0.6
Total Consumer Goods 18,517 7.1
Oil and Gas
Shell 16,498 6.4
Total Oil and Gas 16,498 6.4
Telecommunications
BT 6,390 2.5
Total Telecommunications 6,390 2.5
Technology
Computacenter 2,571 1.0
Total Technology 2,571 1.0
Total Investments 258,409 100.0
1
Prudential plc is headquartered in London and Hong Kong.
2
Glencore plc is headquartered in Switzerland.
£’000 % £’000 %
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Investment Portfolio
as at 31 August 2024
Companies in bold represent the 20 largest investments, which by value account for 66.9% (2023: 66.6%) of total investments. All companies are
headquartered in the UK unless otherwise stated.
All investments are equities, listed on a recognised stock exchange.
Financials
HSBC 11,127 4.3
3i Group 8,138 3.1
Lloyds Bank 7,859 3.0
Standard Chartered 7,542 2.9
Legal & General 6,406 2.5
Intermediate Capital 6,082 2.4
M&G 5,260 2.0
Empiric Student Property 4,845 1.9
TP ICAP 4,449 1.7
Natwest 3,835 1.5
Prudential
1
3,816 1.5
Assura 3,018 1.2
British Land REIT 2,480 1.0
Total Financials 74,857 29.0
Consumer Services
RELX 6,923 2.7
Pearson 5,979 2.3
Pets at Home 5,359 2.1
Hollywood Bowl 4,930 1.9
Inchcape 4,415 1.7
Whitbread 4,076 1.6
XPS 4,041 1.5
Haleon 2,887 1.1
ITV 1,685 0.7
Evoke 914 0.3
Total Consumer Services 41,209 15.9
Healthcare
AstraZeneca 18,613 7.2
GSK (GlaxoSmithKline) 12,267 4.7
ConvaTec 4,993 1.9
Smith & Nephew 2,593 1.0
Total Healthcare 38,466 14.8
Utilities
National Grid 7,709 3.0
SSE 7,264 2.8
Drax 6,113 2.4
Total Utilities 21,086 8.2
Industrials
QinetiQ 8,933 3.5
Bunzl 5,514 2.1
Balfour Beatty 5,378 2.1
Total Industrials 19,825 7.7
Basic Materials
Glencore
2
8,202 3.2
Anglo American 5,071 2.0
Johnson Matthey 4,668 1.8
Victrex 1,049 0.4
Total Basic Materials 18,990 7.4
Consumer Goods
Unilever 9,848 3.8
Cranswick 4,140 1.6
Taylor Wimpey 2,904 1.1
Burberry 1,625 0.6
Total Consumer Goods 18,517 7.1
Oil and Gas
Shell 16,498 6.4
Total Oil and Gas 16,498 6.4
Telecommunications
BT 6,390 2.5
Total Telecommunications 6,390 2.5
Technology
Computacenter 2,571 1.0
Total Technology 2,571 1.0
Total Investments 258,409 100.0
1
Prudential plc is headquartered in London and Hong Kong.
2
Glencore plc is headquartered in Switzerland.
£’000 % £’000 %
16
Schroder Income Growth Fund plc
10-Year Financial Record
At 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 188,165 196,490 216,718 216,740 204,458 170,324 219,915 205,100 203,932 231,561
NAV per share (pence) 273.94 286.06 315.51 315.54 297.66 246.71 316.59 295.26 293.58 333.54
Share price (pence) 269.75 257.00 293.63 301.00 273.00 242.00 316.50 289.00 267.50 299.00
Share price discount to NAV
per share* (%) (1.5) (10.2) (6.9) (4.6) (8.3) (1.9) 0.0 (2.1) (8.9) (10.4)
Gearing* (%) 1
9.5 8.4 5.8 8.3 15.5 9.5 7.9 13.5 13.7 12.2
For the year ended 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue return after
taxation (£’000) 7,761 8,299 9,107 8,767 9,744 8,042 8,370 9,697 9,130 8,084
Revenue return per share
(pence) 11.30 12.08 13.26 12.76 14.19 11.69 12.08 13.96 13.14 11.64
Dividends per share (pence) 10.30 10.60 11.20 11.80 12.40 12.60 12.80 13.20 13.80 14.20
Ongoing charges* (%) 2
0.99 1.00 0.95 0.93 0.87 0.86 0.79 0.74 0.77 0.79
Performance 3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV total return* 100.0 103.5 111.5 128.2 133.2 130.8 113.2 153.0 147.7 154.7 184.9
Share price total
return* 100.0 105.1 104.3 123.9 132.5 125.4 116.6 159.8 152.3 147.8 173.9
FTSE All-Share Index
total return 100.0 97.7 109.1 124.8 130.6 131.2 114.6 145.5 146.9 154.6 180.9
1
Borrowings used for investment purposes, less cash, expressed as a percentage of net assets. If the amount so calculated is negative, this is shown as a “Net cash”
position.
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 2014.
*Alternative Performance Measures.
NAV/share price/FTSE All-Share Index
total returns for the ten years ended
31 August 2024
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 August 2014.
Dividends per share versus the rate of
inflation for the ten years ended 31 August
2024
Source: Morningstar/Office for National Statistics. Rebased to 100 at 31 August
2014.
80
100
120
140
160
180
200
Aug-24
Aug-23
Aug-22
Aug-21
Aug-20
Aug-19
Aug-18
Aug-17
Aug-16
Aug-15
Aug-14
NAV Total Return
Share Price Total Return
FTSE All-Share Total Return
90
100
110
120
130
140
150
Aug-24
Aug-23
Aug-22
Aug-21
Aug-20
Aug-19
Aug-18
Aug-17
Aug-16
Aug-15
Aug-14
CPI
Dividends per share
10-Year Financial Record
At 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 188,165 196,490 216,718 216,740 204,458 170,324 219,915 205,100 203,932 231,561
NAV per share (pence) 273.94 286.06 315.51 315.54 297.66 246.71 316.59 295.26 293.58 333.54
Share price (pence) 269.75 257.00 293.63 301.00 273.00 242.00 316.50 289.00 267.50 299.00
Share price discount to NAV
per share* (%) (1.5) (10.2) (6.9) (4.6) (8.3) (1.9) 0.0 (2.1) (8.9) (10.4)
Gearing* (%) 1
9.5 8.4 5.8 8.3 15.5 9.5 7.9 13.5 13.7 12.2
For the year ended 31 August 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue return after
taxation (£’000) 7,761 8,299 9,107 8,767 9,744 8,042 8,370 9,697 9,130 8,084
Revenue return per share
(pence) 11.30 12.08 13.26 12.76 14.19 11.69 12.08 13.96 13.14 11.64
Dividends per share (pence) 10.30 10.60 11.20 11.80 12.40 12.60 12.80 13.20 13.80 14.20
Ongoing charges* (%) 2
0.99 1.00 0.95 0.93 0.87 0.86 0.79 0.74 0.77 0.79
Performance 3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV total return* 100.0 103.5 111.5 128.2 133.2 130.8 113.2 153.0 147.7 154.7 184.9
Share price total
return* 100.0 105.1 104.3 123.9 132.5 125.4 116.6 159.8 152.3 147.8 173.9
FTSE All-Share Index
total return 100.0 97.7 109.1 124.8 130.6 131.2 114.6 145.5 146.9 154.6 180.9
1
Borrowings used for investment purposes, less cash, expressed as a percentage of net assets. If the amount so calculated is negative, this is shown as a “Net cash”
position.
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 2014.
*Alternative Performance Measures.
NAV/share price/FTSE All-Share Index
total returns for the ten years ended
31 August 2024
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 August 2014.
Dividends per share versus the rate of
inflation for the ten years ended 31 August
2024
Source: Morningstar/Office for National Statistics. Rebased to 100 at 31 August
2014.
80
100
120
140
160
180
200
Aug-24
Aug-23
Aug-22
Aug-21
Aug-20
Aug-19
Aug-18
Aug-17
Aug-16
Aug-15
Aug-14
NAV Total Return
Share Price Total Return
FTSE All-Share Total Return
90
100
110
120
130
140
150
Aug-24
Aug-23
Aug-22
Aug-21
Aug-20
Aug-19
Aug-18
Aug-17
Aug-16
Aug-15
Aug-14
CPI
Dividends per share
Schroder Income Growth Fund plc
17
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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.
Business model
The Board appointed Schroder Unit Trusts Limited (the “Manager” or “AIFM”) 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 including delegation to the Investment Manager. The Manager also
promotes the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company’s investment
objective, as demonstrated in the diagram below. The investment and promotion processes set out in the diagram are described in more detail
below.
Investment trust status
The Company carries on business as an investment trust. Its shares are listed and admitted to trading on 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.
Continuation vote
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 AGM in 2025 and thereafter at five yearly intervals.
Investor
value
Strategy Board
Appoints the Manager and
other service providers
to achieve objectives
Responsible for
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Sets objectives, strategy
and key performance indicators
(”KPIs”)
–
Oversight
Oversees portfolio
management
Monitors the achievement
of KPIs
Oversees the use of gearing
Oversees discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Investment Manager
implements the investment
strategy by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the vehicle remains
attractive to investors
– that the fees and ongoing
charges remain competitive
Business Review
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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.
Business model
The Board appointed Schroder Unit Trusts Limited (the “Manager” or “AIFM”) 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 including delegation to the Investment Manager. The Manager also
promotes the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company’s investment
objective, as demonstrated in the diagram below. The investment and promotion processes set out in the diagram are described in more detail
below.
Investment trust status
The Company carries on business as an investment trust. Its shares are listed and admitted to trading on 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.
Continuation vote
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 AGM in 2025 and thereafter at five yearly intervals.
Investor
value
Strategy Board
Appoints the Manager and
other service providers
to achieve objectives
Responsible for
overall strategy and
oversight including
risk management
Activities centred
on the creation of
shareholder value
–
–
–
Sets objectives, strategy
and key performance indicators
(”KPIs”)
–
Oversight
Oversees portfolio
management
Monitors the achievement
of KPIs
Oversees the use of gearing
Oversees discount/premium
management and the
provision of liquidity
through share issuance
and repurchase
–
–
–
–
Investment
Investment Manager
implements the investment
strategy by following an
investment process
Supported by strong
research and
risk environment
Regular reporting and
interaction with the Board
–
–
–
Promotion
Marketing and sales
capability of the Manager
Support from the corporate
broker with secondary
market intervention to
support discount/
premium management
–
–
Competitiveness
Board is focused on ensuring:
– that the vehicle remains
attractive to investors
– that the fees and ongoing
charges remain competitive
Business Review
18
Schroder Income Growth Fund plc
Business Review
continued
Investment model
Investment objectives
The Company’s principal objectives are to provide real 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.
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 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 15 demonstrates that, as at
31 August 2024, the Manager invested in 44 UK equity investments
spread across ten 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.
Key performance indicators
The investment objective
The Board measures the development and success of the Company’s
business through achievement of the Company’s investment
objective, 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, which is considered to be the most significant key
performance indicator for the Company.
Commentary on performance against the investment objective can
be found in the Chairman’s Statement.
At each meeting, the Board considers a number of performance
indicators to assess the Company’s success in achieving its
investment objective. These are as follows:
– NAV performance;
– Share price performance;
– Share price discount/premium; and
– Ongoing charges ratio.
These are classed as Alternative Performance Measures and their
calculations are explained in more detail on page 72.
The performance against these indicators is reported on page 16.
NAV and share price total return
At each meeting, the Board reviews the performance of the portfolio
in detail and discusses the views of the portfolio managers with them.
Share price discount/premium to NAV per share
The Board reviews the level of discount/premium to NAV per share at
every board meeting and is alert to the value shareholders place on
maintaining as low a level of discount/premium volatility as possible.
Ongoing charges
The Board reviews the Company’s ongoing charges to ensure that the
total costs incurred by shareholders in the running of the Company
remain competitive when measured against peer group funds. An
analysis of the Company’s costs, including management and
performance fees, Directors’ fees and general expenses, is submitted
to each board meeting. Management and any performance fees
payable are reviewed at least annually.
Revenue and dividend policy
The net revenue return for the year, before finance costs and taxation,
was £8,863,000 (2023: £9,676,000). After deducting finance costs and
taxation the amount available for distribution to shareholders was
£8,084,000 (2023: £9,130,000) equivalent to net revenue of 11.64p
(2023: 13.14p) 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 2024,
the Directors have declared four interim dividends, totalling 14.20p
(2023: 13.80p) per ordinary share.
Business Review
continued
Investment model
Investment objectives
The Company’s principal objectives are to provide real 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.
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 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 15 demonstrates that, as at
31 August 2024, the Manager invested in 44 UK equity investments
spread across ten 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.
Key performance indicators
The investment objective
The Board measures the development and success of the Company’s
business through achievement of the Company’s investment
objective, 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, which is considered to be the most significant key
performance indicator for the Company.
Commentary on performance against the investment objective can
be found in the Chairman’s Statement.
At each meeting, the Board considers a number of performance
indicators to assess the Company’s success in achieving its
investment objective. These are as follows:
– NAV performance;
– Share price performance;
– Share price discount/premium; and
– Ongoing charges ratio.
These are classed as Alternative Performance Measures and their
calculations are explained in more detail on page 72.
The performance against these indicators is reported on page 16.
NAV and share price total return
At each meeting, the Board reviews the performance of the portfolio
in detail and discusses the views of the portfolio managers with them.
Share price discount/premium to NAV per share
The Board reviews the level of discount/premium to NAV per share at
every board meeting and is alert to the value shareholders place on
maintaining as low a level of discount/premium volatility as possible.
Ongoing charges
The Board reviews the Company’s ongoing charges to ensure that the
total costs incurred by shareholders in the running of the Company
remain competitive when measured against peer group funds. An
analysis of the Company’s costs, including management and
performance fees, Directors’ fees and general expenses, is submitted
to each board meeting. Management and any performance fees
payable are reviewed at least annually.
Revenue and dividend policy
The net revenue return for the year, before finance costs and taxation,
was £8,863,000 (2023: £9,676,000). After deducting finance costs and
taxation the amount available for distribution to shareholders was
£8,084,000 (2023: £9,130,000) equivalent to net revenue of 11.64p
(2023: 13.14p) 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 2024,
the Directors have declared four interim dividends, totalling 14.20p
(2023: 13.80p) per ordinary share.
Schroder Income Growth Fund plc
19
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Promotion
The Company promotes its shares to a broad range of investors
including discretionary wealth managers, private investors, financial
advisers and institutions which have the potential to be long-term
supporters of the investment strategy. The 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.
These activities consist of investor lunches, 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
adviser 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 investors when appropriate.
Shareholders are encouraged to sign up to the Manager’s Investment
Trusts update, to receive information on the Company directly
http://www.schroders.com/trust-updates/.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Promotion
The Company promotes its shares to a broad range of investors
including discretionary wealth managers, private investors, financial
advisers and institutions which have the potential to be long-term
supporters of the investment strategy. The 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.
These activities consist of investor lunches, 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
adviser 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 investors when appropriate.
Shareholders are encouraged to sign up to the Manager’s Investment
Trusts update, to receive information on the Company directly
http://www.schroders.com/trust-updates/.
20
Schroder Income Growth Fund plc
Business Review
continued
Stakeholder engagement
Section 172 of the Companies Act 2006
During the year under review to 31 August 2024, the Board discharged its duty under section 172 of the Companies Act 2006 to promote the
success of the Company for the benefit of its members as a whole, having regard to the interests of all stakeholders. As an externally managed
investment trust, the Company has no employees, operations or premises, and a number of the Company’s functions are outsourced to
third parties. The Board has identified its key stakeholders as the Company’s shareholders, the Investment Manager, other service providers, the
companies in which it invests, and the wider society and environment. The table below explains how the Directors have engaged with, and
maintained high standards of business conduct and fair treatment of, all stakeholders and outlines key activities undertaken and decisions
made by the Board during the year.
Stakeholder Significance Engagement 2023/24 highlights
The AGM was held in person in 2023 and
questions and feedback from
shareholders were welcomed. The Board,
along with the Investment Manager, look
forward to meeting and interacting with
more shareholders at the forthcoming
AGM in December 2024.
The Company’s web pages continued to
be refreshed and enhanced during the
year to optimise the user experience for
shareholders and investors.
Shareholders can, via the Company’s web
pages, subscribe to the Schroders
investment trusts newsletter to receive
regular updates on the Company.
The Chairman of the Board met with
some of the Company’s major
shareholders during the year and since
the year end. Their views were taken into
consideration as part of the Board’s duty
to ensure their interests were taken into
account.
The Investment Manager engaged with
a number of its shareholders and
investors during the year and regular
feedback was provided to the Board.
A number of promotional activities were
undertaken during the year including
Investment Manager interviews,
webinars and coverage in key
publications.
The Board continues to work with Kepler
on promoting the Company through its
research notes which are published once
a year following the publication of the
Company’s annual results.
The Company repurchased 38,000
ordinary shares during the financial year
to be held in treasury and the Board
continues to monitor the discount closely
and will take appropriate action as
required. Since the year end, the
Company repurchased a further
8,000 ordinary shares to be held in
treasury.
AGM: The Company welcomes
attendance and participation from
shareholders at the AGM. Shareholders
have the opportunity to meet the
Directors and the Manager and ask
questions at the AGM. The Board values
the feedback it receives from
shareholders which is incorporated into
Board discussions.
Publications: The annual and half year
results presentations are available on the
Company’s web page with their
availability announced via the London
Stock Exchange. Daily NAV updates are
issued to provide shareholders with
transparent information on the
Company’s portfolio. Feedback and/or
questions received from shareholders
enable the Company to evolve its
reporting which, in turn, helps to deliver
transparent and understandable
updates.
Shareholder communication: The
Manager communicates with
shareholders periodically. All investors
are offered the opportunity to meet the
Chairman, Senior Independent Director,
or other Board members without using
the Manager or Company Secretary as
a conduit, by writing to the Company’s
registered office. The Board also
corresponds with shareholders by letter
and email. The Board receives regular
feedback from its broker on investor
engagement and sentiment.
Investor Relations updates: At every
board meeting, the Directors receive
updates on the share trading activity,
share price performance and any
shareholders’ feedback, as well as any
publications or comments in the press.
To gain a deeper understanding of the
views of its shareholders and potential
investors, the Investment Manager also
undertakes Investor Roadshows
following publications of results.
Working with external partners: The
Board also engages some external
providers, such as investor
communications advisors to obtain a
more detailed view on specific aspects of
shareholder communications, such as
developing more effective ways to
communicate with investors.
Continued shareholder
support and engagement
are critical to the continuing
existence of the Company
and the delivery of the
long-term strategy.
Shareholders
Business Review
continued
Stakeholder engagement
Section 172 of the Companies Act 2006
During the year under review to 31 August 2024, the Board discharged its duty under section 172 of the Companies Act 2006 to promote the
success of the Company for the benefit of its members as a whole, having regard to the interests of all stakeholders. As an externally managed
investment trust, the Company has no employees, operations or premises, and a number of the Company’s functions are outsourced to
third parties. The Board has identified its key stakeholders as the Company’s shareholders, the Investment Manager, other service providers, the
companies in which it invests, and the wider society and environment. The table below explains how the Directors have engaged with, and
maintained high standards of business conduct and fair treatment of, all stakeholders and outlines key activities undertaken and decisions
made by the Board during the year.
Stakeholder Significance Engagement 2023/24 highlights
The AGM was held in person in 2023 and
questions and feedback from
shareholders were welcomed. The Board,
along with the Investment Manager, look
forward to meeting and interacting with
more shareholders at the forthcoming
AGM in December 2024.
The Company’s web pages continued to
be refreshed and enhanced during the
year to optimise the user experience for
shareholders and investors.
Shareholders can, via the Company’s web
pages, subscribe to the Schroders
investment trusts newsletter to receive
regular updates on the Company.
The Chairman of the Board met with
some of the Company’s major
shareholders during the year and since
the year end. Their views were taken into
consideration as part of the Board’s duty
to ensure their interests were taken into
account.
The Investment Manager engaged with
a number of its shareholders and
investors during the year and regular
feedback was provided to the Board.
A number of promotional activities were
undertaken during the year including
Investment Manager interviews,
webinars and coverage in key
publications.
The Board continues to work with Kepler
on promoting the Company through its
research notes which are published once
a year following the publication of the
Company’s annual results.
The Company repurchased 38,000
ordinary shares during the financial year
to be held in treasury and the Board
continues to monitor the discount closely
and will take appropriate action as
required. Since the year end, the
Company repurchased a further
8,000 ordinary shares to be held in
treasury.
AGM: The Company welcomes
attendance and participation from
shareholders at the AGM. Shareholders
have the opportunity to meet the
Directors and the Manager and ask
questions at the AGM. The Board values
the feedback it receives from
shareholders which is incorporated into
Board discussions.
Publications: The annual and half year
results presentations are available on the
Company’s web page with their
availability announced via the London
Stock Exchange. Daily NAV updates are
issued to provide shareholders with
transparent information on the
Company’s portfolio. Feedback and/or
questions received from shareholders
enable the Company to evolve its
reporting which, in turn, helps to deliver
transparent and understandable
updates.
Shareholder communication: The
Manager communicates with
shareholders periodically. All investors
are offered the opportunity to meet the
Chairman, Senior Independent Director,
or other Board members without using
the Manager or Company Secretary as
a conduit, by writing to the Company’s
registered office. The Board also
corresponds with shareholders by letter
and email. The Board receives regular
feedback from its broker on investor
engagement and sentiment.
Investor Relations updates: At every
board meeting, the Directors receive
updates on the share trading activity,
share price performance and any
shareholders’ feedback, as well as any
publications or comments in the press.
To gain a deeper understanding of the
views of its shareholders and potential
investors, the Investment Manager also
undertakes Investor Roadshows
following publications of results.
Working with external partners: The
Board also engages some external
providers, such as investor
communications advisors to obtain a
more detailed view on specific aspects of
shareholder communications, such as
developing more effective ways to
communicate with investors.
Continued shareholder
support and engagement
are critical to the continuing
existence of the Company
and the delivery of the
long-term strategy.
Shareholders
Schroder Income Growth Fund plc
21
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Stakeholder Significance Engagement 2023/24 highlights
The Board reviewed the portfolio at each
quarterly meeting and maintains
constructive dialogue with the
Investment Manager.
The Board was able to increase its
dividend for the 29th consecutive year.
