aberdeendiversified.co.uk
Aberdeen Diversified
Income and Growth
Trust PLC
Annual Report 30 September2022
Investing across asset classes aiming to deliver dependable income and growth
Aberdeen Diversified Income and Growth Trust plc 1
“The Board believes that the Company’s strategy,
which seeks to provide a dependable quarterly
dividend and capital growth from a diversified
portfolio, is well positioned to deliver an attractive
total return with lower volatility than equities over
the medium term.”
Davina Walter, Chairman
“We feel that the Company is well protected in
the current environment, and ready to take
advantage of growth opportunities when the
outlook improves.”
Nalaka De Silva, Heather McKay, Simon Fox and Nic Baddeley,
abrdn Investments Limited
2 Aberdeen Diversified Income and Growth Trust plc
Net asset value total return
AB
Share price total return
A
+1.2% –5.0%
2021 +12.5% 2021 +15.6%
Revenue return per share Dividend per share
C
4.99
p
5.60
p
2021 5.14p 2021 5.52p
Dividend yield
A
Discount to net asset value (fair value basis)
AB
6.2% 23.7%
2021 5.5% 2021 17.9%
A
Considered to be an Alternative Performance Measure (see pages 114, 115 and 117 for more information).
B
Debt at fair value.
C
See note 8 on page 86.
Net asset value per
Ordinary share with debt
at fair value
Dividends per
Ordinary share
Mid-market price per
Ordinary share
At 30 September – pence Year ended 30 September – pence At 30 September – pence
124.2
119.9
113.4
121.7
117.6
18 19 20 21 22
5.24
5.36 5.44
5.52
5.60
18 19 20 21 22
124.5
108.0
91.5
100.0
89.8
18 19 20 21 22
Performance Hi
g
hli
g
hts
Aberdeen Diversified Income and Growth Trust plc 3
Overview
Financial Calendar, Dividends and Highlights 4
Strategic Report
Chairman’s Statement 8
Overview of Strategy 11
Promoting the Success of the Company 19
Performance and Results 21
Information about the Manager 23
Investment Manager’s Process 24
Investment Manager’s Report 25
Portfolio
Ten Largest Investments 32
Private Markets Investments 33
Fixed Income & Credit Investments 35
Listed Equities 36
Net Assets Summary 38
Manager’s ESG Engagement 39
Governance
Board of Directors 44
Directors’ Report 46
Statement of Corporate Governance 54
Directors’ Remuneration Report 55
Report of the Audit Committee 59
Statement of Directors’ Responsibilities 63
Independent Auditors’ Report to the members of
Aberdeen Diversified Income and Growth Trust plc 64
Financial Statements
Statement of Comprehensive Income 74
Statement of Financial Position 75
Statement of Changes in Equity 76
Statement of Cash Flows 77
Notes to the Financial Statements 78
Corporate Information
Investor Information 108
Glossary 111
AIFMD Disclosures (Unaudited) 113
Alternative Performance Measures (Unaudited) 114
General
Notice of Annual General Meeting 119
Corporate Information 125
Contents
4 Aberdeen Diversified Income and Growth Trust plc
Payment months of quarterly dividends
March, July, October and January
Financial year end
30 September
Annual General Meeting
28 February 2023
Expected announcement of results for the year to
30 September 2023
December 2023
Dividends
Rate xd date Record date Payment date
First interim 2022 1.40p 3 March 2022 4 March 2022 31 March 2022
Second interim 2022 1.40p 16 June 2022 17 June 2022 14 July 2022
Third interim 2022 1.40p 22 September 2022 23 September 2022 20 October 2022
Fourth interim 2022 1.40p 22 December 2022 23 December 2022 19 January 2023
2022 5.60p
First interim 2021 1.38p 4 March 2021 5 March 2021 31 March 2021
Second interim 2021 1.38p 17 June 2021 18 June 2021 15 July 2021
Third interim 2021 1.38p 30 September 2021 1 October 2021 28 October 2021
Fourth interim 2021 1.38p 23 December 2021 24 December 2021 20 January 2022
2021 5.52p
Financial Calendar, Dividends and Hi
g
hli
g
hts
Aberdeen Diversified Income and Growth Trust plc 5
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Highlights
2022 2021 % change
Total assets less current liabilities (before deducting prior charges) £379,052,000 £397,782,000 –4.7
Total shareholders’ funds (Net Assets) £363,358,000 £382,118,000 –4.9
Market capitalisation £276,986,000 £309,319,000 –10.5
Ordinary share price (mid market) 89.80p 100.00p –10.2
Net asset value per Ordinary share (debt at fair value)
AB
117.63p 121.73p –3.4
Discount to net asset value on Ordinary shares (debt at fair value)
AB
23.7% 17.9%
Gearing (ratio of borrowings less cash to shareholders’ funds)
Net gearing (debt at par value)
A
1.8% 2.2%
Net gearing (debt at fair value)
AB
2.0% 3.7%
Dividends and earnings per Ordinary share
Revenue return per share 4.99p 5.14p –2.9
Dividends per share
C
5.60p 5.52p +1.4
Dividend cover (including proposed fourth interim dividend)
A
0.89 0.93
Dividend yield
A
6.2% 5.5%
Revenue reserves
D
£39,261,000 £41,009,000 –4.3
Ongoing charges ratio
AE
1.41% 1.45%
A
Considered to be an Alternative Performance Measure. Details of the calculation can be found on pages 114 to 116.
