REG - abrdn Diversfd. I&G - Annual Financial Report
21/01/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250121:nRSU0075Ua&default-theme=true
RNS Number : 0075U abrdn Diversified Income and Growth 21 January 2025
abrdn Diversified Income and Growth plc
Annual Report 30 September 2024
Performance Highlights
Return of capital per Ordinary share Dividends paid per Ordinary share(A)
38.10p 5.91p(*)
2023 N/A 2023 5.64p
* including a special dividend of 1.65p
Discount to net asset value (par basis)(B)
34.1%
2023 25.8%
(A) The dividends on Ordinary shares paid to shareholders are set out in more
detail in note 8, alongside those paid and proposed in respect of the
financial year. 2024 includes a special dividend of 1.65p (2023 - nil).
(B) Considered to be an Alternative Performance Measure.
Net Asset Value Bridge
30 September 2023 112.7p
Interim Dividends (5,91)p
Return of Capital (38.1)p
Investment performance (1.21)p
30 September 2024 67.48p
Dividends and Highlights
Dividends Declared
Rate xd date Record date Payment date
First interim 2024 1.42p 7 March 2024 8 March 2024 27 March 2024
Second interim 2024 1.95p 26 September 2024 27 September 2024 24 October 2024
2024 3.37p
First interim 2023 1.42p 9 March 2023 10 March 2023 3 April 2023
Second interim 2023 1.42p 8 June 2023 9 June 2023 6 July 2023
Third interim 2023 1.42p 21 September 2023 22 September 2023 19 October 2023
Fourth interim 2023 1.42p 21 December 2023 22 December 2023 22 January 2024
Special 2023 1.65p 2 November 2023 3 November 2023 1 December 2023
2023 7.33p
2024 2023
Total dividends paid per Ordinary share in the financial year(A) 5.91p 5.64p
Return of capital to shareholders per Ordinary share in financial year(B) 38.10p -
(A) 2024 consists of a third interim 2023 of 1.42p, fourth interim dividend
2023 of 1.42p, special dividend 2023 of 1.65p and first interim dividend 2024
of 1.42p. 2023 consists of a third interim dividend 2022 of 1.40p, fourth
interim dividend 2022 of 1.40p, first interim dividend 2023 of 1.42p and
second interim 2023 of 1.42p.
(B) Return of capital by way of B share scheme, being £114,768,000 per the
Statement of Changes in Equity, divided by the number of Ordinary shares in
issue per note 15.
Highlights
2024 2023 % change
Total assets less current liabilities (before deducting prior charges) £203,306,000 £355,264,000 -42.8
Total shareholders' funds (Net Assets) £203,306,000 £339,534,000 -40.1
Ordinary share price (mid market) 44.50p 83.60p -46.8
Net asset value per Ordinary share (debt at par value)(A) 67.48p 112.70p -40.1
Discount to net asset value on Ordinary shares (debt at par value)(B) 34.1% 25.8%
Net (cash)/gearing (debt at par value)(B) (11.0)% (1.6)%
Ongoing charges ratio (including look-through costs)(B) 2.36% 1.74%
(A) See NAV bridge for more detail on the components of the change during the
year.
(B) Considered to be an Alternative Performance Measure.
2024 2023 % change
Net revenue return after taxation £10,913,000 £13,252,000 -17.7
Revenue return per share 3.62p 4.35p -16.8
Dividends per Ordinary share 3.37p 7.33p
Further information on interim dividends, including those paid during the
period, may be found under Note B in the above "Dividends Declared" table and
in Note 8 to the Financial Statements.
Strategic Report
Chairman's Statement
Approval of the Managed Wind-Down of the Company
Following an extensive review of the Company's strategy and discussions with
shareholders, a circular was issued by the Company in February 2024 setting
out the Board's recommendation for a new investment objective and policy as
part of proposals for a Managed Wind-Down of the Company. The necessary
resolutions were approved by shareholders at the General Meeting held on 27
February 2024.
New investment objective and policy
The Company's new investment objective is to conduct an orderly realisation of
its assets in a manner that seeks to optimise the value of its investments
whilst progressively returning cash to shareholders in a timely manner. Full
details of the policy may be found in the 'Overview of Strategy'.
Initial return of capital to shareholders
The Board set out its proposals in a circular, on 17 June 2024, to return
approximately £115 million, representing approximately 38.1p per Ordinary
share, to shareholders (the "Initial Return of Capital"), pursuant to a bonus
issue, on a pro rata basis, of B shares to all shareholders, followed by the
redemption of such B shares (the "B Share Scheme"). The circular, which may be
viewed on the Company's website at abrdndiversified.co.uk, contained the
details of the Initial Return of Capital. This followed the Court approval,
obtained on 7 June 2024, for the Company to reduce its share capital and
cancel the amounts standing to the credit of its share premium account and
capital redemption reserve. This process allowed the Company to set up a
special distributable reserve and provided the Company with sufficient
flexibility and distributable reserves to deliver the Initial Return of
Capital as planned.
The introduction of the B Share Scheme was approved by shareholders at a
General Meeting held on 3 July 2024 and funds were sent on 10 July 2024 to
uncertificated shareholders through CREST, or via cheque or electronic payment
to certificated Shareholders. Ordinary shareholders should note that no
share certificates were created in respect of the B shares which were issued
and almost immediately redeemed with no action required to be taken by
Shareholders.
Over the year ended 30 September 2024 shareholders received 38.1p per Ordinary
share by way of capital return via the B Share Scheme, as described above,
together with dividends, as more fully set out below.
Dividends
Dividends received by shareholders during the year ended 30 September 2024
amounted to 5.91p per Ordinary share, including a special dividend of 1.65p
per share. In relation to the financial year ended 30 September 2024, two
interim dividends were declared out of net income: 1.42p per share, paid to
shareholders on 27 March 2024 and 1.95p per share, paid to shareholders on 24
October 2024. These are more fully explained in note 8.
Following the June 2024 Court approval, and the payment of the interim
dividend in October 2024, it is likely that dividends will be paid in smaller,
less regular, amounts principally for the purpose of maintaining the Company's
investment trust status while capital will be returned progressively to
shareholders by the most tax-efficient mechanism available, which may include
further B share issues.
The Board intends to continue to pay a sufficient level of dividend to ensure
that the Company will not retain more than 15 per cent. of its income in an
accounting period so as to maintain the Company's investment trust status
during the Managed Wind-Down to avoid incurring capital gains within the
closed ended structure. The Directors will declare dividends based on the
Company's net income but the quantum and timing of any dividends in future
will be at the sole discretion of the Board.
Revenue available to the Company has decreased following the sale of the
public markets assets and will reduce further as the private markets assets
are realised. It is expected that, at a minimum, the Company will declare a
dividend each September, normally payable in October, to maintain investment
trust status.
Further returns of capital to shareholders
Having sold substantially all public market assets and returned funds to
shareholders, the Board anticipates further returns of capital as value is
realised from the Company's private markets portfolio, as follows:
· approximately £94 million of the Company's private markets portfolio
(valued as at 30 September 2024) is expected to mature between 2025 and 2027
("Tranche 1").
· the remaining, approximately £88 million of the private markets
portfolio (valued as at 30 September 2024) is expected to mature between 2029
and 2033 ("Tranche 2").
It is intended that the proceeds from both Tranche 1 and Tranche 2 will be
returned to shareholders in a timely and tax-efficient manner as investments
mature or sales opportunities arise, after taking account of undrawn
commitments to existing investments. Further information on portfolio
realisations may be found in the Investment Manager's Report.
Share Capital
Following the approval by the Court, on 7 June 2024, of the reduction in the
Company's share capital, the nominal value per Ordinary share was reduced from
25p to 1p. This is an accounting mechanism and has no impact on the share
price of the Company.
No shares were bought back by the Company during the year ended 30 September
2024, resulting in 301,265,952 Ordinary 1p shares with voting rights and
another 22,485,854 Ordinary 1p shares held in treasury, as at 30 September
2024.
Further information on the apportionment ratio, which relates to the tax
treatment for Shareholders of the proceeds arising from the redemption of the
B shares, may be found after the Notes to the Financial Statements.
Gearing and 6.25% Bonds 2031 repayment
On 9 April 2024, the Company redeemed and cancelled the remaining £16,096,000
of its 6.25% Bonds due 2031 (the "Bonds"). As announced on 8 March 2024, the
redemption price was 114.983%, which was calculated in accordance with the
terms of the trust deed of the Bonds. The total cost of the redemption,
including accrued interest, was £18,587,000. As a result, the Company has no
further Bonds outstanding nor any other borrowings.
Board Structure
Following approval of the Managed Wind-Down, the Board has reviewed the Board
Structure and, mindful of the operating costs of the Company, deems it
appropriate to maintain the number of Directors at four; this is more fully
set out in the Directors' Report.
The Board aims to comply with the requirements of the AIC Corporate Governance
Code (the "AIC Code") where reasonable and practically possible but recognises
that the requirements of the AIC Code are not fully met with regard to gender
and diversity targets.
Further to the Managed Wind-Down, and recognising that the portfolio consists
solely of private markets investments, the Board remains satisfied with this
assessment, reflecting the balance of skills and expertise exhibited by the
current Directors, and does not propose any immediate changes to the
composition of the Board.
Continuation vote
A circular was issued to shareholders on 5 December 2024 (which is available
from the Company's website at abrdndiversified.co.uk) and, at a general
meeting on 23 December 2024, shareholders approved the amendment to the
Company's Articles of Association. This removed the requirement for the
Company to hold an annual continuation vote as well as providing the Board
with authority to seek Court approval for the cancellation of the Company's
capital redemption reserve which was created as a result of the B Share Scheme
in relation to the Initial Return of Capital. The cancellation of this reserve
will create a distributable reserve to support the progressive return of cash
to shareholders in the form of capital.
Outlook
The focus of the Board and Investment Manager is on seeking realisation of
portfolio investments in a manner that maximises value to shareholders and to
return capital to shareholders in the most timely and efficient way possible.
Davina Walter
Chairman
20 January 2025
Overview of Strategy
Managed Wind-Down of the Company
Following an extensive review of the Company's strategy and discussions with
shareholders, a circular was issued by the Company in February 2024 setting
out the Board's recommendation for a new investment objective and policy as
part of proposals for a Managed Wind-Down of the Company. These proposals were
approved by shareholders at a General Meeting held on 27 February 2024.
Investment Objective
With effect from 27 February 2024, the Company's investment objective is to
conduct an orderly realisation of its assets in a manner that seeks to
optimise the value of the Company's investments whilst progressively returning
cash to shareholders in a timely manner.
Prior to 27 February 2024, the Company's investment objective was to seek to
provide income and capital appreciation over the long term through investment
in a globally diversified multi-asset portfolio. Further details of the former
investment policy may be found on pages 11 and 12 of the Company's Annual
Report for the year ended 30 September 2023.
Investment Policy
With effect from 27 February 2024, the Company's investment policy is to
effect an orderly realisation of its assets in a manner that is consistent
with the principles of good investment management. This process might include
sales of individual assets or running off the assets in accordance with their
existing terms, or a combination of both.
The Company will cease to make any new investments or to undertake capital
expenditure except where, in the opinion of both the Board and the investment
manager:
· the investment is a follow-on investment made in connection with an
existing asset in order to comply with the Company's pre-existing obligations;
or
· failure to make the follow-on investment may result in a breach of
contract or applicable law or regulation by the Company; or
· the investment is considered necessary to protect or enhance the value of
any existing investments or to facilitate orderly disposals.
Any cash received by the Company as part of the realisation process prior to
its distribution to Shareholders will be held by the Company as cash on
deposit and/or in liquid cash equivalents securities (including direct
investment in treasuries and/or gilts, funds holding such investments, money
market or cash funds and/or short-dated corporate bonds or funds that invest
in such bonds) pending its return to shareholders.
No more than 15 per cent. of the Company's total assets may be invested (at
the time of investment) in any single cash-equivalent fund or instrument,
other than in treasuries or gilts (which shall be unconstrained).
While the Company redeemed its 6.25% Bonds 2031 in April 2024 and is currently
ungeared, it may use gearing, in the form of borrowings (including secured
bonds) during the Managed Wind-Down, as and when required.
The Company's articles of association contain a borrowing limit equal to the
value of its adjusted total of capital and reserves and borrowings have not
normally been expected to exceed 20 per cent. of shareholders' funds. It is
not anticipated that the Company will take on any new borrowings, but this
remains possible for the efficient management of the Company (such as through
a revolving credit facility or an overdraft).
The Company may use derivatives for efficient portfolio management, that is,
to reduce, transfer or eliminate risk in its investments, including protection
against currency risks.
Management and Delivery of the Investment Objective
The Directors are responsible for determining the Company's investment
objective and investment policy. Day-to-day management of the Company's assets
has been delegated to abrdn Fund Managers Limited (the "Manager"). In turn,
the investment management of the Company has been delegated by the Manager to
abrdn Investments Limited (the "Investment Manager"). Both companies are
subsidiaries of abrdn plc.
Return of Capital to Shareholders
After careful consideration, the Board determined that the fairest and most
efficient way of returning substantial amounts of cash to Shareholders was by
means of a bonus issue of redeemable B Shares which would then be immediately
redeemed by the Company in consideration for a cash payment equal to the
amount treated as paid up on the issue of the B Shares.
A circular was issued by the Company in June 2024 setting out a B Share
Scheme, under which cash would be returned to Shareholders without any further
action being required by Shareholders.
Following approval of the B Share Scheme by Shareholders at a General Meeting
held on 3 July 2024, the Company announced that the Board resolved to return
approximately £115m in aggregate to Shareholders via an issue of B shares. B
Shares of one penny each were paid up from the Company's reserves and issued
to all Shareholders by way of a bonus issue on the basis of 800 B Shares for
every 21 Ordinary Shares held at the Record Date of 4 July 2024. The B Shares
were issued on 5 July 2024 and immediately redeemed at one penny per B Share.
The proceeds from the redemption of the B Shares, which were equivalent to
38.1 pence per Ordinary Share, were sent on 10 July 2024 to uncertificated
Shareholders through CREST or via cheque or electronic payment to certificated
Shareholders. The apportionment ratio, which relates to the tax treatment for
Shareholders of the proceeds arising from the redemption of the B shares, may
be found after the Notes to the Financial Statements.
Further information on the Company's remaining portfolio may be found in the
Investment Manager's Report.
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to assess the
Company's success in achieving its objective and determining its progress in
pursuing its investment policy. The primary KPIs are shown in the table below.
KPI Description
Return of Capital The quantum and timing of any future return(s) of capital to shareholders
under a B Share Scheme (if any), or alternative mechanism, will be at the
discretion of the Board and will be dependent on the realisation of the
Company's investments and its liabilities, general working capital
requirements and the amount and nature (from a tax perspective) of its
distributable reserves from time to time.
Retention of investment trust status under section 1158 of Corporation Tax Act Continue to pay sufficient dividends to ensure the Company retains its
2009 investment trust status.
Ongoing charges The ongoing charges ratio has been calculated in accordance with guidance
issued by the Association of Investment Companies (the "AIC") as the total of
investment management fees and administrative expenses and expressed as a
percentage of the average net asset values with debt at fair value throughout
the year. This includes the Company's share of costs of holdings in investment
companies on a look-through basis. The Board reviews the ongoing charges and
monitors the expenses incurred by the Company. The Company's ongoing charges
for the year, and the previous year, are disclosed in 'Highlights' while the
basis of calculation is set out in the 'Alternative Performance Measures'.
Principal Risks and Uncertainties
The Board has in place a robust process to assess and monitor the principal
and emerging risks facing the Company. A core element of this is the Company's
risk controls self-assessment ("RCSA"), which identifies the risks facing the
Company and assesses the likelihood and potential impact of each risk and the
quality of the controls in place to mitigate the risk. A residual risk rating
is then calculated for each risk based on the outcome of this assessment and
plotted on a risk heat-map. This approach allows the effect of any mitigating
procedures to be reflected in the final assessment. The RCSA, its method of
preparation and the operation of the key controls within the Manager's and
third party service providers' systems of internal control are reviewed on a
regular basis by the Audit Committee.
In order to gain a more comprehensive understanding of the Manager's and other
third party service providers' risk management processes and how these apply
to the Company's business, the Manager's internal audit department presents to
the Audit Committee setting out the results of testing performed in relation
to the Manager's internal control processes. The Audit Committee also
periodically receives presentations from the Manager's risk and compliance and
internal audit teams and reviews ISAE3402 reports from the Manager and from
the Company's Depositary (The Bank of New York Mellon (International)
Limited). The custodian is appointed by the Company's Depositary and does not
have a direct contractual relationship with the Company.
Further to the approval by shareholders of the Managed Wind-Down of the
Company, the Audit Committee has undertaken a comprehensive review of the
RCSA.
The Audit Committee carried out a robust assessment of these revised risks,
which include those that would threaten its business model, future
performance, solvency or liquidity. The Board is confident that the procedures
which the Company has in place are sufficient to ensure that the necessary
monitoring of risks and controls has been carried out during the year ended 30
September 2024.
The Board is monitoring the current heightened geopolitical risks in the form
of the Russian invasion of Ukraine, conflicts in the Middle East and rising
tension between China and Taiwan.
The Board is also conscious of the elevated threat posed by climate change and
continues to monitor, through its Investment Manager, the potential risk that
its portfolio investments may fail to adapt to the requirements imposed by
climate change further details of which may be found under 'Market Risk'.
Risk Mitigating Action
Performance risk (increased) To manage these risks, the Board reviews the progress made by the Company with
regards to Managed Wind-Down.
The Board is responsible for determining the investment policy to fulfil the
Company's objectives and for monitoring the performance of the Company's
Investment Manager and the strategy adopted. Further to the Managed Wind-Down,
the Company invests in unlisted investments (such as private credit, real
estate, infrastructure, natural resources, private equity and alternatives).
These investments may be relatively illiquid and it may be difficult for the
Company to realise these investments over a short time period.
Regulatory risk (unchanged) The Investment Manager monitors investment movements, the level and type of
forecast income and expenditure and the amount of proposed dividends, if any,
The Company operates as an investment trust in accordance with Chapter 4 of to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax
Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from Act 2010 are not breached and the results are reported to the Board at each
capital gains tax on the profits realised from the sale of its investments. meeting. The Board and the AIFM also monitor changes in government policy and
Following authorisation under the Alternative Investment Fund Managers legislation which may have an impact on the Company.
Directive ("AIFMD"), the Company and its appointed AIFM are subject to the
risk that the requirements of this Directive are not correctly complied with.
Operational risk (unchanged) The security of the Company's assets, dealing procedures, accounting records
and maintenance of regulatory and legal requirements depends on the effective
In common with most other investment trust companies, the Company has no operation of the systems in place with third parties. These systems are
employees. The Company therefore relies upon the services provided by third regularly tested and monitored throughout the year, including in relation to
parties and is dependent on the control systems of the Manager and the cyber risk, through their industry-standard controls reports which provide
Depositary. assurance on the effective operation of internal controls. The controls
reports are assessed independently by their reporting accountants.
Market risk (unchanged) The Board considers the diversification of the portfolio, asset allocation,
stock selection, unlisted investments and levels of gearing on a regular basis
Market risk arises from volatility in the prices or valuation of the Company's and has set investment restrictions and guidelines which are monitored and
investments. It represents the potential loss the Company might suffer through reported on by
holding investments in the face of negative market movements.
the Investment Manager. The Board monitors the implementation and results of
the investment process
The Company invests in global assets across a range of countries and changes
with the Investment Manager.
in general economic and market conditions in certain countries, such as
interest rates, exchange rates, rates of inflation, industry conditions, The Board assesses climate change as an emerging risk in terms of how it
competition, political events and trends, tax laws, national and international develops, including how investor sentiment is evolving towards climate change
conflicts, economic sanctions and other factors can also substantially and within investment portfolios, and will consider how the Company may mitigate
adversely affect the securities and, as a consequence, the Company's prospects this risk, any other emerging risks, if and when they become material.
and share price.
Current heightened geopolitical risks are evident in the form of the Russian
invasion of Ukraine, conflicts in the Middle East and rising tension between
China and Taiwan.
The longer term emergence of the effects on investee companies of climate
change, and the regulatory environment around this present a further risk.
Financial risks (increased) Further details are disclosed in note 18 to the financial statements, together
with a summary of the policies for managing these risks.
The Company's investment activities expose it to a variety of financial risks
which include foreign currency risk and interest The Board reviews cashflow forecasts prepared by the Manager, at each meeting,
to monitor the Company's liquidity. The Directors have discretion to vary any
rate risk. Following the realisation of the listed alternative investments, to planned returns of capital to ensure that the Company retains sufficient
fund the return of capital to shareholders in July 2024, the Board liquidity to meet undrawn commitments due to investee companies.
determined that the liquidity risk of the Company had increased, reflecting
the less liquid nature of the remaining investment portfolio.
The Board regularly reviews emerging risks facing the Company, which are
identified by a variety of means, including advice from the Company's
professional advisors, the AIC, and Directors' knowledge of markets, changes
and events. A failure to have in place appropriate procedures to assist in
identifying emerging risks may cause reactive actions and, in the worst case,
could cause the Company to become unviable or otherwise fail.
The principal risks associated with an investment in the Company's shares can
be found in the pre-investment disclosure document ("PIDD") published by the
AIFM, which is available from the Company's website: abrdndiversified.co.uk
Gearing
As at 30 September 2024, the Company had no structural gearing in place (2023
- gearing of £16,096,000). On
9 April 2024, the Company repaid its £16,096,000 6.25% Bonds 2031.
Board Diversity
The Board is fully supportive of all aspects of diversity and the importance
of having a range of skilled, experienced individuals with relevant knowledge
in order to allow it to fulfil its obligations. Further information on Board
Diversity may be found in the Directors' Report.
Promoting the Company
The Board recognises the importance of promoting the Company to investors both
for improving liquidity and enhancing the value and rating of the Company's
shares. The Board has participated in a promotional programme (the
"Programme") run by abrdn on behalf of a number of investment trusts under its
management. The Programme has been modified by the Board in the context of the
Managed Wind-Down of the Company and the primary focus now is ensuring
effective communication with existing shareholders.
Environmental, Social and Human Rights Issues
The Company has no employees as the Board has delegated the day to day
management and administrative functions to the Manager. There are therefore no
disclosures to be made in respect of employees. The Company's socially
responsible investment policy is set out below and the Board maintains
oversight and retains responsibility for the policy.
Socially Responsible Investment Policy
The Board reviews the Manager's policy that encourages companies in which
investments are made to adhere to best practice in the area of corporate
governance and socially responsible investing. They believe that this can best
be achieved by entering into a dialogue with company management to encourage
them, where necessary, to improve their policies in both areas. The Manager's
ultimate objective, however, is to deliver superior investment returns for its
clients. Accordingly, whilst the Manager will seek to favour companies which
pursue best practice in these areas, this should not be to the detriment of
the return on the investment portfolio.
UK Stewardship Code and Proxy Voting as an Institutional Shareholder
Responsibility for actively monitoring the activities of portfolio companies
has been delegated by the Board to the Manager which has sub-delegated that
authority to the Investment Manager. The Manager's response to the FRC's
Stewardship Code may be found on its website at:
https://www.abrdn.com/en-gb/intermediary/sustainable-investing/active-ownership
Modern Slavery Act
Due to the nature of the Company's business, being an investment company that
does not offer goods and services to customers, the Board considers that it is
not within the scope of the Modern Slavery Act 2015 because it has no
turnover. The Company is therefore not required to make a slavery and human
trafficking statement.
However, the Board maintains oversight of its third party suppliers and
considers that, as these comprise predominantly professional advisers and
service providers in the financial services industry, the risk is likely to be
low in relation to this matter.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its operations, nor
does it have responsibility for any other emissions producing sources under
the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations
2013. However, at the portfolio level, the Manager engages on environmental
issues with underlying investments.