The dividend of 14.20p was 82% covered
by earnings. After payment of the fourth
interim dividend, the revenue reserve
was £5.7 million, representing 8.25p per
ordinary share or seven months of the
annual dividend.
Maintaining a close and constructive
working relationship with the Investment
Manager is crucial as the Board and the
Investment Manager both aim to
continue to achieve consistent, long-term
returns in line with the investment
objective. The Board invites the
Investment Manager to attend all Board
and certain Committee meetings in order
to update the Directors on the
performance of the investments and the
implementation of the investment
strategy and objective.
The Management Engagement
Committee reviews the performance of
the Manager, its remuneration and the
discharge of its contractual obligations at
least annually.
Important components in the Board’s
collaboration with the Investment
Manager are:
– Encouraging open discussion with
the Investment Manager;
– Recognising that the interests of
shareholders and the Investment
Manager (as well as of its other
clients) are, for the most part, well
aligned, adopting a tone of
constructive challenge, balanced
when those interests are not fully
congruent by robust negotiation of
the Investment Manager’s terms of
engagement; and
– Drawing on Directors’ individual
experience to support the
Investment Manager in its
monitoring and change
management of portfolio
companies, for the benefit of all of
the Investment Manager’s clients.
Holding the Company’s
shares offers investors
a liquid investment vehicle
through which they can
obtain exposure to the
Company’s diversified
portfolio of investment
opportunities. The
Investment Manager’s
performance is critical for
the Company to deliver its
investment strategy
successfully and meet its
objective 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. The key outsourced
function is the provision of
investment management
services by the Investment
Manager, making it
a significant stakeholder.
The Investment
Manager
The Board received regular updates on
engagement with investee companies
from the Investment Manager at its
board meetings.
During the year, the Investment Manager
engaged with many of its investee
companies and voted at shareholder
meetings (further details can be found
on page 14).
The Investment Management team
conducts face-to-face and/or virtual
meetings with the management teams of
all investee companies to understand
current trading and prospects for their
businesses, and to ensure that their ESG
investment principles and approach are
understood.
The Investment Manager has
discretionary powers to exercise the
Company’s voting rights on resolutions
proposed by the investee companies
within the Company’s portfolio. The
Investment Manager reports to the
Board on stewardship (including voting)
issues and the Board will question the
rationale for voting decisions made.
By active engagement and exercising
voting rights, the Investment Manager
actively works with companies to improve
corporate standards, transparency and
accountability.
The Board is committed to
responsible investing and
actively monitors the
activities of investee
companies through its
delegation to the
Investment Manager.
Investee
companies
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Stakeholder Significance Engagement 2023/24 highlights
The Board reviewed the portfolio at each
quarterly meeting and maintains
constructive dialogue with the
Investment Manager.
The Board was able to increase its
dividend for the 29th consecutive year.
The dividend of 14.20p was 82% covered
by earnings. After payment of the fourth
interim dividend, the revenue reserve
was £5.7 million, representing 8.25p per
ordinary share or seven months of the
annual dividend.
Maintaining a close and constructive
working relationship with the Investment
Manager is crucial as the Board and the
Investment Manager both aim to
continue to achieve consistent, long-term
returns in line with the investment
objective. The Board invites the
Investment Manager to attend all Board
and certain Committee meetings in order
to update the Directors on the
performance of the investments and the
implementation of the investment
strategy and objective.
The Management Engagement
Committee reviews the performance of
the Manager, its remuneration and the
discharge of its contractual obligations at
least annually.
Important components in the Board’s
collaboration with the Investment
Manager are:
– Encouraging open discussion with
the Investment Manager;
– Recognising that the interests of
shareholders and the Investment
Manager (as well as of its other
clients) are, for the most part, well
aligned, adopting a tone of
constructive challenge, balanced
when those interests are not fully
congruent by robust negotiation of
the Investment Manager’s terms of
engagement; and
– Drawing on Directors’ individual
experience to support the
Investment Manager in its
monitoring and change
management of portfolio
companies, for the benefit of all of
the Investment Manager’s clients.
Holding the Company’s
shares offers investors
a liquid investment vehicle
through which they can
obtain exposure to the
Company’s diversified
portfolio of investment
opportunities. The
Investment Manager’s
performance is critical for
the Company to deliver its
investment strategy
successfully and meet its
objective 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. The key outsourced
function is the provision of
investment management
services by the Investment
Manager, making it
a significant stakeholder.
The Investment
Manager
The Board received regular updates on
engagement with investee companies
from the Investment Manager at its
board meetings.
During the year, the Investment Manager
engaged with many of its investee
companies and voted at shareholder
meetings (further details can be found
on page 14).
The Investment Management team
conducts face-to-face and/or virtual
meetings with the management teams of
all investee companies to understand
current trading and prospects for their
businesses, and to ensure that their ESG
investment principles and approach are
understood.
The Investment Manager has
discretionary powers to exercise the
Company’s voting rights on resolutions
proposed by the investee companies
within the Company’s portfolio. The
Investment Manager reports to the
Board on stewardship (including voting)
issues and the Board will question the
rationale for voting decisions made.
By active engagement and exercising
voting rights, the Investment Manager
actively works with companies to improve
corporate standards, transparency and
accountability.
The Board is committed to
responsible investing and
actively monitors the
activities of investee
companies through its
delegation to the
Investment Manager.
Investee
companies
22
Schroder Income Growth Fund plc
Business Review
continued
Stakeholder Significance Engagement 2023/24 highlights
Under delegated authority from the
Board, the Management Engagement
Committee reviewed all material third
party service providers. The Board
considered the ongoing appointments of
its service providers to be in the best
interests of the Company and its
shareholders as a whole and will
continue to monitor their progress in the
year ahead.
During the year, Directors were invited to
attend an internal controls briefing
session, hosted by the Manager which
assessed the internal controls of certain
key service providers including the
Company’s depositary and custodian,
HSBC and the Company’s registrar,
Equiniti.
The Board maintains contact with its key
external providers, both through the
Board and Committee meetings, as well
as outside of the regular meeting cycle.
Their advice, as well as their needs and
views, are routinely taken into account.
The need to foster business relationships
with key service providers is central to
Directors’ decision making as the Board
of an externally managed investment
trust.
In order to operate as an
investment trust with
a listing on the London
Stock Exchange, the
Company relies on a diverse
range of advisers to support
meeting all relevant
obligations.
Other service
providers
During the year, gearing was regularly
considered. The Company entered into
a one year £30 million revolving credit
facility with The Bank of Nova Scotia,
London Branch, effective from
20 September 2024.
Considering how important the
availability of funding is, the Company
aims to demonstrate to lenders that it is
a well-managed business and, in
particular, that the Board focuses
regularly and carefully on the
management of risk.
The Manager manages the relationship
with the Company’s lender and reports to
the Board at each meeting and as and
when required for renewals of terms or
negotiation of loan covenants. The
Manager provides a monthly statement
of compliance of the loan covenants to
the lender.
Availability of funding and
liquidity are crucial to the
Company’s ability to take
advantage of investment
opportunities as they arise.
Lenders
The Board’s desire for greater
engagement reporting has resulted in
the inclusion of case studies showcasing
how the Investment Manager supports
and integrates responsible investing in its
investment approach set out in the
annual report.
The Board engages with the Investment
Manager at each board meeting in
respect of its ESG considerations on
existing and new investments.
Whilst strong long-term
investment performance is
essential for an investment
trust, the Board recognises
that to provide an
investment vehicle that is
sustainable over the
long-term, both it and the
Investment Manager must
have regard to ethical and
environmental issues that
impact society. Hence ESG
considerations are
integrated into the
Investment Manager’s
investment process and will
continue to evolve.
Wider society and
the environment
Business Review
continued
Stakeholder Significance Engagement 2023/24 highlights
Under delegated authority from the
Board, the Management Engagement
Committee reviewed all material third
party service providers. The Board
considered the ongoing appointments of
its service providers to be in the best
interests of the Company and its
shareholders as a whole and will
continue to monitor their progress in the
year ahead.
During the year, Directors were invited to
attend an internal controls briefing
session, hosted by the Manager which
assessed the internal controls of certain
key service providers including the
Company’s depositary and custodian,
HSBC and the Company’s registrar,
Equiniti.
The Board maintains contact with its key
external providers, both through the
Board and Committee meetings, as well
as outside of the regular meeting cycle.
Their advice, as well as their needs and
views, are routinely taken into account.
The need to foster business relationships
with key service providers is central to
Directors’ decision making as the Board
of an externally managed investment
trust.
In order to operate as an
investment trust with
a listing on the London
Stock Exchange, the
Company relies on a diverse
range of advisers to support
meeting all relevant
obligations.
Other service
providers
During the year, gearing was regularly
considered. The Company entered into
a one year £30 million revolving credit
facility with The Bank of Nova Scotia,
London Branch, effective from
20 September 2024.
Considering how important the
availability of funding is, the Company
aims to demonstrate to lenders that it is
a well-managed business and, in
particular, that the Board focuses
regularly and carefully on the
management of risk.
The Manager manages the relationship
with the Company’s lender and reports to
the Board at each meeting and as and
when required for renewals of terms or
negotiation of loan covenants. The
Manager provides a monthly statement
of compliance of the loan covenants to
the lender.
Availability of funding and
liquidity are crucial to the
Company’s ability to take
advantage of investment
opportunities as they arise.
Lenders
The Board’s desire for greater
engagement reporting has resulted in
the inclusion of case studies showcasing
how the Investment Manager supports
and integrates responsible investing in its
investment approach set out in the
annual report.
The Board engages with the Investment
Manager at each board meeting in
respect of its ESG considerations on
existing and new investments.
Whilst strong long-term
investment performance is
essential for an investment
trust, the Board recognises
that to provide an
investment vehicle that is
sustainable over the
long-term, both it and the
Investment Manager must
have regard to ethical and
environmental issues that
impact society. Hence ESG
considerations are
integrated into the
Investment Manager’s
investment process and will
continue to evolve.
Wider society and
the environment
Schroder Income Growth Fund plc
23
Corporate and social responsibility
The Board recognises the Company’s responsibilities with respect to corporate and social responsibility and engages with its outsourced service
providers and other stakeholders to safeguard the Company’s interests. As part of this ongoing monitoring, the Board receives reports from its
service providers with respect to their diversity policies; anti-bribery and corruption policies; Modern Slavery Act 2015 statements; financial
crime policies; and greenhouse gas and energy usage reporting.
Diversity policy
The Board has adopted a diversity and inclusion policy which seeks to promote diversity of gender, social and ethnic backgrounds, cognitive and
personal strengths. The Board recognises that its debates and decision-making are greatly enriched by a wider range of perspectives and
thinking. The Board will encourage any recruitment agencies it engages to find a range of candidates that meet the objective criteria agreed for
each appointment. Appointments will always be based on merit alone. Candidates for board vacancies are selected based on their skills and
experience, which are matched against the balance of skills and experience of the overall Board taking into account the criteria for the role
being offered.
Statement on Board diversity – gender and ethnic background
The Board has made a commitment to consider diversity when reviewing the composition of the Board and notes the Listing Rules
requirements (UK LR 6.6.6(9) and (10)) regarding the targets on board diversity:
• at least 40% of individuals on the board are women;
• at least one senior board position is held by a woman; and
• at least one individual on the board is from a minority ethnic background.
The FCA defines senior board positions as Chairman, Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) or Senior Independent
Director (“SID”). As an investment trust with no executive officers, the Company has no CEO or CFO. The Board has reflected the senior positions
of the Chairman of the Board and the SID in its diversity tables below.
The Board has chosen to align its diversity reporting reference date with the Company’s financial year end and proposes to maintain this
alignment for future reporting periods. The following information has been provided by each Director through the completion of
a questionnaire.
As at 31 August 2024, the Company met all three criteria and there have been no changes since 31 August 2024 to the date of publication of
the annual report and financial statements.
Number of Percentage Number of senior
Gender identity Board members of the Board positions on the Board
Men 2 50% 1
Women 2 50% 1
Number of Percentage Number of senior
Ethnic background Board members of the Board positions on the Board
White British or other White
(including minority-white groups) 3 75% 2
Asian/Asian British 1 25% –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
Financial crime policy
The Company continues to be committed to carrying out its business fairly, honestly and openly 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.
Modern Slavery Act 2015
As an investment trust, the Company does not provide goods or services in the normal course of business and does not have customers.
Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern
Slavery Act 2015.
Climate
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it consumed less than 40,000 kWh during the year and so has no greenhouse gas
emissions, energy consumption or energy efficiency action to report.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Corporate and social responsibility
The Board recognises the Company’s responsibilities with respect to corporate and social responsibility and engages with its outsourced service
providers and other stakeholders to safeguard the Company’s interests. As part of this ongoing monitoring, the Board receives reports from its
service providers with respect to their diversity policies; anti-bribery and corruption policies; Modern Slavery Act 2015 statements; financial
crime policies; and greenhouse gas and energy usage reporting.
Diversity policy
The Board has adopted a diversity and inclusion policy which seeks to promote diversity of gender, social and ethnic backgrounds, cognitive and
personal strengths. The Board recognises that its debates and decision-making are greatly enriched by a wider range of perspectives and
thinking. The Board will encourage any recruitment agencies it engages to find a range of candidates that meet the objective criteria agreed for
each appointment. Appointments will always be based on merit alone. Candidates for board vacancies are selected based on their skills and
experience, which are matched against the balance of skills and experience of the overall Board taking into account the criteria for the role
being offered.
Statement on Board diversity – gender and ethnic background
The Board has made a commitment to consider diversity when reviewing the composition of the Board and notes the Listing Rules
requirements (UK LR 6.6.6(9) and (10)) regarding the targets on board diversity:
• at least 40% of individuals on the board are women;
• at least one senior board position is held by a woman; and
• at least one individual on the board is from a minority ethnic background.
The FCA defines senior board positions as Chairman, Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) or Senior Independent
Director (“SID”). As an investment trust with no executive officers, the Company has no CEO or CFO. The Board has reflected the senior positions
of the Chairman of the Board and the SID in its diversity tables below.
The Board has chosen to align its diversity reporting reference date with the Company’s financial year end and proposes to maintain this
alignment for future reporting periods. The following information has been provided by each Director through the completion of
a questionnaire.
As at 31 August 2024, the Company met all three criteria and there have been no changes since 31 August 2024 to the date of publication of
the annual report and financial statements.
Number of Percentage Number of senior
Gender identity Board members of the Board positions on the Board
Men 2 50% 1
Women 2 50% 1
Number of Percentage Number of senior
Ethnic background Board members of the Board positions on the Board
White British or other White
(including minority-white groups) 3 75% 2
Asian/Asian British 1 25% –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
Financial crime policy
The Company continues to be committed to carrying out its business fairly, honestly and openly 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.
Modern Slavery Act 2015
As an investment trust, the Company does not provide goods or services in the normal course of business and does not have customers.
Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern
Slavery Act 2015.
Climate
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it consumed less than 40,000 kWh during the year and so has no greenhouse gas
emissions, energy consumption or energy efficiency action to report.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
24
Schroder Income Growth Fund plc
Business Review
continued
Principal and emerging risks and uncertainties
The Board, through its delegation to the Audit and Risk Committee, is responsible for the Company’s system of risk management and internal
control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company’s business as an
investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which
are monitored by the Audit and Risk Committee on an ongoing basis. This system assists the Board in determining the nature and extent of the
risks it is willing to take in achieving the Company’s strategic objectives.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and
ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee, including the incidence of
significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen
outcomes or contingencies that may have a material impact on the Company’s performance or condition. The internal control environment of
the Manager, the depositary, and the registrar are tested annually by independent external auditors. The full reports are provided to the Audit
and Risk Committee alongside abridged summaries.
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. Both the principal risks and the
monitoring system are also subject to robust assessment at least annually. The last assessment took place in November 2024.
During the year, the Board discussed and monitored a number of risks which could potentially impact the Company’s ability to meet its strategic
objectives. The Board received updates from the Investment Manager, Company Secretary, and other service providers on emerging risks that
could affect the Company. The Board was mindful of the risks posed by volatile markets, inflation and corresponding interest rate levels which
could affect the asset class. However, these are not factors which explicitly impacted the Company’s performance. These risks are seen as those
that exacerbate existing risks and have been incorporated in the market risks section in the table below.
No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment throughout the
financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company
and that the internal control environment continues to operate effectively.
Actions taken by the Board and, where appropriate, its Committees, to manage and mitigate the Company’s principal and emerging risks and
uncertainties are set out in the table below. The “Change” column on the right highlights at a glance the Board’s assessment of any increases or
decreases in risk during the year after mitigation and management. The arrows show the risks as increased, decreased, or unchanged.
Risk Mitigation and management Change
Strategy
The Board holds a separate annual strategy
meeting to consider the Company’s strategy and
performance, the appropriateness of the
Company’s investment remit together with
opportunities and threats to its business. Share
price relative to NAV per share is monitored at
quarterly board meetings and the use of buy
back authorities is considered on a regular basis.
The marketing and distribution activity is actively
reviewed and there is proactive engagement with
shareholders.
The Company holds a continuation vote every five
years on whether the Company should continue
in its current form. Shareholders will have the
opportunity to vote on the continuation of the
Company at its AGM in 2025.
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 ongoing competitiveness of all service
provider fees is subject to periodic benchmarking
against its competitors.
Annual consideration of management fee levels.
Cost base
The Company’s cost base could become
uncompetitive, particularly in light of open-ended
alternatives.
Business Review
continued
Principal and emerging risks and uncertainties
The Board, through its delegation to the Audit and Risk Committee, is responsible for the Company’s system of risk management and internal
control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company’s business as an
investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which
are monitored by the Audit and Risk Committee on an ongoing basis. This system assists the Board in determining the nature and extent of the
risks it is willing to take in achieving the Company’s strategic objectives.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and
ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee, including the incidence of
significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen
outcomes or contingencies that may have a material impact on the Company’s performance or condition. The internal control environment of
the Manager, the depositary, and the registrar are tested annually by independent external auditors. The full reports are provided to the Audit
and Risk Committee alongside abridged summaries.
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. Both the principal risks and the
monitoring system are also subject to robust assessment at least annually. The last assessment took place in November 2024.
During the year, the Board discussed and monitored a number of risks which could potentially impact the Company’s ability to meet its strategic
objectives. The Board received updates from the Investment Manager, Company Secretary, and other service providers on emerging risks that
could affect the Company. The Board was mindful of the risks posed by volatile markets, inflation and corresponding interest rate levels which
could affect the asset class. However, these are not factors which explicitly impacted the Company’s performance. These risks are seen as those
that exacerbate existing risks and have been incorporated in the market risks section in the table below.
No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment throughout the
financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company
and that the internal control environment continues to operate effectively.
Actions taken by the Board and, where appropriate, its Committees, to manage and mitigate the Company’s principal and emerging risks and
uncertainties are set out in the table below. The “Change” column on the right highlights at a glance the Board’s assessment of any increases or
decreases in risk during the year after mitigation and management. The arrows show the risks as increased, decreased, or unchanged.
Risk Mitigation and management Change
Strategy
The Board holds a separate annual strategy
meeting to consider the Company’s strategy and
performance, the appropriateness of the
Company’s investment remit together with
opportunities and threats to its business. Share
price relative to NAV per share is monitored at
quarterly board meetings and the use of buy
back authorities is considered on a regular basis.
The marketing and distribution activity is actively
reviewed and there is proactive engagement with
shareholders.
The Company holds a continuation vote every five
years on whether the Company should continue
in its current form. Shareholders will have the
opportunity to vote on the continuation of the
Company at its AGM in 2025.
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 ongoing competitiveness of all service
provider fees is subject to periodic benchmarking
against its competitors.
Annual consideration of management fee levels.
Cost base
The Company’s cost base could become
uncompetitive, particularly in light of open-ended
alternatives.
Schroder Income Growth Fund plc
25
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Risk Mitigation and management Change
Investment
Review of the Investment 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.
Investment management
The Investment 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.
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.
There are inherent risks involved in stock
selection. The Investment Manager is
experienced and has a long track record in
successfully investing in public equity holdings.
The Investment 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.
Economic and 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 portfolio will normally be fairly fully invested
and as such will therefore inevitably be exposed to
economic and market risk. Changes in general
economic and market conditions, such as currency
exchange rates, interest rates, inflation rates,
industry conditions, tax laws, political events and
trends can substantially and adversely affect the
value of investments. Market risk includes the
potential impact of events which are outside the
Company’s control, such as pandemics, civil unrest
and wars.
The Investment Manager’s ESG policies, including
those relating to climate change, which have
been adopted by the Company, are fully
integrated into the investment process, as set out
in the Strategic Report. Investments are valued at
fair value and reflect market participants’ views of
ESG and climate change risk on the Company’s
portfolio investments. The Investment Manager
regularly reports to the Board on ESG and climate
change matters, including engagement with
investee companies. Any investor feedback is also
taken into consideration by the Board.
ESG and climate change
Failure by the Investment Manager to identify
potential ESG issues, including the impact of climate
change, could impact shareholder returns due to
valuation issues in investee companies and the
Company’s shares becoming less attractive to
investors.
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.
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.
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.
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the
depositary.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Risk Mitigation and management Change
Investment
Review of the Investment 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.
Investment management
The Investment 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.
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.
There are inherent risks involved in stock
selection. The Investment Manager is
experienced and has a long track record in
successfully investing in public equity holdings.
The Investment 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.
Economic and 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 portfolio will normally be fairly fully invested
and as such will therefore inevitably be exposed to
economic and market risk. Changes in general
economic and market conditions, such as currency
exchange rates, interest rates, inflation rates,
industry conditions, tax laws, political events and
trends can substantially and adversely affect the
value of investments. Market risk includes the
potential impact of events which are outside the
Company’s control, such as pandemics, civil unrest
and wars.
The Investment Manager’s ESG policies, including
those relating to climate change, which have
been adopted by the Company, are fully
integrated into the investment process, as set out
in the Strategic Report. Investments are valued at
fair value and reflect market participants’ views of
ESG and climate change risk on the Company’s
portfolio investments. The Investment Manager
regularly reports to the Board on ESG and climate
change matters, including engagement with
investee companies. Any investor feedback is also
taken into consideration by the Board.
ESG and climate change
Failure by the Investment Manager to identify
potential ESG issues, including the impact of climate
change, could impact shareholder returns due to
valuation issues in investee companies and the
Company’s shares becoming less attractive to
investors.