B
Fair value of 6.25% Bonds 2031 £16,222,000 (2021 – £21,233,000, reflecting the repurchase and cancellation of £43,904,000 of the Bonds during the prior year).
C
The figure for dividends per share reflects the years to which their declaration relates (see note 8 on page 86).
D
The revenue reserve figure does not take account of the third and fourth interim dividends paid after the year end amounting to £4,319,000 and £4,314,000 respectively (2021 –
£4,269,000 and £4,267,000).
E
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.
6 Aberdeen Diversified Income and Growth Trust plc
Strategic
Report
Aberdeen Diversified Income and Growth Trust plc 7
“The Company seeks to provide
income and capital appreciation
over the long term through
investment in a globally diversified
multi-asset portfolio.”
8 Aberdeen Diversified Income and Growth Trust plc
During the past financial year, the Company’s Net Asset
Value (“NAV") and share price experienced steady
performance with low volatility up until the end of August,
despite a challenging period for global equity and bond
markets, so it is disappointing to be reporting a sharp fall in
the share price for the year to 30 September 2022, before
income is re-invested, all of which occurred in September.
September can best be described as a ‘perfect storm’ for
financial markets as the threat of recession combined
with the spiralling cost of living crisis as inflation hit highs
not seen for many years, and the war in Ukraine shows no
end in sight. The final straw for UK markets at the end of
September was when the new Prime Minister at the time,
Liz Truss, and her Chancellor, Kwasi Kwarteng, announced
the now infamous ‘mini budget’ which produced a sharp
sell-off in sterling, UK gilts and equities. During October,
following the change of Chancellor and then subsequently
Prime Minister, the majority of the previously announced
‘mini budget’ was reversed which has helped these
markets recover to prior levels despite the
ongoing challenges.
Portfolio performance
During our reporting period, which covers the year ended
30 September 2022, the Company’s net asset value
(“NAV”) with debt at fair value, and income reinvested, was
+1.2%. During September, as the events mentioned above
unfolded, the Company’s discount widened in the market
sell-off with the result that the share price fell just over 10%
over the year ended 30 September 2022; with income re-
invested (total return) this still equated to a negative
return to shareholders of 5.0%. Since the year end, the
turbulence in stock markets has subsided and further
information may be found in ‘Outlook’.
Since the change of strategy in August 2020, up to 30
November 2022, the Company’s NAV total return was
17.6%, with debt at fair value and dividends re-invested,
which compares favourably with our return target of 6%
per annum; our total return to shareholders, with income
re-invested, was 18.5% over the same period.
Earnings and dividend
A major component of the proposition to investors
remains a dependable quarterly dividend; this
represented a dividend yield of 6.2% based on the year
end share price of 89.8 pence. The Board confirmed, as
part of the strategic review, its intention to continue to pay
at least the current level of dividend. In addition, during the
period while the new private markets’ investments
continue to grow their contribution to the Company’s
income, the Board is prepared to use its revenue reserves
which have been built up by the Company over many
years to support the dividend policy as required. These
reserves are the equivalent of two years of the present
dividend which should give shareholders a level of comfort
regarding regular income payments.