Viability Statement
In accordance with the provisions of the UKLA's Listing Rules and the FRC's UK
Corporate Governance Code, the Directors have assessed the prospects of the
Company over a longer period than the 12 months required by the "Going
Concern" provision. The Board conducted this review for the period up to the
AGM in 2028, being a three year period from the date of shareholders' approval
of this Annual Report. The three year review period was selected because it is
aligned with the Board's anticipated timescale for the completion of the next
phase of the Managed Wind-Down of the Company. The Board considers that this
period reflects a balance between looking out over a medium term horizon and
the inherent uncertainties of looking out further than three years, given the
profile of the Company's private markets investments.
In assessing the viability of the Company over the review period, the Board
has focused upon the following factors:
· the principal risks and uncertainties detailed in the 'Overview of
Strategy' and the steps taken to mitigate these risks;
· the relevance of the Company's investment objective and investment
policy;
· the return of capital to shareholders; and
· the level of demand for the Company's shares.
The three-year review considers the Company's cash flow, involving both
capital commitments and cash distributions, as well as other key financial
ratios over the period. The three-year review also makes certain assumptions
about the normal level of expenditure likely to occur and considers the impact
on the financing facilities of the Company. Whilst the financial statements
have been prepared on a going concern basis, the Board considers that there is
a material uncertainty in respect of the Managed Wind-Down of the Company (see
note 2 (a) for related basis of preparation disclosures).
In making this assessment, the Board has considered in particular the
potential longer term impact of a large economic shock, a period of increased
stock market volatility and/or markets at depressed levels, a significant
reduction in the liquidity of the portfolio or changes in investor sentiment
or regulation, and how these factors might affect the Company's prospects and
viability in the future. The Board reviewed a cash flows analysis in reaching
its conclusions, but recognises that the Company's operating expenses are
significantly lower than its total income.
The Board has also considered a number of financial metrics, including:
· the level of current and historic ongoing charges incurred by the
Company;
· the share price discount to NAV;
· the level of income generated by the Company;
· future income forecasts; and
· the liquidity of the Company's portfolio and timing of expected
realisation of assets.
Considering the liquidity of the portfolio, arising from realisation of
assets, remaining capital commitments, and the largely fixed overheads which
comprise a small percentage of net assets, the Board has concluded that, even
in exceptionally stressed operating conditions, the Company would be able to
meet its ongoing operating costs as they fall due.
Taking into account the Company's current position and the potential impact of
its principal risks and uncertainties, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due for a period of three years from the date of
this Report.
Future of the Company
The Board's view of the future for the Company can be found in the Chairman's
Statement under "Outlook" while the Investment Manager's view on future
portfolio realisations may be found in their report.
On behalf of the Board
Davina Walter
Chairman
20 January 2025
Engagement with Shareholders
The Board is required to report how it has discharged its duties and
responsibilities under section 172 of the Companies Act 2006 during the year
under review. Under this requirement, the Directors have a duty to promote the
success of the Company for the benefit of its members (shareholders) as a
whole, taking into account the likely long term consequences of decisions, the
need to foster relationships with the Company's stakeholders, and the impact
of the Company's operations on the environment. In addition, the Directors
must act fairly between shareholders and be cognisant of maintaining the
reputation of the Company.
Following the Board's decision to place the Company into a Managed Wind-Down
the nature of engagement has changed from one of promotion to a focus on
timely communication with shareholders regarding delivery of the strategy of
asset realisation.
The Purpose of the Company and Role of the Board
The purpose of the Company is to act as a vehicle to provide, over time,
financial returns (both income and capital) to its shareholders. Investment
trusts, such as the Company, are long-term investment vehicles and are
typically externally managed, have no employees, and are overseen by an
independent non-executive board of directors.
The Board, which during the year comprised between four and five independent
non-executive Directors with a broad range of skills and experience across all
major functions that affect the Company, retains responsibility for taking all
decisions relating to the Company's investment objective and policy, gearing,
corporate governance and strategy, and for monitoring the performance of the
Company's service providers.
The Board's philosophy is that the Company should operate in a transparent
culture where all parties are treated with respect as well as the opportunity
to offer practical challenge and participate in positive debate which is
focused on the aim of achieving the expectations of shareholders and other
stakeholders alike. The Board reviews the culture and manner in which the
Manager operates at its regular meetings and receives regular reporting and
feedback from the key service providers.
The Company's main stakeholders are its shareholders, the Manager, other
service providers, as well as its investee companies and funds.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings and receives feedback
on the Manager's interactions with them
Stakeholder How the Board Engages
Shareholders Shareholders are key stakeholders and the Board places great importance on
communication with them, and meet, in the absence of the Manager, with current
and prospective shareholders to discuss performance and to receive shareholder
feedback. The Board welcomes all shareholders' views.
Part of that engagement has been to evaluate the feedback from shareholders
regarding the Company's share price and the persistent discount to NAV at
which its shares trade, culminating in effecting the proposals for a Managed
Wind-Down of the Company in February 2024.
Regular updates are provided to shareholders through the Annual Report, Half
Yearly Report, Manager's monthly factsheets, company announcements, including
daily net asset value announcements, and the Company's website.
Manager The Investment Manager's Report sets out the key investment decisions taken
during the year. The Investment Manager has continued to manage the Company's
assets in accordance with the investment objective, as last amended and
approved by shareholders on 27 February 2024, with the oversight of the Board.
The Board regularly reviews the Company's performance against its investment
objective. In addition to an annual strategy session, the Board reviews in
detail at each meeting the implementation of that strategy to ensure that the
Company is positioned well for the future delivery of its objective for its
stakeholders, in particular evaluating progress as regards the Managed
Wind-Down of the Company. The decision to place the Company in a Managed
Wind-Down was a direct result of the strategy review conducted in late 2023.
The Board receives presentations from the Investment Manager at every Board
meeting to help it to exercise effective oversight of the Investment Manager
and the Company's strategy.
The Board, through the Management Engagement Committee, formally reviews the
performance of the Manager at least annually. More details are provided in the
Directors' Report.
Investee Companies and Funds Responsibility for actively monitoring the activities of investee companies
and funds has been delegated by the Board to the Manager which has
sub-delegated that authority to the Investment Manager.
The Board has also given discretionary powers to the Investment Manager to
exercise voting rights on resolutions proposed by the investee companies
within the Company's portfolio.
The Board and Manager are committed to investing in a responsible manner and
the Investment Manager integrates environmental, social and governance
considerations into its research and analysis as part of the investment
decision-making process. Through engagement and exercising voting rights, the
Investment Manager actively works with companies to improve corporate
standards, transparency and accountability.
Service Providers The Board seeks to maintain constructive relationships with the Company's
suppliers, either directly or through the Manager, with regular communications
and meetings.
The Audit Committee conducts an annual review of the performance, terms and
conditions of the Company's main service providers to ensure they are
performing in line with Board expectations and providing value for money.
Specific Examples of Stakeholder Consideration During the Year
While the importance of giving due consideration to the Company's stakeholders
is not new, and is considered as part of every Board decision, the Directors
were particularly mindful of stakeholder considerations during the year ended
30 September 2024 in relation to the following -
· publication of the circular to shareholders in February 2024, further to
feed-back received from shareholders, proposing that the Company conduct an
orderly realisation to its assets in a manner that sought to optimise the
value of the Company's investments while progressively returning cash to
shareholders; and
· publication of the circular to shareholders in June 2024 recommending to
shareholders the adoption of a B Share Scheme reflecting the Board's belief
that this represented the fairest and most efficient mechanism by which to
return substantial amounts of cash to shareholders.
Performance and Results
Performance (total return)
31 March 2017(B) - 31 December 2020(C) -
30 September 2024 30 September 2024 1 year 3 years 5 years
% return % return % return % return % return
Net asset value - debt at par(A) +13.3 +6.4 -2.3 -2.1 +3.3
Net asset value - debt at fair value(A) +21.6 +8.7 -2.2 -0.6 +10.9
Share price(A) +2.3 +6.4 +8.1 +2.0 +5.3
(A) Considered to be an Alternative Performance Measure. Total return
represents the capital return plus dividends reinvested.
(B) Change of Investment Objective and Investment Policy on 31 March 2017.
(C) Change of Investment Objective and Investment Policy on 31 December 2020.
Source: abrdn, Morningstar and Lipper.
Ten Year Financial Record
Year to/As at 30 September 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total revenue (£'000) 23,120 23,265 17,961 23,262 22,106 20,783 18,878 17,959 17,163 15,638
Per Ordinary share (p)
Net revenue return 7.1 7.6 5.3 6.2 5.7 5.6 5.1 5.0 4.4 3.6
Total return (4.5) 1.3 8.0 2.8 2.6 (1.4) 6.7 (0.2) (0.1) (1.2)
Net dividends payable 6.54 6.54 5.89 5.24 5.36 5.44 5.52 5.60 7.33 3.37
Net asset value per Ordinary share (p)
Debt at par value 136.6 131.6 132.7 130.3 128.1 121.7 123.5 117.8 112.7 67.5
Debt at fair value 131.0 123.6 126.4 124.2 119.9 113.4 121.7 117.6 112.6 N/A
Equity shareholders' funds (£'000) 374,832 351,521 436,767 428,129 413,679 386,230 382,118 363,358 339,534 203,306
Investment Manager's Report
The year ended 30 September 2024 witnessed a considerable reorganisation of
the Company's investment portfolio. Following the approval by shareholders, in
February 2024, for the Company to enter a Managed Wind-Down, the Investment
Manager partially liquidated the portfolio over a three to five month period
to allow the Board to return approximately £115m at NAV on 10 July 2024.
As the Company moves into the next phase of the Managed Wind-Down, the
Investment Manager is taking further steps to realise value for investors over
the next three years. The remaining investments are a broad range of
Alternative and Private Markets exposures ranging from litigation finance,
healthcare royalties, infrastructure, real estate to private equity and
private credit. Each investment has a unique set of dynamics that will need to
be carefully managed over the wind-down period.
Market Dynamics
Monetary Policy
Monetary policy across the US, UK, and Europe has been shaped by persistent
inflationary pressures, delaying anticipated rate cuts. The US Federal Reserve
("Fed") lowered rates by 25 basis points ("bps") in December 2024, bringing
its target range to 4.25%-4.50%, marking the third consecutive rate cut
following similar reductions in September and November. The Fed's cautious
approach reflects ongoing concerns over a slowing labour market, which remains
a key focus. In the UK, the Bank of England ("BoE") reduced the bank rate by
25 bps to 4.75% in November and left the rate unchanged in December. The BoE
Governor has cautioned against over-eager rate cuts given the inflationary
background. The next update is in February 2025, with the BoE currently
expecting inflation to rise to 2.8% by the third quarter of 2025 before
gradually easing. Meanwhile, the European Central Bank ("ECB") lowered its key
interest rates by 25 bps in December 2024, bringing the deposit facility rate
down to 3%. This marked the fourth rate cut of the calendar year 2024. The ECB
anticipates Eurozone inflation returning to its 2% target by early 2025 though
growth remains sluggish due to external political instability and other risks
such as the potential for a new US trade war.
Private Equity and Venture Capital
Private equity is cautiously moving towards more exits but fundraising remains
below historical standards. The trend towards concentration continues with
fewer but larger funds being raised from investors. In the venture capital
space, the lack of distributions is a significant issue. The market for
initial public offerings and large mergers and acquisitions (M&A) remains
subdued, with only 14 companies going public in the third quarter for an
aggregate exit value of $10.4 billion, which is below the long-term average.
Private Credit
In a higher interest rate environment, certain companies are increasingly
opting for payment-in-kind options instead of cash interest payments. This
trend has intensified as the US Federal Reserve shifts towards rate cuts.
Private credit lenders are offering more flexible terms to attract borrowers,
foregoing more attractive cash-pay interest to win deals.
Real Assets
In infrastructure, fundraising in the second quarter was $18.4 billion, just
55% of the five-year average. The number of funds closed was also below the
five-year average. Despite this, long-term allocations to infrastructure are
expected to grow, especially in the energy transition and efficiency sectors.
Investment sentiment in real estate is improving globally, with fundraising
and deal value trending upwards. Europe, in particular, saw real estate deal
value more than double from the previous quarter.
Performance
In aggregate, the majority of investments delivered positive performance in
local currency. The positive contributors included Private Equity (+10bps),
Private Credit (+43bps), Royalties (+45bps). Litigation Finance (+36bps),
Global Private Markets (+22bps), Global Infrastructure (+79bps), and Cash and
Government Bonds (+60bps), Detractors from performance included Real Estate,
which experienced a negative 220bps while FX movements, related to the fall in
the US Dollar against Sterling over the year, returned negative 325bps.
Overall, the aggregate return of the portfolio was -138bps over the year.
How did the portfolio produce returns during the year?
Private Equity
Patria Secondaries Opportunities fund delivered +54bps. Since the start of
2024, the improved momentum in the secondary market seen in H2 2023 has
continued and accelerated with increased activity across a range of deal types
and sizes. The combination of a more stable valuation backdrop and increased
confidence from larger secondary buyers to deploy capital should further
reduce the pricing gap between buyers and sellers, which will in turn
encourage more volume of deals to come to market. With expectations of a
constrained M&A market and slow distribution pace in 2024, both limited
partners (the investors, including the Company, ("LPs")) and general partners
(the manager of the fund, ("GPs")) are expected to proactively seek liquidity
in the secondary market in increasing numbers.
Bonaccord Capital Partners ("BCP") delivered +86bps, BCP buys equity stakes in
alternative asset managers who operate in the private equity, real estate, and
private credit space, mostly in the US. Given the rise in Private Markets
allocation and growth of the underlying managers which BCP invests in,
valuations have increased in line with those for listed peers and growth of
portfolios.
TrueNoord is an aircraft leasing business. The fleet is currently sitting at
86 aircraft and reported that there were a number of further portfolio trades
in the market that they were actively exploring. The valuation of the
portfolio was adjusted relative to listed market comparable entities, with the
Price-to-Book value revised downwards by 130bps. However, ongoing performance
of the business remained on target.
Project Komodo (secondary private equity portfolio in wind-down) detracted
-19bps as the tail of the portfolio continues to wind down.
Private Credit
Overall Private Credit has performed well with all investments adding positive
contribution to the portfolio, attractive spreads were achieved compared with
listed markets.
PIMCO Private Credit fund invests in a diversified pool of secured and
unsecured credit including Asset-Backed Securities, Residential
Mortgage-Backed Securities, bridge facilities across Commercial Real Estate,
Residential Real Estate, Corporate Debt, and Speciality Finance in the US and
Europe. The holding added +10bps before being fully redeemed during the year.
Hark III provides investors with an opportunity to lend capital on a
NAV-financing basis to Private Equity backed portfolio companies or investment
vehicles that would typically require dilutive equity capital. Since they
generally do not meet the stand-alone underwriting criteria of the traditional
lenders, such borrowers require credit enhancement from financial sponsors
giving rise to higher spreads and greater security for lenders. Hark III added
+9bps to the portfolio.
Mount Row II involves the active management of a diversified portfolio of
senior secured debt European and Global leveraged buyouts, with the focus
being on the largest and most liquid performing European senior secured
issuers. The strategy of the fund is to preserve capital for shareholders,
generate income and seek capital appreciation when market opportunities arise,
through the careful management of specific loan books and deleveraging of the
overall portfolio. Mount Row II added 24bps over the year.
Real Assets
Real assets (Real Estate and Infrastructure) detracted from performance,
returning -220bps over the year.
Real Estate assets have suffered from continued underperformance due to a
negative market environment. Residential development investments are
particularly affected where the higher cost of borrowing and delayed disposals
have resulted in losses. Over the year AEROF detracted 209bps while Aberdeen
Property Secondaries Fund detracted 17bps.
Offsetting this is the more stable contracted cashflow exposure generated in
the Global Infrastructure investments programme. Overall this basket of
investments delivered +83bps. The portfolio management team have exercised
liquidity options where available and we expect capital to be returned over
the next three years. There have been some specific asset capitalisation in
the SL Core infrastructure II programme, which will result in slower
distributions in the near term, however this will be beneficial over the
longer term.
Diversifying Opportunities
Diversifying Opportunities investments contributed positive 116bps to the
performance of the Company over the period. These assets are less sensitive to
global macro movements and provided stability to the portfolio. Performance
was broadly spread across several assets, with positive returns from the
private HealthCare Royalty Partners IV (+45bps), Burford Litigation Finance
(+36bps) and the Global Private Markets Fund (+22bps). Residual wind-down
assets in Markel Catco returned a positive +13bps over the year.
Defensive Assets
Our exposure to defensive assets, such as government bonds and cash, increased
in response to providing the capacity to return capital to shareholders and
cover remaining unfunded positions in private markets. In aggregate, these
positions generated positive returns of +60bps to the portfolio.
Future portfolio realisations
We anticipate returning capital regularly to shareholders, subject to
sufficient liquidity, as investments mature over time and a strategy is put in
place for longer dated assets.
There is a broad spectrum of asset classes and maturity across the portfolio.
The investment team are working on a number of potential liquidity mechanisms
and as these options become tangible, we will continue to work with the Board
as to how best to execute this on behalf of shareholders.
Nalaka De Silva,
Head of Private Markets Solutions
Nic Baddeley, Investment Manager,
Private Markets Solutions
Aretaios Chourdakis, Senior Investment Analyst,
Private Markets Solutions
abrdn Investments Limited
Investment Manager
20 January 2025
Portfolio
Private Equity
Patria Secondary Opportunities Fund IV
The fund's strategy is to acquire secondary interests in private markets
investments, principally secondary interests in funds investing in private
equity investments. The fund targets investments in niche or less competitive
areas of the secondary market and/or where the Manager has an information or
sourcing advantage. Such investments are likely to include direct private
equity funds, complex or opportunistic secondaries in private markets
opportunities, and private equity fund of funds or secondary funds.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Private Equity Europe 2020 $406m 14 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Secondary Fund-of Funds $25m USD 56% 27.2% £16.1m
TrueNoord
This is a co-invest in a regional aircraft leasing business based in
Amsterdam. The business specialises in the leasing and lease management of
specific regional aircraft, such as ATR, Bombardier and Embraer, to a range of
partners around the world. It currently has 86 aircraft in its fleet.
Fund Information
Sponsor Asset Class Country/Region Vintage Company Size Term
Freshstream Private Equity Europe 2017 $414m Evergreen
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Co-invest $7m USD 100% 6.9% £7.1m
Bonaccord Capital Partners I
Bonaccord Capital Partners I ("BCP") targets investment in equity stakes in
alternative asset management companies (e.g. Private Equity and Private Credit
Managers). The team focus on managers who are at the growth stage, who have a
core product with a track record, and the potential to launch new products. As
part owners of these managers, BCP receives a steady stream of income returns
from the fees managers charge their investors, with upside 'lumpy' yield
potential from carried interest earnings. There is also potential for
long-term capital appreciation over and above profit distributions, driven by
General Partner growth, de-risking, and potential portfolio-level multiple
arbitrage.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Bonaccord Capital Partners Private Equity North America and Europe 2019 $739m 12 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $20m USD 80% 16.2% £18.1m
Maj Invest Equity V
Maj Invest Equity V is a Private Equity fund focusing on a Buy-Out strategy
investing in small and medium sized companies in Denmark with typical revenues
of €12m to €130m. The sector focus of Maj V is Industrials, Technology,
MedTech and Trade.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Maj Invest Equity A/S Private Equity Denmark 2016 DKK2,125m 10 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund DKK25m DKK 95% -3.9% £2.1m
Harbourvest International Private Equity Partners VI
HIPEP VI is a Private Equity fund of funds, with North American, European,
Asia Pacific and Emerging Market exposure.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
HarbourVest Private Equity Global 2009 €1,448m 13 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Secondary Fund-of Funds $3.6m EUR 95% 19.2% £1.2m
Other Private Equity
Project Komodo
The fund comprises six mature private equity investments totalling less than
£700k in net asset value, and is not described further.
Maj Equity Fund IV
The fund is in liquidation with no assets left to sell, and under £500k of
net asset value, and is not described further.
Infrastructure
Andean Social Infrastructure Fund I LP
Andean Social Infrastructure Fund I invests in social and economic
infrastructure projects undertaken through the award of concessions by central
or local government counterparties with strong credit quality (PPP), including
all major sectors of social and economic infrastructure in approved countries
around the globe.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Infrastructure Latin America 2017 $198m 10 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $25m USD 77% 9.2% £15.8m
Aberdeen Global Infrastructure Partners II
Aberdeen Global Infrastructure Partners II invests in concession and PPP
infrastructure projects in Australia and the US. It has financed and managed
the development of these projects and all are now operational.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Infrastructure North American and Australia 2014 AUD$172m 30 years (with defined liquidity window between years 7 and 12)
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund AUD$25m AUD 53% 29.3% £2.3m
SL Capital Infrastructure II
SL Capital Infrastructure II focuses on mid-market European core
infrastructure projects and an emphasis on sustainability, with significant
ESG philosophy integration into the investment and asset management process.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Infrastructure Europe 2019 €667m 12 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Fund €28.5m EUR 99% 5.4% £27.8m
Pan-European Infrastructure Fund
The Pan-European Infrastructure Fund (PEIF) specialises in European
infrastructure investments. The opportunity was presented by the abrdn
Economic infrastructure team, who were already indirect investors in the fund,
and wanted to increase their exposure through an available secondary sale.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
DWS Infrastructure Europe 2005 €2,066m 10 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Secondary Fund €4.7m EUR 93% 14.8% £768,000
BlackRock Renewable Income UK
BlackRock Renewable Income (BRI) is a UK focused renewable energy fund. BRI is
currently fully invested in 48 wind and solar projects across the UK. 63% of
current NAV is in the UK wind sector, and 37% is in the UK solar sector. 100%
of the portfolio is operational and unlevered, and the portfolio has a net
average cash yield since inception of 8.2% as of 30 June 2024.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
BlackRock Infrastructure Europe 2015 £773m Evergreen
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Fund £8.5m GBP 100% 12.7% £6.7m
Private Credit
Hark Capital Partners III
The Fund's strategy relates to lending to private equity funds against the
value of their assets and the uncalled commitments from underlying investors.