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.
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.
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.
Custody
Safe custody of the Company’s assets may be
compromised through control failures by the
depositary.
26
Schroder Income Growth Fund plc
Business Review
continued
Risk Mitigation and management Change
Compliance
Operational
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.
Accounting, legal and regulatory
In order to continue to qualify as an investment
trust, the Company must comply with the
requirements of section 1158 of the Corporation
Tax Act 2010.
Breaches of the UK Listing Rules, the Companies
Act or other regulations with which the Company is
required to comply, could lead to a number of
detrimental outcomes.
Service providers are appointed subject to due
diligence processes and with clearly-documented
contractual arrangements detailing service
expectations.
Regular reports are provided by key service
providers and the quality of services provided are
monitored.
Audited internal controls reports from key service
providers, including confirmation of business
continuity arrangements, are reviewed annually.
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 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.
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.
Business Review
continued
Risk Mitigation and management Change
Compliance
Operational
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.
Accounting, legal and regulatory
In order to continue to qualify as an investment
trust, the Company must comply with the
requirements of section 1158 of the Corporation
Tax Act 2010.
Breaches of the UK Listing Rules, the Companies
Act or other regulations with which the Company is
required to comply, could lead to a number of
detrimental outcomes.
Service providers are appointed subject to due
diligence processes and with clearly-documented
contractual arrangements detailing service
expectations.
Regular reports are provided by key service
providers and the quality of services provided are
monitored.
Audited internal controls reports from key service
providers, including confirmation of business
continuity arrangements, are reviewed annually.
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 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.
Cyber
The Company’s service providers are all exposed to
the risk of cyber attacks. Cyber attacks could lead to
loss of personal or confidential information or
disrupt operations.
Schroder Income Growth Fund plc
27
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Viability statement
The Directors have assessed the viability of the Company over
a five year period, taking into account the Company’s position at
31 August 2024 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.
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 24 to 26 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 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 2025
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
11 November 2024
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Viability statement
The Directors have assessed the viability of the Company over
a five year period, taking into account the Company’s position at
31 August 2024 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.
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 24 to 26 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 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 2025
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
11 November 2024
28
Governance
29
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement Committee Report 38
Nomination Committee Report 39
Remuneration Committee Report 41
Directors’ Remuneration Report 42
Statement of Directors’ Responsibilities 45
29
Governance
Board of Directors 30
Directors’ Report 32
Audit and Risk Committee Report 35
Management Engagement Committee Report 38
Nomination Committee Report 39
Remuneration Committee Report 41
Directors’ Remuneration Report 42
Statement of Directors’ Responsibilities 45
30
Schroder Income Growth Fund plc
Board of Directors
1
Shareholdings are as at 11 November 2024. Full details of Directors’ shareholdings are set out in the Directors’ Remuneration Report on pages 42 to 44.
June Aitken
Status: Independent non-executive Director and
Nomination Committee Chairman
Length of service: One year – appointed as a Director in
January 2023.
Experience: June has over 30 years’ experience with
a successful equities distribution platform background.
She worked in partnership with institutional investors and
subsequently co-founded an investment manager focused on
environmental and responsible equity mandates for pension
funds and endowments globally. She brings her knowledge of
the investment trust market, including intermediary and retail
investor distribution, and experience of risk and governance
frameworks.
She has previously held roles with Berkshire Capital ICAV, Asian
Masters Fund, Emerging Markets Masters Fund and Aquarius
Fund. June is currently a non-executive director of JP Morgan
Asia Growth and Income plc, and BBGi Global Infrastructure SA.
She is also chairman of CC Japan Income & Growth Trust plc.
Contribution to the Board and its Committees: June brings
broad based experience in investment trusts and financial
services including distribution, responsible investment and
governance.
Committee membership: Audit and Risk, Management
Engagement, Nomination and Remuneration Committees
(Chairman of the Nomination Committee).
Remuneration for the year ended 31 August 2024:
£28,000 per annum
Number of shares held: 10,928
1
Ewen Cameron Watt
Status: Independent non-executive Chairman and
Management Engagement Committee Chairman
Length of service: Seven years – appointed as a Director in
December 2017.
Experience: : Ewen 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 the 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 to the Board and its Committees: Ewen has
extensive financial services and investment experience.
Committee membership: Audit and Risk, Management
Engagement, Nomination and Remuneration Committees
(Chairman of the Management Engagement Committee).
Remuneration for the year ended 31 August 2024: £38,000
per annum
Number of shares held: 13,000
1
Board of Directors
1
Shareholdings are as at 11 November 2024. Full details of Directors’ shareholdings are set out in the Directors’ Remuneration Report on pages 42 to 44.
June Aitken
Status: Independent non-executive Director and
Nomination Committee Chairman
Length of service: One year – appointed as a Director in
January 2023.
Experience: June has over 30 years’ experience with
a successful equities distribution platform background.
She worked in partnership with institutional investors and
subsequently co-founded an investment manager focused on
environmental and responsible equity mandates for pension
funds and endowments globally. She brings her knowledge of
the investment trust market, including intermediary and retail
investor distribution, and experience of risk and governance
frameworks.
She has previously held roles with Berkshire Capital ICAV, Asian
Masters Fund, Emerging Markets Masters Fund and Aquarius
Fund. June is currently a non-executive director of JP Morgan
Asia Growth and Income plc, and BBGi Global Infrastructure SA.
She is also chairman of CC Japan Income & Growth Trust plc.
Contribution to the Board and its Committees: June brings
broad based experience in investment trusts and financial
services including distribution, responsible investment and
governance.
Committee membership: Audit and Risk, Management
Engagement, Nomination and Remuneration Committees
(Chairman of the Nomination Committee).
Remuneration for the year ended 31 August 2024:
£28,000 per annum
Number of shares held: 10,928
1
Ewen Cameron Watt
Status: Independent non-executive Chairman and
Management Engagement Committee Chairman
Length of service: Seven years – appointed as a Director in
December 2017.
Experience: : Ewen 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 the 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 to the Board and its Committees: Ewen has
extensive financial services and investment experience.
Committee membership: Audit and Risk, Management
Engagement, Nomination and Remuneration Committees
(Chairman of the Management Engagement Committee).
Remuneration for the year ended 31 August 2024: £38,000
per annum
Number of shares held: 13,000
1
Schroder Income Growth Fund plc
31
Other Information (Unaudited) Introduction Strategic Report Governance Financial
1
Shareholdings are as at 11 November 2024. Full details of Directors’ shareholdings are set out in the Directors’ Remuneration Report on pages 42 to 44.
2
Mr McIntyre’s shareholding as at 11 November 2024 includes the holding of a connected person.
Fraser McIntyre
Status: Independent non-executive Director and
Audit and Risk Committee Chairman
Length of service: Five years – appointed as a Director in
December 2019.
Experience: Fraser has over 30 years of experience in financial
services, including asset management, investment banking and
audit. He started his career auditing financial services
companies with PwC before working in the prime
brokerage/equity divisions of two investment banks, Goldman
Sachs and UBS. 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. He
also operates a consultancy business advising hedge funds.
Contribution to the Board and its Committees: 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).
Remuneration for the year ended 31 August 2024: £33,000
per annum
Number of shares held: 16,357
2
Victoria Muir
Status: Senior Independent non-executive Director
and Remuneration Committee Chairman
Length of service: Five years – appointed as a Director in July
2019.
Experience: Victoria 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 Global Equity
Income Trust plc, and a director of Premier Miton Global
Renewables Trust plc and its subsidiary PMGR Securities 2025
plc. Victoria has 30 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 to the Board and its Committees: 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).
Remuneration for the year ended 31 August 2024: £28,000
per annum
Number of shares held: 3,500
1
Other Information (Unaudited) Introduction Strategic Report Governance Financial
1
Shareholdings are as at 11 November 2024. Full details of Directors’ shareholdings are set out in the Directors’ Remuneration Report on pages 42 to 44.
2
Mr McIntyre’s shareholding as at 11 November 2024 includes the holding of a connected person.
Fraser McIntyre
Status: Independent non-executive Director and
Audit and Risk Committee Chairman
Length of service: Five years – appointed as a Director in
December 2019.
Experience: Fraser has over 30 years of experience in financial
services, including asset management, investment banking and
audit. He started his career auditing financial services
companies with PwC before working in the prime
brokerage/equity divisions of two investment banks, Goldman
Sachs and UBS. 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. He
also operates a consultancy business advising hedge funds.
Contribution to the Board and its Committees: 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).
Remuneration for the year ended 31 August 2024: £33,000
per annum
Number of shares held: 16,357
2
Victoria Muir
Status: Senior Independent non-executive Director
and Remuneration Committee Chairman
Length of service: Five years – appointed as a Director in July
2019.
Experience: Victoria 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 Global Equity
Income Trust plc, and a director of Premier Miton Global
Renewables Trust plc and its subsidiary PMGR Securities 2025
plc. Victoria has 30 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 to the Board and its Committees: 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).
Remuneration for the year ended 31 August 2024: £28,000
per annum
Number of shares held: 3,500
1
32
Schroder Income Growth Fund plc
The Directors submit their annual report and financial statements of
the Company for the year ended 31 August 2024.
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 30. He has no
conflicting relationships.
Senior Independent Director (“SID”)
The SID acts as a sounding board for the Chairman, meets with
major shareholders as appropriate, provides a channel for any
shareholder concerns regarding the Chairman and takes the lead in
the annual evaluation of the Chairman by the independent
Directors.
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 or by email to
amcompanysecretary@schroders.com.
Corporate governance statement
The Company is committed to high standards of corporate
governance and has implemented a framework for corporate
governance which it considers to be appropriate for an investment
trust.
The FCA requires all UK listed companies to disclose how they have
applied the principles and complied with the provisions of the
UK Corporate Governance Code 2018 (the “UK Code”) issued by
the Financial Reporting Council (“FRC”).
The Board has considered the principles and provisions of the
AIC Code of Corporate Governance (the “AIC Code”) which addresses
those set out in the UK Code, as well as setting out additional
Provisions on issues that are of specific relevance to the Company.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the FRC
provides more relevant information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adopts the principles
and provisions set out in the UK Code to make them relevant for
investment companies.
The Board confirms that the Company has complied with the
AIC Code, in so far as they apply to the Company’s business,
throughout the year under review. As all of the Company’s
day-to-day management and administrative functions are
outsourced to third parties, it has no executive directors,
employees or internal operations and therefore has not
reported in respect of the following UK Code Provisions:
• the role of the executive directors and senior management;
• the need for an internal audit function; and
• executive directors’ remuneration.
Role and operation of the Board
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 Report on pages 4 to 27 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.
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 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.
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. Each Committee’s effectiveness was assessed, and
judged to be satisfactory, as part of the Board’s annual review of the
Board and its Committees.
Directors’ Report
The Directors submit their annual report and financial statements of
the Company for the year ended 31 August 2024.
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 30. He has no
conflicting relationships.
Senior Independent Director (“SID”)
The SID acts as a sounding board for the Chairman, meets with
major shareholders as appropriate, provides a channel for any
shareholder concerns regarding the Chairman and takes the lead in
the annual evaluation of the Chairman by the independent
Directors.
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 or by email to
amcompanysecretary@schroders.com.
Corporate governance statement
The Company is committed to high standards of corporate
governance and has implemented a framework for corporate
governance which it considers to be appropriate for an investment
trust.
The FCA requires all UK listed companies to disclose how they have
applied the principles and complied with the provisions of the
UK Corporate Governance Code 2018 (the “UK Code”) issued by
the Financial Reporting Council (“FRC”).
The Board has considered the principles and provisions of the
AIC Code of Corporate Governance (the “AIC Code”) which addresses
those set out in the UK Code, as well as setting out additional
Provisions on issues that are of specific relevance to the Company.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the FRC
provides more relevant information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adopts the principles
and provisions set out in the UK Code to make them relevant for
investment companies.
The Board confirms that the Company has complied with the
AIC Code, in so far as they apply to the Company’s business,
throughout the year under review. As all of the Company’s
day-to-day management and administrative functions are
outsourced to third parties, it has no executive directors,
employees or internal operations and therefore has not
reported in respect of the following UK Code Provisions:
• the role of the executive directors and senior management;
• the need for an internal audit function; and
• executive directors’ remuneration.
Role and operation of the Board
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 Report on pages 4 to 27 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.
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 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.
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. Each Committee’s effectiveness was assessed, and
judged to be satisfactory, as part of the Board’s annual review of the
Board and its Committees.
Directors’ Report
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 meetings of the Board and its Committees held during the financial year, and the attendance of individual
Directors, is shown below. Whenever possible all Directors attend the AGM.
Audit Management
and Risk Engagement Nomination Remuneration
Board Committee Committee Committee Committee
Ewen Cameron Watt 4/4 2/2 1/1 1/1 1/1
June Aitken 4/4 2/2 1/1 1/1 1/1
Fraser McIntyre 4/4 2/2 1/1 1/1 1/1
Victoria Muir 4/4 2/2 1/1 1/1 1/1
In addition to the scheduled quarterly Board meetings, the Board met once during the year to review and focus on the Company’s strategy and on additional
occasions for ad-hoc business. The Board is satisfied that the Chairman and each of the other non-executive Directors commit sufficient time to the affairs of the
Company to fulfil their duties.
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 Alternative Investment Fund Manager (“AIFM” or “Manager”). In accordance with the terms of an AIFM agreement which is governed by
the laws of England and Wales, the appointment 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. Details of the
amounts paid to the Manager are detailed in note 4 on page 58.
The Manager 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 £773.7 billion (as at 30 June 2024) on behalf of institutional and retail investors, financial institutions and high
net-worth clients from around the world, invested in a broad range of asset classes across equities, fixed income, multi-asset and
alternatives.
Fees payable to the Manager
Under the terms of the AIFM Agreement, a management fee is payable at a rate of 0.45% per annum of chargeable assets. A further fee of
£150,000 plus VAT per annum is payable to cover administration and company secretarial fees.
The management fee payable in respect of the year ended 31 August 2024 amounted to £1,090,000 (2023: £1,055,000).
Details of all amounts payable to the Manager are set out in note 4 on page 58.
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 FCA and the Prudential Regulation Authority,
carries out certain duties of a depositary specified in the AIFM Directive including, in relation to the Company:
– safekeeping of the assets of the Company which are entrusted to it;
– cash monitoring and 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.
Schroder Income Growth Fund plc 33
Other Information (Unaudited) Introduction Strategic Report Governance Financial
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 meetings of the Board and its Committees held during the financial year, and the attendance of individual
Directors, is shown below. Whenever possible all Directors attend the AGM.
Audit Management
and Risk Engagement Nomination Remuneration
Board Committee Committee Committee Committee
Ewen Cameron Watt 4/4 2/2 1/1 1/1 1/1
June Aitken 4/4 2/2 1/1 1/1 1/1
Fraser McIntyre 4/4 2/2 1/1 1/1 1/1
Victoria Muir 4/4 2/2 1/1 1/1 1/1
In addition to the scheduled quarterly Board meetings, the Board met once during the year to review and focus on the Company’s strategy and on additional
occasions for ad-hoc business. The Board is satisfied that the Chairman and each of the other non-executive Directors commit sufficient time to the affairs of the
Company to fulfil their duties.
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 Alternative Investment Fund Manager (“AIFM” or “Manager”). In accordance with the terms of an AIFM agreement which is governed by
the laws of England and Wales, the appointment 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. Details of the
amounts paid to the Manager are detailed in note 4 on page 58.
The Manager 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 £773.7 billion (as at 30 June 2024) on behalf of institutional and retail investors, financial institutions and high
net-worth clients from around the world, invested in a broad range of asset classes across equities, fixed income, multi-asset and
alternatives.
Fees payable to the Manager
Under the terms of the AIFM Agreement, a management fee is payable at a rate of 0.45% per annum of chargeable assets. A further fee of
£150,000 plus VAT per annum is payable to cover administration and company secretarial fees.
The management fee payable in respect of the year ended 31 August 2024 amounted to £1,090,000 (2023: £1,055,000).
Details of all amounts payable to the Manager are set out in note 4 on page 58.
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 FCA and the Prudential Regulation Authority,
carries out certain duties of a depositary specified in the AIFM Directive including, in relation to the Company:
– safekeeping of the assets of the Company which are entrusted to it;
– cash monitoring and 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.
Schroder Income Growth Fund plc 33
Other Information (Unaudited) Introduction Strategic Report Governance Financial
34
Schroder Income Growth Fund plc
Share capital and substantial share interests
During the year under review the Company repurchased a total of
38,000 shares of 10 pence each which were placed in treasury. As at
31 August 2024, the Company had 69,463,343 ordinary shares of
10p in issue, of which 38,000 were held in treasury.
Since the year end, a further 8,000 shares have been repurchased to
be held in treasury and as at 11 November 2024, the Company had
69,463,343 ordinary shares of 10p in issue, of which 46,000 ordinary
shares were held in treasury. Accordingly, the total number of voting
rights in the Company at 11 November 2024 is 69,417,343. Details
of changes to the Company’s share capital during the year under
review are given in note 14 to the financial statements on page 61.
All shares in issue rank equally with respect to voting, dividends and
any distribution on winding up.
As at 31 August 2024, the Company has received notifications in
accordance with the 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. The Company
is reliant on investors to comply with these regulations, and certain
investors may be exempted from providing these. As such, this
should not be relied on as an exhaustive list of shareholders holding
above 3% of the Company’s voting rights.
Number of % of
shares held 1
voting rights 1
Charles Stanley & Co. Limited 3,422,693 4.98
1
As at date of notification.
There have been no notified changes to the above holdings since
the year end.
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
11 November 2024
Directors’ Report
continued
Share capital and substantial share interests
During the year under review the Company repurchased a total of
38,000 shares of 10 pence each which were placed in treasury. As at
31 August 2024, the Company had 69,463,343 ordinary shares of
10p in issue, of which 38,000 were held in treasury.
Since the year end, a further 8,000 shares have been repurchased to
be held in treasury and as at 11 November 2024, the Company had
69,463,343 ordinary shares of 10p in issue, of which 46,000 ordinary
shares were held in treasury. Accordingly, the total number of voting
rights in the Company at 11 November 2024 is 69,417,343. Details
of changes to the Company’s share capital during the year under
review are given in note 14 to the financial statements on page 61.
All shares in issue rank equally with respect to voting, dividends and
any distribution on winding up.
As at 31 August 2024, the Company has received notifications in
accordance with the 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. The Company
is reliant on investors to comply with these regulations, and certain
investors may be exempted from providing these. As such, this
should not be relied on as an exhaustive list of shareholders holding
above 3% of the Company’s voting rights.
Number of % of
shares held 1
voting rights 1
Charles Stanley & Co. Limited 3,422,693 4.98
1
As at date of notification.
There have been no notified changes to the above holdings since
the year end.
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
11 November 2024
Directors’ Report
continued
Schroder Income Growth Fund plc
35
Other Information (Unaudited) Introduction Strategic Report Governance Financial
The responsibilities and work carried out by the Audit and Risk Committee during the year under review are set out in the following report. The
duties and responsibilities of the Committee, which include monitoring the integrity of the Company’s financial reporting and internal controls,
are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s web pages,
www.schroders.co.uk/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. The AIC Code permits the Chairman of the Board to be a member of the Committee, but not its
chairman, provided that they were independent upon appointment. Given the Board’s size, the Directors believe it is appropriate for the
Chairman of the Board, who was independent on appointment, to remain a member of the Committee and continue to benefit from his
experience and knowledge. The activities of the Committee were considered as part of the internally facilitated board appraisal process
completed in accordance with standard governance arrangements. The evaluation found that the Committee functioned well, with the right
balance of membership, skills and experience.
Approach
Risk management and internal
controls Financial reports and valuation Audit
Principal and emerging risks and
uncertainties
To establish a process for identifying,
assessing, managing and monitoring
principal and emerging risks and
uncertainties of the Company, and an
explanation of how these are being
managed or mitigated.
The Committee is responsible for reviewing
the adequacy and effectiveness of the
Company’s internal controls and the
whistleblowing procedures operated by the
AIFM and other services providers.
Financial statements
To monitor the integrity of the financial
statements of the Company and any formal
announcements relating to the Company’s
financial performance and valuation.
Audit results
To discuss any matters arising from the
audit and recommendations made by the
Auditor.
Risk
management
Internal
controls
Review of
external
auditors and
their work
Half year
and annual
report
Accounting
policies and
judgements
Going concern and viability
To review the position and make
recommendations to the Board in relation to
whether it considers it appropriate to adopt
the going concern basis of accounting in
preparing its annual and half year financial
statements.
The Committee is also responsible for
reviewing the disclosures made by the
Company in the viability statement.
Auditor appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment,
re-appointment, effectiveness, any
non-audit services by the Auditor and
removal of the external Auditor. To review
their independence, and to approve their
remuneration and terms of engagement.
To review the audit plan and engagement
letter.
Audit and Risk Committee Report
Other Information (Unaudited) Introduction Strategic Report Governance Financial
The responsibilities and work carried out by the Audit and Risk Committee during the year under review are set out in the following report. The
duties and responsibilities of the Committee, which include monitoring the integrity of the Company’s financial reporting and internal controls,
are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s web pages,
www.schroders.co.uk/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. The AIC Code permits the Chairman of the Board to be a member of the Committee, but not its
chairman, provided that they were independent upon appointment. Given the Board’s size, the Directors believe it is appropriate for the
Chairman of the Board, who was independent on appointment, to remain a member of the Committee and continue to benefit from his
experience and knowledge. The activities of the Committee were considered as part of the internally facilitated board appraisal process
completed in accordance with standard governance arrangements. The evaluation found that the Committee functioned well, with the right
balance of membership, skills and experience.
Approach
Risk management and internal
controls Financial reports and valuation Audit
Principal and emerging risks and
uncertainties
To establish a process for identifying,
assessing, managing and monitoring
principal and emerging risks and
uncertainties of the Company, and an
explanation of how these are being
managed or mitigated.
The Committee is responsible for reviewing
the adequacy and effectiveness of the
Company’s internal controls and the
whistleblowing procedures operated by the
AIFM and other services providers.
Financial statements
To monitor the integrity of the financial
statements of the Company and any formal
announcements relating to the Company’s
financial performance and valuation.
Audit results
To discuss any matters arising from the
audit and recommendations made by the
Auditor.