Three interim dividends of 1.40 pence per share were paid
to shareholders in March, July and October 2022. The
Board declared, on 15 December 2022, a fourth interim
dividend of 1.40 pence per share to be paid on 19 January
2023 to shareholders on the register on 23 December
2022. The ex-dividend date is 22 December 2022. Total
dividends for the year are 5.60 pence per share. As in
previous years, the Board intends to put to shareholders at
the Annual General Meeting (“AGM”) on 28 February 2023
a resolution in respect of its current policy to declare four
interim dividends each year.
Discount management
Despite the increased stability and improved NAV
performance achieved since the change in strategy in
August 2020, the share price discount to NAV has
remained stubbornly wide and at the year end was 23.7%
(calculated with debt at fair value and including income).
The Board is conscious that further work is required to
increase awareness of the strengths and benefits of the
revised strategy, which has an increased tilt towards
private markets, and is working with the Manager and the
Company’s broker in this regard. While the Board is
unhappy with the current level of the discount, the
increased focus on less liquid investments is incongruous
with the previous policy which, following a reconstruction
in 2017, was stated as ‘seeking to maintain the Company’s
share price discount to NAV (excluding income, with debt
at fair value) at less than 5%, subject to normal market
conditions’. While market conditions could hardly be
described as ‘normal’ at times over the past couple of
years, the Company’s limited share buybacks have
proved largely ineffective in narrowing the discount in
these more volatile markets. Substantial buybacks in
pursuit of defending a 5% discount level would not only
demonstrably shrink the Company but, more importantly,
would have a detrimental impact on the balance sheet
and portfolio construction by reducing liquidity available
for the Company’s unfunded commitments. The Board
does not believe this to be in the best interests of
shareholders as a whole and, as a consequence,
considers that a refinement of the share buyback policy to
being investment-led is merited following the revision of
the investment strategy.
Chairman’s Statement
Aberdeen Diversified Income and Growth Trust plc 9
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Board has reviewed the share buyback policy,
working closely with the Manager. The Manager seeks to
generate attractive risk adjusted returns by investing in, or
committing to, new or existing opportunities, whilst having
particular regard to the Company’s return target, and
taking into account income, predicted cash flows, market
risk and liquidity requirements. It is proposed that, subject
to overall liquidity needs, available cash may be used
under the Company's share buyback authority, granted
annually by shareholders, to undertake share buybacks
where to do so represents a better prospect of delivering
the return objective and long-term shareholder value than
that which could be achieved by investing in new
opportunities. Shareholders are able to endorse this
revised policy, which the Board believes is preferable,
being investment-led, by voting in favour of Resolution 15
at the AGM, which gives the Company the authority to buy
back its own shares up to a limit of 14.99% of the then
issued share capital. Further details on Resolution 15, as
well as on Resolution 12 relating to the continuation of the
Company, may be found on pages 51 and 52 of the
Directors’ Report.
Treasury shares
The Company bought back 871,424 shares into treasury,
at a cost of £864,000, during the year ended 30
September 2022. The Board has agreed that shares
bought into treasury will only be re-issued in the event of
the share price trading at a premium to the NAV per share
as Ordinary shares can be re-issued out of treasury less
expensively than new Ordinary shares can be issued.
Although shares may be held in treasury indefinitely the
Board has adopted a policy such that, in the event that the
number of treasury shares represents more than 10% of
the Company’s issued share capital (excluding treasury
shares) at the end of any financial year, the Company will
cancel a proportion of its treasury shares such that the
remaining balance will equal 7.5% of the issued share
capital (excluding treasury shares).
Investment team changes
During the year the Investment Manager has made
changes to the team supporting Nalaka De Silva and I am
delighted to welcome Heather McKay, Head of Global
Active Allocation, and Simon Fox, Senior Investment
Director for Global Active Allocation, who will now be
working closely with Nalaka and Nic Baddeley. Heather
brings considerable experience in strategic asset
allocation while Simon, with his client consulting expertise,
will support the Company’s interaction with shareholders.