Hark III intends to provide investors with an opportunity to achieve
attractive risk-adjusted returns of 11%-12% at a compelling relative value.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Hark Capital Partners Private Credit US 2022 $485m 7 years + 1
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $10m USD 50% 12.2% £4.1m
PIMCO Private Income Fund
PIMCO's Private Income Fund, launched in April 2019, is primarily focused on
income producing private assets. It seeks to deploy capital fluidly across
credit sectors and over economic cycles. It is housed in an evergreen fund
structure, for investors seeking to manage their exposure through time. The
Investment opportunity has three core pillars to its strategy: a multi-sector
approach to private credit, integrated investment team and evergreen vehicle
structure. The fund is a highly-diversified private lending fund that
leverages PIMCO's position as a global fixed income leader with deep credit
expertise. It seeks to provide attractive income-driven returns by primarily
investing in performing private credit across the residential, commercial,
specialty finance, and corporate sectors.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
PIMCO Private Credit America and Europe 2021 $730m Open-ended
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $10m USD 100% 4.4% £6.7m
Mount Row Credit Fund II
Mount Row Credit Fund II, is an active managed diversified portfolio of senior
debt European and Global leveraged buyouts with the focus being on the largest
and most liquid performing European senior secured issuers. Fund's strategy is
to preserve capital for shareholders, generate current income and seek capital
appreciated when market opportunities arise.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Investcorp Private Credit Europe 2021 €221m 2.5 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $10m GBP 100% 4.5% £9.4m
Real Estate
Aberdeen European Residential Opportunities Fund
AEROF is a residential development fund, converting brownfield sites with
higher value as residential units and building residential assets on
greenfield sites both for sale and for rental in the build to rent, micro
living and student accommodation sectors. The fund was due to finish in
2023, but has entered its extension period, and is due to complete in Q2 2025.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Real Estate Europe & UK 2017 €600m 6 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund €15m EUR 100% -30.1% £2.6m
Aberdeen Property Secondary Partners II
The Fund's strategy is to acquire attractive property fund across Europe and
India. The portfolio has exposure across seven different countries with three
of those accounting for 88% of the portfolio (Spain, the UK, and India). From
a sector perspective the largest exposure (53% of NAV) is to offices, with a
further 23% invested in the more resilient residential sector. The Fund term
was due to expire in December 2024 but has now been extended by a year to
December 2025.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Real Estate Europe and Asia 2017 €103m 7 years +1+1+1
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Secondary Fund-of Funds €22m EUR 94% 6.0% £7.8m
Cheyne Social Property Impact Fund
Cheyne Social Property Impact Fund invests in UK property for use by social
sector organisations for disadvantaged groups. The fund reached its maturity
in 2021 and we granted its extension of 12 months in January 2021 and 18th
months to September 2023. As the fund is now past the end of its permitted
life, the Company are not being charged any fees by the manager for this fund.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Cheyne Real Estate UK 2016 £187m 7 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund £6m GBP 100% -1.2% £3.3m
Special Opportunities
Burford Opportunity Fund
Burford Opportunity Fund invests in litigation finance, funding the legal
costs of carefully selected commercial cases typically in return for a
percentage of the damages or awards paid to the claimant, should they be
successful.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Burford Capital Litigation Finance North America 2018 $300m 5 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $25m USD 75% 13.6% £16.1m
HealthCare Royalty Partners IV
HealthCare Royalty Partners IV (HCR IV) invests in royalty streams from life
sciences companies and drug developers. Many life science companies or
developers want to raise funds to fund future research and development work,
without diluting their interests or giving away control. By selling a
proportion of their future sales to funds such as HCRIV, they can raise this
non-dilutive capital.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
Abrdn Healthcare Royalties Global, with a focus on North America 2018 $1,2bn 10 years
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary Fund $25m USD 98% 15.6% £12.3m
abrdn Global Private Markets Fund
The abrdn Global Private Markets Fund launched with existing exposure to North
American and European private equity focused on mid-market companies, along
with economic infrastructure and energy assets in the UK and Europe. The Fund
is currently building out and diversifying its exposure. There is exploratory
activity globally with particular attention on technology, demographics and
sustainability themes. The near-term focus will be to expand the portfolio
into private credit and real asset strategies (Real Estate, Infrastructure and
Natural Resources) while diversifying the current private equity and
infrastructure assets by sector and market. Geographically, we will focus on
private equity and venture capital in North America, infrastructure in OECD
markets, real estate in the Europe and Asia, and private credit strategies in
North America and Europe. Implementation will focus on secondary investments
and co-investments alongside Fund commitments.
Fund Information
Fund Manager Asset Class Country/Region Vintage Fund Size Term
abrdn Multi-asset private market Global 2018 £328m Open-ended
Key Information
Investment Commitment Currency % Drawn IRR NAV (GBP)
Primary/Secondary/Direct £15m GBP 100% 9.5% £20.7m
Ten Largest Investments
As at 30 September 2024
At At
30 September 30 September
2024 2023
% of Total % of Total
investments investments
SL Capital Infrastructure II(AB) 15.2 8.1
European economic infrastructure
Aberdeen Standard Global Private Markets Fund(AB) 11.4 5.9
Multi-strategy private markets exposure
Bonaccord Capital Partners I-A(B) 10.0 4.7
Investment in alternative asset management companies
Burford Opportunity Fund(B) 8.9 5.1
Litigation finance investments initiated by Burford Capital
Patria Secondaries Opportunities Fund IV(B) 8.8 3.8
Diversified Private Equity portfolio which invests through secondary
transactions
Andean Social Infrastructure Fund I(AB) 8.7 4.4
Infrastructure project investments in the Andean region of South America
Healthcare Royalty Partners IV(B) 6.8 4.7
Healthcare royalty streams primarily in the US
Mount Row Credit Fund II(B) 5.1 3.0
Diversified portfolio of senior debt European and Global leveraged buyouts
Aberdeen Property Secondaries Partners II(AB) 4.3 2.8
Real estate value added portfolio of properties across United Kingdon and
Europe
TrueNoord Co-Investment(B) 3.9 2.6
Aircraft leasing company which specialises in regional aircraft
(A) Denotes abrdn plc managed products
(B) Unlisted holdings
Private Markets Investments
As at 30 September 2024
Valuation Total investments Valuation
2024 2024 2023
Company £'000 % £'000
Private Equity
Bonaccord Capital Partners I-A(B) 18,130 10.0 16,091
Patria Secondaries Opportunities Fund IV(AB) 16,057 8.8 12,940
TrueNoord Co-Investment(B) 7,136 3.9 8,765
Maj Invest Equity V(B) 2,095 1.1 2,432
HarbourVest International Private Equity VI(B) 1,240 0.7 1,678
Mesirow Financial Private Equity IV(B) 400 0.2 599
HarbourVest VIII Venture Fund(B) 104 0.1 123
Mesirow Financial Private Equity III(B) 80 - 117
Maj Invest Equity IV(B) 24 - 1,205
HarbourVest VIII Buyout Fund(B) 23 - 160
Top ten Private Equity holdings 45,289 24.8
Other holdings 9 -
Total Private Equity 45,298 24.8
Real Estate
Aberdeen Property Secondaries Partners II(AB) 7,840 4.3 9,385
Cheyne Social Property Impact Fund(B) 3,299 1.8 3,299
Aberdeen European Residential Opportunities Fund(AB) 2,556 1.4 7,524
Total Real Estate 13,695 7.5
Infrastructure
SL Capital Infrastructure II(AB) 27,792 15.2 27,419
Andean Social Infrastructure Fund I(AB) 15,821 8.7 15,016
BlackRock Renewable Income - UK(B) 6,657 3.7 8,199
Aberdeen Global Infrastructure Partners II (AUD)(AB) 2,250 1.2 4,541
Pan European Infrastructure Fund(B) 768 0.4 1,205
Total Infrastructure 53,288 29.2
Private Credit
Mount Row Credit Fund II(B) 9,393 5.1 10,166
PIMCO Private Income Fund Offshore Feeder I LP(B) 6,736 3.7 7,662
ASI Hark III(B) 4,109 2.2 6,042
Total Private Credit 20,238 11.0
Other
Aberdeen Standard Global Private Markets Fund(AB) 20,730 11.4 19,934
Burford Opportunity Fund(B) 16,120 8.9 17,272
Healthcare Royalty Partners IV(B) 12,263 6.8 16,235
Markel CATCo Reinsurance Fund Ltd - LDAF 2018 SPI(B) 572 0.3 333
Markel CATCo Reinsurance Fund Ltd - LDAF 2019 SPI(B) 242 0.1 81
Total Other 49,927 27.5
Total Private Markets 182,446 100.0
(A) Denotes abrdn plc managed products
(B) Unlisted holdings
Listed Equities
As at 30 September 2024
Valuation Valuation Valuation
2024 2024 2023
Company £'000 % £'000
Reinsurance Sub-Fund
CATCo Reinsurance Opportunities Fund 79 - 84
Total Reinsurance Sub-Fund 79 -
Total Equities 79 -
Net Assets Summary
As at 30 September 2024
Valuation Net assets Valuation Net assets
2024 2024 2023 2023
£'000 % £'000 %
Total investments 182,525 89.8 339,972 100.1
Cash and cash equivalents(A) 22,300 11.0 21,087 6.2
Forward contracts - - (5,615) (1.6)
6.25% Bonds 2031 - - (15,730) (4.6)
Other net liabilities (1,519) (0.8) (180) (0.1)
Net assets 203,306 100.0 339,534 100.0
Governance
Directors' Report
The Directors present their audited Annual Report for the year ended 30
September 2024.
Results
The financial statements for the year ended 30 September 2024 may be found
below.
Return of capital to shareholders
The Company returned approximately 38.1p per Ordinary share to shareholders on
10 July 2024 via a B Share Scheme which was approved by shareholders at a
General Meeting held on 3 July 2024. Further detail may be found in Overview
of Strategy.
Dividends
Interim dividends of 1.42p per Ordinary share and 1.95p per Ordinary share,
were paid on 27 March 2024 and 24 October 2024, respectively, in respect of
the year ended 30 September 2024.
In accordance with the circular to shareholders published by the Company on 17
June 2024, the Board intends to continue to pay a sufficient level of dividend
to ensure that the Company will not retain more than 15 per cent. of its
income in an accounting period so as to maintain the Company's investment
trust status during the Managed Wind-Down.
Revenue available to the Company will decrease as the portfolio assets are
realised and there can be no guarantee as to the payment, quantum, or timing
of dividends during the Managed Wind-Down process. However, it is expected
that, at a minimum, the Company will declare a dividend each September,
normally payable in October, to maintain investment trust status.
Further information on the Board's intentions regarding future dividends may
be found in the Chairman's Statement and, in relation to Resolution 3 to be
proposed at the AGM on 26 February 2025, in the Directors' Report.
Investment Trust Status
The Company is registered as a public limited company in Scotland under number
SC003721 and is an investment company within the meaning of Section 833 of the
Companies Act 2006. The Company has been approved by HM Revenue & Customs
as an investment trust subject to it continuing to meet the relevant
eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the
ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011. The
Directors are of the opinion that the Company has conducted its affairs for
the year ended 30 September 2024 so as to enable it to comply with the ongoing
requirements for investment trust status.
Individual Savings Accounts
The Company has conducted its affairs in such a way as to satisfy the
requirements as a qualifying security for Individual Savings Accounts. The
Directors intend that the Company will continue to conduct its affairs in this
manner.
Capital Structure and Voting rights
The issued Ordinary share capital at 30 September 2024 consisted of
301,265,952 Ordinary shares with nominal value of 1p each (2023 - 301,265,952
Ordinary shares with nominal value of 25p each) with voting rights and
22,485,854 Ordinary shares of 1p each (2023 - 22,485,854 Ordinary shares of
25p each) held in treasury. No Ordinary shares were bought back into treasury
during the year ended 30 September 2024 (2023 - 7,181,362) and no Ordinary
shares were bought back into treasury between 1 October 2024 and the date of
approval of this Annual Report.
Each Ordinary share (excluding treasury shares) holds one voting right and
shareholders are entitled to vote on all resolutions which are proposed at
general meetings of the Company. The Ordinary shares, excluding treasury
shares, carry a right to receive dividends. On a winding up or other return
of capital, after meeting the liabilities of the Company, the surplus assets
will be paid to Ordinary shareholders in proportion to their shareholdings.
Following the approval by the Court of Session in Edinburgh of the reduction
in the Company's share capital on 7 June 2024, the nominal value per Ordinary
share was reduced from 25p to 1p.
There are no restrictions on the transfer of Ordinary shares in the Company
other than certain restrictions which may from time to time be imposed by law.
Directors
As at 30 September 2024 and as the date of this Report, the Board consisted of
a non-executive Chairman and three non-executive Directors, all of whom served
as Directors throughout the year ended 30 September 2024, Anna Troup retired
as a Director on 27 February 2024. Tom Challenor was Senior Independent
Director and Chairman of the Audit Committee.
Board Diversity
The Board recognises the importance of having a range of skilled, experienced
individuals with the right knowledge represented on the Board in order to
allow it to fulfil its obligations. The Board also recognises the benefits and
is supportive of, and will give due regard to, the principle of diversity in
its recruitment of new Board members. The Board will not display any bias for
age, gender, race, sexual orientation, socio-economic background, religion,
ethnic or national origins or disability in considering the appointment of
Directors. The Board will continue to ensure that all appointments are made on
the basis of merit against the specification prepared for each appointment.
The Board will take account of the targets set out in the FCA's Listing Rules,
which are set out below.
The Board voluntarily discloses the information, which has been provided by
each Director, in the tables below in relation to its diversity. The Board has
resolved that the Company's year end date be the most appropriate reference
date for disclosure purposes. There have been no changes between 30 September
2024 and the date of approval of this report.
The Board acknowledges that it does not meet the target that at least 40% of
Directors are women as set out in UKLR 6.6.6R (9)(a)(i) nor the target that at
least one Director is from a minority ethnic background as set out in UKLR
6.6.6R (9)(a)(iii). Further to the retirement of Anna Troup and the approval
of shareholders of the Company entering a Managed Wind-Down, which both
occurred on 27 February 2024, the Board considers that four Directors is the
appropriate number, taking account of the responsibilities that require to be
discharged and the need to exercise control over the Company's operating
costs. The Board does not expect to undertake a recruitment exercise in the
medium term, which would present an opportunity to address diversity.
Table for reporting on gender as at 30 September 2024
Number of board members Percentage of the board Number of senior positions Number in executive management Percentage of executive management
on the board
(CEO, CFO, Chair and SID)
Men 3 75% 1 n/a n/a
(note 3) (note 3)
Women 1 25% 1
(note 1)
Not specified/prefer not to say - - -
Table for reporting on ethnic background as at 30 September 2024
Number of board members Percentage of the board Number of senior positions Number in executive management Percentage of executive management
on the board
(CEO, CFO, Chair and SID)
White British or other White 4 100% 1 n/a n/a
(including minority-white groups)
(note 3) (note 3)
Minority ethnic - - -
(note 2)
Not specified/prefer not to say - - -
Notes:
1. Does not meet the target that at least 40% of Directors are women
as set out in UKLR 6.6.6R (9)(a)(i).
2. Does not meet the target that at least one Director is from a
minority ethnic background as set out in UKLR 6.6.6R (9)(a)(iii).
3. This column is not applicable as the Company is externally managed
and does not have any executive staff, specifically it does not have either a
CEO or CFO.
The Role of the Chairman and Senior Independent Director
The Chairman is responsible for providing effective leadership to the Board,
by setting the tone of the Company, demonstrating objective judgement and
promoting a culture of openness and debate. The Chairman facilitates the
effective contribution, and encourages active engagement, by each Director. In
conjunction with the Company Secretary, the Chairman ensures that Directors
receive accurate, timely and clear information to assist them with effective
decision-making. The Chairman leads the evaluation of the Board and individual
Directors and acts upon the results of the evaluation process by recognising
strengths and addressing any weaknesses. The Chairman also engages with major
shareholders and ensures that all Directors understand shareholder views.
The Senior Independent Director acts as a sounding board for the Chairman and
acts as an intermediary for other Directors, when necessary. Working closely
with the Nomination Committee, the Senior Independent Director takes
responsibility for an orderly succession process for the Chairman, and leads
the annual appraisal of the Chairman's performance. The Senior Independent
Director is also available to shareholders to discuss any concerns they may
have. Tom Challenor is the Senior Independent Director.
Board Committees
The Board has appointed a number of Committees, as set out below. Copies of
their terms of reference, which define the responsibilities and duties of each
Committee, are available on the Company's website, or upon request from the
Company. The terms of reference of each of the Committees are reviewed and
re-assessed by the Board for their adequacy on an ongoing basis.
Audit Committee
The Audit Committee's Report is contained in the separate report.
Management Engagement Committee
The Management Engagement Committee consists of all the Directors and was
chaired by Davina Walter throughout the year. The terms and conditions of the
Manager's appointment, including an evaluation of performance and fees, are
reviewed by the Committee on an annual basis. The Committee also keeps under
review the resources of abrdn plc, together with its commitment to the Company
and its investment trust business. In addition, the Committee conducts an
annual review of the performance, terms and conditions of the Company's key
third party suppliers, by undertaking peer comparisons and reviewing reports
from the Manager and the Depositary.
The Board conducts a formal annual evaluation of the performance of, and
contractual relationship with, the Manager and those third parties appointed
by the Manager. The evaluation includes consideration of the investment
strategy and process of the Manager, noting performance against the benchmark
over the long term and the quality of the support that the Company receives
from the Manager. The Board confirms that it is satisfied that the continuing
appointment of the Manager, on the terms agreed, is in the interests of
shareholders as
a whole.
Management Agreement
The Company has appointed the Manager, a wholly-owned subsidiary of abrdn plc,
as its alternative investment fund manager.
The Manager has been appointed to provide investment management, risk
management, administration and company secretarial services as well as
promotional activities. The Company's portfolio is managed by the Investment
Manager by way of a group delegation agreement in place between the Manager
and Investment Manager. In addition, the Manager has sub-delegated
administrative and secretarial services to abrdn Holdings Limited and
promotional activities to abrdn Investments Limited.
The Manager charges a monthly fee at the rate of one-twelfth of 0.50% on the
first £300 million of NAV and 0.45% of NAV in excess of £300 million. The
value of any investments in Exchange Traded Funds, unit trusts, open ended and
closed ended investment companies and investment trusts of which the Manager,
or another company within the abrdn plc group, is the operator, manager or
investment adviser, is deducted from net assets. Details of the management fee
charged during the year are included in note 4 to the financial statements.
The management agreement has in place a six months' notice period. In the
event of termination by the Company on less than the agreed notice period,
compensation is payable to the Manager in lieu of the unexpired notice period.
Nomination Committee
The Nomination Committee consists of all the Directors and was chaired by
Davina Walter throughout the year. The Committee reviews the effectiveness of
the Board, succession planning, Board appointments, appraisals, training and
the remuneration policy. As stated in the Directors' Remuneration Report, the
Nomination Committee determines the level of Directors' fees and there is no
separate remuneration committee.
The names and biographies of each of the current Directors are shown on the
Company's website and indicate their range of skills and experience as well as
their length of service and individual contribution to the governance of the
Company.
Through the work of the Nomination Committee, the Directors undertook a review
of the Board, its Committees and the performance of individual Directors. The
process involved the completion of questionnaires by each Director with the
results discussed by the Board thereafter, with appropriate action points
agreed. Following the evaluation process, the Board concluded that it operates
effectively to promote the success of the Company and that each Director makes
a significant contribution to the collective Board. The review of the Chairman
was undertaken by the Senior Independent Director. The Board has assessed
that, collectively, it had in place the appropriate balance of skills,
experience, length of service and knowledge of the Company while recognising
the advantages of diversity.
Potential new Directors are identified against the requirements of the
Company's business and the need to have a balance of skills, experience,
independence, diversity and knowledge of the Company within the Board.
Each Director has the requisite high level and range of business and financial
experience which enables the Board to provide clear and effective leadership
and proper governance of the Company.
The Directors attended scheduled meetings of the Board and Board Committees
during the year ended 30 September 2024 as set out in the table (with their
eligibility to attend the relevant meetings in brackets). The Directors meet
more regularly when business needs require, in particular in relation to the
strategic review. In addition, there were ad hoc Committee meetings when not
all Directors were required to attend.
Director Scheduled Board Meetings Audit Committee Meetings Management Engagement Committee Meetings Nomination Committee Meetings
Davina Walter (A) 5 (5) - (-) 2 (2) 2 (2)
Tom Challenor 5 (5) 3 (3) 2 (2) 2 (2)
Trevor Bradley 5 (5) 3 (3) 2 (2) 2 (2)
Anna Troup (B) 2 (2) 1 (1) 1 (1) 1 (1)
Alistair Mackintosh 5 (5) 3 (3) 2 (2) 2 (2)
(A) Davina Walter, as Chairman of the Board, is not a member of the Audit
Committee
(B) Retired as a Director on 27 February 2024
Further to the above, all Directors participated in additional meetings in
relation to the strategic review.
In line with best practice in corporate governance, all Directors offer
themselves for election or re-election at the AGM. Davina Walter, Tom
Challenor, Trevor Bradley and Alistair Mackintosh each retire and, being
eligible, each submits themselves for re-election at the AGM. The Board
believes that all current Directors remain, and all Directors during the year
ended 30 September 2024 were, and continue to be, independent of the Manager
and free from any relationship which could materially interfere with the
exercise of their judgement on issues of strategy, performance, resources and
standards of conduct. In addition, the Board confirms that each Director
demonstrates commitment to the role and their performance remains effective
which supports their individual contribution to the role.
The Board therefore recommends, for approval by shareholders, the resolutions
for the individual re-election as Directors at the AGM of each of Davina
Walter, Tom Challenor, Trevor Bradley and Alistair Mackintosh.
Directors' and Officers' Liability Insurance
The Company's Articles of Association indemnify each of the Directors out of
the assets of the Company against any liabilities incurred by them as a
Director of the Company in defending proceedings, or in connection with any
application to the court in which relief is granted. In addition, the
Directors have been granted qualifying indemnity provisions by the Company
which are currently in force. Directors' and Officers' liability insurance
cover has been maintained throughout the year at the expense of the Company.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation where a Director
has an actual or potential conflict of interest. As part of this process, each
Director prepares a list of other positions held and all other conflict
situations that may need to be authorised either in relation to the Director
concerned or his or her connected persons. The Board considers each Director's
situation and decides whether to prevent or manage any conflict, taking into
consideration what is in the best interests of the Company and whether the
Director's ability to act in accordance with their duties is affected. Each
Director is required to notify the Company Secretary of any potential, or
actual, conflict situations that will need authorising by the Board.
Authorisations given by the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although all Directors are
issued with letters of appointment. There were no contracts during, or at the
end of the year, in which any Director was interested.
The Board takes a zero-tolerance approach to bribery and has adopted
appropriate procedures designed to prevent bribery. The Manager also takes a
zero-tolerance approach and has its own detailed policy and procedures in
place to prevent bribery and corruption.
Corporate Governance
The Statement of Corporate Governance, which forms part of the Directors'
Report, may be found below.
Going Concern
The Financial Statements of the Company have been prepared on a going concern
basis. This conclusion is consistent with the Company's Viability Statement
as set out in the 'Overview of Strategy'.
The Directors are mindful of the principal risks and uncertainties disclosed
in the 'Overview of Strategy' and have reviewed forecasts detailing revenue,
liabilities and capital commitments. The Directors are satisfied that: the
Company is able to meet all of its liabilities from its assets, including its
ongoing charges, so possesses sufficient resources to continue in operational
existence for the foreseeable future and at least 12 months from the date of
approval of this Annual Report; the Company is financially sound; and the
Company's key third party service providers had in place appropriate business
continuity plans.
Further to a circular published on 5 December 2024, a General Meeting of the
Company was held on 23 December 2024 at which shareholders approved the
adoption of new Articles of Association which removed the requirement for the
Company to hold an annual continuation vote.
Following the approval by shareholders of the Company, on 27 February 2024,
for the Company to pursue a Managed Wind-Down, the Directors do not believe
this should automatically trigger the adoption of a basis other than going
concern in line with the Association of Investment Companies ("AIC") Statement
of Recommended Practice ("SORP") which states that it is usually appropriate
to prepare financial statements on a going concern basis.
Additionally, the SORP guidance sets out that it is appropriate for the
financial statements to be prepared on a going concern basis whilst making a
material uncertainty disclosure as set out in accounting standards. Whilst the
financial statements for the year ended 30 September 2024 have been prepared
on a going concern basis, the Directors recognise that there is a material
uncertainty in respect of the Managed Wind-Down (see note 2(a) for related
basis of preparation disclosures).
Relations with Shareholders
The Directors place great importance on communication with shareholders and
regularly meet with current and prospective shareholders to discuss
performance, including in the absence of the Manager. The Board receives
quarterly investor relations updates from the Manager. Significant changes to
the shareholder register, as well as shareholder feedback, are discussed by
the Directors at each Board meeting.
Regular updates are provided to shareholders through the Annual Report, Half
Yearly Report, monthly factsheets and daily net asset value announcements, all
of which are available through the Company's website at:
abrdndiversified.co.uk. The Annual Report is also widely distributed to other
parties who have an interest in the Company's performance. Shareholders and
investors may obtain up-to-date information through its website or by
contacting the Company directly by email to diversifiedincome@abrdn.com.