Risk
management
Internal
controls
Review of
external
auditors and
their work
Half year
and annual
report
Accounting
policies and
judgements
Going concern and viability
To review the position and make
recommendations to the Board in relation to
whether it considers it appropriate to adopt
the going concern basis of accounting in
preparing its annual and half year financial
statements.
The Committee is also responsible for
reviewing the disclosures made by the
Company in the viability statement.
Auditor appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment,
re-appointment, effectiveness, any
non-audit services by the Auditor and
removal of the external Auditor. To review
their independence, and to approve their
remuneration and terms of engagement.
To review the audit plan and engagement
letter.
Audit and Risk Committee Report
36
Schroder Income Growth Fund plc
Audit and Risk Committee Report
continued
The Committee met twice during the year under review and the table below sets out how the Committee discharged its duties during the year.
Further details on attendance can be found on page 33.
Application during the year
Risk management and internal
controls Financial reports and valuation Audit
Meetings with the Auditor
The Auditor attended meetings to present
their audit plan and the findings of the
audit. The Committee met the Auditor
without representatives of the Manager
present.
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, 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.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Principal and emerging risks and
uncertainties
Reviewed the principal and emerging risks
and uncertainties faced by the Company
together with the systems, processes and
oversight in place to manage and mitigate
them.
Service provider controls
Consideration of the operational controls
maintained by the Manager, depositary and
registrar.
Auditor independence
Ernst & Young LLP has provided audit
services to the Company since it was
appointed on 17 May 2019.
The Auditor is required to rotate the senior
statutory auditor every five years. There are
no contractual obligations restricting the
choice of external auditor. This is the
fifth year that the senior statutory auditor,
Matthew Price, has conducted the audit of
the Company’s financial statements.
A succession plan has been put forward
ahead of the required rotation of the senior
statutory auditor and agreed with the audit
committee.
The Committee was satisfied that there
were no circumstances that affected the
independence or objectivity of the Auditor.
Calculation of the investment
management fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
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.
Audit tender
An audit tender was last undertaken in
2019.
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.
Overall accuracy of the annual report
and financial statements
Consideration of the annual report and
financial statements and the letter from the
Manager in support of the letter of
representation to the Auditor.
Compliance with the investment trust
qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Valuation and existence of holdings
Quarterly review of portfolio holdings and
assurance reports.
Audit and Risk Committee Report
continued
The Committee met twice during the year under review and the table below sets out how the Committee discharged its duties during the year.
Further details on attendance can be found on page 33.
Application during the year
Risk management and internal
controls Financial reports and valuation Audit
Meetings with the Auditor
The Auditor attended meetings to present
their audit plan and the findings of the
audit. The Committee met the Auditor
without representatives of the Manager
present.
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, 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.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Principal and emerging risks and
uncertainties
Reviewed the principal and emerging risks
and uncertainties faced by the Company
together with the systems, processes and
oversight in place to manage and mitigate
them.
Service provider controls
Consideration of the operational controls
maintained by the Manager, depositary and
registrar.
Auditor independence
Ernst & Young LLP has provided audit
services to the Company since it was
appointed on 17 May 2019.
The Auditor is required to rotate the senior
statutory auditor every five years. There are
no contractual obligations restricting the
choice of external auditor. This is the
fifth year that the senior statutory auditor,
Matthew Price, has conducted the audit of
the Company’s financial statements.
A succession plan has been put forward
ahead of the required rotation of the senior
statutory auditor and agreed with the audit
committee.
The Committee was satisfied that there
were no circumstances that affected the
independence or objectivity of the Auditor.
Calculation of the investment
management fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
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.
Audit tender
An audit tender was last undertaken in
2019.
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.
Overall accuracy of the annual report
and financial statements
Consideration of the annual report and
financial statements and the letter from the
Manager in support of the letter of
representation to the Auditor.
Compliance with the investment trust
qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Valuation and existence of holdings
Quarterly review of portfolio holdings and
assurance reports.
Schroder Income Growth Fund plc
37
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Risk management and internal
controls Financial reports and valuation Audit
Fraser McIntyre
Chairman of the Audit and Risk Committee
11 November 2024
Fair, balanced and understandable
Reviewed the annual report and financial
statements to advise the Board whether it
was fair, balanced and understandable.
Reviewed whether performance measures
were reflective of the business, whether there
was adequate commentary on the
Company’s strengths and weaknesses and
that the annual report and financial
statements, taken as a whole was consistent
with the Board’s view of the operation of the
Company.
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
under review.
Going concern and viability
Reviewed the position and made
recommendations to the Board in relation to
whether it considered it appropriate to adopt
the going concern basis of accounting in
preparing its annual and half year report.
The Committee is also responsible for
reviewing the disclosures made by the
Company in the viability statement.
Consent to continue as Auditor
Ernst & Young LLP indicated to the
Committee its willingness to continue to act
as Auditor.
Recommendations made to, and approved by, the Board:
• The Committee recommended that the Board approve the annual and half year report and financial statements.
• The Committee recommended that the going concern assumption be adopted in the annual report and financial statements and the
explanations set out in the viability statement.
• As a result of the work performed, the Committee has concluded that the annual report and financial statements for the year ended
31 August 2024, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to
assess the Company’s position, performance, business model and strategy, and has reported on these findings to the Board. The
Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 45.
• Having reviewed the performance of the Auditor as described above, the Committee considered it appropriate to recommend the
Auditor’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 forthcoming AGM.
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Risk management and internal
controls Financial reports and valuation Audit
Fraser McIntyre
Chairman of the Audit and Risk Committee
11 November 2024
Fair, balanced and understandable
Reviewed the annual report and financial
statements to advise the Board whether it
was fair, balanced and understandable.
Reviewed whether performance measures
were reflective of the business, whether there
was adequate commentary on the
Company’s strengths and weaknesses and
that the annual report and financial
statements, taken as a whole was consistent
with the Board’s view of the operation of the
Company.
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
under review.
Going concern and viability
Reviewed the position and made
recommendations to the Board in relation to
whether it considered it appropriate to adopt
the going concern basis of accounting in
preparing its annual and half year report.
The Committee is also responsible for
reviewing the disclosures made by the
Company in the viability statement.
Consent to continue as Auditor
Ernst & Young LLP indicated to the
Committee its willingness to continue to act
as Auditor.
Recommendations made to, and approved by, the Board:
• The Committee recommended that the Board approve the annual and half year report and financial statements.
• The Committee recommended that the going concern assumption be adopted in the annual report and financial statements and the
explanations set out in the viability statement.
• As a result of the work performed, the Committee has concluded that the annual report and financial statements for the year ended
31 August 2024, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to
assess the Company’s position, performance, business model and strategy, and has reported on these findings to the Board. The
Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 45.
• Having reviewed the performance of the Auditor as described above, the Committee considered it appropriate to recommend the
Auditor’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 forthcoming AGM.
38
Schroder Income Growth Fund plc
Management Engagement Committee Report
The Management Engagement Committee is responsible for (1) the monitoring and oversight of the Manager’s performance and fees, and
confirming the Manager’s ongoing suitability, and (2) reviewing and assessing the Company’s other service providers, including reviewing their
fees. All Directors are members of the Committee. Ewen Cameron Watt is the Chairman of the Committee. Its terms of reference are available
on the Company’s web pages, www.schroders.co.uk/incomegrowth. The activities of the Committee were considered as part of the internally
facilitated board appraisal process completed in accordance with standard governance arrangements. The evaluation found that the Committee
functioned well, with the right balance of membership, skills and experience.
Approach
Oversight of the Manager Oversight of other service providers
Application during the year
The Committee:
• reviews the 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.
The Committee reviews the performance and competitiveness of
the following service providers on at least an annual basis:
• Depositary and custodian
• Corporate broker
• Registrar
• Lender
The Committee also receives a report from the Company
Secretary on ancillary service providers, and considers any
recommendations.
The Committee notes the Audit and Risk Committee’s review of
the Auditor.
The Committee 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,
including the fee structure, and agreed they remained fit for
purpose.
The Committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
The annual review of each of the service providers was
satisfactory.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the internal controls of the
Manager, registrar, and depositary and custodian.
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.
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. Ewen Cameron Watt is the Chairman of the Committee. Its terms of reference are available
on the Company’s web pages, www.schroders.co.uk/incomegrowth. The activities of the Committee were considered as part of the internally
facilitated board appraisal process completed in accordance with standard governance arrangements. The evaluation found that the Committee
functioned well, with the right balance of membership, skills and experience.
Approach
Oversight of the Manager Oversight of other service providers
Application during the year
The Committee:
• reviews the 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.
The Committee reviews the performance and competitiveness of
the following service providers on at least an annual basis:
• Depositary and custodian
• Corporate broker
• Registrar
• Lender
The Committee also receives a report from the Company
Secretary on ancillary service providers, and considers any
recommendations.
The Committee notes the Audit and Risk Committee’s review of
the Auditor.
The Committee 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,
including the fee structure, and agreed they remained fit for
purpose.
The Committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
The annual review of each of the service providers was
satisfactory.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the internal controls of the
Manager, registrar, and depositary and custodian.
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.
Schroder Income Growth Fund plc
39
Other Information (Unaudited) Introduction Strategic Report Governance Financial
The Nomination Committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment during their tenure,
and (3) the Board’s succession. All Directors are members of the Committee. June Aitken is the Chairman of the Committee. Its terms of
reference are available on the Company’s web pages, www.schroders.co.uk/incomegrowth. The activities of the Committee were considered as
part of the internally facilitated board appraisal process completed in accordance with standard governance arrangements. The evaluation
found that the Committee functioned well, with the right balance of membership, skills and experience.
Oversight of Directors
Approach
Selection and induction Board evaluation Succession
Application during the year (see overleaf)
Selection Induction
Application
of succession
policy
Annual
review of
succession
policy
Annual
evaluation
• The Committee prepares a job
specification for each role and considers
the use of an independent recruitment
firm. For the Chairman and Chairmen of
the 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.
• The Committee discusses the long list,
invites a number of candidates for
interview and makes a recommendation
to the Board.
• The Committee reviews the induction
and training of new Directors.
• The Committee assesses each Director
annually and considers if 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.
• Taking into consideration diversity and
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 of the Board,
who should not serve longer than nine
years, in ordinary circumstances and that
each Director will be subject to annual
re-election at the AGM.
• The Committee reviews the Board’s
current and future needs at least
annually. Should any need be identified
the Committee will initiate the selection
process.
• The Committee oversees the handover
process for retiring Directors.
Nomination Committee Report
Other Information (Unaudited) Introduction Strategic Report Governance Financial
The Nomination Committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment during their tenure,
and (3) the Board’s succession. All Directors are members of the Committee. June Aitken is the Chairman of the Committee. Its terms of
reference are available on the Company’s web pages, www.schroders.co.uk/incomegrowth. The activities of the Committee were considered as
part of the internally facilitated board appraisal process completed in accordance with standard governance arrangements. The evaluation
found that the Committee functioned well, with the right balance of membership, skills and experience.
Oversight of Directors
Approach
Selection and induction Board evaluation Succession
Application during the year (see overleaf)
Selection Induction
Application
of succession
policy
Annual
review of
succession
policy
Annual
evaluation
• The Committee prepares a job
specification for each role and considers
the use of an independent recruitment
firm. For the Chairman and Chairmen of
the 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.
• The Committee discusses the long list,
invites a number of candidates for
interview and makes a recommendation
to the Board.
• The Committee reviews the induction
and training of new Directors.
• The Committee assesses each Director
annually and considers if 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.
• Taking into consideration diversity and
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 of the Board,
who should not serve longer than nine
years, in ordinary circumstances and that
each Director will be subject to annual
re-election at the AGM.
• The Committee reviews the Board’s
current and future needs at least
annually. Should any need be identified
the Committee will initiate the selection
process.
• The Committee oversees the handover
process for retiring Directors.
Nomination Committee Report
40
Schroder Income Growth Fund plc
Nomination Committee Report
continued
Selection and induction Board evaluation Succession
• The annual Board evaluation, including
evaluation of its Committees, was
undertaken in July 2024 and concluded
that the Board and its Committees
functioned well, with the right balance of
membership, skills and experience. For the
year under review, the evaluation was
undertaken internally by the completion of
questionnaires.
• The Committee also reviewed each
Director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono, not
for profit roles, to ensure that each
Director remained free from conflict and
had sufficient time available to discharge
each of their duties effectively.
• The Committee 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 30 and 31.
• All Directors were considered to be
independent in character and judgement
and the Committee reviews this
information annually.
• Based on its assessment, the Committee
provided individual recommendations for
each Director’s re-election.
• The Committee believes it is important
for the Board to have the appropriate
skills and diversity and has reviewed
composition and succession plans with
these in mind.
• The Board has complied with the FCA
Listing Rule in relation to diversity and
provided necessary disclosures on
page 23.
• The Committee reviewed the succession
policy and agreed it was still fit for
purpose.
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 and
should all be recommended for re-election by shareholders at the forthcoming AGM.
Nomination Committee Report
continued
Selection and induction Board evaluation Succession
• The annual Board evaluation, including
evaluation of its Committees, was
undertaken in July 2024 and concluded
that the Board and its Committees
functioned well, with the right balance of
membership, skills and experience. For the
year under review, the evaluation was
undertaken internally by the completion of
questionnaires.
• The Committee also reviewed each
Director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono, not
for profit roles, to ensure that each
Director remained free from conflict and
had sufficient time available to discharge
each of their duties effectively.
• The Committee 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 30 and 31.
• All Directors were considered to be
independent in character and judgement
and the Committee reviews this
information annually.
• Based on its assessment, the Committee
provided individual recommendations for
each Director’s re-election.
• The Committee believes it is important
for the Board to have the appropriate
skills and diversity and has reviewed
composition and succession plans with
these in mind.
• The Board has complied with the FCA
Listing Rule in relation to diversity and
provided necessary disclosures on
page 23.
• The Committee reviewed the succession
policy and agreed it was still fit for
purpose.
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 and
should all be recommended for re-election by shareholders at the forthcoming AGM.
Schroder Income Growth Fund plc
41
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Remuneration Committee Report
The Remuneration Committee is responsible for 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 web
pages, www.schroders.co.uk/incomegrowth. The activities of the Committee were considered as part of the internally facilitated board appraisal
process completed in accordance with standard governance arrangements. The evaluation found that the Committee functioned well, with the
right balance of membership, skills and experience.
Approach
Directors’ fees
• The Committee determines and agrees with the Board the framework or broad policy for the remuneration of the Directors. The objective
of the policy shall be to ensure that members of the Board are, in a fair and responsible manner, rewarded for their individual contributions
to the success of the Company. No Director shall be involved in any decisions as to their own remuneration outcome.
• The Committee reviews the ongoing appropriateness and relevance of the remuneration policy.
• The Committee reviews Director remuneration annually and makes recommendations on the fees paid to non-executive Directors in light
of Directors’ workloads, levels of responsibility and industry norms.
• The Committee ensures that each year the Remuneration Report is put to shareholders for approval as an advisory vote at the AGM, and
the Remuneration Policy is put to shareholders for approval every three years at the AGM.
Application during the year
Directors’ fees
• The remuneration framework, as set out in the Directors’ Remuneration Report, was unchanged during the year.
• The Committee concluded that the remuneration policy remained appropriate and relevant.
• The Committee reviewed Directors’ fees, using external benchmarking, and recommended that Directors’ fees be increased with effect
from 1 September 2024.
• The Remuneration Report will be put to shareholders for approval as an advisory vote at the forthcoming AGM.
Recommendations made to, and approved by, the Board:
• That the remuneration framework and remuneration policy remained appropriate.
• That the Remuneration Report should be put to shareholders for approval as an advisory vote at the forthcoming AGM.
• That Directors’ fees be increased to the following with effect from 1 September 2024: Chairman £40,000; Audit and Risk Committee
Chairman £34,000; Director £28,750.
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Remuneration Committee Report
The Remuneration Committee is responsible for 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 web
pages, www.schroders.co.uk/incomegrowth. The activities of the Committee were considered as part of the internally facilitated board appraisal
process completed in accordance with standard governance arrangements. The evaluation found that the Committee functioned well, with the
right balance of membership, skills and experience.
Approach
Directors’ fees
• The Committee determines and agrees with the Board the framework or broad policy for the remuneration of the Directors. The objective
of the policy shall be to ensure that members of the Board are, in a fair and responsible manner, rewarded for their individual contributions
to the success of the Company. No Director shall be involved in any decisions as to their own remuneration outcome.
• The Committee reviews the ongoing appropriateness and relevance of the remuneration policy.
• The Committee reviews Director remuneration annually and makes recommendations on the fees paid to non-executive Directors in light
of Directors’ workloads, levels of responsibility and industry norms.
• The Committee ensures that each year the Remuneration Report is put to shareholders for approval as an advisory vote at the AGM, and
the Remuneration Policy is put to shareholders for approval every three years at the AGM.
Application during the year
Directors’ fees
• The remuneration framework, as set out in the Directors’ Remuneration Report, was unchanged during the year.
• The Committee concluded that the remuneration policy remained appropriate and relevant.
• The Committee reviewed Directors’ fees, using external benchmarking, and recommended that Directors’ fees be increased with effect
from 1 September 2024.
• The Remuneration Report will be put to shareholders for approval as an advisory vote at the forthcoming AGM.
Recommendations made to, and approved by, the Board:
• That the remuneration framework and remuneration policy remained appropriate.
• That the Remuneration Report should be put to shareholders for approval as an advisory vote at the forthcoming AGM.
• That Directors’ fees be increased to the following with effect from 1 September 2024: Chairman £40,000; Audit and Risk Committee
Chairman £34,000; Director £28,750.
42
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 2023 AGM and the current
policy provisions will apply until the policy is next considered by
shareholders at the AGM in 2026. Additionally, an ordinary resolution
to approve this report will be put to shareholders at the forthcoming
AGM.
At the AGM held on 13 December 2023, 97.74% 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
2.26% were against. 15,180 votes were withheld.
At the AGM held on 13 December 2023, 97.77% 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 2023 were in favour, while 2.23% were against. 15,680
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 receive fees at a higher rate than the other Directors
to reflect their additional responsibilities. Directors’ fees are set at
a level to recruit and retain individuals of sufficient calibre, with the
level of knowledge, experience and expertise necessary to promote
the success of the Company in reaching its short and long-term
strategic objectives.
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.
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.
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.
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' report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 31 August 2024.
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 2024 and the
preceding financial year. Directors’ remuneration is all fixed; they do
not receive any variable remuneration. The performance of the
Company over the financial year is presented on inside front cover
and page 1, under the heading “Performance Summary”.
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 2023 AGM and the current
policy provisions will apply until the policy is next considered by
shareholders at the AGM in 2026. Additionally, an ordinary resolution
to approve this report will be put to shareholders at the forthcoming
AGM.
At the AGM held on 13 December 2023, 97.74% 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
2.26% were against. 15,180 votes were withheld.
At the AGM held on 13 December 2023, 97.77% 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 2023 were in favour, while 2.23% were against. 15,680
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 receive fees at a higher rate than the other Directors
to reflect their additional responsibilities. Directors’ fees are set at
a level to recruit and retain individuals of sufficient calibre, with the
level of knowledge, experience and expertise necessary to promote
the success of the Company in reaching its short and long-term
strategic objectives.
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.
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.
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.
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' report on remuneration
This report sets out how the remuneration policy was implemented
during the year ended 31 August 2024.
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 2024 and the
preceding financial year. Directors’ remuneration is all fixed; they do
not receive any variable remuneration. The performance of the
Company over the financial year is presented on inside front cover
and page 1, under the heading “Performance Summary”.
Schroder Income Growth Fund plc
43
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Change in annual
fee over years
Fees Taxable benefits 1
Total ended 31 August
2024 2023 2024 2023 2024 2023 2024 2023 2022 2021 2020
Director £ £ £ £ £ £ % % % % %
Ewen Cameron Watt
(Chairman)
2
38,000 34,176 1,721 440 39,721 34,616 14.7 32.3 9.0 (1.1) (1.8)
June Aitken
3
28,000 18,000 – 103 28,000 18,103 54.7 0.0 n/a n/a n/a
Bridget Guerin
4
– 10,771 – 568 – 11,339 n/a (68.7) 5.5 8.4 26.7
Fraser McIntyre
5
33,000 32,000 482 1,749 33,482 33,749 (0.8) 8.5 12.6 71.3 n/a
Victoria Muir 28,000 27,000 704 1,696 28,704 28,696 0.0 10.3 8.3 (1.2) 823.6
Total 127,000 121,946 2,907 4,556 129,907 126,503
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
Appointed Chairman on 15 December 2022.
3
Appointed to the Board on 1 January 2023.
4
Retired from the Board and as Chairman on 15 December 2022.
5
Appointed as a Director on 17 December 2019 and Audit and Risk Committee Chairman on 17 December 2020.
The information in the above table has been audited.
Consideration of matters relating to Directors’ remuneration
Directors’ remuneration was last reviewed by the Remuneration Committee and the Board in July 2024. The members of the Committee and
Board at the time that remuneration levels were considered were as set out on pages 30 and 31. 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 corporate broker was taken into consideration together with independent third party research.
Following this review, the Board agreed the Remuneration Committee’s recommendation that with effect from 1 September 2024, Directors’
annual fees should be increased to £40,000 for the Chairman, £34,000 for the Audit and Risk Committee Chairman and £28,750 for Directors.
The Remuneration Committee believes that the level of increase and resulting fees appropriately reflects prevailing market rates for an
investment trust of the Company’s size, the increasing complexity of regulation and resultant time spent by the Directors on Company matters,
and will also enable the Company to attract appropriately experienced additional Directors in the future.
The maximum level of fees payable, in aggregate, to the Directors of the Company is currently £150,000 per annum.