Gearing
The Company’s net gearing was 2.0% at 30 September
2022 as compared to 3.7% as at 30 September 2021, with
the 6.25% 2031 Bonds priced at fair value. The Board
continues to keep the overall level of gearing under review
but, in the prevailing economic environment, there is no
current intention to introduce further gearing.
Board review
As part of its annual board review the Board engaged an
experienced board review consultancy to undertake an
evaluation of the Board, its committees and individual
Directors. Assessments were undertaken by each
Director and then discussed by the Board. The evaluation
has helped confirm that the Company’s Board has in
place an appropriate balance of experience, skills,
corporate knowledge and gender diversity (60% male,
40% female). Through recent changes to the listing rules
boards will be, in future, required to report whether
specific targets are met and publish data on the
composition of the board by gender and ethnic
backgrounds. Currently the Board meets two of the
criteria that at least 40% of Directors should be women
and at least one senior board position (Chair, CEO, CFO or
SID) should be a woman. The Board will use future
recruitment opportunities to meet the third criteria of a
board member who considers their ethnicity to be other
than white or minority white.
Environmental, social and governance
(“ESG”)
There is no simple answer to sustainable investing and
policies that accommodate climate change especially as
some of the strongest returns in markets have come from
fossil fuel companies on the back of soaring energy prices.
It is however very clear that these factors need to be
carefully considered and active engagement with
companies is required in order to help drive change.
Taking account of ESG factors is now an integral part of
the investment process at abrdn as well as the ongoing
monitoring after investments are included in the portfolio.
Equally as important the investment teams undertake
constructive engagement with the investments held, in
both public and private markets, on ESG issues and
related risks. More detail on the approach to ESG can be
found in the comments on Socially Responsible Investment
Policy in the Overview of Strategy (page 17) as well as the
comments on ESG which are set out in the Manager’s
Report. The Board continues to review closely the
Manager’s approach to, and adherence with, its ESG
philosophy and policies.
10 Aberdeen Diversified Income and Growth Trust plc
Changes in the allocation of certain
expenses between capital and income
The Company has, in recent years, charged the
Company’s management fee and loan stock financing
costs 60% to capital and 40% to revenue. Further to the
reshaping of the investment portfolio following the
strategic review in 2020, the Board has amended the
allocation of these costs to charge 50% to capital and 50%
to revenue with effect from 1 October 2022.
Name change
In order to align the Company's name with that of the
Manager's business, which has changed to abrdn plc, the
Board has resolved to amend the Company's name to
abrdn Diversified Income and Growth plc, on or around 31
March 2023. The Company’s website will change to
abrdndiversified.co.uk. The Company’s London Stock
Exchange ticker, “ADIG”, will remain unchanged.
AGM
This year’s AGM is scheduled to be held in the South Place
Hotel, 3 South Place, London, EC2M 2AF, from 12.30 p.m.
on Tuesday 28 February 2023. The AGM provides
shareholders with an opportunity to receive a
presentation from the Investment Manager and to ask any
questions that they may have of either the Board or the
Investment Manager.
The Notice of AGM, which may be found on pages 119 to
123, includes Resolution 12 relating to the continuation of
the Company. The Board encourages shareholders to
vote in favour of the Company’s continuation as it believes
the Investment Manager’s strategy is now well positioned
to deliver a dependable quarterly dividend as well as
capital growth from its genuinely diversified portfolio
consisting of a wide range of assets, each with clear,
fundamental performance drivers.
Outlook
Markets continue to face considerable risks. These include
higher inflation rates fuelling a cost of living crisis,
economic recession in major economies, rising interest
rates and the Russia/Ukraine conflict showing no
resolution in sight. Although markets have adjusted to
reflect the likely damage to corporate earnings, there is
little good news on the horizon to encourage investors
back into the markets. The Board, with the Investment
Manager, regularly reviews the asset allocation taking into
account these heightened risks; and the portfolio does
incorporate a degree of inflation-linkage through its
infrastructure assets whilst the renewable investments
offer a degree of income protection.
It is encouraging that markets have staged a recovery
following the falls witnessed around the Company’s year
end in September. Throughout this challenging period, the
Board believes that the Company’s strategy, which seeks
to provide a dependable quarterly dividend and capital
growth from a globally diversified multi-asset portfolio, is
well positioned to deliver an attractive total return with
lower volatility than equities over the medium term.