The Board's policy is to communicate directly with shareholders and their
representative bodies without the involvement of the management group (either
the Company Secretary or abrdn) in situations where direct communication is
required and representatives from the Board offer to meet with major
shareholders on an annual basis in order to gauge their views. The Company
Secretary acts on behalf of the Board, not the Manager, and there is no
filtering of communication. At each Board meeting the Board receives full
details of any communication from shareholders to which the Chairman responds,
as appropriate, on behalf of the Board.
In addition, in relation to institutional shareholders, members of the Board
may either accompany the Manager or conduct meetings in the absence of the
Manager.
The Company's Annual General Meeting ordinarily provides a forum, both formal
and informal, for shareholders to meet and discuss issues with the Directors
and Investment Manager. The Notice of AGM included within the Annual Report is
normally sent out at least 20 working days in advance of the meeting.
Substantial Interests
As at 30 September 2024, the following interests over 3% in the issued
Ordinary share capital of the Company had been disclosed in accordance with
the requirements of the FCA's Disclosure Guidance and Transparency Rules:
Shareholder Number of shares held % held (B)
Interactive Investor (A) 50,472,885 16.8
Hargreaves Lansdown (A) 28,365,225 9.4
City of London 21,134,901 7.0
Investec Wealth & Investment 11,139,438 3.7
Castellain Capital 9,700,933 3.2
(A) Non-beneficial interest
(B) Based on 301,265,952 Ordinary shares in issue (excluding treasury shares)
as at 30 September 2024
The above interests at 30 September 2024 were unchanged at the date of
approval of this Report.
Criminal Finances Act 2017
The Criminal Finances Act 2017 introduced a corporate criminal offence of
"failing to take reasonable steps to prevent the facilitation of tax evasion".
The Board has confirmed that it is the Company's policy to conduct all of its
business in an honest and ethical manner. The Board takes a zero tolerance
approach to facilitation of tax evasion, whether under UK law or under the law
of any foreign country.
Accountability and Audit
The responsibilities of the Directors and the auditors in connection with the
financial statements appear are set out in the published Annual Report.
Each Director confirms that, so far as they are aware, there is no relevant
audit information of which the Company's auditors are unaware, and they have
taken all the steps that they could reasonably be expected to have taken as
Directors in order to make themselves aware of any relevant audit information
and to establish that the Company's auditors are aware of that information.
Annual General Meeting
The Annual General Meeting will be held at 10.00 am on 26 February 2025 at 18
Bishops Square, London E1 6EG. The Notice of the Meeting may be found in the
published Annual Report.
Resolutions including the following business will be proposed at the Annual
General Meeting:
Dividend policy (Resolution 3)
It is best practice in corporate governance for companies to seek annual
shareholder approval of a policy to pay interim dividends where separate
authority is not sought for a final dividend.
Market Purchase of the Company's own Ordinary Shares (Resolution 10)
Resolution 10 will be proposed as a special resolution to authorise the
Company to make market purchases of its own Ordinary shares.
The Board is seeking shareholders' approval to authorise the Company to buy
back its own shares for holding in treasury in order to provide flexibility as
part of the Managed Wind-Down. The Company is not seeking separate authority
to sell such shares (or any of them) for cash (or its equivalent) and expects,
ultimately, to cancel the shares. No dividends will be paid on treasury shares
and no voting rights attach to them.
Resolution 10 gives the Company the authority to buy Ordinary shares up to a
maximum of 14.99% of the issued Ordinary share capital of the Company
(excluding treasury shares) as at the date of the passing of the resolution
(approximately 45 million Ordinary shares). The minimum price which may be
paid for an Ordinary share is 1p (exclusive of expenses). The maximum price
(exclusive of expenses) which may be paid for the shares is the higher of a)
5% above the average of the middle market quotations of the Ordinary shares
(as derived from the Daily Official List of the London Stock Exchange) for the
shares for the five business days immediately preceding the date of purchase;
and b) the higher of the price of the last independent trade and the highest
current independent bid on the main market for the Ordinary shares.
This authority, if conferred, will expire at the conclusion of the next Annual
General Meeting of the Company or, if earlier, on 31 March 2026 (unless
previously revoked, varied or extended by the Company in general meeting) and
will be exercised only if it would result in an increase in net asset value
per Ordinary share for the remaining shareholders and if it is in the best
interests of shareholders as a whole.
Holding General Meetings on not less than 14 days' clear notice (Resolution 11)
Under the Companies Act 2006, the notice period for all general meetings of
the Company is 21 clear days' notice. Annual general meetings will always be
held on at least 21 clear days' notice but shareholders can approve a shorter
notice period for other general meetings. Resolution 11, which is a special
resolution, seeks the authority from shareholders for the Company to be able
to hold general meetings (other than Annual General Meetings) on not less than
14 clear days' notice. The approval will be effective until the Company's next
Annual General Meeting, when it is intended that a similar resolution will be
proposed. The Company will also need to meet the requirements for electronic
voting under the Companies Act 2006 (as amended by the Shareholders' Rights
Regulations) before it can call a general meeting on not less than 14 days'
clear notice.
The Board believes that it is in the best interests of Shareholders to have
the ability to call meetings on not less than 14 clear days' notice should an
urgent matter arise. The Directors do not intend to hold a general meeting
on less than 21 clear days' notice unless immediate action is required.
This power will expire at the conclusion of the next Annual General Meeting of
the Company or, if earlier, 31 March 2026 (unless previously revoked, varied
or extended by the Company in general meeting).
Recommendation
The Directors consider that the resolutions to be proposed at the Annual
General Meeting are in the best interests of the Company and its shareholders
and recommend that shareholders vote in favour of the resolutions as they
intend to do in respect of their own beneficial shareholdings, amounting to
318,885 Ordinary shares, representing 0.1% of the issued share capital
(excluding treasury shares).
On behalf of the Board
Davina Walter
Chairman
20 January 2025
Statement of Corporate Governance
abrdn Diversified Income and Growth plc (the "Company") is committed to high
standards of corporate governance. The Board is accountable to the Company's
shareholders for good governance and this statement describes how the Company
has applied the principles identified in the UK Corporate Governance Code as
published in July 2018 (the "UK Code"), which is available on the Financial
Reporting Council's (the "FRC") website: frc.org.uk, and is applicable for the
Company's year ended 30 September 2024.
The Board has also considered the principles and provisions of the AIC Code of
Corporate Governance as published in February 2019 (the "AIC Code"). The AIC
Code addresses the principles and provisions set out in the UK Code, as well
as setting out additional provisions on issues that are of specific relevance
to the Company. The AIC Code is available on the AIC's website: theaic.co.uk.
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 Board confirms that, during the year, the Company has complied with the
principles and provisions of the AIC Code and the relevant provisions of the
UK Code, except for those provisions relating to:
· the role and responsibility of the chief executive;
· executive directors' remuneration; and
· the requirement for an internal audit function.
The Board considers that these provisions are not relevant to the position of
the Company being an externally managed investment company. In particular, all
of the Company's day-to-day management and administrative functions are
outsourced to third parties. As a result, the Company has no executive
directors, employees or internal operations. The Company has therefore not
reported further in respect of these provisions.
Information on how the Company has applied the AIC Code, the UK Code, the
Companies Act 2006 and the FCA's DTR 7.2.6 is provided in the Directors'
Report and Audit Committee's Report as follows:
· the composition and operation of the Board and its Committees are
detailed in the Directors' Report and, in respect of the Audit Committee, in
that Committee's report;
· the Board's policy on diversity is included in the Directors' Report;
· the Company's approach to internal control and risk management is
detailed in the Report of the Audit Committee;
· the contractual arrangements with, and annual assessment of, the Manager
are set out in the Directors' Report;
· the Company's capital structure and voting rights are summarised in the
Directors' Report;
· the substantial interests disclosed in the Company's shares are listed in
the Directors' Report;
· the rules concerning the appointment and replacement of Directors are
contained in the Company's Articles of Association and are summarised in the
Directors' Remuneration Report. There are no agreements between the Company
and its Directors concerning compensation for loss of office; and
· the powers to issue or buy back the Company's ordinary shares, which are
sought annually, and any amendments to the Company's Articles of Association,
require a special resolution (75% majority) to be passed by shareholders and
information on these resolutions may be found in the Directors' Report.
On behalf of the Board
Davina Walter
Chairman
20 January 2025
Directors' Remuneration Report
This Directors' Remuneration Report comprises three parts:
i. a Remuneration Policy, which is subject to a binding shareholder
vote every three years, or sooner if varied during this interval; most
recently approved by shareholders in a poll at the AGM on 28 February 2023
where 91.4% of the votes were cast in favour of the relevant resolution while
8.6% were cast against. The Remuneration Policy will be put to shareholders at
the AGM in 2026;
ii. an Implementation Report which is subject to an advisory vote on
the level of remuneration paid during the year; and
iii. an Annual Statement.
The law requires the Company's auditors to audit certain of the disclosures
provided in the Directors' Remuneration Report. Where disclosures have been
audited, they are indicated as such. The auditors' opinion is included in the
report included in the published Annual Report.
Remuneration Policy
The Directors' Remuneration Policy is determined by the full Board, chaired by
Davina Walter, and a separate Remuneration Committee has not been established.
The Board's policy is that the remuneration of non-executive Directors should
be sufficient to attract and retain the Directors needed to oversee the
Company properly and to reflect its specific circumstances. The remuneration
should also reflect the nature of the Directors' duties, responsibilities, the
value of their time spent and be fair and comparable to that of other
investment trusts that are similar in size, and have similar capital
structures and similar investment objectives.
Fees paid to the directors of companies within the Company's peer group are
also taken into account and the Company Secretary provides the Directors with
relevant comparative information.
The policy also provides that the Chairman of the Board and of each Committee
may be paid a fee which is proportionate to the additional responsibilities
involved in that position. In order to avoid conflicts of interest, each
Director absents themselves from the consideration of their own fee. There
were no changes to the Directors' Remuneration Policy during the year nor are
there any proposals for any changes in the foreseeable future.
No communications were received from shareholders regarding Directors'
remuneration during the year.
Limits on Directors' Remuneration
Directors' fees are set within the limits of the Company's Articles of
Association which limit the aggregate fees payable to the Board of Directors
per annum. The current limit is £300,000 per annum which may only be
increased by an ordinary resolution of shareholders.
The level of fees for the years ended 30 September 2024 and 2023 is set out in
the following table. Fees are reviewed annually and increased, if considered
appropriate.
30 September 2024 30 September 2023
£
£
Chairman 51,750 48,400
Chairman of Audit Committee 37,750 35,400
Senior Independent Director 34,250 32,100
Director 32,000 29,900
Appointment
· The Company only intends to appoint non-executive Directors.
· All the Directors are non-executive and are appointed under the terms of
Letters of Appointment.
· Directors must retire and be subject to election at the first Annual
General Meeting after their appointment, and be subject to re-election at
least every three years thereafter. Notwithstanding this, the Board has agreed
that all Directors shall retire and, if eligible, stand for re-election at
each AGM.
· Any Director newly appointed to the Board will receive the fee applicable
to each of the other Directors at the time of appointment together with any
other fee then currently payable in respect of a specific role which the new
Director is to undertake for the Company.
· No incentive or introductory fees will be paid to encourage a person to
become a Director.
· Directors are not eligible for bonuses, pension benefits, share options,
long term incentive schemes or other benefits.
· Directors are entitled to reimbursement of out-of-pocket expenses
incurred in connection with the performance of their duties, including travel
expenses, which are considered to be taxable expenses.
· The Company indemnifies its Directors for all costs, charges, losses,
expenses and liabilities which may be incurred in the discharge of duties as a
Director of the Company.
Performance, Service Contracts, Compensation and Loss of Office
· The Directors' remuneration is not subject to any performance related
fee.
· No Director has a service contract.
· No Director was interested in contracts with the Company during the
period or subsequently.
· The terms of appointment provide that a Director may be removed without
notice.
· Compensation will not be due upon leaving office.
· No Director is entitled to any other monetary payment or any assets of
the Company.
· Directors' and Officers' liability insurance cover is maintained by the
Company on behalf of the Directors.
It is the Board's intention that this Remuneration Policy applies for the
three years to 30 September 2025.
Implementation Report
Review of Directors' Fees
The level of Directors' fees was last revised with effect from 1 October 2023.
The Board carried out a review of Directors' annual fees, by reference to
inflation, as measured by the increase in the Consumer Prices Index for the
year to 30 September 2024, and taking account of peer group comparisons by
sector and by market capitalisation. Accordingly, it was concluded that
Directors' fees would change, with effect from 1 October 2024, to the
following rounded rates per annum: £55,000 (Chairman), £43,000 (Audit
Committee Chairman/Senior Independent Director) and £36,750 for each other
Director.
Company Performance
The graph in the published Annual Report shows the share price return
(assuming all dividends are reinvested) to Ordinary shareholders compared to
the total return of the FTSE All-share Index over the ten year period ended 30
September 2024 (rebased to 100 at 30 September 2014). This index was chosen
for comparative purposes only.
Statement of Voting at General Meeting
At the Company's last AGM, held on 27 February 2024, shareholders approved, as
Resolution 2, the Directors' Remuneration Report (other than the Directors'
Remuneration Policy) in respect of the year ended 30 September 2023. The
votes cast by poll on Resolution 2 are shown in the following table:
Resolution For Against Withheld
Receive and adopt the Directors' Remuneration Report (excluding the Directors' 98.9m 2.7m 710,892
Remuneration Policy)
(97.4%) (2.6%)
Spend on Pay
As the Company has no employees, the Directors do not consider it appropriate
to present a table comparing remuneration paid to Directors with distributions
to shareholders. However, for ease of reference, the total fees paid to
Directors are shown in the table below while dividends paid to shareholders
are set out in note 8 and capital distributions to shareholders are detailed
in note 15 .
Audited Information
Directors' Interests in the Company
The Directors are not required to have a shareholding in the Company. The
Directors' shareholdings (including their connected persons), all of which are
beneficial, had the following interest in the share capital of the Company as
at 30 September 2023 and 30 September 2024.
30 September 2024 30 September 2023
Ordinary shares Ordinary shares
Davina Walter 57,926 37,387
Tom Challenor 160,959 160,264
Trevor Bradley 75,000 50,000
Alistair Mackintosh (A) 25,000 25,000
Anna Troup 5,000 (B) 5,000
(A) Held via a family investment company
(B) As at date of retirement on 27 February 2024
There have been no changes to the Directors' interests in the share capital of
the Company since 30 September 2024, up to the date of approval of this
Report.
Fees Payable
The Directors who served during the year received the following fees, which
exclude employers' National Insurance contributions. Fees are pro-rated where
a change takes place during a financial year. There were no payments to
third parties included in the fees referred to in the table. All fees are at a
fixed rate and there is no variable remuneration. Taxable benefits refer to
travel costs associated with Directors' attendance at Board and Committee
meetings.
Audited Information
Directors' Remuneration
The Directors received the following remuneration in the form of fees and
taxable expenses:
Year ended 30 September 2024 Year ended 30 September 2023
Fees Taxable Expenses Fees Taxable Expenses
£ £ Total £ £ Total
£ £
Davina Walter 51,750 276 52,026 48,400 135 48,535
Tom Challenor (see note below) 40,000 221 40,221 37,600 132 37,732
Trevor Bradley 32,000 452 32,452 29,900 255 30,155
Anna Troup 13,333 99 13,432 29,900 40 29,940
Alistair Mackintosh 32,000 162 32,162 29,900 372 30,272
Total 169,083 1,210 170,293 175,700 934 176,634
Taxable expenses refer to amounts claimed by Directors for travelling to
attend meetings. The above amounts exclude any employers' national insurance
contributions, if applicable. All fees are at a fixed rate and there is no
variable remuneration. Fees are pro-rated where a change takes place during a
financial year. No payments were made to third parties. There are no other
fees to disclose as the Company has no employees, chief executive or executive
directors.
Tom Challenor is paid a composite annual fee, reflecting his position as
Senior Independent Director and Chairman of the Audit Committee; this was
equivalent to an annual fee of £40,000 for the year ended 30 September 2024
(2023 - £37,600). With effect from 1 October 2024, Tom Challenor's composite
annual fee is £43,000.
Annual Percentage Change in Directors' Remuneration
The table below sets out, for the Directors who served during the Year, the
annual percentage change in Directors' fees for the past three years.
Year ended 30 September 2024 Year ended 30 September 2023 Year ended 30 September 2022 Year ended 30 September 2021 Year ended 30 September 2020
Fees Fees Fees Fees Fees
% % % % %
Davina Walter (appointed a Director on 1 February 2019, SID on 27 February 6.9 8.5 1.9 16.6 102.8
2019 and Chairman on 26 February 2020)
Tom Challenor (appointed a Director on 6 April 2017 and SID on 4 June 2021) 6.4 8.4 6.3 3.6 6.1
Trevor Bradley (appointed a Director on 1 August 2019) 7.0 8.7 1.9 1.9 511.6
Alistair Mackintosh (appointed a Director on 1 May 2021) 7.0 8.7 144.4 0.0 0.0
Anna Troup (appointed a Director on 1 August 2019); retired on 27 February -55.4 8.7 1.9 1.9 511.6
2024
Annual Statement
On behalf of the Board and in accordance with Part 2 of Schedule 8 of the
Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013, it is confirmed that the above Remuneration Report
summarises, as applicable, for the year ended 30 September 2024:
· the major decisions on Directors' remuneration;
· any substantial changes relating to Directors' remuneration made during
the year; and
· the context in which the changes occurred and decisions have been taken,
including management of any potential conflicts of interest arising and
reflected any feedback from shareholders.
On behalf of the Board
Davina Walter
Chairman
20 January 2025
Report of the Audit Committee
The Audit Committee presents its Report for the year ended 30 September 2024.
Committee Composition
An Audit Committee has been established which was chaired by Tom Challenor
throughout the year and consisted of the whole Board with the exception of
Davina Walter. In compliance with July 2018 UK Code on Corporate Governance
(the "Code"), the Chairman of the Board is not a member of the Committee but
attends the Audit Committee by invitation of the Chairman.
The Directors have satisfied themselves that at least one of the Committee's
members has recent and relevant financial experience - Tom Challenor is a
Fellow of the Institute of Chartered Accountants in England & Wales - and
that, collectively, the Audit Committee possesses competence appropriate for
the investment trust sector.
Role of the Audit Committee
The principal role of the Audit Committee is to assist the Board in relation
to the reporting of financial information, the review of financial controls
and the management of risk. The Committee has defined terms of reference which
are reviewed and re-assessed for their adequacy on at least an annual basis.
Copies of the terms of reference are published on the Company's website and
are available from the Company Secretary on request.
The Committee's main functions are listed below:
· to review and monitor the internal control systems and risk management
systems (including review of non-financial risks) on which the Company is
reliant (the Directors' statement on the Company's internal controls and risk
management is set out below);
· to consider whether there is a need for the Company to have its own
internal audit function;
· to monitor the integrity of the half-yearly and annual financial
statements of the Company by reviewing, and challenging where necessary, the
actions and judgements of the Manager;
· to review, and report to the Board on, the significant financial
reporting issues and judgements made in connection with the preparation of the
Company's financial statements, half-yearly financial reports, announcements
and related formal statements;
· to review the content of the Annual Report and advise the Board on
whether, taken as a whole, it is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Company's
position and performance, business model and strategy;
· to meet with the auditors to review the proposed audit programme of work
and the findings of the auditors. The Committee shall also use this as an
opportunity to assess the effectiveness of the audit process;
· to develop and implement policy on the engagement of the auditors to
supply non-audit services;
· to review a statement from the Manager detailing the arrangements in
place within the Manager whereby staff may, in confidence, escalate concerns
about possible improprieties in matters of financial reporting or other
matters;
· to make recommendations in relation to the appointment of the auditors
and to approve the remuneration and terms of engagement of the auditors; and
· to monitor and review the auditors' independence, objectivity,
effectiveness, resources and qualification.
Activities During the Year
The Audit Committee met on three occasions during the year when, amongst other
matters, it considered the Annual Report and the Half-Yearly Financial
Report. Representatives of the Manager's internal audit department and risk
and compliance department reported to the Committee on matters such as
internal control systems, risk and the conduct of the business in the context
of its regulatory environment.
Internal Control
There is an ongoing process, for identifying, evaluating and managing the
Company's significant business and operational risks, which has been in place
for the year ended 30 September 2024 and up to the date of approval of the
Annual Report, which is regularly reviewed by the Committee and complies with
the FRC's guidance on
internal controls.
The Committee has overall responsibility for ensuring that there is a system
of internal controls in place and a process for reviewing its effectiveness.
Any system of internal control is designed to manage rather than eliminate the
risk of failure to achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss.
The design, implementation and maintenance of controls and procedures to
safeguard the assets of the Company and to manage its affairs properly extends
to operational and compliance controls and risk management. The Audit
Committee has prepared its own risk controls self-assessment which lists
potential risks relating to strategy; shareholders; Board; investment
management; promotional activities; company secretarial; depositary; third
party service providers and other external factors. The Committee considers
the potential cause and possible effect of these risks as well as reviewing
the controls in place to mitigate these potential risks.
Clear lines of accountability have been established between the Committee and
the Manager. The Committee receives six-monthly reports from the Manager's
risk and compliance and internal audit teams covering key performance and risk
indicators and considers control and compliance issues brought to its
attention. In carrying out its review, the Committee has had regard to the
activities of the Manager, including its internal audit and compliance
functions, and of the auditors.
The Committee has reviewed the Manager's process for identifying and
evaluating the significant risks faced by the Company and the policies and
procedures by which these risks are managed. The Committee has also reviewed
the effectiveness of the Manager's system of internal control including its
annual internal controls report prepared in accordance with the International
Auditing and Assurance Standards Board's International Standard on Assurances
Engagements ("ISAE") 3402, "Assurance Reports on Controls at a Service
Organisation".
Risks are identified and documented through a risk management framework by
each function within the Manager's activities. Risk is considered in the
context of the FRC's guidance on internal controls and includes financial,
regulatory, market, operational and reputational risk. This helps the internal
audit risk assessment model identify those functions for review. Any
weaknesses identified are reported to the Committee and timetables are agreed
for implementing improvements to systems. The implementation of any remedial
action required is monitored and feedback provided to the Committee.
The key components designed to provide effective internal control are outlined
below:
· written agreements are in place which specifically define the roles and
responsibilities of the Manager and other third party service providers;
· the Committee and Manager have agreed clearly defined investment
criteria, specified levels of authority and exposure limits. Reports on these
issues, including performance statistics and investment valuations, are
regularly submitted to the Board;
· the Manager prepares forecasts and management accounts which allow the
Board to assess the Company's activities and review its performance; the
emphasis is on obtaining the relevant degree of assurance and not merely
reporting by exception;
· as a matter of course the Manager's compliance department continually
reviews its operations; and
· at its meeting in November 2024, the Committee carried out an annual
assessment of internal controls for the year ended 30 September 2024 by
considering documentation from the Manager, including the internal audit and
compliance functions, and taking account of events since 30 September 2024.
The Committee has considered the need for an internal audit function. However,
the Company has no employees and the day-to-day management of the Company's
assets has been delegated to the Manager which has its own compliance and
internal control systems. The Committee has therefore decided to place
reliance on those systems and internal audit procedures and has concluded that
it is not necessary for the Company to have its own internal audit function.