Directors’ annual report on remuneration
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 ended Year ended
31 August 31 August
2024 2023 %
£’000 £’000 Change
Remuneration payable to Directors 130 127 2.4
Distributions paid to shareholders
Dividends 9,860 9,585
Share buy backs 102 –
Distributions paid to shareholders 9,962 9,585 3.9
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Change in annual
fee over years
Fees Taxable benefits 1
Total ended 31 August
2024 2023 2024 2023 2024 2023 2024 2023 2022 2021 2020
Director £ £ £ £ £ £ % % % % %
Ewen Cameron Watt
(Chairman)
2
38,000 34,176 1,721 440 39,721 34,616 14.7 32.3 9.0 (1.1) (1.8)
June Aitken
3
28,000 18,000 – 103 28,000 18,103 54.7 0.0 n/a n/a n/a
Bridget Guerin
4
– 10,771 – 568 – 11,339 n/a (68.7) 5.5 8.4 26.7
Fraser McIntyre
5
33,000 32,000 482 1,749 33,482 33,749 (0.8) 8.5 12.6 71.3 n/a
Victoria Muir 28,000 27,000 704 1,696 28,704 28,696 0.0 10.3 8.3 (1.2) 823.6
Total 127,000 121,946 2,907 4,556 129,907 126,503
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
Appointed Chairman on 15 December 2022.
3
Appointed to the Board on 1 January 2023.
4
Retired from the Board and as Chairman on 15 December 2022.
5
Appointed as a Director on 17 December 2019 and Audit and Risk Committee Chairman on 17 December 2020.
The information in the above table has been audited.
Consideration of matters relating to Directors’ remuneration
Directors’ remuneration was last reviewed by the Remuneration Committee and the Board in July 2024. The members of the Committee and
Board at the time that remuneration levels were considered were as set out on pages 30 and 31. 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 corporate broker was taken into consideration together with independent third party research.
Following this review, the Board agreed the Remuneration Committee’s recommendation that with effect from 1 September 2024, Directors’
annual fees should be increased to £40,000 for the Chairman, £34,000 for the Audit and Risk Committee Chairman and £28,750 for Directors.
The Remuneration Committee believes that the level of increase and resulting fees appropriately reflects prevailing market rates for an
investment trust of the Company’s size, the increasing complexity of regulation and resultant time spent by the Directors on Company matters,
and will also enable the Company to attract appropriately experienced additional Directors in the future.
The maximum level of fees payable, in aggregate, to the Directors of the Company is currently £150,000 per annum.
Directors’ annual report on remuneration
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 ended Year ended
31 August 31 August
2024 2023 %
£’000 £’000 Change
Remuneration payable to Directors 130 127 2.4
Distributions paid to shareholders
Dividends 9,860 9,585
Share buy backs 102 –
Distributions paid to shareholders 9,962 9,585 3.9
44
Schroder Income Growth Fund plc
Directors’ Remuneration Report
continued
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, per Schedule 8, section 18, 4 (c) of the Companies Act 2006. The FTSE All-Share Index has been selected as an appropriate comparison
based on the composition of the Company’s investment portfolio.
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 August 2014.
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
2024
1
2023
1
Ewen Cameron Watt 13,000 13,000
June Aitken 10,680 10,163
Fraser McIntyre 16,140 7,984
Victoria Muir 3,500 3,500
1
Ordinary shares of 10p each
Since the year ended 31 August 2024, Ms Aitken purchased 248 ordinary shares. Following this purchase, Ms Aitken's interests increased to
10,928 ordinary shares in the Company. Further, a connected person to Mr McIntyre purchased 217 ordinary shares. Following this purchase,
Mr McIntyre's interests increased to 16,357 ordinary shares in the Company. There have been no other notified changes to Directors' interests
in the shares of the Company.
The information in the above table has been audited.
On behalf of the Board
Victoria Muir
Chairman of the Remuneration Committee
11 November 2024
FTSE All-Share Index Share price
75
100
125
150
175
200
31 Aug 24
31 Aug 23
31 Aug 22
31 Aug 21
31 Aug 20
31 Aug 19
31 Aug 18
31 Aug 17
31 Aug 16
31 Aug 15
31 Aug 14
Directors’ Remuneration Report
continued
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, per Schedule 8, section 18, 4 (c) of the Companies Act 2006. The FTSE All-Share Index has been selected as an appropriate comparison
based on the composition of the Company’s investment portfolio.
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 August 2014.
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
2024
1
2023
1
Ewen Cameron Watt 13,000 13,000
June Aitken 10,680 10,163
Fraser McIntyre 16,140 7,984
Victoria Muir 3,500 3,500
1
Ordinary shares of 10p each
Since the year ended 31 August 2024, Ms Aitken purchased 248 ordinary shares. Following this purchase, Ms Aitken's interests increased to
10,928 ordinary shares in the Company. Further, a connected person to Mr McIntyre purchased 217 ordinary shares. Following this purchase,
Mr McIntyre's interests increased to 16,357 ordinary shares in the Company. There have been no other notified changes to Directors' interests
in the shares of the Company.
The information in the above table has been audited.
On behalf of the Board
Victoria Muir
Chairman of the Remuneration Committee
11 November 2024
FTSE All-Share Index Share price
75
100
125
150
175
200
31 Aug 24
31 Aug 23
31 Aug 22
31 Aug 21
31 Aug 20
31 Aug 19
31 Aug 18
31 Aug 17
31 Aug 16
31 Aug 15
31 Aug 14
Schroder Income Growth Fund plc
45
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Statement of Directors’ Responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and 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 web pages. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Directors’ statement
Each of the Directors, whose names and functions are listed on
pages 30 and 31, confirm that to the best of their knowledge:
– the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, 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;
– the annual report and financial statements includes a fair review
of the development and performance of the business and the
position of the Company, together with a description of the
principal and emerging risks and uncertainties that it faces; and
– the annual report and financial statements, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
On behalf of the Board
Ewen Cameron Watt
Chairman
11 November 2024
Other Information (Unaudited) Introduction Strategic Report Governance Financial
Statement of Directors’ Responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and 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 web pages. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Directors’ statement
Each of the Directors, whose names and functions are listed on
pages 30 and 31, confirm that to the best of their knowledge:
– the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, 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;
– the annual report and financial statements includes a fair review
of the development and performance of the business and the
position of the Company, together with a description of the
principal and emerging risks and uncertainties that it faces; and
– the annual report and financial statements, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
On behalf of the Board
Ewen Cameron Watt
Chairman
11 November 2024
46
Schroders
Capital Global Innovation Trust plc
Financial
Financial
Independent Auditor’s Report 48
Statement of Comprehensive Income 53
Statement of Changes in Equity 54
Statement of Financial Position 55
Notes to the Financial Statements 56
47
Financial
Independent Auditor’s Report 48
Statement of Comprehensive Income 53
Statement of Changes in Equity 54
Statement of Financial Position 55
Notes to the Financial Statements 56
47
48
Schroder Income Growth Fund plc
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 for the year ended 31 August 2024 which comprise the
Statement of Comprehensive Income, Statement of Changes in
Equity, Statement of Financial Position, and the related notes 1 to 21
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
2024 and of its profit for the year then ended;
– have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
– have been prepared in accordance with the requirements of the
Companies Act 2006.
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 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 included the following
procedures;
– Confirmation of our understanding of the Company’s going
concern assessment process and engagement with the Directors
and the Company Secretary to determine if all key factors were
considered in their assessment.
– Inspection of the Directors’ assessment of going concern,
including the revenue forecast, for the period to 30 November
2025 which is at least 12 months from the date the financial
statements will be authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is able to continue
to meet its ongoing costs as they fall due.
– Review of the factors and assumptions, including the impact of the
current economic environment, 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.
– Consideration of 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.
– Review of 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.
– Review of 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 2025 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.
Overview of our audit approach
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, the potential impact of
climate change 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
Stakeholders have been increasingly interested 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 25 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.
Key audit
matters
– Risk of incomplete or inaccurate revenue
recognition, including the classification of special
dividends as revenue or capital items in the
Statement of Comprehensive Income.
– Risk of incorrect valuation or ownership of the
investment portfolio.
– Overall materiality of £2.32 million which
represents 1% of shareholders’ funds.
Materiality
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 for the year ended 31 August 2024 which comprise the
Statement of Comprehensive Income, Statement of Changes in
Equity, Statement of Financial Position, and the related notes 1 to 21
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
2024 and of its profit for the year then ended;
– have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
– have been prepared in accordance with the requirements of the
Companies Act 2006.
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 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 included the following
procedures;
– Confirmation of our understanding of the Company’s going
concern assessment process and engagement with the Directors
and the Company Secretary to determine if all key factors were
considered in their assessment.
– Inspection of the Directors’ assessment of going concern,
including the revenue forecast, for the period to 30 November
2025 which is at least 12 months from the date the financial
statements will be authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is able to continue
to meet its ongoing costs as they fall due.
– Review of the factors and assumptions, including the impact of the
current economic environment, 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.
– Consideration of 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.
– Review of 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.
– Review of 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 2025 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.
Overview of our audit approach
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, the potential impact of
climate change 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
Stakeholders have been increasingly interested 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 25 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.
Key audit
matters
– Risk of incomplete or inaccurate revenue
recognition, including the classification of special
dividends as revenue or capital items in the
Statement of Comprehensive Income.
– Risk of incorrect valuation or ownership of the
investment portfolio.
– Overall materiality of £2.32 million which
represents 1% of shareholders’ funds.
Materiality
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.
Key observations communicated to
Risk Our response to the risk the Audit and Risk Committee
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
Statement of Comprehensive Income.
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 and accrued
dividends, 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 and all accrued dividends, we
agreed the amounts to bank statements.
To test completeness of recorded income,
we verified that dividends had been
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 2024.
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 two special dividends in
the period. For these dividends, we assessed
the appropriateness of the Administrator’s
classification as revenue for these dividends
by reviewing the underlying rationale for the
distribution.
Incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or
capital items in the Statement of
Comprehensive Income
As described in the Audit and Risk Committee
Report (page 35); Accounting policies (note 1
to the financial statements pages 56 to 57);
The total revenue for the year to 31 August
2024 was £9.74 million (2023:
£10.56 million), consisting primarily of
dividend income from listed equity
investments.
The Company received special dividends
amounting to £0.33 million (2023:
£0.20 million). Of which £0.05 million was
classed as revenue (2023: £0.20 million), and
£0.28 million (2023: £0 million) was classed
as capital.
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.
In addition, the Directors may be required to
exercise judgment in determining whether
income receivable in the form of special
dividends should be classified as ‘revenue’ or
‘capital’ in the Statement of Comprehensive
Income.
Schroder Income Growth Fund plc 49
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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.
Key observations communicated to
Risk Our response to the risk the Audit and Risk Committee
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
Statement of Comprehensive Income.
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 and accrued
dividends, 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 and all accrued dividends, we
agreed the amounts to bank statements.
To test completeness of recorded income,
we verified that dividends had been
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 2024.
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 two special dividends in
the period. For these dividends, we assessed
the appropriateness of the Administrator’s
classification as revenue for these dividends
by reviewing the underlying rationale for the
distribution.
Incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or
capital items in the Statement of
Comprehensive Income
As described in the Audit and Risk Committee
Report (page 35); Accounting policies (note 1
to the financial statements pages 56 to 57);
The total revenue for the year to 31 August
2024 was £9.74 million (2023:
£10.56 million), consisting primarily of
dividend income from listed equity
investments.
The Company received special dividends
amounting to £0.33 million (2023:
£0.20 million). Of which £0.05 million was
classed as revenue (2023: £0.20 million), and
£0.28 million (2023: £0 million) was classed
as capital.
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.
In addition, the Directors may be required to
exercise judgment in determining whether
income receivable in the form of special
dividends should be classified as ‘revenue’ or
‘capital’ in the Statement of Comprehensive
Income.
Schroder Income Growth Fund plc 49
Introduction Strategic Report Governance Financial Other Information (Unaudited)
50
Schroder Income Growth Fund plc
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
continued
Key observations communicated to
Risk Our response to the risk the Audit and Risk Committee
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.
We determined materiality for the Company to be £2.32 million (2023:
£2.04 million), which is 1% (2023: 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% (2023: 75%) of our planning
materiality, namely £1.74 million (2023: £1.53 million). 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 Statement of Comprehensive
Income which is calculated as 5% of net revenue before tax. We
determined this to be £0.40 million (2023: £0.46 million).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of £0.12 million (2023:
£0.10 million), 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.
The results of our procedures identified no
material misstatements in relation to the risk
of incorrect valuation or ownership of the
investment portfolio.
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 reviewed the prices for all investments in
the portfolio to identify prices that have not
changed within five business days from year
end to verify whether the listed price is a
valid fair value. Our testing identified no
prices which had not changed, and no stale
prices were identified.
We compared the Company’s investment
holdings at 31 August 2024 to independent
confirmations received directly from the
Company’s Custodian and Depositary.
Risk of incorrect valuation or ownership
of the investment portfolio
As described in the Audit and Risk Committee’s
Report (page 35); Accounting policies (note 1
to the financial statements pages 56 to 57).
The valuation of the investment portfolio at
31 August 2024 was £258.4 million (2023:
£229.7 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 last business day
of the year.
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
continued
Key observations communicated to
Risk Our response to the risk the Audit and Risk Committee
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.
We determined materiality for the Company to be £2.32 million (2023:
£2.04 million), which is 1% (2023: 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% (2023: 75%) of our planning
materiality, namely £1.74 million (2023: £1.53 million). 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 Statement of Comprehensive
Income which is calculated as 5% of net revenue before tax. We
determined this to be £0.40 million (2023: £0.46 million).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of £0.12 million (2023:
£0.10 million), 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.
The results of our procedures identified no
material misstatements in relation to the risk
of incorrect valuation or ownership of the
investment portfolio.
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 reviewed the prices for all investments in
the portfolio to identify prices that have not
changed within five business days from year
end to verify whether the listed price is a
valid fair value. Our testing identified no
prices which had not changed, and no stale
prices were identified.
We compared the Company’s investment
holdings at 31 August 2024 to independent
confirmations received directly from the
Company’s Custodian and Depositary.
Risk of incorrect valuation or ownership
of the investment portfolio
As described in the Audit and Risk Committee’s
Report (page 35); Accounting policies (note 1
to the financial statements pages 56 to 57).
The valuation of the investment portfolio at
31 August 2024 was £258.4 million (2023:
£229.7 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 last business day
of the year.
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’ reports 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.
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 UK 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 45;
– 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 45;
– Directors’ 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 45;
– Directors’ statement on fair, balanced and understandable set
out on page 37;
– Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 24;
– The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on pages 35 to 37; and
– The section describing the work of the audit committee set out
on pages 35 to 37.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set
out on page 45, 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 United Kingdom Generally Accepted
Accounting Practice, the Companies Act 2006, the UK 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.
Schroder Income Growth Fund plc 51
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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’ reports 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.
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 UK 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 45;
– 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 45;
– Directors’ 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 45;
– Directors’ statement on fair, balanced and understandable set
out on page 37;
– Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 24;
– The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on pages 35 to 37; and
– The section describing the work of the audit committee set out
on pages 35 to 37.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set
out on page 45, 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 United Kingdom Generally Accepted
Accounting Practice, the Companies Act 2006, the UK 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.
Schroder Income Growth Fund plc 51
Introduction Strategic Report Governance Financial Other Information (Unaudited)
52
Schroder Income Growth Fund plc
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
continued
– 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
Statement of Comprehensive Income. Further discussion of our
approach is set out in the key audit matter above.
– 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 committee, we
were appointed by the Company on 5 July 2019 to audit the
financial statements for the year ending 31 August 2024 and
subsequent financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments is six years, covering the
years ending 31 August 2019 to 31 August 2024.
– 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
11 November 2024
Independent Auditor’s Report
to the Members of Schroder Income Growth Fund plc
continued
– 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
Statement of Comprehensive Income. Further discussion of our
approach is set out in the key audit matter above.
– 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 committee, we
were appointed by the Company on 5 July 2019 to audit the
financial statements for the year ending 31 August 2024 and
subsequent financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments is six years, covering the
years ending 31 August 2019 to 31 August 2024.
– 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
11 November 2024
Schroder Income Growth Fund plc
53
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Statement of Comprehensive Income
for the year ended 31 August 2024
2024 2023
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value through profit or loss 2 – 30,756 30,756 – 326 326
Net foreign currency gains – 23 23 – – –
Income from investments 3 9,742 275 10,017 10,560 – 10,560
Other interest receivable and similar income 3 142 – 142 90 – 90
Gross return 9,884 31,054 40,938 10,650 326 10,976
Management fee 4 (436) (654) (1,090) (422) (633) (1,055)
Administrative expenses 5 (585) – (585) (552) – (552)
Net return/(loss) before finance costs and taxation 8,863 30,400 39,263 9,676 (307) 9,369
Finance costs 6 (779) (1,168) (1,947) (546) (821) (1,367)
Net return/(loss) before taxation 8,084 29,232 37,316 9,130 (1,128) 8,002
Taxation 7 – – – – – –
Net return/(loss) after taxation 8,084 29,232 37,316 9,130 (1,128) 8,002
Return/(loss) per share (pence) 9 11.64 42.09 53.73 13.14 (1.62) 11.52
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 56 to 66 form an integral part of these financial statements.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Statement of Comprehensive Income
for the year ended 31 August 2024
2024 2023
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value through profit or loss 2 – 30,756 30,756 – 326 326
Net foreign currency gains – 23 23 – – –
Income from investments 3 9,742 275 10,017 10,560 – 10,560
Other interest receivable and similar income 3 142 – 142 90 – 90
Gross return 9,884 31,054 40,938 10,650 326 10,976
Management fee 4 (436) (654) (1,090) (422) (633) (1,055)
Administrative expenses 5 (585) – (585) (552) – (552)
Net return/(loss) before finance costs and taxation 8,863 30,400 39,263 9,676 (307) 9,369
Finance costs 6 (779) (1,168) (1,947) (546) (821) (1,367)
Net return/(loss) before taxation 8,084 29,232 37,316 9,130 (1,128) 8,002
Taxation 7 – – – – – –
Net return/(loss) after taxation 8,084 29,232 37,316 9,130 (1,128) 8,002
Return/(loss) per share (pence) 9 11.64 42.09 53.73 13.14 (1.62) 11.52
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 56 to 66 form an integral part of these financial statements.
Called-up
Capital
Warrant
Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 August 2022 6,946 9,449 2,011 1,596 34,936 138,240 11,922 205,100
Net (loss)/return after taxation – – – – – (1,128) 9,130 8,002
Dividends paid in the year 8 – – – – – – (9,170) (9,170)
At 31 August 2023 6,946 9,449 2,011 1,596 34,936 137,112 11,882 203,932
Repurchase of ordinary shares into
treasury – – – – (102) – – (102)
Net return after taxation – – – – – 29,232 8,084 37,316
Dividends paid in the year 8 – – – – – – (9,585) (9,585)
At 31 August 2024 6,946 9,449 2,011 1,596 34,834 166,344 10,381 231,561
The notes on pages 56 to 66 form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 31 August 2024
54 Schroder Income Growth Fund plc
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 August 2022 6,946 9,449 2,011 1,596 34,936 138,240 11,922 205,100
Net (loss)/return after taxation – – – – – (1,128) 9,130 8,002
Dividends paid in the year 8 – – – – – – (9,170) (9,170)
At 31 August 2023 6,946 9,449 2,011 1,596 34,936 137,112 11,882 203,932
Repurchase of ordinary shares into
treasury – – – – (102) – – (102)
Net return after taxation – – – – – 29,232 8,084 37,316
Dividends paid in the year 8 – – – – – – (9,585) (9,585)
At 31 August 2024 6,946 9,449 2,011 1,596 34,834 166,344 10,381 231,561
The notes on pages 56 to 66 form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 31 August 2024
54 Schroder Income Growth Fund plc
Schroder Income Growth Fund plc
55
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Statement of Financial Position
at 31 August 2024
2024 2023
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 258,409 229,714
Current assets
Debtors 11 1,909 2,557
Cash and cash equivalents 12 1,692 1,560
3,601 4,117
Current liabilities
Creditors: amounts falling due within one year 13 (30,449) (29,899)
Net current liabilities (26,848) (25,782)
Total assets less current liabilities 231,561 203,932
Net assets 231,561 203,932
Capital and reserves
Called-up share capital 14 6,946 6,946
Share premium 15 9,449 9,449
Capital redemption reserve 15 2,011 2,011
Warrant exercise reserve 15 1,596 1,596
Share purchase reserve 15 34,834 34,936
Capital reserves 15 166,344 137,112
Revenue reserve 15 10,381 11,882
Total equity shareholders’ funds 231,561 203,932
Net asset value per share (pence) 16 333.54 293.58
These financial statements were approved and authorised for issue by the Board of Directors on 11 November 2024 and signed on its behalf by:
Ewen Cameron Watt
Chairman
The notes on pages 56 to 66 form an integral part of these financial statements.
Registered in England and Wales as a public company limited by shares
Company registration number: 03008494
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Statement of Financial Position
at 31 August 2024
2024 2023
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 258,409 229,714
Current assets
Debtors 11 1,909 2,557
Cash and cash equivalents 12 1,692 1,560
3,601 4,117
Current liabilities
Creditors: amounts falling due within one year 13 (30,449) (29,899)
Net current liabilities (26,848) (25,782)
Total assets less current liabilities 231,561 203,932
Net assets 231,561 203,932
Capital and reserves
Called-up share capital 14 6,946 6,946
Share premium 15 9,449 9,449
Capital redemption reserve 15 2,011 2,011
Warrant exercise reserve 15 1,596 1,596
Share purchase reserve 15 34,834 34,936
Capital reserves 15 166,344 137,112
Revenue reserve 15 10,381 11,882
Total equity shareholders’ funds 231,561 203,932
Net asset value per share (pence) 16 333.54 293.58
These financial statements were approved and authorised for issue by the Board of Directors on 11 November 2024 and signed on its behalf by:
Ewen Cameron Watt
Chairman
The notes on pages 56 to 66 form an integral part of these financial statements.
Registered in England and Wales as a public company limited by shares
Company registration number: 03008494
56
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 financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice
(“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital
Trusts” (the “SORP”) issued by the Association of Investment Companies in July 2022. All of the Company’s operations are of a continuing nature.
The financial statements have been prepared on a going concern basis under the historical cost convention, with the exception of investments
which are measured at fair value through profit or loss. The Directors believe that the Company has adequate resources to continue operating
until 30 November 2025, which is at least 12 months from the date of approval of these financial statements. 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. The Directors have considered the impact of
climate change risk and emerging risk and have concluded that there was no further impact of climate change to be taken into account as the
investments are valued based on market pricing. Further details of Directors’ considerations regarding this are given in the Chairman’s
Statement, Investment Manager’s Review, Going Concern Statement, Viability Statement and under the Principal and Emerging Risks and
Uncertainties in the Strategic Report.
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 financial statements are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these financial statements are consistent with those applied in the financial statements for the year ended
31 August 2023.
Other than the Director’s assessment of going concern, no significant judgements, estimates or assumptions have been required in the
preparation of the financial statements for the current or preceding financial year.
(b) Valuation of investments
The Company’s 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. Fair
value gains or losses are recognised in the capital column of the Statement of Comprehensive Income.
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 Statement of
Comprehensive Income 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 Statement of Comprehensive Income 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 Statement of Comprehensive Income and in capital
reserves.
(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.
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 40% to revenue and 60% 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 60.
Notes to the Financial Statements
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 financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice
(“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital
Trusts” (the “SORP”) issued by the Association of Investment Companies in July 2022. All of the Company’s operations are of a continuing nature.
The financial statements have been prepared on a going concern basis under the historical cost convention, with the exception of investments
which are measured at fair value through profit or loss. The Directors believe that the Company has adequate resources to continue operating
until 30 November 2025, which is at least 12 months from the date of approval of these financial statements. 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. The Directors have considered the impact of
climate change risk and emerging risk and have concluded that there was no further impact of climate change to be taken into account as the
investments are valued based on market pricing. Further details of Directors’ considerations regarding this are given in the Chairman’s
Statement, Investment Manager’s Review, Going Concern Statement, Viability Statement and under the Principal and Emerging Risks and
Uncertainties in the Strategic Report.
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 financial statements are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these financial statements are consistent with those applied in the financial statements for the year ended
31 August 2023.
Other than the Director’s assessment of going concern, no significant judgements, estimates or assumptions have been required in the
preparation of the financial statements for the current or preceding financial year.
(b) Valuation of investments
The Company’s 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. Fair
value gains or losses are recognised in the capital column of the Statement of Comprehensive Income.
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 Statement of
Comprehensive Income 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 Statement of Comprehensive Income 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 Statement of Comprehensive Income and in capital
reserves.
(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.
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 40% to revenue and 60% 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 60.
Notes to the Financial Statements
Schroder Income Growth Fund plc
57
Introduction Strategic Report Governance Financial Other Information (Unaudited)
(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 40% to revenue and 60% 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, cash equivalents and demand deposits which are readily convertible to a known amount of cash
and are subject to insignificant risk of changes in value.
Cash equivalents are short-term maturity of three months or less, highly liquid investments that are readily convertible to known amounts of
cash. The Company’s investment in HSBC’s Sterling Liquidity Fund of £944,000 (2023: Nil) is managed as part of the Company’s cash and cash
equivalents as defined under FRS 102: 7.2.
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 are classified as financial liabilities at amortised cost. They are initially measured at the proceeds received, net of direct issue costs,
and subsequently measured at amortised cost using the effective interest method.
(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
financial statements.
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.
2. Gains on investments held at fair value through profit or loss 2024 2023
£’000 £’000
Gains on sales of investments based on historic cost 3,099 1,242
Amounts recognised in investment holding gains and losses in the previous year in respect of investments
sold in the year (3,014) (2,196)
Gains/(losses) on sales of investments based on the carrying value at the previous statement of financial position date 85 (954)
Unrealised gain recognised in respect of investments continuing to be held 30,671 1,280
Gains on investments held at fair value through profit or loss 30,756 326
Introduction Strategic Report Governance Financial Other Information (Unaudited)
(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 40% to revenue and 60% 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, cash equivalents and demand deposits which are readily convertible to a known amount of cash
and are subject to insignificant risk of changes in value.
Cash equivalents are short-term maturity of three months or less, highly liquid investments that are readily convertible to known amounts of
cash. The Company’s investment in HSBC’s Sterling Liquidity Fund of £944,000 (2023: Nil) is managed as part of the Company’s cash and cash
equivalents as defined under FRS 102: 7.2.
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 are classified as financial liabilities at amortised cost. They are initially measured at the proceeds received, net of direct issue costs,
and subsequently measured at amortised cost using the effective interest method.
(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
financial statements.
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.
2. Gains on investments held at fair value through profit or loss 2024 2023
£’000 £’000
Gains on sales of investments based on historic cost 3,099 1,242
Amounts recognised in investment holding gains and losses in the previous year in respect of investments
sold in the year (3,014) (2,196)
Gains/(losses) on sales of investments based on the carrying value at the previous statement of financial position date 85 (954)
Unrealised gain recognised in respect of investments continuing to be held 30,671 1,280
Gains on investments held at fair value through profit or loss 30,756 326
58
Schroder Income Growth Fund plc
Notes to the Financial Statements
continued
3. Income 2024 2023
£’000 £’000
Income from investments:
UK dividends 8,736 8,763
UK special dividends 51 196
Overseas dividends 839 1,538
Scrip dividends 116 63
9,742 10,560
Other interest receivable and similar income:
Deposit interest 107 90
Other income 35 –
142 90
Capital:
Special dividends allocated to capital 275 –
Total income 10,159 10,650
4. Management fee 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 436 654 1,090 422 633 1,055
The basis for calculating the management fee is set out in the Directors’ Report on page 33.
5. Administrative expenses 2024 2023
£’000 £’000
Administration expenses 399 374
Directors’ fees 127 122
Auditor’s remuneration for the audit of the Company’s financial statements
1
59 56
585 552
1
Includes £10,000 (2023: £9,000) irrecoverable VAT.
6. Finance costs 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 779 1,168 1,947 546 821 1,367
7. Taxation
(a) Analysis of charge in the year
2024 2023
£’000 £’000
Irrecoverable overseas tax – –
Tax charge for the year – –
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2023: lower) than the Company’s applicable rate of corporation tax for the year of 25% (2023: 21.5%).
The factors affecting the current tax charge for the year are as follows:
Notes to the Financial Statements
continued
3. Income 2024 2023
£’000 £’000
Income from investments:
UK dividends 8,736 8,763
UK special dividends 51 196
Overseas dividends 839 1,538
Scrip dividends 116 63
9,742 10,560
Other interest receivable and similar income:
Deposit interest 107 90
Other income 35 –
142 90
Capital:
Special dividends allocated to capital 275 –
Total income 10,159 10,650
4. Management fee 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 436 654 1,090 422 633 1,055
The basis for calculating the management fee is set out in the Directors’ Report on page 33.
5. Administrative expenses 2024 2023
£’000 £’000
Administration expenses 399 374
Directors’ fees 127 122
Auditor’s remuneration for the audit of the Company’s financial statements
1
59 56
585 552
1
Includes £10,000 (2023: £9,000) irrecoverable VAT.
6. Finance costs 2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 779 1,168 1,947 546 821 1,367
7. Taxation
(a) Analysis of charge in the year
2024 2023
£’000 £’000
Irrecoverable overseas tax – –
Tax charge for the year – –
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2023: lower) than the Company’s applicable rate of corporation tax for the year of 25% (2023: 21.5%).
The factors affecting the current tax charge for the year are as follows:
Schroder Income Growth Fund plc
59
Introduction Strategic Report Governance Financial Other Information (Unaudited)
2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net gain/return on ordinary activities before taxation 8,084 29,232 37,316 9,130 (1,128) 8,002
Net gain/return on ordinary activities before taxation multiplied by
the Company’s applicable rate of corporation tax for the year
of 25% (2023: 21.5%) 2,021 7,308 9,329 1,962 (243) 1,719
Effects of:
Capital losses on investments – (7,695) (7,695) – (70) (70)
Income not chargeable to corporation tax (2,339) (69) (2,408) (2,181) – (2,181)
Unrelieved expenses 318 456 774 219 313 532
Tax charge for the year – – – – – –
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £9,979,000 (2023: £9,207,000) based on a main rate of corporation tax of 25% (2023:
25%). The main rate of corporation tax increased to 25% for fiscal years beginning on or after 1 April 2023.
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
financial statements.
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.
8. Dividends
(a) Dividends paid and declared
2024 2023
£’000 £’000
2023 fourth interim dividend of 6.3p (2022: 5.7p) 4,376 3,959
First interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Second interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Third interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Total dividends paid in the year 9,585 9,170
2024 2023
£’000 £’000
Fourth interim dividend declared of 6.7p (2023: 6.3p) 4,651 4,376
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 £8,084,000 (2023: £9,130,000).
2024 2023
£’000 £’000
First interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Second interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Third interim dividend of 2.5p (2023: 2.5p) 1,735 1,737
Fourth interim dividend of 6.7p (2023: 6.3p) 4,651 4,376
Total dividends of 14.2p (2023: 13.8p) per share 9,860 9,587
Introduction Strategic Report Governance Financial Other Information (Unaudited)
2024 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net gain/return on ordinary activities before taxation 8,084 29,232 37,316 9,130 (1,128) 8,002
Net gain/return on ordinary activities before taxation multiplied by
the Company’s applicable rate of corporation tax for the year
of 25% (2023: 21.5%) 2,021 7,308 9,329 1,962 (243) 1,719
Effects of:
Capital losses on investments – (7,695) (7,695) – (70) (70)
Income not chargeable to corporation tax (2,339) (69) (2,408) (2,181) – (2,181)
Unrelieved expenses 318 456 774 219 313 532
Tax charge for the year – – – – – –
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £9,979,000 (2023: £9,207,000) based on a main rate of corporation tax of 25% (2023:
25%). The main rate of corporation tax increased to 25% for fiscal years beginning on or after 1 April 2023.
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
financial statements.
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.
8. Dividends
(a) Dividends paid and declared
2024 2023
£’000 £’000
2023 fourth interim dividend of 6.3p (2022: 5.7p) 4,376 3,959
First interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Second interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Third interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Total dividends paid in the year 9,585 9,170
2024 2023
£’000 £’000
Fourth interim dividend declared of 6.7p (2023: 6.3p) 4,651 4,376
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 £8,084,000 (2023: £9,130,000).
2024 2023
£’000 £’000
First interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Second interim dividend of 2.5p (2023: 2.5p) 1,737 1,737
Third interim dividend of 2.5p (2023: 2.5p) 1,735 1,737
Fourth interim dividend of 6.7p (2023: 6.3p) 4,651 4,376
Total dividends of 14.2p (2023: 13.8p) per share 9,860 9,587
60
Schroder Income Growth Fund plc
Notes to the Financial Statements
continued
9. Return/(loss) per share 2024 2023
£’000 £’000
Revenue return 8,084 9,130
Capital return/(loss) 29,232 (1,128)
Total return 37,316 8,002
Weighted average number of ordinary shares in issue during the year 69,449,119 69,463,343
Revenue return per share (pence) 11.64 13.14
Capital return/(loss) per share (pence) 42.09 (1.62)
Total return/gain per share (pence) 53.73 11.52
10. Investments held at fair value through profit or loss 2024 2023
£’000 £’000
Opening book cost 207,268 207,135
Opening investment holding gains 22,446 23,362
Opening fair value 229,714 230,497
Analysis of transactions made during the year
Purchases at cost 25,189 57,193
Sales proceeds (27,250) (58,302)
Gains on investments held at fair value 30,756 326
Closing fair value 258,409 229,714
Closing book cost 208,306 207,268
Closing investment holding gains 50,103 22,446
Closing fair value 258,409 229,714
All investments are listed on a recognised stock exchange.
Sales proceeds amounting to £27,250,000 (2023: £58,302,000) were receivable from disposal of investments in the year. The book cost of these
investments when they were purchased was £24,151,000 (2023: £57,059,000). 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:
2024 2023
£’000 £’000
On acquisitions 130 236
On disposals 13 30
143 266
11. Debtors 2024 2023
£’000 £’000
Dividends and interest receivable 1,901 2,537
Taxation recoverable – 5
Other debtors 8 15
1,909 2,557
The Directors consider that the carrying amount of debtors approximates to their fair value.
12. Cash and cash equivalents 2024 2023
£’000 £’000
Cash at bank 748 1,560
Money market fund 944 –
1,692 1,560
As at 31 August 2024, the Company held shares in the HSBC Sterling Liquidity fund with a market value of £944,000 (31 August 2023: Nil), which
is managed as part of the Company’s cash and cash equivalents as defined under FRS 102:7.2.
Notes to the Financial Statements
continued
9. Return/(loss) per share 2024 2023
£’000 £’000
Revenue return 8,084 9,130
Capital return/(loss) 29,232 (1,128)
Total return 37,316 8,002
Weighted average number of ordinary shares in issue during the year 69,449,119 69,463,343
Revenue return per share (pence) 11.64 13.14
Capital return/(loss) per share (pence) 42.09 (1.62)
Total return/gain per share (pence) 53.73 11.52
10. Investments held at fair value through profit or loss 2024 2023
£’000 £’000
Opening book cost 207,268 207,135
Opening investment holding gains 22,446 23,362
Opening fair value 229,714 230,497
Analysis of transactions made during the year
Purchases at cost 25,189 57,193
Sales proceeds (27,250) (58,302)
Gains on investments held at fair value 30,756 326
Closing fair value 258,409 229,714
Closing book cost 208,306 207,268
Closing investment holding gains 50,103 22,446
Closing fair value 258,409 229,714
All investments are listed on a recognised stock exchange.
Sales proceeds amounting to £27,250,000 (2023: £58,302,000) were receivable from disposal of investments in the year. The book cost of these
investments when they were purchased was £24,151,000 (2023: £57,059,000). 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:
2024 2023
£’000 £’000
On acquisitions 130 236
On disposals 13 30
143 266
11. Debtors 2024 2023
£’000 £’000
Dividends and interest receivable 1,901 2,537
Taxation recoverable – 5
Other debtors 8 15
1,909 2,557
The Directors consider that the carrying amount of debtors approximates to their fair value.
12. Cash and cash equivalents 2024 2023
£’000 £’000
Cash at bank 748 1,560
Money market fund 944 –
1,692 1,560
As at 31 August 2024, the Company held shares in the HSBC Sterling Liquidity fund with a market value of £944,000 (31 August 2023: Nil), which
is managed as part of the Company’s cash and cash equivalents as defined under FRS 102:7.2.
Schroder Income Growth Fund plc
61
Introduction Strategic Report Governance Financial Other Information (Unaudited)
13. Creditors: amounts falling due within one year 2024 2023
£’000 £’000
Bank loan 30,000 29,500
Other creditors and accruals 449 399
30,449 29,899
The bank loan comprises £30.0 million (2023: £29.5 million) drawn down on the Company’s revolving credit facility with SMBC Bank International
plc. The facility was not extended, and effective 20 September 2024, the Company entered into a new loan agreement with The Bank of Nova
Scotia, London Branch.
The facility with SMBC Bank International plc was unsecured and subject to covenants and restrictions which were customary for a facility of this
nature, all of which were complied with during the year. Further details of this facility are given in note 20(a)(i) on page 63.
The new facility is secured and is subject to covenants and restrictions which are customary to a facility of this nature.
The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
14. Called-up share capital 2024 2023
£’000 £’000
Ordinary shares allotted, called-up and fully paid:
Ordinary shares of 10p each
Opening balance of 69,463,343 (2023: 69,463,343) shares 6,946 6,946
Repurchase of 38,000 (2023: nil) shares held in treasury (4) –
Subtotal of 69,425,343 (2023: 69,463,343) shares 6,942 6,946
38,000 (2023: nil) shares held in treasury 4 –
Total of 69,425,343 (2023: 69,463,343) shares 6,946 6,946
15. Reserves 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
Year ended 31 August 2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 9,449 2,011 1,596 34,936 114,666 22,446 11,882
Gains on sales of investments based on the carrying
value at the previous statement of financial position date – – – – 85 – –
Net movement in investment holding gains and losses – – – – – 30,671 –
Transfer on disposal of investments – – – – 3,014 (3,014) –
Realised exchange gains on currency balances – – – – 23 – –
Management fee and finance costs allocated to capital – – – – (1,822) – –
Share repurchase into treasury – – – (102) – – –
Special dividends allocated to capital – – – – 275 – –
Dividends paid – – – – – – (9,585)
Retained revenue for the year – – – – – – 8,084
Closing balance 9,449 2,011 1,596 34,834 116,241 50,103 10,381
Introduction Strategic Report Governance Financial Other Information (Unaudited)
13. Creditors: amounts falling due within one year 2024 2023
£’000 £’000
Bank loan 30,000 29,500
Other creditors and accruals 449 399
30,449 29,899
The bank loan comprises £30.0 million (2023: £29.5 million) drawn down on the Company’s revolving credit facility with SMBC Bank International
plc. The facility was not extended, and effective 20 September 2024, the Company entered into a new loan agreement with The Bank of Nova
Scotia, London Branch.
The facility with SMBC Bank International plc was unsecured and subject to covenants and restrictions which were customary for a facility of this
nature, all of which were complied with during the year. Further details of this facility are given in note 20(a)(i) on page 63.
The new facility is secured and is subject to covenants and restrictions which are customary to a facility of this nature.
The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
14. Called-up share capital 2024 2023
£’000 £’000
Ordinary shares allotted, called-up and fully paid:
Ordinary shares of 10p each
Opening balance of 69,463,343 (2023: 69,463,343) shares 6,946 6,946
Repurchase of 38,000 (2023: nil) shares held in treasury (4) –
Subtotal of 69,425,343 (2023: 69,463,343) shares 6,942 6,946
38,000 (2023: nil) shares held in treasury 4 –
Total of 69,425,343 (2023: 69,463,343) shares 6,946 6,946
15. Reserves 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
Year ended 31 August 2024 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 9,449 2,011 1,596 34,936 114,666 22,446 11,882
Gains on sales of investments based on the carrying
value at the previous statement of financial position date – – – – 85 – –
Net movement in investment holding gains and losses – – – – – 30,671 –
Transfer on disposal of investments – – – – 3,014 (3,014) –
Realised exchange gains on currency balances – – – – 23 – –
Management fee and finance costs allocated to capital – – – – (1,822) – –
Share repurchase into treasury – – – (102) – – –
Special dividends allocated to capital – – – – 275 – –
Dividends paid – – – – – – (9,585)
Retained revenue for the year – – – – – – 8,084
Closing balance 9,449 2,011 1,596 34,834 116,241 50,103 10,381
62
Schroder Income Growth Fund plc
Notes to the Financial Statements
continued
15. Reserves continued 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
Year ended 31 August 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 9,449 2,011 1,596 34,936 114,878 23,362 11,922
Losses on sales of investments based on the carrying
value at the previous statement of financial position date – – – – (954) – –
Net movement in investment holding gains and losses – – – – – 1,280 –
Transfer on disposal of investments – – – – 2,196 (2,196) –
Management fee and finance costs allocated to capital – – – – (1,454) – –
Dividends paid – – – – – – (9,170)
Retained revenue for the year – – – – – – 9,130
Closing balance 9,449 2,011 1,596 34,936 114,666 22,446 11,882
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 be distributed as dividends or used to repurchase the Company’s own shares.
16. Net asset value per share 2024 2023
Net assets attributable to shareholders (£’000) 231,561 203,932
Shares in issue at the year end 69,425,343 69,463,343
Net asset value per share (pence) 333.54 293.58
17. 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 33. 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 2024 amounted to £1,090,000 (2023: £1,055,000) of which £291,000
(2023: £259,000) was outstanding at the year end.
Effective from 1 March 2021, the Manager is entitled to receive a further fee to cover administration and company secretarial costs.
The secretarial fee payable for the year amounted to £180,000 (2023: £180,000) including VAT, of which £45,000 (2023: £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.
18. Related party transactions
Details of the remuneration payable to Directors are given in the Directors’ Remuneration Report on pages 42 to 44 and details of Directors’
shareholdings are given in the Directors’ Remuneration Report on page 44. Details of transactions with the Manager are given in note 17 above.
There have been no other transactions with related parties during the year (2023: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio.
FRS 102 requires 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).
At 31 August 2024, all investments in the Company’s portfolio are categorised as Level 1 (2023: same).
Notes to the Financial Statements
continued
15. Reserves continued 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
Year ended 31 August 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 9,449 2,011 1,596 34,936 114,878 23,362 11,922
Losses on sales of investments based on the carrying
value at the previous statement of financial position date – – – – (954) – –
Net movement in investment holding gains and losses – – – – – 1,280 –
Transfer on disposal of investments – – – – 2,196 (2,196) –
Management fee and finance costs allocated to capital – – – – (1,454) – –
Dividends paid – – – – – – (9,170)
Retained revenue for the year – – – – – – 9,130
Closing balance 9,449 2,011 1,596 34,936 114,666 22,446 11,882
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 be distributed as dividends or used to repurchase the Company’s own shares.
16. Net asset value per share 2024 2023
Net assets attributable to shareholders (£’000) 231,561 203,932
Shares in issue at the year end 69,425,343 69,463,343
Net asset value per share (pence) 333.54 293.58
17. 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 33. 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 2024 amounted to £1,090,000 (2023: £1,055,000) of which £291,000
(2023: £259,000) was outstanding at the year end.
Effective from 1 March 2021, the Manager is entitled to receive a further fee to cover administration and company secretarial costs.
The secretarial fee payable for the year amounted to £180,000 (2023: £180,000) including VAT, of which £45,000 (2023: £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.
18. Related party transactions
Details of the remuneration payable to Directors are given in the Directors’ Remuneration Report on pages 42 to 44 and details of Directors’
shareholdings are given in the Directors’ Remuneration Report on page 44. Details of transactions with the Manager are given in note 17 above.
There have been no other transactions with related parties during the year (2023: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio.
FRS 102 requires 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).
At 31 August 2024, all investments in the Company’s portfolio are categorised as Level 1 (2023: same).
Schroder Income Growth Fund plc
63
Introduction Strategic Report Governance Financial Other Information (Unaudited)
20. 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.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown
below:
2024 2023
£’000 £’000
Exposure to floating interest rates:
Cash and cash equivalents 1,692 1,560
Creditors falling due within one year: bank loan (30,000) (29,500)
Total exposure (28,308) (27,940)
Cash balances earn interest at a floating rate based on the Sterling Overnight Index Average (2023: Sterling Overnight Index Average).