Financial Statements and Significant Risks
During its review of the Company's financial statements for the year ended 30
September 2024, the Audit Committee considered, through review of reports and
other documentation, the following significant issues, in particular those
communicated by the auditors during its planning and reporting of the year end
audit:
Valuation and Existence of Investments
How the issue was addressed - The Company's investments have been valued in
accordance with the accounting policies, as disclosed in note 2(e) to the
financial statements, which are consistent with the International Private
Equity and Venture Capital Valuation Guidelines - Edition 2022. Within the FRS
102 Fair Value hierarchy, as set out in Note 19, investments are categorised
as either Level 1, totalling £79,000 (2023 - £90.3m) or Level 3, totalling
£182.4m (2023 - £198.5m). The portfolio holdings and their pricing is
reviewed and verified by the Manager on a regular basis and management
accounts, including a full portfolio listing, are prepared for each Board
meeting. The Audit Committee rigorously challenges the assumptions underlying
valuation of unlisted investments. The Company engages the services of an
independent Depositary to hold the assets of the Company. The Depositary
checks the consistency of its records with those of the Manager on a monthly
basis and reports to the Committee on an annual basis.
Recognition of Investment Income
How the issue was addressed - the recognition of investment income is
undertaken in accordance with accounting policy note 2(b) to the financial
statements. Special dividends are allocated to the capital or revenue accounts
according to the nature of the payment and the intention of the underlying
company. The Directors also review, at each meeting, the Company's income,
including income received, revenue forecasts and dividend comparisons.
Maintenance of Investment Trust Status
How the issue was addressed - the Company has been approved as an investment
trust under Sections 1158 and 1159 of the Corporation Tax Act 2010. Ongoing
compliance with the eligibility criteria is monitored on a regular basis by
the Manager and reported at each Committee meeting.
Allocation of finance costs and
investment management fees
The Company's finance costs and investment management fees were charged 50% to
capital and 50% to revenue during the year ended 30 September 2024. With
effect from 1 October 2024, management fees will be charged 90% to capital and
10% to revenue, reflecting the Committee's currently anticipated split of
future investment returns during the Managed Wind-Down of the Company.
Review of Auditors
The Audit Committee has reviewed the effectiveness of the auditors,
PricewaterhouseCoopers LLP including:
· Independence - the auditors discuss with the Audit Committee, at least
annually, the steps it takes to ensure its independence and objectivity and
makes the Committee aware of any potential issues, explaining all relevant
safeguards.
· Quality of audit work - including the ability to resolve issues in a
timely manner (identified issues are satisfactorily and promptly resolved),
its communications/presentation of outputs (the explanation of the audit plan,
any deviations from it and the subsequent audit findings are comprehensive and
comprehensible), and its working relationship with management (the auditors
has a constructive working relationship with the Manager).
· Quality of people and service - including continuity and succession plans
(the audit team is made up of sufficient, suitably experienced staff with
provision made for knowledge of the investment trust sector and retention on
rotation of the audit director).
In reviewing the auditors, the Committee also took into account the FRC's
latest Audit Quality Inspection Report for PricewaterhouseCoopers LLP.
Audit Tender
This year's audit of the Company's Annual Report is the fifth performed by
PricewaterhouseCoopers LLP since their appointment following an audit tender
process held by the Company in 2019 and is therefore the fifth year for which
the senior statutory auditor, Shujaat Khan, has served. The Committee
anticipates that the Company will undertake an audit tender process not later
than the year ended 30 September 2029.
Shareholders will have the opportunity to vote on the re-appointment of
PricewaterhouseCoopers LLP as auditors, and their remuneration, as Resolutions
8 and 9 at the forthcoming AGM.
Provision of Non-Audit Services
The Committee has established a policy on the supply of non-audit services
provided by the auditors. Such services are considered on an individual basis
and may only be provided if the service is at a reasonable and competitive
cost and does not constitute a conflict of interest or potential conflict of
interest or prevent the auditors from remaining objective and independent.
In addition, non-audit services will only be approved by the Committee if in
compliance with the Financial Reporting Council's and UK Public Interest
Entity's independence requirements. All non-audit services require the
pre-approval of the Committee. There were no non-audit fees paid to the
auditors during the year under review (2023 - total of £17,225, comprising
£12,000 for the review of the Half-Yearly Financial Report and £5,225 in
relation to covenant compliance requirements for the 6.25% Bonds 2031).
Tom Challenor
Chairman of the Audit Committee
20 January 2025
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements, in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with UK Accounting Standards, including FRS
102 'The Financial Reporting Standard Applicable in the UK and Republic of
Ireland' and applicable law.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and estimates that are reasonable and prudent;
· state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; 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 also responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions and
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements and the
Directors' Remuneration Report comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Statement of Corporate Governance that comply with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website but not
for any information on the website that has been prepared or issued by third
parties. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Each of the directors, whose names and functions are listed in Board of
Directors confirm that, to the best of their knowledge:
· the financial statements have been prepared in accordance with applicable
accounting standards and give a true and fair view of the assets, liabilities,
financial position and profit of the Company;
· in the opinion of the Directors, the Annual Report taken as a whole, is
fair, balanced and understandable and it provides the information necessary to
assess the Company's position and performance, business model and strategy;
and
· the Strategic Report and Directors' Report include a fair review of the
development and performance of the business and the position of the Company,
together with a description of the principal risks and uncertainties that the
Company faces.
On behalf of the Board,
Davina Walter
Chairman
20 January 2025
Independent Auditors' Report to the members of abrdn Diversified Income and Growth plc
Report on the audit of the financial statements
Opinion
In our opinion, abrdn Diversified Income and Growth plc's financial
statements:
· give a true and fair view of the state of the Company's affairs as at 30
September 2024 and of its loss and cash flows for the year then ended;
· have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, including
FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of
Ireland", and applicable law); and
· have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements, included within the Annual Report,
which comprise: the Statement of Financial Position as at 30 September 2024;
the Statement of Comprehensive Income; the Statement of Changes in Equity and
the Statement of Cash Flows for the year then ended; and the notes to the
financial statements, which include a description of the significant
accounting policies.
Our opinion is consistent with our reporting to the
Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK)
are further described in the Auditors' 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 remained independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC's Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services
prohibited by the FRC's Ethical Standard were not provided.
We have provided no non-audit services to the Company in the period under
audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we
have considered the adequacy of the disclosure made in note 2 to the financial
statements concerning the Company's ability to continue as a going concern.
The timing of the realisation of the Company's private market investments, as
part of its Managed Wind Down, remains uncertain. These conditions, along with
the other matters explained in note 2 to the financial statements, indicate
the existence of a material uncertainty which may cast significant doubt about
the Company's ability to continue as a going concern. The financial statements
do not include the adjustments that would result if the Company were unable to
continue as a 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:
· obtaining and evaluating the Directors' going concern assessment.
· reviewing meetings minutes of the Board of Directors.
· assessing the disclosures presented in the Annual Report, including the
Viability Statement and the Going Concern statement, and assessing their
consistency with the Financial Statements and the evidence we obtained in our
audit.
· assessing the adequacy of the Directors' cash flow assessment with a
focus on available liquid resources and outflows expected.
In relation to the directors' reporting on how they have applied the UK
Corporate Governance Code, other than the material uncertainty identified in
note 2 to the financial statements, 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, or in respect of the directors'
identification in the financial statements of any other material uncertainties
to the Company's ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our audit approach
Overview
Audit scope
· We conducted our audit of the financial statements using information from
the Alternative Investment Fund Manager (AIFM) to whom the Directors have
delegated the provision of all administrative functions.
· We tailored the scope of our audit taking into account the types of
investments within the Company, the involvement of the third party referred to
above, the accounting processes and controls, and the industry in which the
Company operates.
· We obtained an understanding of the control environment in place at both
the AIFM and the Administrator, and adopted a fully substantive testing
approach using reports obtained from the AIFM.
Key Audit Matters
· Material uncertainty related to going concern
· Valuation and existence of investments
· Income from investments
Materiality
· Overall materiality: £2.03m (2023: £3.4m) based on approximately 1% of
Net Assets
· Performance materiality: £1.52m (2023: £2.54m)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors' professional
judgement, were of most significance in the 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) identified by the
auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
In addition to going concern, described in the Material uncertainty related to
going concern section above, we determined the matters described below to be
the key audit matters to be communicated in our report. This is not a complete
list of all risks identified by our audit.
The key audit matters below are consistent with last year,
Key audit matter How our audit addressed the key audit matter
Valuation and existence of investments Investments for which a market price is not readily available (Level 3)
Refer to the Report of the Audit Committee, the Accounting Policies and the We understood and evaluated the valuation methodology applied by the
Notes to the Financial Statements. Directors, in consultation with the AIFM, by reference to the International
Private Equity and Venture Capital Valuation guidelines (IPEV) and the
Level 1 and 2 investments at the year end are valued at £0.079m. Level 3 requirements of UK GAAP.
investments at year end were valued at £182m.
Furthermore, our testing of Level 3 investments included:
We focused on the valuation and existence of investments because they
represent the principal element of the net asset value of the Company as Obtaining a reconciliation of the investments that summarised year on year
disclosed on the Statement of Financial Position. In addition, the valuation movements including any drawdowns and distributions in the period;
of Level 3 investments requires judgement to be applied by the Directors in
considering the reliability and valuation basis of underlying investment Checking that the valuations used in the financial statements were consistent
manager valuation statements. with the Company's accounting records including the reconciliation of
investments;
Checking the accuracy of the valuations recorded by the client to underlying
investment manager valuation reports;
We obtained independent confirmation from underlying investment managers to
confirm ownership and existence of investments as at 30 September 2024;
We considered the methodology and valuation approach applied by investment
managers to check that it was in line with the requirements of IPEV;
In addition, for certain investments, we engaged our internal valuation
experts to consider whether the year to year movement in valuations were
considered to be appropriate and whether any publicly available evidence
contradicted the valuations recorded.
No material misstatements were identified.
Income from investments We assessed the revenue recognition accounting policy applied for compliance
with UK GAAP and the AIC SORP and performed testing to check that income had
Refer to the Report of the Audit Committee, the Notes to the Financial been accounted for in accordance with this stated accounting policy.
Statements and to the Accounting Policies.
Dividend Income
ISAs (UK) presume there is a risk of fraud in income recognition because of
the pressure management may feel to achieve a certain objective. In this We tested the accuracy of dividend receipts by agreeing the dividend rates
instance, we consider that 'income' refers to all the Company's income from investments to independent market data for all investments for which
streams, both revenue and capital (including gains and losses on investments). distribution information was publicly available.
Income from investments comprised dividend income, fixed interest income, To test for completeness, we tested that the appropriate dividends had been
distributions from Level 3 investments, and gains and losses on investments. received in the year by reference to independent data of dividends for all
listed investments during the year, and no unrecorded dividends were found.
We focused on the accuracy, completeness and occurrence of investment income
recognition as incomplete or inaccurate income could have a material impact on To test the occurrence assertion, we tested that all dividends recorded in the
the Company's net asset value and return for the year. year had been declared in the market by investment holdings, and we traced a
sample of dividends received to bank statements.
We also focused on the accounting policy for investment income recognition and
the presentation of investment income in the Income Statement for compliance We also tested the allocation and presentation of dividend income between the
with the requirements of The Association of Investment Companies Statement of revenue and capital return columns of the Income Statement in line with the
Recommended Practice (the "AIC SORP"), as incorrect application could indicate requirements set out in the AIC SORP by determining reasons behind dividend
a misstatement in income recognition. distributions.
No material misstatements were identified.
Fixed Interest income
We tested fixed interest income for a sample of investments by recalculating
the expected coupon interest and amortisation, using the opening and closing
portfolios and coupon rates and maturity dates obtained from independent
third-party sources.
No material misstatements were identified.
Unquoted Limited Partnership income
For a sample of distributions from unlisted investments recorded in the period
we tested the accuracy and occurrence of the amounts by agreeing the amounts
to distribution notices and bank statements.
No material misstatements were identified.
Gains and losses on investments
The gains and losses on investments held at fair value comprise realised and
unrealised gains and losses. We tested the valuation of the Level 3
investments at the year-end (see above) as part of our work over unrealised
gains and losses, together with testing the reconciliation of opening and
closing investments. Additionally, for any realised gains and losses, we
tested a sample of disposal proceeds by agreeing the proceeds to bank
statements and we re-performed the calculation of a sample of realised gains
and losses.
No material misstatements were identified.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to
be able to give an opinion on the financial statements as a whole, taking into
account the structure of the Company, the accounting processes and controls,
and the industry in which it operates.
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the
financial statements.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent
of the potential impact of climate risk on the Company's financial statements,
and we remained alert when performing our audit procedures for any indicators
of the impact of climate risk. Our procedures did not identify any material
impact as a result of climate risk on the Company's financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements
as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Overall Company materiality £2.03m (2023: £3.4m)
How we determined it approximately 1% of Net Assets.
Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in
assessing the performance of the entity, and is a generally accepted auditing
benchmark. This benchmark provides an appropriate and consistent year on year
basis for our audit.
We use performance materiality to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds overall materiality. Specifically, we use performance materiality in
determining the scope of our audit and the nature and extent of our testing of
account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2023: 75%) of
overall materiality, amounting to £1.52m (2023: £2.54m) for the Company
financial statements.
In determining the performance materiality, we considered a number of factors
- the history of misstatements, risk assessment and aggregation risk and the
effectiveness of controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above £101,000 (2023: £169,000) as well as
misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Reporting on other information
The other information comprises all of the information in the Annual Report
other than the financial statements and our auditors' report thereon. The
directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there
is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors' Report, we also considered
whether the disclosures required by the UK Companies Act 2006 have been
included.
Based on our work undertaken in the course of the audit, the Companies Act
2006 requires us also to report certain opinions and matters as described
below.
Strategic Report and Directors' Report
In our opinion, based on our work undertaken in the course of the audit, the
information given in the Strategic Report and Directors' Report for the year
ended 30 September 2024 is consistent with the financial statements and has
been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Company and its environment
obtained in the course of the audit, we did not identify any material
misstatements in the Strategic report and Directors' Report.
Directors' Remuneration
In our opinion, the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors' statements 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. Our additional
responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of
this report.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the corporate governance statement, included
within the Statement of Corporate Governance is materially consistent with the
financial statements and our knowledge obtained during the audit, and, except
for the matters reported in the section headed 'Material uncertainty related
to going concern', we have nothing material to add or draw attention to in
relation to:
· The directors' confirmation that they have carried out a robust
assessment of the emerging and principal risks;
· The disclosures in the Annual Report that describe those principal risks,
what procedures are in place to identify emerging risks and an explanation of
how these are being managed or mitigated;
· The directors' statement in the financial statements about whether they
considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification
of any material uncertainties to the Company's ability to continue to do so
over a period of at least twelve months from the date of approval of the
financial statements;
· The directors' explanation as to their assessment of the Company's
prospects, the period this assessment covers and why the period is
appropriate; and
· The directors' statement as to whether they have a reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities as they fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary qualifications or
assumptions.
Our review of the directors' statement regarding the longer-term viability of
the Company was substantially less in scope than an audit and only consisted
of making inquiries and considering the directors' process supporting their
statement; checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and
understanding of the Company and its environment obtained in the course of the
audit.
In addition, 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 and our
knowledge obtained during the audit:
· The directors' statement that they consider the Annual Report, taken as a
whole, is fair, balanced and understandable, and provides the information
necessary for the members to assess the Company's position, performance,
business model and strategy;
· The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and
· The section of the Annual Report describing the work of the Audit
Committee.
We have nothing to report in respect of our responsibility to report when the
directors' statement relating to the Company's compliance with the Code does
not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities, the
directors are responsible for the preparation of the financial statements in
accordance with the applicable framework and for being satisfied that they
give a true and fair view. The directors are also responsible for such
internal control as they 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.
Auditors' 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 auditors' 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.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the Company and industry, we identified that the
principal risks of non-compliance with laws and regulations related to
breaches of section 1158 of the Corporation Tax Act 2010 and we considered the
extent to which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have a direct
impact on the financial statements such as the Companies Act 2006. We
evaluated management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of
controls), and determined that the principal risks were related to posting
inappropriate journal entries to increase revenue (investment income and
capital gains) or to increase net asset value, and management bias in
accounting estimates. Audit procedures performed by the engagement team
included:
· consideration of known or suspected instances of non-compliance with laws
and regulation and fraud
where applicable;
· reviewing relevant meeting minutes, including those of the Board and the
Audit Committee;
· assessment of the Company's compliance with the requirements of section
1158 of the Corporation Tax Act 2010;
· challenging assumptions and judgements made by management in their
significant accounting estimates, in particular in relation to the valuation
of Level 3 investments;
· identifying and testing journal entries, in particular a sample of manual
year end journal entries posted during the preparation of the financial
statements; and
· designing audit procedures to incorporate unpredictability around the
nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are
less likely to become aware of instances of non-compliance with laws and
regulations that are not closely related to events and transactions reflected
in the financial statements. Also, 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.
Our audit testing might include testing complete populations of certain
transactions and balances, possibly using data auditing techniques. However,
it typically involves selecting a limited number of items for testing, rather
than testing complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the
population from which the sample
is selected.
A further description of our responsibilities for the audit of the financial
statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditors' report.
Use of this report
This report, including the opinions, has been prepared for and only for the
Company's members as a body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
· we have not obtained all the information and explanations we require for
our audit; or
· adequate accounting records have not been kept by the Company, or returns
adequate for our audit have not been received from branches not visited by us;
or
· certain disclosures of Directors' remuneration specified by law are not
made; 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.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the
members on 26 February 2020 to audit the financial statements for the year
ended 30 September 2020 and subsequent financial periods. The period of total
uninterrupted engagement is 5 years, covering the years ended 30 September
2020 to 30 September 2024.
Shujaat Khan (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
20 January 2025
Financial Statements
Statement of Comprehensive Income
Year ended 30 September 2024 Year ended 30 September 2023
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments 10 - (16,112) (16,112) - (24,549) (24,549)
Foreign exchange gains - 5,601 5,601 - 13,297 13,297
Income 3 15,638 - 15,638 17,163 - 17,163
Investment management fees 4 (474) (474) (948) (563) (563) (1,126)
Administrative expenses 5 (1,006) (503) (1,509) (1,146) (38) (1,184)
Net return/(loss) before finance costs and taxation 14,158 (11,488) 2,670 15,454 (11,853) 3,601
Finance costs 6 (284) (3,043) (3,327) (524) (524) (1,048)
Net return/(loss) before taxation 13,874 (14,531) (657) 14,930 (12,377) 2,553
Taxation 7 (2,961) (37) (2,998) (1,678) (1,174) (2,852)
Return/(loss) attributable to equity shareholders 10,913 (14,568) (3,655) 13,252 (13,551) (299)
Return/(loss) per Ordinary share (pence) 9 3.62 (4.83) (1.21) 4.35 (4.45) (0.10)
The total column of the Statement of Comprehensive Income is the profit and
loss account of the Company. There has been no other comprehensive income
during the year, accordingly, the return/(loss) attributable to equity
shareholders is equivalent to the total comprehensive income/(loss) for the
year.
All revenue and capital items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of these financial statements.
Statement of Financial Position
As at As at
30 September 2024 30 September 2023
Note £'000 £'000
Non-current assets
Investments at fair value through profit or loss 10 182,525 339,972
182,525 339,972
Current assets
Other debtors and receivables 11 633 1,549
Derivative financial instruments - 87
Cash and cash equivalents 12 22,300 21,025
22,933 22,661
Creditors: amounts falling due within one year
Derivative financial instruments - (5,702)
Other payables 13 (2,152) (1,667)
(2,152) (7,369)
Net current assets 20,781 15,292
Total assets less current liabilities 203,306 355,264
Non-current liabilities
Creditors: amounts falling due after more than one year
6.25% Bonds 2031 14 - (15,730)
Net assets 203,306 339,534
Capital and reserves
Called up share capital 15 3,238 80,938
Share premium account - 116,556
Capital redemption reserve 114,768 37,043
Special distributable reserve 1,763 -
Capital reserve 16 55,149 69,717
Revenue reserve 28,388 35,280
Total shareholders' funds 203,306 339,534
Net asset value per Ordinary share (pence) 17 67.48 112.70
The financial statements were approved by the Board of Directors and
authorised for issue on 20 January 2025 and were signed on its behalf by:
Davina Walter, Chairman
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 30 September 2024
Ordinary Share Capital Special
Share B share premium redemption distributable Capital Revenue
capital capital account reserve reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2023 80,938 - 116,556 37,043 - 69,717 35,280 339,534
Return/(loss) after taxation - - - - - (14,568) 10,913 (3,655)
B shares issued during the year 15 - 114,768 - - - - - 114,768
B shares redeemed during the year 15 - (114,768) - 114,768 (114,768) - - (114,768)
Return of capital to B shareholders 15 - - - - (114,768) - - (114,768)
Cancellation and reduction of Ordinary shares 15 (77,700) - (116,556) (37,043) 231,299 - - -
Dividends paid 8 - - - - - - (17,805) (17,805)
Balance at 30 September 2024 3,238 - - 114,768 1,763 55,149 28,388 203,306
For the year ended 30 September 2023
Ordinary Share Capital Special
Share B share premium redemption distributable Capital Revenue
capital capital account reserve reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2022 (*restated)(A) 84,438 - 116,556 33,543 - 89,560 39,261 363,358
Return/(loss) after taxation - - - - - (13,551) 13,252 (299)
Ordinary shares purchased for treasury 15 - - - - - (6,292) - (6,292)
Ordinary shares cancelled from treasury 15 (3,500) - - 3,500 - - - -
Dividends paid 8 - - - - - - (17,233) (17,233)
Balance at 30 September 2023 80,938 - 116,556 37,043 - 69,717 35,280 339,534
(A) Restated in the financial statements for the year ended 30 September 2024
to reflect a transfer of £6,914,000 from called up share capital to the
capital redemption reserve following the cancellation of 27,659,068 Ordinary
shares of 25p from treasury on 31 March 2021.
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
Year ended Year ended
30 September 2024 30 September 2023
Note £'000 £'000
Operating activities
Net return before finance costs and taxation 2,670 3,601
Adjustments for:
Dividend income (3,306) (7,341)
Distribution income (8,935) (6,815)
Fixed interest income (1,074) (2,643)
Treasury bill income (1,140) -
Interest income (1,177) (344)
Other income (6) (20)
Dividends received 3,434 7,349
Distributions received 8,914 6,815
Fixed interest income received 1,652 2,540
Treasury bill income received 1,140 -
Interest received 1,145 294
Other income received 6 20
(Gains)/losses on forward contracts (5,615) 693
Foreign exchange losses 154 88
Losses on investments 16,166 24,549
(Increase)/decrease in other debtors (7) 23
(Decrease)/increase in accruals (482) 204
Corporation tax paid (1,923) (1,110)
Taxation released/(withheld) 120 (550)
Net cash flow from operating activities 11,736 27,353
Investing activities
Purchases of investments (182,809) (102,128)
Sales of investments 324,187 113,246
Net cash flow from investing activities 141,378 11,118
Financing activities
Redemption of B shares (114,768) -
Redemption of 6.25% Bond (18,508) -
Purchase of own shares to treasury - (6,292)
Interest paid (604) (1,012)
Equity dividends paid 8 (17,805) (17,233)
Net cash flow used in financing activities (151,685) (24,537)
Increase in cash and cash equivalents 1,429 13,934
Analysis of changes in cash and cash equivalents during the year
Opening balance 21,025 7,179
Foreign exchange (154) (88)
Increase in cash and cash equivalents as above 1,429 13,934
Closing balance 22,300 21,025
Represented by:
Money market funds 20,516 12,450
Cash at bank and in hand 1,784 8,575
22,300 21,025
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 30 September 2024
1. Principal activity
The Company is a closed-end investment company, registered in Scotland No
SC003721, with its Ordinary shares having a listing on the London Stock
Exchange.
2. Accounting policies
(a) Basis of preparation. The financial statements have been prepared in
accordance with Financial Reporting Standard 102 - the Financial Reporting
Standard applicable in the UK and Republic of Ireland ("FRS 102"), the
Companies Act 2006 and the Association of Investment Companies ('AIC')
Statement of Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (the 'SORP') issued in July 2022. They
have also been prepared on a going concern basis and on the assumption that
approval as an investment trust will continue to be granted.
The financial statements are presented in sterling (rounded to the nearest
£'000), which is the Company's functional and presentation currency. The
Company's performance is evaluated and its liquidity is managed in sterling.
Therefore sterling is considered as the currency that most faithfully
represents the economic effects of the underlying transactions, events and
conditions.
Going concern. During the year, the shareholders of the Company voted in
favour of the Directors' proposals for a Managed Wind-Down of the Company.
Further to a circular published on 5 December 2024, a General Meeting of the
Company was held on 23 December 2024 at which shareholders approved the
adoption of new Articles of Association which removed the requirement for the
Company to hold an annual continuation vote.
The Directors are mindful of the principal risks and uncertainties disclosed
in the 'Overview of Strategy' and have reviewed forecasts detailing revenue,
liabilities and timing of capital commitments. The Directors are satisfied
that: the Company is able to meet all of its liabilities from its assets,
including its ongoing charges, so possesses sufficient resources to continue
in operational existence for the foreseeable future and at least 12 months
from the date of approval of this Annual Report; the Company is financially
sound; and the Company's key third party service providers had in place
appropriate business continuity plans.
Therefore, the financial statements of the Company have been prepared on a
going concern basis. This conclusion is consistent with the Company's
Viability Statement in the 'Overview of Strategy'. The timing, however, of the
realisation of the Company's private markets investments, as part of its
Managed Wind Down, remains uncertain.
In accordance with the SORP guidance, the Directors note that these conditions
indicate the existence of a material uncertainty which may cast significant
doubt about the Company's ability to continue as a going concern. The
Company's financial statements do not include the adjustments that would
result if the Company was unable to continue as a going concern, such as a
liquidation provision or potential adjustments to carrying values of
investments relating to their realisation in due course.
Significant accounting judgements, estimates and assumptions. The preparation
of financial statements requires the use of certain significant accounting
judgements, estimates and assumptions which require Directors to exercise
judgement in the process of applying the accounting policies. The areas where
judgements, estimates and assumptions have the most significant effect on the
amounts recognised in the financial statements are the determination of the
fair value of unlisted investments, as disclosed in note 2(e).
(b) Income. Dividend income receivable on equity shares is recognised on the
ex-dividend date. Dividend income on equity shares where no ex-dividend date
is quoted is brought into account when the Company's right to receive payment
is established. Where the Company has elected to receive dividends in the form
of additional shares rather than in cash the amount of the cash dividend
foregone is recognised as income. Special dividends are credited to capital or
revenue according to their circumstances. Dividend income is presented gross
of any non-recoverable withholding taxes, which are disclosed separately in
the Statement of Comprehensive Income.
Distributions of non-recallable capital received from unlisted holdings during
their investment phase, which have been funded through profits being
generated, are allocated to revenue in alignment with the nature of the
underlying source of income and in accordance with guidance in the AIC SORP.
The fixed returns on debt instruments are recognised using the time
apportioned accruals basis and the discount or premium on acquisition is
amortised or accreted on a straight line basis. Interest income is accounted
for on an accruals basis. Underwriting commission is recognised when the issue
underwritten closes.
(c) Expenses. All expenses are recognised on an accruals basis. Expenses are
charged through the revenue column of the Statement of Comprehensive Income
except as follows:
- expenses which are incidental to the acquisition or disposal of an
investment are treated as capital and separately identified and disclosed in
note 10;
- the Company charges 50% of investment management fees and finance costs to
capital, in accordance with the Board's view at that time of the expected long
term return in the form of capital gains and income respectively from the
investment portfolio of the Company. With effect from 1 October 2024,
management fees will be charged 90% to capital and 10% to revenue, reflecting
the currently anticipated split of future investment returns during the
Managed Wind-Down of the Company.
In accordance with the investment management agreement, where applicable, an
amount equivalent to the management fee received by the Manager on the
underlying holding which is managed by the Group in the normal course of
business, is either removed from or offset against the management fee payable
by the Company to ensure that no double counting occurs.
(d) Taxation. The tax expense represents the sum of tax currently payable and
deferred tax. Any tax payable is based on the taxable profit for the year.
Taxable profit differs from net profit as reported in the Statement of
Comprehensive Income because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Company's liability for current tax is
calculated using tax rates that were applicable at the Statement of Financial
Position date.
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the Statement of Financial Position date, where
transactions or events that result in an obligation to pay more tax in the
future or right to pay less tax in the future have occurred at the Statement
of Financial Position date. This is subject to deferred tax assets only being
recognised if it is considered more likely than not that there will be
suitable profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the
financial statements which are capable of reversal in one or more subsequent
periods. Deferred tax is measured on a non-discounted basis at the tax rates
that are expected to apply in the periods in which timing differences are
expected to reverse, based on tax rates and laws enacted or substantively
enacted at the Statement of Financial Position date.
The tax effect of different items of income/gain and expenditure/loss is
allocated between capital and revenue within the Statement of Comprehensive
Income on the same basis as the particular item to which it relates using the
Company's effective rate of tax for the year. The SORP recommends that the
benefit of that tax relief should be allocated to capital and a corresponding
charge made to revenue. The Company does not apply the marginal method of
allocation of tax relief as any allocation of tax relief between capital and
revenue would have no impact on shareholders' funds. Had this allocation been
made, the charge to revenue and corresponding credit to capital for the year
ended 30 September 2024 would have been £190,000 (2023 - £1,122,000).
(e) Investments. The Company has chosen to apply the recognition and measurement
provisions of IAS 39 Financial Instruments: Recognition and Measurement and
investments have been designated upon initial recognition at fair value
through profit or loss. This is done because all investments are considered to
form part of a group of financial assets which is evaluated on a fair value
basis, in accordance with the Company's documented investment strategy, and
information about the grouping is provided internally on that basis.
Investments are recognised and de-recognised at trade date where a purchase or
sale is under a contract whose terms require delivery within the timeframe
established by the market concerned, and are measured initially at fair value.
Subsequent to initial recognition, investments are valued at fair value
through profit or loss. For listed investments, this is deemed to be bid
market prices or closing prices for SETS (London Stock Exchange's electronic
trading service) stocks sourced from the London Stock Exchange.
Unlisted investments, including those in Limited Partnerships ('LPs') are
valued by the Directors at fair value using International Private Equity and
Venture Capital Valuation Guidelines - Edition 2022.
The Company's investments in LPs are subject to the terms and conditions of
the respective investee's offering documentation. The investments in LPs are
valued based on the reported Net Asset Value ('NAV') of such assets as
determined by the administrator or General Partner of the LP and adjusted by
the Directors in consultation with the Manager to take account of concerns
such as liquidity so as to ensure that investments held at fair value through
profit or loss are carried at fair value. The reported NAV is net of
applicable fees and expenses including carried interest amounts of the
investees and the underlying investments held by each LP are accounted for, as
defined in the respective investee's offering documentation. While the
underlying fund managers may utilise various model-based approaches to value
their investment portfolios, on which the Company's valuations are based, no
such models are used directly in the preparation of fair values of the
investments. The NAV of LPs reported by the administrators may subsequently be
adjusted when such results are subject to audit and audit adjustments may be
material to the Company.
Gains and losses arising from changes in fair value are treated in net profit
or loss for the period as a capital item in the Statement of Comprehensive
Income and are ultimately recognised in the capital reserve.
(f) Borrowings. Borrowings are measured initially at the fair value of the
consideration received, net of any issue expenses, and subsequently at
amortised cost using the effective interest rate method. The finance costs of
such borrowings are accounted for on an accruals basis using the effective
interest rate method and have been charged 50% to revenue and 50% to capital
in the Statement of Comprehensive Income up to 30 September 2024 to reflect
the Company's investment policy and prospective income and capital growth.
With effect from 1 October 2024, management fees will be charged 90% to
capital and 10% to revenue, reflecting the currently anticipated split of
future investment returns during the Managed Wind-Down of the Company.
(g) Nature and purpose of reserves
Called up share capital. The Ordinary and B share capital on the Statement of
Financial Position relates to the number of shares in issue and in treasury.
Only when the shares are cancelled, either from treasury or directly, is a
transfer made to the capital redemption reserve. This reserve is not
distributable.
Share premium account. The balance classified as share premium includes the
premium above nominal value from the proceeds on issue of any equity share
capital comprising Ordinary shares. This reserve was cancelled during the
year.
Capital redemption reserve. The capital redemption reserve is used to record
the amount equivalent to the nominal value of any of the Company's Ordinary
and B shares purchased and cancelled in order to maintain the Company's
capital. This reserve is not distributable.
Special distributable reserve. On 7 June 2024 the Court approved the creation
of a Special distributable reserve by way of cancelling the £116,556,000
share premium account, the £37,043,000 capital redemption reserve and
reducing the nominal value of each of its ordinary shares from 25p to 1p. This
reserve is available for the Company to return capital to shareholders and the
redemption of B shares.
Capital reserve. This reserve reflects any gains or losses on investments
realised in the period along with any movement in the fair value of
investments held that have been recognised in the Statement of Comprehensive
Income. These include gains and losses from foreign currency exchange
differences. Additionally, expenses, including finance costs, are charged to
this reserve in accordance with (c) and (f) above. The capital reserve is
distributable to the extent unrealised gains/losses arising from unlisted
investments are excluded.
Revenue reserve. This reserve reflects all income and costs which are
recognised in the revenue column of the Statement of Comprehensive Income. The
revenue reserve represents the amount of the Company's reserves distributable
by way of dividend.
When making a distribution to shareholders, the Directors determine profits
available for distribution by reference to 'Guidance on realised and
distributable profits under the Companies Act 2006' issued by the Institute of
Chartered Accountants in England and Wales and the Institute of Chartered
Accountants of Scotland in April 2017. The availability of distributable
reserves in the Company is dependent on those dividends meeting the definition
of qualifying consideration within the guidance and on available cash
resources of the company and other accessible sources of funds. The
distributable reserves are therefore subject to any future restrictions or
limitations at the time such distribution is made.
(h) Valuation of derivative financial instruments. Derivatives are classified at
fair value through profit or loss - held for trading. Derivatives are
initially accounted and measured at fair value on the date the derivative
contract is entered into and subsequently measured at fair value. The gain or
loss on re-measurement is taken to the Statement of Comprehensive Income. The
sources of the return under the derivative contract are allocated to the
revenue and capital column of the Statement of Comprehensive Income in
alignment with the nature of the underlying source of income and in accordance
with guidance in the AIC SORP.
(i) Dividends payable. Dividends payable to equity shareholders are recognised in
the financial statements when they have been approved by shareholders and
become a liability of the Company. Interim dividends are recognised in the
financial statements in the period in which they are paid.
(j) Foreign currency. Monetary assets and liabilities and non-monetary assets held
at fair value denominated in foreign currencies are converted into sterling at
the rate of exchange ruling at the reporting date. Transactions during the
year involving foreign currencies are converted at the rate of exchange ruling
at the transaction date. Gains or losses arising from a change in exchange
rates subsequent to the date of a transaction are included as a currency gain
or loss in revenue or capital in the Statement of Comprehensive Income,
depending on whether the gain or loss is of a revenue or capital nature.
(k) Treasury shares. When the Company purchases the Company's equity share capital
to be held as treasury shares, the amount of the consideration paid, which
includes directly attributable costs, is net of any tax effects, and is
recognised as a deduction from the capital reserve. When these shares are sold
subsequently, the amount received is recognised as an increase in equity, and
any resulting surplus on the transaction is transferred to the share premium
account and any resulting deficit is transferred from the capital reserve.
(l) Cash and cash equivalents. Cash comprises cash at bank. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and that are subject to insignificant risk of change in value.
(m) Segmental reporting. The Directors are of the opinion that the Company is
engaged in a single segment of business activity, being investment business.
Consequently, no business segmental analysis is provided.
3. Income
2024 2023
£'000 £'000
Income from investments
UK listed dividends 436 1,988
Overseas listed dividends 2,870 5,353
Unquoted Limited Partnership income 8,935 6,815
Treasury bill income 1,140 -
Fixed interest income 1,074 2,643
14,455 16,799
Other income
Deposit interest 108 216
Interest from money market funds 1,069 128
Other income 6 20
1,183 364
Total income 15,638 17,163
4. Investment management fees
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 474 474 948 563 563 1,126
The investment management fee has been levied by abrdn Fund Managers Limited
("aFML") at the following tiered levels:
- 0.50% per annum in respect of the first £300 million of the net asset value
(with the 6.25% Bonds 2031 at fair value); and
- 0.45% per annum in respect of the balance of the net asset value (with the
6.25% Bonds 2031 at fair value).
The Company also receives rebates in respect of underlying investments in
other funds managed by the Group (where an investment management fee is
charged by the Group on that fund) in the normal course of business to ensure
that no double counting occurs. Any investments made in funds managed by the
Manager which themselves invest directly into alternative investments
including, but not limited to, infrastructure and property are charged at the
Manager's lowest institutional fee rate. To avoid double charging, such
investments are excluded from the overall management fee calculation.
At the year end, an amount of £90,000 (2023 - £179,000) was outstanding in
respect of management fees due by the Company.
5. Administrative expenses
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Directors' remuneration 169 - 169 176 - 176
Custody fees 25 - 25 28 - 28
Depositary fees 42 - 42 43 - 43
Shareholders' services(A) 141 - 141 388 - 388
Registrar's fees 63 - 63 63 - 63
Transaction costs - 3 3 - 38 38
Legal and professional fees 126 500 626 109 - 109
Printing and postage 55 - 55 54 - 54
Irrecoverable VAT 137 - 137 38 - 38
Auditor's remuneration:
- statutory audit 131 - 131 125 - 125
- other non-audit services
report in respect of Bond covenant compliance - - - 5 - 5
review of Half-yearly Report - - - 12 - 12
Other expenses 117 - 117 105 - 105
1,006 503 1,509 1,146 38 1,184
(A) Includes registration, savings scheme and other wrapper administration and
promotional expenses, of which £141,000 (2023 - £388,000) was payable to
aFML to cover promotional activities during the year. There was £121,000
(2023 - £337,000) due to aFML in respect of these promotional activities at
the year end.
6. Finance costs
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
6.25% Bonds 2031 282 282 564 521 521 1,042
Loss on early repayment (note 14) - 2,759 2,759 - - -
Bank interest 2 2 4 3 3 6
284 3,043 3,327 524 524 1,048
7. Taxation
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(a) Analysis of charge for the year
Current UK tax 2,983 - 2,983 1,656 - 1,656
Double taxation relief (10) - (10) (32) - (32)
Overseas tax suffered (12) 37 25 54 7 61
Current tax charge for the year 2,961 37 2,998 1,678 7 1,685
Movement in deferred tax asset - - - - 1,167 1,167
Total tax charge for the year 2,961 37 2,998 1,678 1,174 2,852
(b) Factors affecting the tax charge for the year. The tax assessed for the year
is lower than the standard rate of corporation tax of 25% (2023 - effective
rate 22%). The differences are explained as follows:
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return/(loss) before taxation 13,874 (14,531) (657) 14,930 (12,377) 2,553
Net return/(loss) before taxation multiplied by the standard rate of 3,469 (3,633) (164) 3,285 (2,723) 562
corporation tax of 25.0% (2023 - 22.0%)
Effects of:
Non taxable losses on investments held at fair value through profit or loss - 4,028 4,028 - 5,401 5,401
Exchange gains not taxable - (1,400) (1,400) - (2,926) (2,926)
Non taxable UK dividend income (147) - (147) (157) - (157)
Non taxable overseas dividend income (149) - (149) (350) - (350)
Disallowable expenses - 815 815 - - -
Overseas tax suffered (12) 37 25 54 7 61
Double taxation relief (10) - (10) (32) - (32)
Utilisation of excess management expenses - - - - (874) (874)
Effect of not applying the marginal method of allocation of tax relief (190) 190 - (1,122) 1,122 -
Movement in deferred tax asset - - - - 1,167 1,167
2,961 37 2,998 1,678 1,174 2,852
(c) Factors that may affect future tax charges. At the year end, after offset
against income taxable on receipt, there is a potential deferred tax asset of
£nil (2023 - £nil) in relation to surplus management expenses. It is
unlikely that the fund will generate sufficient taxable profits in the future
to utilise these amounts and therefore no deferred tax asset has been
recognised.
8. Ordinary dividends on equity shares
2024 2023
£'000 £'000
Third interim dividend for 2023 - 1.42p (2022 - 1.40p) 4,278 4,319
Special dividend for 2023 - 1.65p (2022 -nil) 4,971 -
Fourth interim dividend for 2023 - 1.42p (2022 - 1.40p) 4,278 4,314
First interim dividend for 2024 - 1.42p (2023 - 1.42p) 4,278 4,322
Second interim dividend for 2024 - 1.95p (2023 - 1.42p) - 4,278
17,805 17,233
Set out below are the total dividends paid and proposed in respect of the
financial year, which is the basis on which the requirements of Sections 1158
and 1159 of the Corporation Tax Act 2010 are considered. The revenue available
for distribution by way of dividend for the year is £10,913,000 (2023 -
£13,252,000).
2024 2023
£'000 £'000
First interim dividend for 2024 - 1.42p (2023 - 1.42p) 4,278 4,322
Second interim dividend for 2024 - 1.95p (2023 - 1.42p) 5,875 4,278
Third interim dividend for 2024 - n/a (2023 - 1.42p) - 4,278
Fourth interim dividend for 2024 - n/a (2023 - 1.42p) - 4,278
Special dividend for 2024 - n/a (2023 -1.65p) - 4,971
10,153 22,127
9. Return per Ordinary share
2024 2023
p p
Revenue return 3.62 4.35
Capital return (4.83) (4.45)
Total loss (1.21) (0.10)
The figures above are based on the following:
2024 2023
£'000 £'000
Revenue return 10,913 13,252
Capital return (14,568) (13,551)
Total loss (3,655) (299)
Weighted average number of shares in issue(A) 301,265,952 304,340,151
(A) Calculated excluding shares held in treasury.
10. Investments
2024 2023
£'000 £'000
Held at fair value through profit or loss
Opening valuation 339,972 373,732
Opening investment holdings gains (10,772) (31,812)
Opening book cost 329,200 341,920
Movements during the year:
Purchases at cost 182,809 102,128
Sales - proceeds (324,162) (111,509)
Sales - losses (8,195) (3,509)
Dilution of fixed income book cost 18 170
Closing book cost 179,670 329,200
Closing investment holdings gains 2,855 10,772
Closing valuation of investments 182,525 339,972
2024 2023
The portfolio valuation(A) £'000 £'000
UK equities - 91,499
Overseas equities 79 18,125
Fixed interest - 29,619
Loan investments - 2,279
Unlisted holdings 182,446 198,450
182,525 339,972
(A) The portfolio valuation includes pooled investment vehicles and collective
investment schemes.
2024 2023
Losses on investments £'000 £'000
Realised losses (8,195) (3,509)
Net movement in investment holdings losses (7,917) (21,040)
(16,112) (24,549)
The Company received £324,162,000 (2023 - £111,509,000) from investments
sold in the period. The book cost of these investments when they were
purchased was £332,357,000 (2023 - £115,018,000). These investments have
been revalued over time and until they were sold any unrealised gains/losses
were included in the fair value of investments.
Transaction costs. During the year expenses were incurred in acquiring or
disposing of investments classified as fair value through profit or loss.
These have been expensed through capital and are included within losses on
investments in the Statement of Comprehensive Income. The total costs were as
follows:
2024 2023
£'000 £'000
Purchases 6 68
Sales 69 43
75 111
The above transaction costs are calculated in line with the AIC SORP. The
transaction costs in the Company's Key Information Document are calculated on
a different basis and in line with the PRIIPs regulations.
Substantial holdings. At the year end the Company held more than 3% of a share
class in the following investees:
% of
Investee Class Class
Aberdeen Global Infrastructure Partners II AUD 11
Aberdeen European Residential Opportunities Fund B 84
Aberdeen Property Secondaries Partners II A-1 21
Aberdeen Standard Global Private Markets Fund GBP Acc 6
Andean Social Infrastructure Fund I USD 13
Bonaccord Capital Partners I-A USD 7
Cheyne Social Property Impact Fund GBP 3
Maj Equity Fund IV DKK 3
Mount Row Credit Fund III A9 100
Patria Secondaries Opportunities Fund IV USD 9
SL Capital Infrastructure II EUR 4
Significant holdings disclosure requirements - AIC SORP
Details are disclosed below in accordance with the requirements of paragraph
82 of the AIC Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (updated in July 2022)
in relation to unlisted investments included in the ten largest holdings
disclosed in the 'Portfolio' section. As required, this disclosure includes
turnover, pre-tax profits and net assets attributable to investors as reported
within the most recently audited financial statements of the investee
companies, where possible.
Income
recognised
Proportion from Net assets
Latest of capital Book Market holding in Pre-tax attributable to
As at 30 September 2024 Financial owned cost value the period Turnover profit/(loss) shareholders
Name Statements % £'000 £'000 £'000 ('000) ('000) ('000)
SL Capital Infrastructure II n/a 4 25,374 27,792 Information not publicly available
Aberdeen Standard Global Private Markets Fund n/a 6 15,044 20,730 Information not publicly available
Bonaccord Capital Partners I-A n/a 7 13,584 18,130 Information not publicly available
Burford Opportunity Fund n/a 8 13,789 16,120 Information not publicly available
Patria Secondaries Opportunities Fund IV n/a 9 10,734 16,057 Information not publicly available
Andean Social Infrastructure Fund I n/a 13 13,459 15,821 Information not publicly available
Healthcare Royalty Partners IV n/a 2 17,187 12,263 Information not publicly available
Mount Row Credit Fund II n/a 5 9,943 9,393 Information not publicly available
Aberdeen Property Secondaries Partners II n/a 21 8,783 7,840 Information not publicly available
TrueNoord Co-Investment n/a 2 4,550 7,136 Information not publicly available
Income
recognised
Proportion from Net assets
Latest of capital Book Market holding in Pre-tax attributable to
As at 30 September 2023 Financial owned cost value the period Turnover profit/(loss) shareholders
Name Statements % £'000 £'000 £'000 ('000) ('000) ('000)
SL Capital Infrastructure II n/a 5 22,386 27,419 Information not publicly available
Aberdeen Standard Global Private Markets Fund n/a 6 15,044 19,934 Information not publicly available
Burford Opportunity Fund n/a 8 13,818 17,272 Information not publicly available
Healthcare Royalty Partners IV n/a 2 18,397 16,235 Information not publicly available
Bonaccord Capital Partners I-A n/a 7 11,823 16,091 Information not publicly available
Andean Social Infrastructure Fund I n/a 13 14,311 15,016 Information not publicly available
Patria Secondaries Opportunities Fund IV n/a 6 8,080 12,940 Information not publicly available
11. Other debtors and receivables
2024 2023
£'000 £'000
Amounts due from brokers - 62
Prepayments and accrued income 163 903
Taxation recoverable 470 584
633 1,549
12. Cash and cash equivalents
2024 2023
£'000 £'000
Cash at bank and in hand 1,784 8,575
Money market funds 20,516 12,450
22,300 21,025
13. Other payables
2024 2023
£'000 £'000
Interest on 6.25% Bonds 2031 - 55
Corporation tax payable 1,800 756
Other payables 352 856
2,152 1,667
14. Creditors: amounts falling due after more than one year
2024 2023
£'000 £'000
6.25% Bonds 2031(A)
Balance at beginning of year 15,730 15,694
Amortisation of discount and issue expenses 19 36
Loss on early repayment 2,759 -
Repayment (18,508) -
Balance at end of year - 15,730
(A) At the prior year end the fair value of the 6.25% Bonds using the last
available quoted offer price from the London Stock Exchange as at 30 September
2023 was 99.8297p, a total of £16,069,000.
On 9 April 2024, the 6.25% Bonds were repaid early at a price of 114.983%,
resulting in a total cost of £18,587,000, including accrued interest of
£79,000 thereon.