The £30.0 million credit facility with SMBC Bank International plc was not extended, and effective 20 September 2024, the Company entered
into a new loan agreement with The Bank of Nova Scotia, London Branch. 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 2024, the Company had drawn down £30.0 million (2023: £29.5 million), for a one month period at an
interest rate of 6.28% (2023: 5.91%) 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 of cash
balances and drawings on the facility have fluctuated. The maximum and minimum exposure during the year was as follows:
2024 2023
£’000 £’000
Minimum debit interest rate exposure during the year – net debt (24,828) (21,727)
Maximum debit interest rate exposure during the year – net debt (29,635) (27,940)
Introduction Strategic Report Governance Financial Other Information (Unaudited)
20. 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.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown
below:
2024 2023
£’000 £’000
Exposure to floating interest rates:
Cash and cash equivalents 1,692 1,560
Creditors falling due within one year: bank loan (30,000) (29,500)
Total exposure (28,308) (27,940)
Cash balances earn interest at a floating rate based on the Sterling Overnight Index Average (2023: Sterling Overnight Index Average).
The £30.0 million credit facility with SMBC Bank International plc was not extended, and effective 20 September 2024, the Company entered
into a new loan agreement with The Bank of Nova Scotia, London Branch. 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 2024, the Company had drawn down £30.0 million (2023: £29.5 million), for a one month period at an
interest rate of 6.28% (2023: 5.91%) 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 of cash
balances and drawings on the facility have fluctuated. The maximum and minimum exposure during the year was as follows:
2024 2023
£’000 £’000
Minimum debit interest rate exposure during the year – net debt (24,828) (21,727)
Maximum debit interest rate exposure during the year – net debt (29,635) (27,940)
64
Schroder Income Growth Fund plc
Notes to the Financial Statements
continued
20. Financial instruments’ exposure to risk and risk management policies continued
(a) Market risk continued
(i) Interest rate risk continued
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2023: 1.0%) increase or decrease in
interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a reasonable
illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial
instruments held at the statement of financial position date which are exposed to interest rate movements, with all other variables held
constant.
2024 2023
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Statement of comprehensive income – return after taxation
Revenue return (103) 103 (102) 102
Capital return (180) 180 (177) 177
Total return after taxation (283) 283 (279) 279
Net assets (283) 283 (279) 279
Due to UK interest rates stabilising over the course of the year, the interest rate sensitivity has been updated back to 1.0%. The prior year
disclosure has been updated to 1.0% to show a direct comparison in the sensitivity. As disclosed in the prior year annual report, an increase of
1.5% reduced total return after taxation by £420,000 (a decrease of 1.5% 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.
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:
2024 2023
£’000 £’000
Investments held at fair value through profit or loss 258,409 229,714
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 15. 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% (2023:
20%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on observation of
current market conditions. The sensitivity analysis is based on the Company’s exposure through equity investments and includes the impact on
the management fee but assumes that all other variables are held constant.
2024 2023
20% increase 20% decrease 20% increase 20% decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Statement of comprehensive income – return after taxation
Revenue return (93) 93 (83) 83
Capital return 51,542 (51,542) 45,819 (45,819)
Total return after taxation and net assets 51,449 (51,449) 45,736 (45,736)
Change in net asset value 22.2% (22.2%) 22.4% (22.4%)
Notes to the Financial Statements
continued
20. Financial instruments’ exposure to risk and risk management policies continued
(a) Market risk continued
(i) Interest rate risk continued
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2023: 1.0%) increase or decrease in
interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a reasonable
illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial
instruments held at the statement of financial position date which are exposed to interest rate movements, with all other variables held
constant.
2024 2023
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Statement of comprehensive income – return after taxation
Revenue return (103) 103 (102) 102
Capital return (180) 180 (177) 177
Total return after taxation (283) 283 (279) 279
Net assets (283) 283 (279) 279
Due to UK interest rates stabilising over the course of the year, the interest rate sensitivity has been updated back to 1.0%. The prior year
disclosure has been updated to 1.0% to show a direct comparison in the sensitivity. As disclosed in the prior year annual report, an increase of
1.5% reduced total return after taxation by £420,000 (a decrease of 1.5% 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.
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:
2024 2023
£’000 £’000
Investments held at fair value through profit or loss 258,409 229,714
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 15. 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% (2023:
20%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on observation of
current market conditions. The sensitivity analysis is based on the Company’s exposure through equity investments and includes the impact on
the management fee but assumes that all other variables are held constant.
2024 2023
20% increase 20% decrease 20% increase 20% decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Statement of comprehensive income – return after taxation
Revenue return (93) 93 (83) 83
Capital return 51,542 (51,542) 45,819 (45,819)
Total return after taxation and net assets 51,449 (51,449) 45,736 (45,736)
Change in net asset value 22.2% (22.2%) 22.4% (22.4%)
Schroder Income Growth Fund plc
65
Introduction Strategic Report Governance Financial Other Information (Unaudited)
(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.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2024 2023
Three months Three months
or less Total or less Total
£’000 £’000 £’000 £’000
Creditors: amounts falling due within one year
Other creditors and accruals 444 444 399 399
Bank loan – including interest 30,157 30,157 29,645 29,645
30,601 30,601 30,044 30,044
(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 A3 with Moody’s. The
Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the custodian were to become
insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash balances
are all deposited with the custodian as banker and held on the custodian’s balance sheet. Accordingly, in accordance with usual banking
practice, the Company will rank as a general creditor to the custodian in respect of cash balances.
Credit risk exposure
The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current and
comparative year end.
2024 2023
Balance Maximum Balance Maximum
sheet exposure sheet exposure
£’000 £’000 £’000 £’000
Current assets
Debtors – dividends and interest receivable and other debtors 1,909 1,909 2,557 2,557
Cash and cash equivalents 1,692 1,692 1,560 1,560
3,601 3,601 4,117 4,117
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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
(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.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2024 2023
Three months Three months
or less Total or less Total
£’000 £’000 £’000 £’000
Creditors: amounts falling due within one year
Other creditors and accruals 444 444 399 399
Bank loan – including interest 30,157 30,157 29,645 29,645
30,601 30,601 30,044 30,044
(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 A3 with Moody’s. The
Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the custodian were to become
insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash balances
are all deposited with the custodian as banker and held on the custodian’s balance sheet. Accordingly, in accordance with usual banking
practice, the Company will rank as a general creditor to the custodian in respect of cash balances.
Credit risk exposure
The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current and
comparative year end.
2024 2023
Balance Maximum Balance Maximum
sheet exposure sheet exposure
£’000 £’000 £’000 £’000
Current assets
Debtors – dividends and interest receivable and other debtors 1,909 1,909 2,557 2,557
Cash and cash equivalents 1,692 1,692 1,560 1,560
3,601 3,601 4,117 4,117
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.
66
Schroder Income Growth Fund plc
21. Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
The Company’s debt and capital structure comprises the following:
2024 2023
£’000 £’000
Debt
Bank loan 30,000 29,500
Equity
Called-up share capital 6,946 6,946
Reserves 224,615 196,986
231,561 203,932
Total debt and equity 261,561 233,432
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.
2024 2023
£’000 £’000
Borrowings used for investment purposes, less cash 28,308 27,940
Net assets 231,561 203,932
Gearing 12.2% 13.7%
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.
Notes to the Financial Statements
continued
21. Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
The Company’s debt and capital structure comprises the following:
2024 2023
£’000 £’000
Debt
Bank loan 30,000 29,500
Equity
Called-up share capital 6,946 6,946
Reserves 224,615 196,986
231,561 203,932
Total debt and equity 261,561 233,432
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.
2024 2023
£’000 £’000
Borrowings used for investment purposes, less cash 28,308 27,940
Net assets 231,561 203,932
Gearing 12.2% 13.7%
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.
Notes to the Financial Statements
continued
Other Information (Unaudited)
Annual General Meeting – Recommendations 68
Notice of Annual General Meeting 69
Explanatory Notes to the Notice of Meeting 70
Definitions of Terms and Alternative
Performance Measures 72
Shareholder Information 74
Risk Disclosures 76
Information about the Company 77
Other
Information
(Unaudited)
67
Annual General Meeting – Recommendations 68
Notice of Annual General Meeting 69
Explanatory Notes to the Notice of Meeting 70
Definitions of Terms and Alternative
Performance Measures 72
Shareholder Information 74
Risk Disclosures 76
Information about the Company 77
Other
Information
(Unaudited)
67
68
Schroder Income Growth Fund plc
Annual General Meeting – Recommendations
The AGM of the Company will be held on 11 December 2024 at
12.30 p.m. The formal Notice of Meeting is set out on pages 69 to
71.
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 10 are all ordinary resolutions
Resolutions 1 to 10 are ordinary resolutions. Resolution 2 concerns
the Remuneration Report, on pages 42 to 44. Resolutions 3 to 6 invite
shareholders to re-elect each of the Directors for another year. The
re-elections have been recommended by the Nomination Committee
on pages 39 and 40 (their biographies are set out on pages 30 and
31). Resolutions 7 and 8 concern the re-appointment and
remuneration of the Company’s Auditor, discussed in the Audit and
Risk Committee Report on pages 35 to 37. Resolution 9 relates to an
advisory vote in respect of the Company’s dividend policy.
Special business
Resolution 10: Directors’ authority to allot shares
(ordinary resolution) and Resolution 11: 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 £694,173.43 (being 10% of the issued
share capital, excluding shares held in treasury, as at the date of the
Notice of the AGM). A special resolution will also be proposed to give
the Directors authority to allot securities for cash on a non
pre-emptive basis up to a maximum aggregate nominal amount of
£694,173.43 (being 10% of the Company’s issued share capital,
excluding shares held in treasury, 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 2025 unless renewed, varied or revoked earlier.
Resolution 12: authority to make market purchases of
the Company’s own shares (special resolution)
At the AGM held on 13 December 2023, the Company was granted
authority to make market purchases of up to 10,412,555 ordinary
shares of 10p each for cancellation. 46,000 shares have been brought
back under this authority and the Company therefore has remaining
authority to purchase up to 10,366,555 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 2024 AGM will
lapse at the conclusion of the AGM in 2025 unless renewed, varied or
revoked earlier.
Resolution 13: notice period for general meetings
(special resolution)
Resolution 13 set out in the Notice of AGM is a special resolution and
will, if passed, allow the Company to hold general meetings (other
than annual general meetings) on a minimum notice period of
14 clear days, rather than 21 clear days as required by the Companies
Act 2006. The approval will be effective until the Company’s next AGM
to be held in 2025. The Directors will only call general meetings on
14 clear days’ notice when they consider it to be in the best interests
of the Company’s shareholders and will only do so if the Company
offers facilities for all shareholders to vote by electronic means and
when the matter needs to be dealt with expediently.
Recommendations
The Board considers that the resolutions relating to the above items
of business are in the best interests of shareholders as a whole.
Accordingly, the Board unanimously recommends to shareholders
that they vote in favour of the resolutions to be proposed at the
forthcoming AGM, as they intend to do in respect of their own
beneficial holdings.
Annual General Meeting – Recommendations
The AGM of the Company will be held on 11 December 2024 at
12.30 p.m. The formal Notice of Meeting is set out on pages 69 to
71.
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 10 are all ordinary resolutions
Resolutions 1 to 10 are ordinary resolutions. Resolution 2 concerns
the Remuneration Report, on pages 42 to 44. Resolutions 3 to 6 invite
shareholders to re-elect each of the Directors for another year. The
re-elections have been recommended by the Nomination Committee
on pages 39 and 40 (their biographies are set out on pages 30 and
31). Resolutions 7 and 8 concern the re-appointment and
remuneration of the Company’s Auditor, discussed in the Audit and
Risk Committee Report on pages 35 to 37. Resolution 9 relates to an
advisory vote in respect of the Company’s dividend policy.
Special business
Resolution 10: Directors’ authority to allot shares
(ordinary resolution) and Resolution 11: 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 £694,173.43 (being 10% of the issued
share capital, excluding shares held in treasury, as at the date of the
Notice of the AGM). A special resolution will also be proposed to give
the Directors authority to allot securities for cash on a non
pre-emptive basis up to a maximum aggregate nominal amount of
£694,173.43 (being 10% of the Company’s issued share capital,
excluding shares held in treasury, 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 2025 unless renewed, varied or revoked earlier.
Resolution 12: authority to make market purchases of
the Company’s own shares (special resolution)
At the AGM held on 13 December 2023, the Company was granted
authority to make market purchases of up to 10,412,555 ordinary
shares of 10p each for cancellation. 46,000 shares have been brought
back under this authority and the Company therefore has remaining
authority to purchase up to 10,366,555 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 2024 AGM will
lapse at the conclusion of the AGM in 2025 unless renewed, varied or
revoked earlier.
Resolution 13: notice period for general meetings
(special resolution)
Resolution 13 set out in the Notice of AGM is a special resolution and
will, if passed, allow the Company to hold general meetings (other
than annual general meetings) on a minimum notice period of
14 clear days, rather than 21 clear days as required by the Companies
Act 2006. The approval will be effective until the Company’s next AGM
to be held in 2025. The Directors will only call general meetings on
14 clear days’ notice when they consider it to be in the best interests
of the Company’s shareholders and will only do so if the Company
offers facilities for all shareholders to vote by electronic means and
when the matter needs to be dealt with expediently.
Recommendations
The Board considers that the resolutions relating to the above items
of business are in the best interests of shareholders as a whole.
Accordingly, the Board unanimously recommends to shareholders
that they vote in favour of the resolutions to be proposed at the
forthcoming AGM, as they intend to do in respect of their own
beneficial holdings.
Schroder Income Growth Fund plc
69
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Schroder
Income Growth Fund plc will be held on Wednesday, 11 December
2024 at 12.30 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 to 13 will be
proposed as special resolutions:
1. To receive the Report of the Directors and the audited financial
statements for the year ended 31 August 2024.
2. To approve the Directors’ Remuneration Report for the year
ended 31 August 2024.
3. To approve the re-election of Ewen Cameron Watt as a Director
of the Company.
4. To approve the re-election of June Aitken as a Director of the
Company.
5. To approve the re-election of Fraser McIntyre as a Director of the
Company.
6. To approve the re-election of Victoria Muir as a Director of the
Company.
7. To re-appoint Ernst & Young LLP as Auditor to the Company.
8. To authorise the Directors to determine the remuneration of
Ernst & Young LLP as Auditor to the Company.
9. To approve the Company’s dividend policy, as set out on page 18
of the annual report and financial statements for the year ended
31 August 2024.
10. 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 £694,173.43 (being 10% 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.”
11. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, subject to the passing of Resolution 10 set out above, the
directors be and are hereby empowered, pursuant to Section
571 of the Act, to allot equity securities (including any shares
held in treasury) (as defined in section 560(1) of the Act) pursuant
to the authority given in accordance with section 551 of the Act
by the said Resolution 10 and/or where such allotment
constitutes an allotment of equity securities by virtue of section
560(2) of the Act as if Section 561(1) of the Act did not apply to
any such allotment, provided that this power shall be limited to
the allotment of equity securities up to an aggregate nominal
amount of £694,173.43 (representing 10% 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.”
12. 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
10,405,660, representing 14.99% of the Company’s issued
ordinary share capital as at the date of this Notice (excluding
treasury shares);
(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 2025
(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.”
13. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, a general meeting, other than an Annual General Meeting,
may be called on not less than 14 clear days’ notice.”
By order of the Board
for and on behalf of
Registered Office:
Schroder Investment Management Limited 1 London Wall Place,
Company Secretary London EC2Y 5AU
11 November 2024 Registered Number: 03008494
Introduction Strategic Report Governance Financial Other Information (Unaudited)
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Schroder
Income Growth Fund plc will be held on Wednesday, 11 December
2024 at 12.30 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 to 13 will be
proposed as special resolutions:
1. To receive the Report of the Directors and the audited financial
statements for the year ended 31 August 2024.
2. To approve the Directors’ Remuneration Report for the year
ended 31 August 2024.
3. To approve the re-election of Ewen Cameron Watt as a Director
of the Company.
4. To approve the re-election of June Aitken as a Director of the
Company.
5. To approve the re-election of Fraser McIntyre as a Director of the
Company.
6. To approve the re-election of Victoria Muir as a Director of the
Company.
7. To re-appoint Ernst & Young LLP as Auditor to the Company.
8. To authorise the Directors to determine the remuneration of
Ernst & Young LLP as Auditor to the Company.
9. To approve the Company’s dividend policy, as set out on page 18
of the annual report and financial statements for the year ended
31 August 2024.
10. 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 £694,173.43 (being 10% 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.”
11. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, subject to the passing of Resolution 10 set out above, the
directors be and are hereby empowered, pursuant to Section
571 of the Act, to allot equity securities (including any shares
held in treasury) (as defined in section 560(1) of the Act) pursuant
to the authority given in accordance with section 551 of the Act
by the said Resolution 10 and/or where such allotment
constitutes an allotment of equity securities by virtue of section
560(2) of the Act as if Section 561(1) of the Act did not apply to
any such allotment, provided that this power shall be limited to
the allotment of equity securities up to an aggregate nominal
amount of £694,173.43 (representing 10% 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.”
12. 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
10,405,660, representing 14.99% of the Company’s issued
ordinary share capital as at the date of this Notice (excluding
treasury shares);
(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 2025
(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.”
13. To consider and, if thought fit, to pass the following resolution as
a special resolution:
“THAT, a general meeting, other than an Annual General Meeting,
may be called on not less than 14 clear days’ notice.”
By order of the Board
for and on behalf of
Registered Office:
Schroder Investment Management Limited 1 London Wall Place,
Company Secretary London EC2Y 5AU
11 November 2024 Registered Number: 03008494
70
Schroder Income Growth Fund plc
Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend and vote at the
meeting and to appoint one or more proxies, who need not be
a shareholder, as their proxy to exercise all or any of their rights
to attend, speak and vote on their behalf at the meeting.
A proxy form is attached. 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 Registrar, Equiniti Limited, on
+44 (0) 800 032 0641, or you may photocopy the attached proxy
form. Please indicate in the box next to the proxy holder’s name
the number of shares in relation to which they are authorised to
act as your proxy. Please also indicate by ticking the box provided
if the proxy instruction is one of multiple instructions being given.
Completion and return of a form of proxy will not preclude
a member from attending the Annual General Meeting and
voting in person.
On a vote by show of hands, every ordinary shareholder who is
present in person has one vote and every duly appointed proxy
who is present has one vote. On a poll vote, every ordinary
shareholder who is present in person or by way of a proxy has
one vote for every share of which he/she is a holder.
The “Vote Withheld” option on the proxy form is provided to
enable you to abstain on any particular resolution. However it
should be noted that a “Vote Withheld” is not a vote in law and
will not be counted in the calculation of the proportion of the
votes ‘For’ and ‘Against’ a resolution.
A proxy form must be signed and dated by the shareholder or
his or her attorney duly authorised in writing. In the case of joint
holdings, any one holder may sign this form. The vote of the
senior joint holder who tenders a vote, whether in person or by
proxy, will be accepted to the exclusion of the votes of the other
joint holder and for this purpose seniority will be determined by
the order in which the names appear on the Register of
Members in respect of the joint holding. To be valid, proxy
form(s) must be completed and returned to the Company’s
Registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, or 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 by going to Equiniti’s Shareview website,
www.shareview.co.uk, and logging in to your Shareview Portfolio.
Once you have logged in, simply click ‘View’ on the ‘My
Investments’ page and then click on the link to vote and follow
the on-screen instructions. If you have not yet registered for
a Shareview Portfolio, go to www.shareview.co.uk and enter the
requested information. It is important that you register for
a Shareview Portfolio with enough time to complete the
registration and authentication processes. Please note that to be
valid, your proxy instructions must be received by Equiniti no
later than 12.30pm on 9 December 2024. If you have any
difficulties with online voting, you should contact the shareholder
helpline on +44 (0) 800 032 0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest
time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided either
in this Notice of Annual General Meeting or any related
documents to communicate with the Company for any purposes
other than expressly stated.
Representatives of shareholders that are corporations will have
to produce evidence of their proper appointment when
attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an
agreement between him or her and the shareholder by whom
he or she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual General
Meeting. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he or she may, under any
such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of ordinary shareholders in relation
to the appointment of proxies in note 1 above does not apply to
Nominated Persons. The rights described in that note can only
be exercised by ordinary shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of Members of the
Company at 6.30 p.m. on 9 December 2024, 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 9 December 2024
shall be disregarded in determining the right of any person to
attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by
using the procedures described in the CREST manual. The CREST
manual can be viewed at www.euroclear.com. A CREST message
appointing a proxy (a “CREST proxy instruction”) regardless of
whether it constitutes the appointment of a proxy or an
amendment to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted so as
to be received by the issuer’s agent (ID RA19) by the latest time
for receipt of proxy appointments.
5. If you are an institutional investor you may be able to appoint
a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 12.30 p.m. on
Monday 9 December 2024 in order to be considered valid.
Before you can appoint a proxy via this process you will need to
have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by
them and they will govern the electronic appointment of your
proxy.
6. 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
Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend and vote at the
meeting and to appoint one or more proxies, who need not be
a shareholder, as their proxy to exercise all or any of their rights
to attend, speak and vote on their behalf at the meeting.
A proxy form is attached. 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 Registrar, Equiniti Limited, on
+44 (0) 800 032 0641, or you may photocopy the attached proxy
form. Please indicate in the box next to the proxy holder’s name
the number of shares in relation to which they are authorised to
act as your proxy. Please also indicate by ticking the box provided
if the proxy instruction is one of multiple instructions being given.
Completion and return of a form of proxy will not preclude
a member from attending the Annual General Meeting and
voting in person.
On a vote by show of hands, every ordinary shareholder who is
present in person has one vote and every duly appointed proxy
who is present has one vote. On a poll vote, every ordinary
shareholder who is present in person or by way of a proxy has
one vote for every share of which he/she is a holder.
The “Vote Withheld” option on the proxy form is provided to
enable you to abstain on any particular resolution. However it
should be noted that a “Vote Withheld” is not a vote in law and
will not be counted in the calculation of the proportion of the
votes ‘For’ and ‘Against’ a resolution.
A proxy form must be signed and dated by the shareholder or
his or her attorney duly authorised in writing. In the case of joint
holdings, any one holder may sign this form. The vote of the
senior joint holder who tenders a vote, whether in person or by
proxy, will be accepted to the exclusion of the votes of the other
joint holder and for this purpose seniority will be determined by
the order in which the names appear on the Register of
Members in respect of the joint holding. To be valid, proxy
form(s) must be completed and returned to the Company’s
Registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, or 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 by going to Equiniti’s Shareview website,
www.shareview.co.uk, and logging in to your Shareview Portfolio.