At the year end the Company had in issue £nil (2023 - £16,096,000) Bonds
2031 which were issued at 99.343%. The Bonds have been accounted for in
accordance with FRS 102, which require any discount or issue costs to be
amortised over the life of the Bonds. The Bonds were secured by a floating
charge over all of the assets of the Company.
Under the covenants relating to the Bonds, the Company is required to ensure
that, at all times, the aggregate principal amount outstanding in respect of
monies borrowed by the Company does not exceed an amount equal to its share
capital and reserves. All covenants were met during the year.
15. Called up share capital
Ordinary Treasury B Total
shares shares shares shares
(number) (number) (number) (number) £'000
Allotted, called up and fully paid
Ordinary shares of 25p each
Ordinary shares of 25p each at 1 October 2023 301,265,952 22,485,854 - 323,751,806 80,938
B shares issued during the year - - 11,476,796,243 11,476,796,243 114,768
B shares redeemed during the year - - (11,476,796,243) (11,476,796,243) (114,768)
Reduction in nominal value of shares from 25p to 1p - - - - (77,700)
Ordinary shares of 1p at 30 September 2024 301,265,952 22,485,854 - 323,751,806 3,238
On 7 June 2024, the Company received Court approval for a reduction in the
nominal value of its ordinary shares from 25p to 1p.
On 5 July 2024, the Company returned capital to shareholders by way of a bonus
issue of 800 B shares per 21 ordinary shares. The B shares, held by Ordinary
shareholders, were issued and immediately redeemed at 1p per B share at a cost
of £114,768,000.
During the year no ordinary shares were purchased (2023 - 7,181,362 to be held
in treasury at a cost of £6,292,000). There were no Ordinary shares of 25p
issued from treasury during the year (2023 - nil).
16. Capital reserve
2024 2023
£'000 £'000
At 1 October 69,717 89,560
Movement in investment holding gains (7,917) (21,040)
Losses on realisation of investments at fair value (8,195) (3,509)
Foreign exchange gains 5,601 13,297
Transaction and other costs (503) (38)
Finance costs (3,043) (524)
Purchase of own shares to treasury - (6,292)
Investment management fees (474) (563)
Overseas tax suffered (37) (7)
Deferred tax - (1,167)
At 30 September 55,149 69,717
17. Net asset value per Ordinary share
The net asset value per Ordinary share and the net asset value attributable to
the Ordinary shares at the year end were as follows:
Debt at par 2024 2023
Net asset value attributable (£'000) 203,306 339,534
Number of Ordinary shares in issue excluding treasury (note 15) 301,265,952 301,265,952
Net asset value per share (p) 67.48 112.70
Debt at fair value £'000 £'000
Net asset value attributable n/a 339,534
Add: Amortised cost of 6.25% Bonds 2031 n/a 15,730
Less: Market value of 6.25% Bonds 2031 n/a (16,069)
n/a 339,195
Number of Ordinary shares in issue excluding treasury (note 15) 301,265,952 301,265,952
Net asset value per share (p) n/a 112.59
18. Financial instruments
Risk management. The Company's investment activities expose it to various
types of financial risk associated with the financial instruments and markets
in which it invests. The Company's financial instruments, other than
derivatives, comprise securities and other investments, cash balances, liquid
resources, loans and debtors and creditors that arise directly from its
operations; for example, in respect of sales and purchases awaiting
settlement, and debtors for accrued income. The Company also has the ability
to enter into derivative transactions in the form of forward foreign currency
contracts, futures and options, subject to Board approval, for the purpose of
enhancing portfolio returns and for hedging purposes in a manner consistent
with the Company's broader investment policy.
As at 30 September 2024 there were no open positions in derivatives
transactions (2023 - 18).
Risk management framework. The directors of abrdn Fund Managers Limited
('aFML') collectively assume responsibility for aFML's obligations under the
AIFMD including reviewing investment performance and monitoring the Company's
risk profile during the year.
aFML is a fully integrated member of abrdn plc (the 'Group'), which provides a
variety of services and support to aFML in the conduct of its business
activities, including the oversight of the risk management framework for the
Company. aFML has delegated the day to day administration of the investment
policy to abrdn Investments Limited, which is responsible for ensuring that
the Company is managed within the terms of its investment guidelines and the
limits set out in its pre-investment disclosures to investors (details of
which can be found on the Company's website). aFML has retained responsibility
for monitoring and oversight of investment performance, product risk and
regulatory and operational risk for the Company.
The Group's Internal Audit Department is independent of the Risk Division and
reports directly to the Audit Committee of the Group's Board of Directors and
to the Group's Chief Executive Officer. The Internal Audit Department is
responsible for providing an independent assessment of the Group's control
environment.
The Manager conducts its risk oversight function through the operation of the
Group's risk management processes and systems which are embedded within the
Group's operations. The Group's Risk Division supports management in the
identification and mitigation of risks and provides independent monitoring of
the business. The Division includes Compliance, Business Risk, Market Risk,
Risk Management and Legal. The team is headed up by the Group's Chief Risk
Officer, who reports to the Chief Executive Officer of the Group. The Risk
Division achieves its objective through embedding the Risk Management
Framework throughout the organisation using the Group's operational risk
management system ('SHIELD').
The Group's corporate governance structure is supported by several committees
to assist the board of directors of aFML, its subsidiaries and the Company to
fulfil their roles and responsibilities. The Group's Risk Division is
represented on all committees, with the exception of those committees that
deal with investment recommendations. The specific goals and guidelines on the
functioning of those committees are described in the committees' terms of
reference.
Risk management. The main risks the Company faces from these financial
instruments are (i) market risk (comprising interest rate, foreign currency
and other price risk), (ii) liquidity risk and (iii) credit risk.
In order to mitigate risk, the investment strategy is to select investments
for their fundamental value. Asset selection is therefore based on disciplined
accounting, market and sector analysis. It is the Board's policy to hold an
appropriate spread of investments in the portfolio in order to reduce the risk
arising from factors specific to a particular asset class. The Investment
Manager actively monitors market prices throughout the year and reports to the
Board, which meets regularly in order to consider investment strategy. Further
information on the progress made with the Managed Wind-Down of the Company may
be found in the Chairman's Statement and in the Investment Manager's Report.
The Board has agreed the parameters for net cash, which was -11% of net assets
as at 30 September 2024 (2023 - net cash of -1.6%). The Manager's policies for
managing these risks are summarised below and have been applied throughout the
current and previous year. The numerical disclosures in the tables listed
below exclude short-term debtors and creditors.
Market risk. The Company's investment portfolio is exposed to market price
fluctuations, which are monitored by the Manager in pursuance of the revised
investment objective and investment objective as set out in the 'Overview of
Strategy'. Adherence to investment guidelines and to investment and borrowing
powers set out in the management agreement mitigates the risk of exposure to
any particular security or issuer. Further information on the investment
portfolio is set out in the Investment Manager's Report.
Market price risk arises mainly from uncertainty about future prices of
financial instruments used in the Company's operations. It represents the
potential loss the Company might suffer through holding market positions as a
consequence of price movements.
Interest rate risk. Interest rate movements may affect:
- the level of income receivable on cash deposits; and
- the fair value of any investments in fixed interest rate securities.
Management of the risk. The possible effects on fair value and cash flows that
could arise as a result of changes in interest rates are taken into account
when making investment and borrowing decisions.
The Board imposes borrowing limits to ensure gearing levels are appropriate to
market conditions and reviews these on a regular basis. Interest rate risk is
the risk of movements in the value of financial instruments as a result of
fluctuations in interest rates.
Financial assets. The interest rate risk of the portfolio of financial assets
at the reporting date was as follows:
2024 2023
Within More than Within More than
1 year 1 year Total 1 year 1 year Total
£'000 £'000 £'000 £'000 £'000 £'000
Exposure to fixed interest rates
Fixed interest investments - - - 3,677 25,942 29,619
Exposure to floating interest rates
Loan investments(A) - - - - 2,279 2,279
Cash and cash equivalents 22,300 - 22,300 21,025 - 21,025
22,300 - 22,300 24,702 28,221 52,923
(A) Variable distributions received from investment holdings, which have an
underlying portfolio of fixed interest securities.
Financial liabilities. The Company has no borrowings following the early
repayment of the 6.25% Bond during the year (2023 - held at amortised cost of
£15,730,000 and a fair value of £16,069,000).
Interest rate sensitivity. A sensitivity analysis demonstrates the sensitivity
of the Company's results for the year to a reasonably possible change in
interest rates, with all other variables held constant.
The sensitivity of the return/(loss) attributable to equity shareholders for
the year is the effect of the assumed change in interest rates on:
- the net interest income for the year, based on the floating rate financial
assets held at the Statement of Financial Position date; and
- changes in fair value of investments for the year, based on revaluing fixed
rate financial assets and liabilities at the Statement of Financial Position
date.
If interest rates had been 50 basis points higher or lower and all other
variables were held constant, the Company's net interest for the year ended 30
September 2024 would increase/decrease by £112,000 (2023 - increase/decrease
£105,000). This is attributable to the Company's exposure to interest rates
on its floating rate cash balances at 30 September 2024.
The capital return would decrease/increase by £nil (2023 - increase/decrease
by £2,236,000) using VaR ("Value at Risk") analysis based on 100 observations
of monthly VaR computations of fixed interest portfolio positions at each year
end (2023 - none).
Foreign currency risk. A proportion of the Company's investment portfolio is
invested in overseas securities whose values are subject to fluctuation due to
changes in foreign exchange rates. In addition, the impact of changes in
foreign exchange rates upon the profits of investee companies can result,
indirectly, in changes in their valuations. Consequently the Statement of
Financial Position can be affected by movements in exchange rates.
Management of the risk. The revenue account is subject to currency
fluctuations arising on dividends receivable in foreign currencies and,
indirectly, due to the impact of foreign exchange rates upon the profits of
investee companies. The Company may enter into derivative transactions, in the
form of forward foreign currency contracts, to ensure that exposure to foreign
denominated investments and cashflows is appropriately hedged.
Foreign currency risk exposure by currency of denomination excluding other
debtors and receivables and other payables falling due within one year:
30 September 2024 30 September 2023
Net Total Net Total
monetary currency monetary currency
Investments items exposure Investments items exposure
£'000 £'000 £'000 £'000 £'000 £'000
US Dollar 97,877 898 98,775 117,117 (3,089) 114,028
Euro 40,201 13 40,214 53,472 (459) 53,013
Other 4,369 63 4,432 41,008 (596) 40,412
142,447 974 143,421 211,597 (4,144) 207,453
Foreign currency sensitivity. The following table details the impact on the
Company's net assets to a 20% decrease (in the context of a 20% increase the
figures below should all be read as negative) in sterling against the foreign
currencies in which the Company has exposure. The sensitivity analysis
includes foreign currency denominated monetary items and adjusts their
translation at the period end for a 20% change in foreign currency rates. This
sensitivity excludes forward foreign currency contracts entered into for
hedging short term cash flows.
2024 2023
£'000 £'000
US Dollar 19,755 22,806
Euro 8,043 10,603
Other 886 8,082
28,684 41,491
Forward foreign currency contracts. There were no forward foreign currency
contracts outstanding at the Statement of Financial Position date:
Unrealised
gain/(loss)
30 September
Buy Sell Settlement Amount Contracted 2024
Date of contract Currency Currency date '000 rate £'000
N/A N/A N/A N/A N/A N/A N/A
Unrealised
gain/(loss)
30 September
Buy Sell Settlement Amount Contracted 2023
Date of contract Currency Currency date '000 rate £'000
31 August 2023 JPY GBP 7 December 2023 4,920 180.2114 53
11 September 2023 USD GBP 7 December 2023 837 1.2211 21
15 September 2023 USD GBP 7 December 2023 617 1.2211 12
25 September 2023 GBP CAD 7 December 2023 528 1.6492 1
25 September 2023 GBP EUR 7 December 2023 205 1.1498 -
87
31 August 2023 CHF GBP 7 December 2023 1,895 1.1088 (1)
31 August 2023 GBP AUD 7 December 2023 11,285 1.8876 (383)
31 August 2023 GBP CAD 7 December 2023 8,270 1.6492 (332)
31 August 2023 GBP EUR 7 December 2023 56,882 1.1498 (549)
31 August 2023 GBP NOK 7 December 2023 5,222 12.9686 (193)
31 August 2023 GBP NZD 7 December 2023 5,462 2.0322 (254)
31 August 2023 GBP SEK 7 December 2023 5,463 13.2251 (213)
31 August 2023 GBP USD 7 December 2023 97,334 1.2211 (3,733)
31 August 2023 GBP USD 7 December 2023 284 1.2211 (11)
1 September 2023 GBP USD 7 December 2023 389 1.2211 (15)
13 September 2023 GBP CAD 7 December 2023 180 1.6492 (4)
13 September 2023 GBP EUR 7 December 2023 225 1.1498 (1)
19 September 2023 GBP USD 7 December 2023 945 1.2211 (13)
(5,702)
Other price risk. Other price risks (ie changes in market prices other than
those arising from interest rate or currency risk) may affect the value of
investments.
Management of the risk. The Company's investment objective is to conduct an
orderly realisation of its assets in a manner that seeks to optimise the value
of its investments whilst progressively returning cash to shareholders in a
timely manner. Full details of the revised investment policy may be found in
the 'Overview of Strategy.
Other price risk sensitivity. If market prices at the reporting date had been
10% higher or lower on investments held at fair value while all other
variables remained constant, the return attributable to Ordinary shareholders
and equity for the year ended 30 September 2024 would have increased/decreased
by £18,253,000 (2023 - £30,807,000).
Liquidity risk. This is the risk that the Company will encounter difficulty in
meeting obligations associated with financial liabilities.
Management of the risk. During the year, the Company repaid the outstanding
balance of its 6.25% Bonds 2031 in issue, however the Company may continue to
use gearing, in the form of borrowings (including secured bonds), during the
managed wind-down process.
19. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used in making
the measurements. The fair value hierarchy has the following levels:
Level 1: inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the assets or liabilities, either directly (ie as prices) or
indirectly (ie derived from prices).
Level 3: inputs are unobservable (ie for which market data is unavailable) for
the asset or liability.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. For this purpose, the
significance of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability.
The financial assets and liabilities measured at fair value in the Statement
of Financial Position are grouped into the fair value hierarchy at the
reporting date as follows:
Level 1 Level 2 Level 3 Total
As at 30 September 2024 £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Equity investments 79 - 182,446 182,525
Net fair value 79 - 182,446 182,525
Level 1 Level 2 Level 3 Total
As at 30 September 2023 £'000 £'000 £'000 £'000
Financial assets/(liabilities) at fair value through profit or loss
Equity investments 90,332 19,292 198,450 308,074
Loan investments - 2,279 - 2,279
Fixed interest instruments - 29,619 - 29,619
Forward currency contracts - financial assets - 87 - 87
Forward currency contracts - financial liabilities - (5,702) - (5,702)
Net fair value 90,332 45,575 198,450 334,357
Year ended Year ended
30 September 2024 30 September 2023
Level 3 Financial assets at fair value through profit or loss £'000 £'000
Opening fair value 198,450 209,065
Purchases including calls (at cost) 11,210 26,083
Disposals and return of capital (9,281) (26,368)
Total gains or losses included in losses on investments in the Statement of
Comprehensive Income:
- assets disposed of during the year 1,233 8,253
- assets held at the end of the year (19,166) (18,583)
Closing balance 182,446 198,450
The fair value of Level 3 financial assets has been determined by reference to
primary valuation techniques described in note 2(e) of these financial
statements and included within other price sensitivity within note 18. The
Level 3 equity investments comprise the following:
Year ended Year ended
30 September 2024 30 September 2023
£'000 £'000
Aberdeen European Residential Opportunities Fund 2,556 7,524
Aberdeen Global Infrastructure Partners II (AUD) 2,250 4,541
Aberdeen Property Secondaries Partners II 7,840 9,385
Aberdeen Standard Global Private Markets Fund 20,730 19,934
Andean Social Infrastructure Fund I 15,821 15,016
ASI HARK III 4,109 6,042
BlackRock Renewable Income - UK 6,657 8,199
Bonaccord Capital Partners I-A 18,130 16,091
Burford Opportunity Fund 16,120 17,272
Cheyne Social Property Impact Fund 3,299 3,299
Dover Street VII 4 20
HarbourVest International Private Equity V 5 7
HarbourVest International Private Equity VI 1,240 1,678
HarbourVest VIII Buyout Fund 23 160
HarbourVest VIII Venture Fund 104 123
Healthcare Royalty Partners IV 12,263 16,235
Maj Invest Equity IV 24 1,205
Maj Invest Equity V 2,095 2,432
Markel CATCo Reinsurance Fund Ltd - LDAF 2018 SPI 572 333
Markel CATCo Reinsurance Fund Ltd - LDAF 2019 SPI 242 81
Mesirow Financial Private Equity III 80 117
Mesirow Financial Private Equity IV 400 599
Mount Row Credit Fund II 9,393 10,166
Pan European Infrastructure Fund 768 1,205
Patria Secondaries Opportunities Fund IV 16,057 12,940
PIMCO Private Income Fund Offshore Feeder I LP 6,736 7,662
SL Capital Infrastructure II 27,792 27,419
TrueNoord Co-Investment 7,136 8,765
182,446 198,450
For all other assets and liabilities (i.e. those not included in the hierarchy
table) carrying value approximates to fair value.
20. Related party transactions and transactions with the Manager
Related party transactions - Directors' fees and interests. Fees payable
during the year to the Directors and their interests in shares of the Company
are considered to be related party transactions and are disclosed within the
Directors' Remuneration Report. The balance of fees due to Directors at the
year end was £13,000 (2023 - £15,000).
Transactions with the Manager. The Company has an agreement with aFML for the
provision of management services. The investment management fee is levied by
aFML at the following tiered levels, payable monthly in arrears:
- 0.50% per annum in respect of the first £300 million of the net asset value
(with debt at fair value); and
- 0.45% per annum in respect of the balance of the net asset value (with debt
at fair value).
Details of transactions during the year and balances outstanding at the year
end are disclosed in note 4.
In accordance with the investment management agreement, where applicable, an
amount equivalent to the management fee received by the Manager on the
underlying holding which is managed by the Group in the normal course of
business, is either removed from or offset against the management fee payable
by the Company to ensure that no double counting occurs. Any investments made
in funds managed by the Group which themselves invest directly into
alternative investments including, but not limited to, infrastructure and
property will be charged at the Group's lowest institutional fee rate. To
avoid double charging, such investments will be excluded from the overall
management fee calculation.
The following table details all investments held at 30 September 2024 that
were managed by the Group. For the period to 30 September 2024 no fees were
levied in respect of these funds.
30 September 2024
£'000
SL Capital Infrastructure II(A) 27,792
Aberdeen Standard Global Private Markets Fund(A) 20,730
Andean Social Infrastructure Fund I(A) 15,821
Aberdeen European Residential Opportunities Fund(A) 2,556
Aberdeen Global Infrastructure Partners II (AUD)(A) 2,250
Aberdeen Property Secondaries Partners II(B) 7,840
76,989
(A) The value of this holding is removed from the management fee calculation
to ensure that no double counting occurs.
(B) An amount equivalent to the management fee received by the Manager on the
underlying is offset against the management fee payable by the Company to
ensure that no double counting occurs.
The Company also has an agreement with aFML for the provision of secretarial,
accounting and administration services and promotional activities. Details of
transactions during the year and balances outstanding at the year end are
disclosed in note 5.
21. Capital management policies and procedures
The current investment objective of the Company is to conduct an orderly
realisation of its assets in a manner that seeks to optimise the value of its
investments whilst progressively returning cash to shareholders in a timely
manner.
The capital of the Company consists of equity (comprising issued capital,
reserves and retained earnings). The Company manages its capital to ensure
that it will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the equity balance.
The Board 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 Investment
Manager's views on the market (net gearing at the reporting period end in the
Financial Highlights and the calculation basis is set out in the Alternative
Performance Measures);
- the level of equity shares in issue; and
- the revenue account, shareholder distributions and the extent to which the
balance is either accretive or dilutive of the revenue reserves.
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period.
22. Analysis of changes in net debt
At Currency Non-cash At
1 October 2023 differences Cash flows movements 30 September 2024
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 21,025 - 1,275 - 22,300
Debt due after one year (15,730) - 18,508 (2,778) -
Total 5,295 - 19,783 (2,778) 22,300
At Currency Non-cash At
1 October 2022 differences Cash flows movements 30 September 2023
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 7,179 - 13,846 - 21,025
Debt due after one year (15,694) - - (36) (15,730)
Total (8,515) - 13,846 (36) 5,295
23. Commitments and contingent liabilities
At 30 September 2024 the Company had commitments of £268,430,000 of which
£32,891,000 remained outstanding (2023 - £43,282,000). Further details are
given below. There were no contingent liabilities as at 30 September 2024
(2023 - £nil).
Undrawn commitments
30 September 2024
£'000
Patria Secondaries Opportunities Fund IV 8,190
Aberdeen Global Infrastructure Partners II (AUD) 6,096
Burford Opportunity Fund 4,682
Andean Social Infrastructure Fund I 4,362
Bonaccord Capital Partners I-A 2,911
ASI Hark III 3,730
Aberdeen Property Secondaries Partners II 1,059
Maj Invest Equity IV 321
Healthcare Royalty Partners IV 315
Pan European Infrastructure Fund 267
SL Capital Infrastructure II 219
Dover Street VII 164
Maj Invest Equity V 150
HarbourVest International Private Equity VI 148
Mesirow Financial Private Equity IV 130
HarbourVest VIII Buyout Fund 65
HarbourVest International Private Equity V 27
Mesirow Financial Private Equity III 47
HarbourVest VIII Venture Fund 8
32,891
Undrawn commitments
30 September 2023
£'000
Patria Secondaries Opportunities Fund IV 11,775
Aberdeen Global Infrastructure Partners II (AUD) 6,233
Burford Opportunity Fund 5,445
Andean Social Infrastructure Fund I 4,793
Bonaccord Capital Partners I-A 4,522
SL Capital Infrastructure II 2,798
ASI Hark III 2,517
Healthcare Royalty Partners IV 1,324
Aberdeen European Residential Opportunities Fund 1,201
Aberdeen Property Secondaries Partners II 1,183
Maj Invest Equity IV 364
Pan European Infrastructure Fund 278
Maj Invest Equity V 211
Dover Street VII 181
HarbourVest International Private Equity VI 154
Mesirow Financial Private Equity IV 143
HarbourVest VIII Buyout Fund 71
Mesirow Financial Private Equity III 52
HarbourVest International Private Equity V 29
HarbourVest VIII Venture Fund 8
43,282
24. Subsequent events
On 23 December 2024, shareholders approved proposals to cancel the entire
amount standing to the credit of the Company's capital redemption reserve and
to amend the Company's articles of association in order to remove the
requirement for the Company to hold a continuation vote at each annual general
meeting.
Corporate Information
AIFMD Disclosures (Unaudited)
The Manager and the Company are required to make certain disclosures available
to investors in accordance with the AIFMD. Those disclosures that are required
to be made pre-investment are included within a pre-investment disclosure
document ("PIDD") which can be found on the Company's website.
There have been no material changes to the disclosures contained within the
PIDD since its most recent update in January 2025.
The periodic disclosures as required under the AIFMD to investors are made
below:
· information on the investment strategy, geographic and sector investment
focus and principal stock exposures is included in the Strategic Report;
· none of the Company's assets are subject to special arrangements arising
from their illiquid nature;
· the Strategic Report, note 18 to the financial statements and the PIDD,
together set out the risk profile and risk management systems in place. There
have been no changes to the risk management systems in place in the period
under review and no breaches of any of the risk limits set, with no breach
expected;
· there are no new arrangements for managing the liquidity of the Company
or any material changes to the liquidity management systems and procedures
employed by the Manager; and
· all authorised Alternative Investment Fund Managers are required to
comply with the AIFMD Remuneration Code. In accordance with the AIFMD
Remuneration Code, the AIFM's remuneration policy in respect of its reporting
period ended 31 December 2023 is available on the website of abrdn plc at
www.abrdn.com/en-gb/corporate/about-us/our-leadership-team/remuneration-disclosure
or on request from the Company Secretary, abrdn Holdings Limited.
Leverage
The table below sets out the current maximum permitted limit and actual level
of leverage for the Company:
Gross Method Commitment Method
Maximum level of leverage 3.50:1 2.50:1
Actual level at 30 September 2024 0.90:1 1.01:1
There have been no breaches of the maximum level during the period and no
changes to the maximum level of leverage employed by the Company. There have
been no changes to the circumstances in which the Company may be required to
post assets as collateral and no guarantees granted under the leveraging
arrangement. Changes to the information contained either within this Annual
Report or the PIDD in relation to any special arrangements in place, the
maximum level of leverage which AFML may employ on behalf of the Company; the
right of use of collateral or any guarantee granted under any leveraging
arrangement; or any change to the position in relation to any discharge of
liability by the Depositary will be notified via a regulatory news service
without undue delay in accordance with
the AIFMD.
The information above has been approved for the purposes of Section 21 of the
Financial Services and Markets Act 2000 (as amended by the Financial Services
Act 2012) by abrdn Fund Managers Limited which is authorised and regulated by
the Financial Conduct Authority in the United Kingdom.
Alternative Performance Measures
Alternative Performance Measures ("APMs") are numerical measures of the
Company's current, historical or future performance, financial position or
cash flows, other than financial measures defined or specified in the
applicable financial framework. The Company's applicable financial framework
includes FRS 102 and the AIC SORP. The Directors assess the Company's
performance against a range of criteria which are viewed as particularly
relevant for closed-end investment companies.
Net asset value per Ordinary share - debt at fair value
The net asset value per Ordinary share with debt at fair value is calculated
as follows:
As at As at
30 September 2024 30 September 2023
£'000 £'000
Net asset value attributable n/a 339,534
Add: Amortised cost of 6.25% Bonds 2031 n/a 15,730
Less: Market value of 6.25% Bonds 2031 n/a (16,069)
n/a 339,195
Number of Ordinary shares in issue excluding treasury shares n/a 301,265,952
Net asset value per share (p) n/a 112.59
2024 n/a due to the 6.25% Bonds 2031 being repaid during the year.
Discount to net asset value per Ordinary share - debt at par value
The discount is the amount by which the Ordinary share price is lower than the
net asset value per Ordinary share - debt at fair value, expressed as a
percentage of the net asset value - debt at fair value. The Board considers
this to be the most appropriate measure of the Company's discount.
30 September 2024 30 September 2023
Net asset value per Ordinary share (p) a 67.48 112.70
Share price (p) b 44.50 83.60
Discount (a-b)/a 34.1% 25.8%
Net (cash)/gearing - debt at par value
Net (cash)/gearing with debt at par value measures the total borrowings less
cash and cash equivalents divided by shareholders' funds, expressed as a
percentage. Under AIC reporting guidance cash and cash equivalents includes
net amounts due to and from brokers at the period end, in addition to cash and
short term deposits.
30 September 2024 30 September 2023
Borrowings (£'000) a - 15,730
Cash (£'000) b 22,300 21,025
Amounts due to brokers (£'000) c - -
Amounts due from brokers (£'000) d - 62
Shareholders' funds (£'000) e 203,306 339,534
Net cash (a-b+c-d)/e (11.0)% (1.6)%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and
administrative expenses and expressed as a percentage of the average daily net
asset values with debt at fair value published throughout the year.
2024 2023
£ £
Investment management fees 948,000 1,126,000
Administrative expenses 1,509,000 1,184,000
Less: non-recurring charges(A) (525,000) (31,000)
Ongoing charges 1,932,000 2,279,000
Average net assets with debt at fair value 298,853,000 351,878,000
Ongoing charges ratio (excluding look-through costs) 0.65% 0.65%
Look-through costs(B) 1.71% 1.09%
Ongoing charges ratio (including look-through costs) 2.36% 1.74%
(A) Comprises legal and professional fees unlikely to recur including those
associated with the reduction in issued share capital and subsequent issue and
redemption of B shares.
(B) Calculated in accordance with AIC guidance issued in October 2020 to
include the Company's share of costs of holdings in investment companies on a
look-through basis.
The ongoing charges ratio provided in the Company's Key Information Document
is calculated in line with the PRIIPs regulations, which includes financing
and transaction costs. This can be found within the literature library section
of the Company's website: abrdndiversified.co.uk.
Total return
NAV and share price total returns show how the NAV and share price has
performed over a period of time in percentage terms, taking into account both
capital returns and dividends paid to shareholders. NAV and share price total
returns are monitored against open-ended and closed-ended competitors, and the
Reference Index, respectively.
NAV NAV Share
Year ended 30 September 2024 (debt at par) (debt at fair value)(A) Price
Opening at 1 October 2023 a 112.7p n/a 83.6p
Closing at 30 September 2024 b 67.5p n/a 44.5p
Price movements c=(b/a)-1 -40.1% n/a -46.8%
Dividend reinvestment(AB) d 37.8% n/a 54.9%
Total return c+d -2.3% n/a +8.1%
(A) 2024 n/a due to the 6.25% Bonds 2031 being repaid during the year.
(B) Includes the 38.10p per Ordinary share return of capital made during the
year.
NAV NAV Share
Year ended 30 September 2023 (debt at par) (debt at fair value) Price
Opening at 1 October 2022 a 117.8p 117.6p 89.8p
Closing at 30 September 2023 b 112.7p 112.6p 83.6p
Price movements c=(b/a)-1 -4.3% -4.3% -6.9%
Dividend reinvestment(A) d 4.7% 4.7% 6.2%
Total return c+d +0.4% +0.4% -0.7%
(A) NAV total return involves investing the net dividend in the NAV of the
Company with debt at fair value on the date on which that dividend goes
ex-dividend. Share price total return involves reinvesting the net dividend in
the share price of the Company on the date on which that dividend goes
ex-dividend.
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of abrdn Diversified
Income and Growth plc (the "Company") will be held at 10.00 am on 26 February
2025 at 18 Bishops Square, E1 6EG, for the following purposes:
To consider and, if thought fit, pass the following resolutions as ordinary
resolutions:
1. To receive the Directors' Report, the Auditors' Report and the
audited financial statements for the year ended
30 September 2024.
2. To receive and adopt the Directors' Remuneration Report (other than
the Directors' Remuneration Policy) for the year ended 30 September 2024.
3. To approve the Company's dividend policy to continue to pay interim
dividends.
4. To re-elect Alistair Mackintosh as a Director of the Company.*
5. To re-elect Trevor Bradley as a Director of the Company.*
6. To re-elect Tom Challenor as a Director of the Company.*
7. To re-elect Davina Walter as a Director of the Company.*
8. To re-appoint PricewaterhouseCoopers LLP as auditors of the Company
to hold office from the conclusion of the Annual General Meeting of the
Company until the conclusion of the next annual general meeting at which
financial statements and reports are laid before the Company.
9. To authorise the Directors to fix the remuneration of the auditors.
To consider and, if thought fit, pass the following resolutions as special
resolutions:
Authority to Make Market Purchases of Shares
10. That the Company be generally and, subject as hereinafter appears,
unconditionally authorised in accordance with section 701 of the Act to make
market purchases (within the meaning of section 693(4) of the Act) of fully
paid Ordinary shares on such terms and in such manner as the Directors from
time to time determine, and to cancel or hold in treasury such shares,
provided always that:
a) the maximum number of shares hereby authorised to be purchased shall
be an aggregate of 45,159,766 Ordinary shares or, if less, the number
representing 14.99% of the Ordinary shares in issue (excluding shares already
held in treasury) as at the date of the passing of this resolution;
b) the minimum price which may be paid for a share shall be 1 pence;
c) the maximum price (exclusive of expenses) which may be paid for a
share shall be the higher of (a) an amount equal to 105% of the average of the
middle market quotations for a share taken from, and calculated by reference
to, the Daily Official List of the London Stock Exchange for the five business
days immediately preceding the day on which the share is purchased; and (b)
the higher of the price of the last independent trade and the highest current
independent bid at the time the purchase is carried out;
d) the authority hereby conferred shall expire at the conclusion of the
next annual general meeting of the Company or on 31 March 2026, whichever is
earlier, unless such authority is previously revoked, varied or renewed prior
to such time; and
e) the Company may make a contract or contracts to purchase shares under
the authority hereby conferred prior to the expiry of such authority and may
make a purchase of shares pursuant to any such contract or contracts
notwithstanding such expiry above.
Authority to Call General Meetings on not less than 14 Clear Days' Notice
11. That a general meeting, other than an annual general meeting, may be
called on not less than 14 clear days' notice.
*The biographies of the Directors offering themselves for re-election may be
found on the Company's website.
By order of the Board
abrdn Holdings Limited
Company Secretary
20 January 2025
Registered Office
1 George Street
Edinburgh EH2 2LL
Notes
(1) Only those Shareholders registered in the Register at close of
business on 24 February 2025 shall be entitled to attend and/or vote at the
Annual General Meeting in respect of the number of shares registered in their
name at that time (the "specified time"). If the Annual General Meeting is
adjourned to a time not more than 48 hours after the specified time applicable
to the original Meeting, that time will also apply for the purpose of
determining the entitlement of shareholders to attend and/or vote at the
adjourned meeting. If the Annual General Meeting is adjourned for a longer
period, the time by which a person must be entered on the Register in order to
have the right to attend and/or vote at the adjourned meeting is close of
business two days (excluding non-working days) prior to the time of the
adjourned meeting. Changes to entries on the Register after the relevant
deadline shall be disregarded in determining the rights of any person to
attend and/or vote at the Annual General Meeting.
(2) Holders of Ordinary shares are entitled to attend and vote at the
Annual General Meeting or any adjournment thereof. If you wish to attend,
there will be a members' register to sign on arrival.
(3) As at 20 January 2025 (being the latest practicable day prior to
the date of approval of this Report) the Company's issued share capital
consisted of 301,265,952 Ordinary shares with voting rights and 22,485,854
Ordinary shares in treasury. Each Ordinary share carries the right to one vote
at general meetings. Therefore the total voting rights in the Company at 20
January 2025 were 301,265,952.
(4) A Shareholder entitled to attend and vote at the Annual General
Meeting is entitled to appoint one or more proxies to attend, speak and vote
instead of him or her, provided that if two or more proxies are appointed,
each proxy must be appointed to exercise the rights attaching to different
shares. A Form of Proxy is enclosed with this Notice. A proxy need not be a
Shareholder of the Company. Completion and return of the Form of Proxy will
not preclude Shareholders from attending or voting at the Annual General
Meeting, if they so wish. Details of how to appoint the Chairman of the Annual
General Meeting or another person as your proxy using the Form of Proxy are
set out in the notes to the Form of Proxy. If you wish your proxy to speak on
your behalf at the Annual General Meeting you will need to appoint your own
choice of proxy (not the Chairman) and give your instructions directly to the
proxy. In the event that a Form of Proxy is returned without an indication as
to how the proxy shall vote on the resolutions, the proxy will exercise his or
her discretion as to whether, and if so how, he or she votes.
(5) To be valid, the Form of Proxy, together with the power of
attorney or other authority, if any, under which it is executed (or a
notarially certified copy of such power or authority) must be deposited with
the Company's Registrar, for this purpose being Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, as soon as
possible, but in any event not later than 48 hours (excluding non-working
days) before the time fixed for the Annual General Meeting. If you have any
queries relating to the completion of the Form of Proxy, please contact
Computershare Investor Services on 0330 303 1184 (lines are open 8.30am to
5.30 p.m. Monday to Friday, excluding public holidays). Computershare Investor
Services PLC cannot provide advice on the merits of the business to be
considered nor give any financial, legal or tax advice. Alternatively, if the
Shareholder holds his or her shares in uncertificated form (i.e. in CREST)
they may vote using the CREST System (see note (10) below).
(6) A vote given in accordance with the terms of an instrument of
proxy shall be valid notwithstanding the previous death or insanity of the
principal or revocation of the proxy or of the authority under which the proxy
was executed, or the transfer of the share in respect of which the proxy is
given, provided that no intimation in writing of such death, insanity,
revocation or transfer as aforesaid shall have been received by the Company at
its registered office or the address specified in note (5) above before the
commencement of the Annual General Meeting or adjourned meeting at which the
proxy is used. Where there are joint holders of any share, any one of such
persons may vote at any Meeting, and if more than one of such persons is
present at any meeting personally or by proxy, the vote of the senior holder
who tenders the vote shall be accepted to the exclusion of the votes of other
joint holders and, for this purpose, seniority will be determined by the order
in which the names stand in the Register.
(7) 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/her and the
Shareholder by whom he/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/she may, under any such agreement, have a right to give
instructions to the Shareholder as to the exercise of voting rights.
Nominated Persons should also remember that their main point of contact in
terms of their investment in the Company remains the Shareholder who nominated
the Nominated Person to enjoy information rights (or, perhaps the custodian or
broker who administers the investment on their behalf). Nominated Persons
should continue to contact that Shareholder, custodian or broker (and not the
Company) regarding any changes or queries relating to the Nominated Person's
personal details and interests in the Company (including any administrative
matter). The statement of the rights of Shareholders in relation to the
appointment of proxies in notes (4) to (7) does not apply to Nominated
Persons. The rights described in these notes can only be exercised by
Shareholders of the Company.
(8) Any corporation which is a Shareholder may authorise such person
as it thinks fit to act as its representative at the Annual General Meeting.
Any person so authorised shall be entitled to exercise on behalf of the
corporation which he represents the same powers (other than to appoint a
proxy) as that corporation could exercise if it were an individual Shareholder
(provided, in the case of multiple corporate representatives of the same
corporate Shareholder, they are appointed in respect of different shares owned
by the corporate Shareholder or, if they are appointed in respect of the same
shares, they vote the shares in the same way). To be able to attend and vote
at the Annual General Meeting, corporate representatives will be required to
produce prior to their entry to the Annual General Meeting evidence
satisfactory to the Company of their appointment.
(9) To allow effective constitution of the Annual General Meeting, if
it is apparent to the Chairman that no Shareholders will be present in person
or by proxy, other than by proxy in the Chairman's favour, then the Chairman
may appoint a substitute to act as proxy in his stead for any Shareholder,
provided that such substitute proxy shall vote on the same basis as the
Chairman.
(10) Notes on CREST Voting. CREST members who wish to appoint a proxy or
proxies by utilising the CREST electronic proxy appointment service may do so
by utilising the procedures described in the CREST Manual, which is available
to download from the Euroclear UK & Ireland ("Euroclear") website
(euroclear.com/CREST). CREST personal members or other CREST sponsored
members, and those CREST members who have appointed voting service provider(s)
should contact their CREST sponsor or voting service provider(s) who will be
able to take the appropriate action on their behalf.
a. In order for a proxy appointment or instruction made using the
CREST system to be valid, the appropriate CREST message (a "CREST proxy
instruction") must be properly authenticated in accordance with Euroclear's
specifications and must contain the information required for such
instructions, as described in the CREST Manual. To appoint a proxy or to give
or amend an instruction to a previously appointed proxy via the CREST system,
the CREST message must be received by the issuer's agent 3RA50 by 10.00 am
on 24 February 2025. For this purpose, the time of receipt will be taken to
be the time (as determined by the timestamp applied to the message by the
CREST applications Host) from which the issuer's agent is able to retrieve
the message.
b. CREST members and, where applicable, their CREST sponsors or
voting service providers should note that Euroclear does not make available
special procedures in CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input of CREST proxy
instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member or CREST sponsored member
or has appointed a voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) takes(s)) such action as shall be
necessary to ensure that a message is transmitted by means of the CREST system
by a particular time. For further information on CREST procedures, limitations
and system timings please refer to the CREST Manual.
c. The Company may treat as invalid a proxy appointment sent by
CREST in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001. In any case, a proxy form must be
received by the Company's Registrar no later than 10.00 am on 24 February
2025.
(11) The attendance at the Annual General Meeting of Shareholders and their
proxies and representatives is understood by the Company to confirm their
agreement to receive any communications made at the Annual General Meeting.
(12) Shareholders are advised that unless otherwise provided, the telephone
numbers and website addresses which may be set out in this Notice or the Form
of Proxy/Form of Direction are not to be used for the purpose of serving
information or documents on the Company including the service of information
or documents relating to proceedings at the Annual General Meeting. If the
Chairman, as a result of any proxy appointments, is given discretion as to how
the votes the subject of those proxies are cast and the voting rights in
respect of those discretionary proxies, when added to the interests in the
Company's shares already held by the Chairman, result in the Chairman holding
such number of voting rights that he has a notifiable obligation under the
Disclosure Guidance and Transparency Rules, the Chairman will make the
necessary notifications to the Company and the Financial Conduct Authority. As
a result any person holding 3% or more of the voting rights in the Company who
grants the Chairman a discretionary proxy in respect of some or all of those
voting rights and so would otherwise have a notification obligation under the
Disclosure Guidance and Transparency Rules, need not make a separate
notification to the Company and the Financial
Conduct Authority.
(13) In accordance with Section 311A of the Companies Act 2006, the contents
of this notice of Meeting, details of the total number of shares in respect of
which members are entitled to exercise voting rights at the Annual General
Meeting and, if applicable, any members' statements, members' resolutions or
members' matters of business received by the Company after the date of this
notice will be available on the Company's website, abrdndiversified.co.uk.
(14) 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
Shareholder attending the Annual General Meeting, except in certain
circumstances, including if it is undesirable in the interests of the Company
or the
good order of the Annual General Meeting that the question be answered or if
to do so would involve the disclosure of
confidential information.
(15) Shareholders should note that it is possible that, pursuant to requests
made by Shareholders of the Company under section 527 of the Companies Act
2006, the Company may be required to publish on a website a statement setting
out any matter relating to: (a) the audit of the Company's financial
statements (including the auditors' report and the conduct of the audit) that
are to be laid out before the Annual General Meeting; or (b) any circumstance
connected with auditors of the Company ceasing to hold office since the
previous meeting at which annual accounts and reports were laid in accordance
with section 437 of the Companies Act 2006, that the shareholders propose to
raise at the Annual General Meeting. The Company may not require the
Shareholders requesting any such website publication to pay its expenses in
complying with sections 527 or 528 of the Companies Act 2006. Where the
Company is required to place a statement on a website under section 527 of the
Companies Act 2006, it must forward the statement to the Company's auditors
not later that the time when it makes the statement available on the website.
The business which may be dealt with at the Annual General Meeting includes
any statement that the Company has been required under section 527 of the
Companies Act 2006 to publish on the website.
(16) The "Vote Withheld" option on the Form of Proxy is provided to enable a
member to abstain on any particular resolution. It should be noted that an
abstention is not a vote in law and will not be counted in the calculation of
the proportion of votes "For" or "Against" a particular resolution.
(17) Physical attendance at the Annual General Meeting may not be possible.
If the law, Government guidance or terms and conditions stipulated by the
venue for the Annual General Meeting so requires at the time of the meeting,
the Chairman will limit, in his or her sole discretion, the number of
individuals in physical attendance at the meeting. Notwithstanding this, the
Company may still impose entry restrictions on certain persons wishing to
attend the meeting in order to ensure the health and safety of those
attending. In such circumstances, physical attendance may be limited to two
persons as the minimum number required to form
a quorum.
The Company strongly encourages Shareholders to appoint the Chairman as their
proxy to ensure their votes are registered. Instructions for submitting a
proxy are contained in Notes (4) to (7) above.
Shareholders are also encouraged to submit any questions in advance of the
Annual General Meeting by email to: diversified.income@abrdn.com
Apportionment Ratio for B shares
Further to Part 5 of the Circular to shareholders published on 17 June 2024
(the "Circular"), the following sets out the apportionment ratio in relation
to the B shares, further to the capital distribution to shareholders on 10
July 2024. The Circular may be found on the Company's website.
For the purposes of United Kingdom taxation of capital gains and corporation
tax on chargeable gains ("Capital Gains Tax"), the issue of B Shares
constitutes a reorganisation of the share capital of the Company. Accordingly,
the B Shares are treated as the same asset as a shareholder's holding of
existing Ordinary shares, and as having been acquired at the same time as a
shareholder's holding of existing Ordinary shares was acquired. A
shareholder's combined holding of Ordinary shares and B shares has the same
aggregate base cost as the shareholder's holding of Ordinary shares
immediately before the issue of B shares. The aggregate base cost should be
apportioned between B shares and the Ordinary shares held by a shareholder by
reference to the market values of the Ordinary shares and the B shares on the
first day of trading after the issue of B shares.
Due to the terms on which the B Shares were issued and subsequently redeemed,
and as they were unlisted and non-transferable, their market value has been
assessed, below, as equal to their nominal value of one pence on 5 July 2024.
The market value of the Ordinary shares is calculated with reference to their
market value on the first day of trading after the issue of the B shares,
which is considered to be 5 July 2024.
Accordingly, the aggregate base cost of the Ordinary shares which should be
apportioned against the B Shares redemption proceeds, received by shareholders
on 10 July 2024, is 45.79%, calculated as follows:
Class of share Market value on first Relevant ratio used for the issue of B Shares Relevant value Relevant percentage
day of trading
(pence per share)
(pence per share)
Ordinary share* 45.1 21 947.1 54.21%
B Share 1 800 800 45.79%
* The lower of the two prices for an Ordinary share shown in the London Stock
Exchange Daily Official List for 5 July 2024 as the closing price for an
Ordinary share on that day plus one-half of the difference between those two
figures in accordance with SI 2015/616.
United Kingdom taxation
The information above does not constitute tax advice and is intended only as a
guide to United Kingdom law and HMRC published practice (which are both
subject to change at any time, possibly with retrospective effect) in June
2024. It relates only to certain limited aspects of the United Kingdom
taxation treatment of shareholders and is intended to apply only to
shareholders who are resident in the United Kingdom for United Kingdom tax
purposes and who are, and were the absolute beneficial owners of their
Ordinary shares and B Shares and who hold, or held, them as investments (and
not as securities to be realised in the course of a trade) other than under an
ISA. The information above may not apply to certain shareholders, such as, but
not limited to, dealers in securities, insurance companies, collective
investment schemes and shareholders who are exempt from taxation. The position
may be different for future transactions.
Shareholders who are in any doubt as to their tax position or who are subject
to tax in a jurisdiction other than the United Kingdom should consult an
appropriate professional adviser.
Additional Notes to the Annual Financial Report
The published Annual Report will be posted to shareholders in January 2025 and
copies will be available from the registered office of the Company and on the
Company's website at - www.abrdndiversified.co.uk
(http://www.abrdndiversified.co.uk) *
Please note that past performance is not necessarily a guide to the future and
that the value of investments and the income from them may fall as well as
rise. Investors may not get back the amount they originally invested.
By order of the Board
abrdn Holdings Limited
Company Secretary
20 January 2025
* Neither the Company's website nor the content of any website accessible from
hyperlinks on the Company's website (or any other website) is (or is deemed to
be) incorporated into, or forms (or is deemed to form) part of this
announcement.
END
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR PKKBKABKDPDBRecent news on abrdn Diversified Income and Growth
See all newsREG - abrdn Diversfd. I&G - Net Asset Value(s)
AnnouncementREG - abrdn Diversfd. I&G - Net Asset Value(s)
AnnouncementREG - abrdn Diversfd. I&G - Net Asset Value(s)
AnnouncementREG - abrdn Diversfd. I&G - Net Asset Value(s)
AnnouncementREG - abrdn Diversfd. I&G - Net Asset Value(s)
Announcement