Once you have logged in, simply click ‘View’ on the ‘My
Investments’ page and then click on the link to vote and follow
the on-screen instructions. If you have not yet registered for
a Shareview Portfolio, go to www.shareview.co.uk and enter the
requested information. It is important that you register for
a Shareview Portfolio with enough time to complete the
registration and authentication processes. Please note that to be
valid, your proxy instructions must be received by Equiniti no
later than 12.30pm on 9 December 2024. If you have any
difficulties with online voting, you should contact the shareholder
helpline on +44 (0) 800 032 0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest
time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided either
in this Notice of Annual General Meeting or any related
documents to communicate with the Company for any purposes
other than expressly stated.
Representatives of shareholders that are corporations will have
to produce evidence of their proper appointment when
attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an
agreement between him or her and the shareholder by whom
he or she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual General
Meeting. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he or she may, under any
such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of ordinary shareholders in relation
to the appointment of proxies in note 1 above does not apply to
Nominated Persons. The rights described in that note can only
be exercised by ordinary shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of Members of the
Company at 6.30 p.m. on 9 December 2024, 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 9 December 2024
shall be disregarded in determining the right of any person to
attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by
using the procedures described in the CREST manual. The CREST
manual can be viewed at www.euroclear.com. A CREST message
appointing a proxy (a “CREST proxy instruction”) regardless of
whether it constitutes the appointment of a proxy or an
amendment to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted so as
to be received by the issuer’s agent (ID RA19) by the latest time
for receipt of proxy appointments.
5. If you are an institutional investor you may be able to appoint
a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 12.30 p.m. on
Monday 9 December 2024 in order to be considered valid.
Before you can appoint a proxy via this process you will need to
have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by
them and they will govern the electronic appointment of your
proxy.
6. 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
Schroder Income Growth Fund plc
71
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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.
In addition, a copy of the Articles of Association of the Company
will be available for inspection.
7. The biographies of the Directors offering themselves for
re-election are set out on pages 30 and 31 of the Company’s
annual report and financial statements for the year ended
31 August 2024.
8. As at 11 November 2024, 69,463,343 ordinary shares of 10
pence each were in issue (of which 46,000 ordinary shares were
held in treasury). Therefore the total number of voting rights of
the Company as at 11 November 2024 was 69,417,343.
9. 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.
10. 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.
11. 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 auditor 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.
12. 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.
Introduction Strategic Report Governance Financial Other Information (Unaudited)
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.
In addition, a copy of the Articles of Association of the Company
will be available for inspection.
7. The biographies of the Directors offering themselves for
re-election are set out on pages 30 and 31 of the Company’s
annual report and financial statements for the year ended
31 August 2024.
8. As at 11 November 2024, 69,463,343 ordinary shares of 10
pence each were in issue (of which 46,000 ordinary shares were
held in treasury). Therefore the total number of voting rights of
the Company as at 11 November 2024 was 69,417,343.
9. 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.
10. 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.
11. 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 auditor 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.
12. 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.
72
Schroder Income Growth Fund plc
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Numerical
calculations are given where relevant. Some of the financial
measures below are classified as APMs as defined by the
European Securities and Markets Authority. Under this
definition, APMs include a financial measure of historical
financial performance or financial position, other than
a financial measure defined or specified in the applicable
financial reporting framework. APMs have been marked
with an asterisk.
Net asset value (“NAV”) per share
The NAV per share of 333.54p (2023: 293.58p) represents the net
assets attributable to equity shareholders of £231,561,000 (2023:
£203,932,000) divided by the number of shares in issue of 69,425,343
(2023: 69,463,343).
The change in the NAV amounted to 13.5% (2023: –0.6%) over the
year. However, this performance measure excludes the positive
impact of dividends paid out by the Company during the year. When
these dividends are factored into the calculation, the resulting
performance measure is termed the “total return”. Total return
calculations and definitions are given below.
Total return*
The combined effect of any dividends paid, together with the rise or
fall in the share price or NAV per share. Total return statistics enable
the investor to make performance comparisons between investment
companies with different dividend policies. Any dividends received by
a shareholder are assumed to have been reinvested in either the
assets of the Company at its NAV per share at the time the shares
were quoted ex-dividend (to calculate the NAV per share total return)
or in additional shares of the Company (to calculate the share price
total return).
The NAV total return for the year ended 31 August 2024 is calculated
as follows:
Opening NAV at 31/8/23 293.58p
Closing NAV at 31/8/24 333.54p
NAV on Cumulative
Dividend received XD date XD date Factor factor
6.30p 05/10/2023 284.17p 1.0222 1.0222
2.50p 28/12/2023 299.74p 1.0083 1.0307
2.50p 04/04/2024 308.09p 1.0081 1.0391
2.50p 04/07/2024 323.67p 1.0077 1.0471
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage increase in the opening NAV: 19.0%
The NAV total return for the year ended 31 August 2023 is
calculated as follows:
Opening NAV at 31/7/22 295.26p
Closing NAV at 31/7/23 293.58p
NAV on Cumulative
Dividend received XD date XD date Factor factor
5.70p 13/10/2022 265.18p 1.0215 1.0215
2.50p 29/12/2022 298.48p 1.0084 1.0301
2.50p 06/04/2023 305.88p 1.0082 1.0385
2.50p 06/07/2023 284.73p 1.0088 1.0476
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage increase in the opening NAV: 4.2%
The share price total return for the year ended 31 August 2024 is
calculated as follows:
Opening Share price at 31/8/23 267.50p
Closing Share price at 31/8/24 299.00p
Share
price on Cumulative
Dividend received XD date XD date Factor factor
6.30p 05/10/2023 255.00p 1.0247 1.0247
2.50p 28/12/2023 278.00p 1.0090 1.0339
2.50p 04/04/2024 264.00p 1.0095 1.0437
2.50p 04/07/2024 290.00p 1.0086 1.0527
Share price total return, being the closing share price,
multiplied by the factor, expressed as a percentage
change in the opening share price 17.7%
The share price total return for the year ended 31 August 2023 is
calculated as follows:
Opening Share price at 31/8/22 289.00p
Closing Share price at 31/07/23 267.50p
Share
price on Cumulative
Dividend received XD date XD date Factor factor
5.70p 13/10/2022 257.00p 1.0222 1.0222
2.50p 29/12/2022 305.00p 1.0082 1.0306
2.50p 06/04/2023 301.00p 1.0083 1.0391
2.50p 06/07/2023 281.00p 1.0089 1.0484
Share price total return, being the
closing share price, multiplied by
the factor, expressed as a percentage
change in the opening share price: –3.0%
Discount/premium*
The amount by which the share price of an investment trust is lower
(discount) or higher (premium) than the NAV per share. If the shares
are trading at a discount, investors would be paying less than the
value attributable to the shares by reference to the underlying assets.
A premium or discount is generally the consequence of supply and
demand for the shares on the stock market. The discount or premium
is expressed as a percentage of the NAV per share. The discount at
the year end amounted to 10.4% (2023: 8.9%), as the closing share
price at 299.00p (2023: 267.50p) lower than the closing NAV of
333.54p (2023: 293.58p).
Definitions of Terms and Alternative Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Numerical
calculations are given where relevant. Some of the financial
measures below are classified as APMs as defined by the
European Securities and Markets Authority. Under this
definition, APMs include a financial measure of historical
financial performance or financial position, other than
a financial measure defined or specified in the applicable
financial reporting framework. APMs have been marked
with an asterisk.
Net asset value (“NAV”) per share
The NAV per share of 333.54p (2023: 293.58p) represents the net
assets attributable to equity shareholders of £231,561,000 (2023:
£203,932,000) divided by the number of shares in issue of 69,425,343
(2023: 69,463,343).
The change in the NAV amounted to 13.5% (2023: –0.6%) over the
year. However, this performance measure excludes the positive
impact of dividends paid out by the Company during the year. When
these dividends are factored into the calculation, the resulting
performance measure is termed the “total return”. Total return
calculations and definitions are given below.
Total return*
The combined effect of any dividends paid, together with the rise or
fall in the share price or NAV per share. Total return statistics enable
the investor to make performance comparisons between investment
companies with different dividend policies. Any dividends received by
a shareholder are assumed to have been reinvested in either the
assets of the Company at its NAV per share at the time the shares
were quoted ex-dividend (to calculate the NAV per share total return)
or in additional shares of the Company (to calculate the share price
total return).
The NAV total return for the year ended 31 August 2024 is calculated
as follows:
Opening NAV at 31/8/23 293.58p
Closing NAV at 31/8/24 333.54p
NAV on Cumulative
Dividend received XD date XD date Factor factor
6.30p 05/10/2023 284.17p 1.0222 1.0222
2.50p 28/12/2023 299.74p 1.0083 1.0307
2.50p 04/04/2024 308.09p 1.0081 1.0391
2.50p 04/07/2024 323.67p 1.0077 1.0471
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage increase in the opening NAV: 19.0%
The NAV total return for the year ended 31 August 2023 is
calculated as follows:
Opening NAV at 31/7/22 295.26p
Closing NAV at 31/7/23 293.58p
NAV on Cumulative
Dividend received XD date XD date Factor factor
5.70p 13/10/2022 265.18p 1.0215 1.0215
2.50p 29/12/2022 298.48p 1.0084 1.0301
2.50p 06/04/2023 305.88p 1.0082 1.0385
2.50p 06/07/2023 284.73p 1.0088 1.0476
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage increase in the opening NAV: 4.2%
The share price total return for the year ended 31 August 2024 is
calculated as follows:
Opening Share price at 31/8/23 267.50p
Closing Share price at 31/8/24 299.00p
Share
price on Cumulative
Dividend received XD date XD date Factor factor
6.30p 05/10/2023 255.00p 1.0247 1.0247
2.50p 28/12/2023 278.00p 1.0090 1.0339
2.50p 04/04/2024 264.00p 1.0095 1.0437
2.50p 04/07/2024 290.00p 1.0086 1.0527
Share price total return, being the closing share price,
multiplied by the factor, expressed as a percentage
change in the opening share price 17.7%
The share price total return for the year ended 31 August 2023 is
calculated as follows:
Opening Share price at 31/8/22 289.00p
Closing Share price at 31/07/23 267.50p
Share
price on Cumulative
Dividend received XD date XD date Factor factor
5.70p 13/10/2022 257.00p 1.0222 1.0222
2.50p 29/12/2022 305.00p 1.0082 1.0306
2.50p 06/04/2023 301.00p 1.0083 1.0391
2.50p 06/07/2023 281.00p 1.0089 1.0484
Share price total return, being the
closing share price, multiplied by
the factor, expressed as a percentage
change in the opening share price: –3.0%
Discount/premium*
The amount by which the share price of an investment trust is lower
(discount) or higher (premium) than the NAV per share. If the shares
are trading at a discount, investors would be paying less than the
value attributable to the shares by reference to the underlying assets.
A premium or discount is generally the consequence of supply and
demand for the shares on the stock market. The discount or premium
is expressed as a percentage of the NAV per share. The discount at
the year end amounted to 10.4% (2023: 8.9%), as the closing share
price at 299.00p (2023: 267.50p) lower than the closing NAV of
333.54p (2023: 293.58p).
Definitions of Terms and Alternative Performance Measures
Schroder Income Growth Fund plc
73
Introduction Strategic Report Governance Financial Other Information (Unaudited)
*Alternative Performance Measure.
Gearing*
The gearing percentage reflects the amount of borrowings (i.e. bank
loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra amount by
which shareholders’ funds would move if the Company’s investments
were to rise or fall. Gearing is defined as: borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets. The gearing figure at the relevant year end is calculated as
follows:
2024 2023
£’000 £’000
Borrowings used for investment
purposes, less cash 28,308 27,941
Net assets 231,561 203,932
Gearing 12.2% 13.7%
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 £1,675,000 (2023: £1,607,000),
expressed as a percentage of the average daily net asset values
during the period of £211.7 million (2023: £207.9 million).
Introduction Strategic Report Governance Financial Other Information (Unaudited)
*Alternative Performance Measure.
Gearing*
The gearing percentage reflects the amount of borrowings (i.e. bank
loans or overdrafts) which the Company has drawn down and
invested in the market. This figure is indicative of the extra amount by
which shareholders’ funds would move if the Company’s investments
were to rise or fall. Gearing is defined as: borrowings used for
investment purposes, less cash, expressed as a percentage of net
assets. The gearing figure at the relevant year end is calculated as
follows:
2024 2023
£’000 £’000
Borrowings used for investment
purposes, less cash 28,308 27,941
Net assets 231,561 203,932
Gearing 12.2% 13.7%
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 £1,675,000 (2023: £1,607,000),
expressed as a percentage of the average daily net asset values
during the period of £211.7 million (2023: £207.9 million).
74
Schroder Income Growth Fund plc
Shareholder Information
Web pages and share price information
The Company has dedicated web pages, which may be found at
www.schroders.com/incomegrowth. The web pages are the
Company’s primary method of electronic communication with
shareholders. They contain details of the Company’s ordinary share
price and copies of the annual report and financial statements and
other documents published by the Company as well as information
on the Directors, terms of reference of committees and other
governance arrangements. In addition, the web pages contain links to
announcements made by the Company to the market and Schroders’
website.
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 web pages.
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
Annual General Meeting December
Half year end 28 February
Half-year results announced May
Financial-year end 31 August
Annual results announced November
Alternative Investment Fund Managers
(“AIFM”) Directive
The AIFM Directive, as transposed into the FCA Handbook in the UK,
requires that certain pre-investment information be made available to
investors in Alternative Investment Funds (such as the Company) and
also that certain regular and periodic disclosures are made. This
information and these disclosures may be found either below,
elsewhere in this annual report and financial statements, or in the
Company’s AIFM Directive information disclosure document
published on the Company’s web pages.
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 Company’s web pages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance-based Products
Regulation, the Manager, as the Company’s AIFM, is required to
publish a short KID on the Company. KIDs are designed to provide
certain prescribed information to retail investors, including details of
potential returns under different performance scenarios and
a risk/reward indicator. The Company’s KID is available on its web
pages.
How to invest
There are a number of ways to easily invest in the Company. The Manager
has set these out at https://www.schroders.com/invest-in-a-trust/.
Complaints
The Company has adopted a policy on complaints and other
shareholder communications which ensures that shareholder
complaints and communications addressed to the Company
Secretary, the Chairman or the Board are, in each case, considered by
the Chairman and the Board.
Shareholder Information
Web pages and share price information
The Company has dedicated web pages, which may be found at
www.schroders.com/incomegrowth. The web pages are the
Company’s primary method of electronic communication with
shareholders. They contain details of the Company’s ordinary share
price and copies of the annual report and financial statements and
other documents published by the Company as well as information
on the Directors, terms of reference of committees and other
governance arrangements. In addition, the web pages contain links to
announcements made by the Company to the market and Schroders’
website.
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 web pages.
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
Annual General Meeting December
Half year end 28 February
Half-year results announced May
Financial-year end 31 August
Annual results announced November
Alternative Investment Fund Managers
(“AIFM”) Directive
The AIFM Directive, as transposed into the FCA Handbook in the UK,
requires that certain pre-investment information be made available to
investors in Alternative Investment Funds (such as the Company) and
also that certain regular and periodic disclosures are made. This
information and these disclosures may be found either below,
elsewhere in this annual report and financial statements, or in the
Company’s AIFM Directive information disclosure document
published on the Company’s web pages.
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 Company’s web pages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance-based Products
Regulation, the Manager, as the Company’s AIFM, is required to
publish a short KID on the Company. KIDs are designed to provide
certain prescribed information to retail investors, including details of
potential returns under different performance scenarios and
a risk/reward indicator. The Company’s KID is available on its web
pages.
How to invest
There are a number of ways to easily invest in the Company. The Manager
has set these out at https://www.schroders.com/invest-in-a-trust/.
Complaints
The Company has adopted a policy on complaints and other
shareholder communications which ensures that shareholder
complaints and communications addressed to the Company
Secretary, the Chairman or the Board are, in each case, considered by
the Chairman and the Board.
Schroder Income Growth Fund plc
75
Introduction Strategic Report Governance Financial Other Information (Unaudited) Introduction Strategic Report Governance Financial
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high risk shares or investments.
These operations are commonly known as ‘boiler rooms’. These
‘brokers’ can be very persistent and extremely persuasive.
Shareholders are advised to be wary of any unsolicited advice, offers
to buy shares at a discount or offers of free company reports. If you
receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• Check that they are properly authorised by the FCA before getting
involved by visiting https://register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at https://www.fca.org.uk/consumers/warning-
list-unauthorised-firms#list. More detailed information on this or
similar activity can be found on the FCA website at
https://fca.org.uk/consumers/protect-yourself-scams.
Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque.
Applications for an electronic mandate can be made by contacting the
Registrar, Equiniti.
This is the most secure and efficient method of payment and ensures
that you receive any dividends promptly.
If you do not have a UK bank or building society account, please
contact Equiniti for details of their overseas payment service.
Further information can be found at www.shareview.co.uk, including
how to register with Shareview Portfolio and manage your
shareholding online.
Introduction Strategic Report Governance Financial Other Information (Unaudited) Introduction Strategic Report Governance Financial
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high risk shares or investments.
These operations are commonly known as ‘boiler rooms’. These
‘brokers’ can be very persistent and extremely persuasive.
Shareholders are advised to be wary of any unsolicited advice, offers
to buy shares at a discount or offers of free company reports. If you
receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• Check that they are properly authorised by the FCA before getting
involved by visiting https://register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of unauthorised firms of which it is aware,
which can be accessed at https://www.fca.org.uk/consumers/warning-
list-unauthorised-firms#list. More detailed information on this or
similar activity can be found on the FCA website at
https://fca.org.uk/consumers/protect-yourself-scams.
Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque.
Applications for an electronic mandate can be made by contacting the
Registrar, Equiniti.
This is the most secure and efficient method of payment and ensures
that you receive any dividends promptly.
If you do not have a UK bank or building society account, please
contact Equiniti for details of their overseas payment service.
Further information can be found at www.shareview.co.uk, including
how to register with Shareview Portfolio and manage your
shareholding online.
76
Schroder Income Growth Fund plc
Risk Disclosures
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or
individual positions. This may result in large changes in the value of the Company, both up or down.
Counterparty risk The Company may have contractual agreements with counterparties. If a counterparty is unable to fulfil their
obligations, the sum that they owe to the Company may be lost in part or in whole.
Currency risk If the Company’s investments are denominated in currencies different to the currency of the Company’s shares, the
Company may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates.
Derivatives risk Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to manage the
portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative
and may result in losses to the Company.
Emerging markets Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty, operational and
& frontier risk liquidity risk than developed markets.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase returns if
the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if they fail to do
so. In falling markets, the whole of the value in such investments could be lost, which would result in losses to the
Company.
Liquidity Risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their shares or
may not get back the amount that they originally invested. Certain investments of the Company, in particular the
unquoted investments, may be less liquid and more difficult to value. In difficult market conditions, the Company may
not be able to sell an investment for full value or at all and this could affect performance of the Company.
Market Risk The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the
Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved.
Depending on market conditions and the macro economic environment, investment objectives may become more
difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a greater
extent in response to changes in demand.
Smaller companies Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell,
risk and they may also fluctuate in value to a greater extent.
Risk Disclosures
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or
individual positions. This may result in large changes in the value of the Company, both up or down.
Counterparty risk The Company may have contractual agreements with counterparties. If a counterparty is unable to fulfil their
obligations, the sum that they owe to the Company may be lost in part or in whole.
Currency risk If the Company’s investments are denominated in currencies different to the currency of the Company’s shares, the
Company may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates.
Derivatives risk Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to manage the
portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative
and may result in losses to the Company.
Emerging markets Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty, operational and
& frontier risk liquidity risk than developed markets.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase returns if
the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if they fail to do
so. In falling markets, the whole of the value in such investments could be lost, which would result in losses to the
Company.
Liquidity Risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their shares or
may not get back the amount that they originally invested. Certain investments of the Company, in particular the
unquoted investments, may be less liquid and more difficult to value. In difficult market conditions, the Company may
not be able to sell an investment for full value or at all and this could affect performance of the Company.
Market Risk The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the
Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved.
Depending on market conditions and the macro economic environment, investment objectives may become more
difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net
asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a greater
extent in response to changes in demand.
Smaller companies Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell,
risk and they may also fluctuate in value to a greater extent.
Schroder Income Growth Fund plc
77
Introduction Strategic Report Governance Financial Other Information (Unaudited)
www.schroders.co.uk/incomegrowth
Directors
Ewen Cameron Watt (Chairman)
June Aitken
Fraser McIntyre
Victoria Muir
Registered Office
1 London Wall Place
London EC2Y 5AU
Telephone: +44 (0)20 7658 6000
Email: amcompanysecretary@schroders.com
Advisers and service providers
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
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate broker
Peel Hunt LLP
7th Floor
100 Liverpool Street
London EC2M 2AT
Independent Auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder helpline: 0800 032 0641
1
Website: www.shareview.co.uk
1
Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address
held on the register. Any notifications and enquiries relating to
shareholdings, including a change of address or other
amendment should be directed to Equiniti Limited at the above
address and telephone number above.
Other information
Company number
03008494
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
Privacy notice
The Company’s privacy notice is available on its web pages.
Information about the Company
Introduction Strategic Report Governance Financial Other Information (Unaudited)
www.schroders.co.uk/incomegrowth
Directors
Ewen Cameron Watt (Chairman)
June Aitken
Fraser McIntyre
Victoria Muir
Registered Office
1 London Wall Place
London EC2Y 5AU
Telephone: +44 (0)20 7658 6000
Email: amcompanysecretary@schroders.com
Advisers and service providers
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
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate broker
Peel Hunt LLP
7th Floor
100 Liverpool Street
London EC2M 2AT
Independent Auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder helpline: 0800 032 0641
1
Website: www.shareview.co.uk
1
Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address
held on the register. Any notifications and enquiries relating to
shareholdings, including a change of address or other
amendment should be directed to Equiniti Limited at the above
address and telephone number above.
Other information
Company number
03008494
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
Privacy notice
The Company’s privacy notice is available on its web pages.
Information about the Company
Schroder Investment Management Limited
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not be
placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
@schroders
schroders.com
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not be
placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised
and regulated by the Financial Conduct Authority. For your security, communications
may be taped or monitored.
@schroders
schroders.com