Davina Walter
Chairman
20 December 2022
Chairman’s Statement
Continued
Aberdeen Diversified Income and Growth Trust plc 11
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Investment Objective
The Company seeks to provide income and capital
appreciation over the long term through investment in a
globally diversified multi-asset portfolio.
Alongside this objective, the Board uses a Total Return
(defined as dividends plus change in NAV) of 6% per
annum over a rolling five year period against which to
measure the returns from the portfolio.
Investment Approach
The Company is an investment trust governed by a Board
of Directors with its Ordinary shares listed on the premium
segment of the London Stock Exchange. It outsources its
investment management and administration to an
investment management group, abrdn plc, and other third
party providers. The Company does not have a fixed life,
but a resolution on whether the Company should continue
is put to shareholders at each Annual General Meeting.
The Company invests globally using a flexible multi-asset
approach via quoted and unlisted (Private Markets)
investments providing shareholders with access to the
kind of diversified portfolio held by large, sophisticated
global investors.
It offers an attractive investment proposition
characterised by:
· a genuinely diversified portfolio with access to a wide
selection of alternative asset classes;
· an attractive income with the potential to grow;
· volatility around half that of equities; and
· the broad resources of abrdn plc.
An appropriate spread of risk is sought by investing in a
diversified portfolio of securities and other assets. This
includes, but is not limited to:
· Private Markets, comprising private equity, private
credit, real estate, infrastructure, natural resources and
unlisted alternatives;
· Listed Equities (including global equities, European
green infrastructure, UK mid-cap equities as well as
listed alternatives, such as royalties and litigation
finance); and
· Fixed Income and Credit, comprising global loans, asset
backed lending, and emerging/frontier market debt.
Asset allocation is flexible allowing investment in the most
attractive investment opportunities at any point in time
whilst always maintaining a diversified portfolio. The
Company leverages off the spread of capabilities and
experience within abrdn plc and may invest in funds
managed by the Manager where such allocation can
offer requisite exposure to certain alternative asset
classes in a cost effective manner.
Investment Policy
The Manager has enhanced its investment approach to
meet the requirements of the new investment objective.
This has involved extending the proportion of Private
Markets investments in the portfolio with new vehicles
being introduced. The portfolio will also adopt a core-
satellite approach.
With effect from the Company’s AGM on 23 February
2021, the Company’s shareholders approved a change to
the Investment Policy, incorporating the following
investment restrictions, at the time of investment, which
the Manager must adhere to:
· no individual quoted company or transferable security
exposure in the portfolio may exceed 15% of the
Company’s total assets, other than in treasuries
and gilts;
· no other individual asset in the portfolio (including
property, infrastructure, private equity, commodities
and other alternative assets) may exceed 5% of the
Company’s total assets;
· the Company will not normally invest more than 5% of
its total assets in the unlisted securities issued by any
individual company; and
· no more than 15% of the Company’s total assets
may be invested in an individual regulated pooled
investment fund.
The Company may invest in exchange-traded funds
provided they are quoted on a recognised investment
exchange. The Company may invest in cash and cash
equivalents including money market funds, treasuries
and gilts.
No more than 10% of the Company’s total assets may be
invested in other listed closed-ended investment
companies. This restriction does not apply to investments
in any such listed closed-ended investment companies
which themselves have published investment policies to
invest no more than 15% of their total assets in other
closed-ended investment companies.
Overview of Strate
g
y
12 Aberdeen Diversified Income and Growth Trust plc
The Company may use derivatives to enhance portfolio
returns (of a capital or income nature) and for efficient
portfolio management, that is, to reduce, transfer or
eliminate risk in its investments, including protection
against currency risks.
The Company may use gearing, in the form of borrowings
and derivatives, to enhance income and capital returns
over the long term. The borrowings may be in sterling or
other currencies. The Company’s articles of association
contain a borrowing limit equal to the value of its adjusted
total of capital and reserves. However, borrowings would
not normally be expected to exceed 20% of shareholders’
funds. Total gearing, including net derivative exposure,
would not normally be expected to result in a net
economic equity exposure in excess of 120%.
It is the policy of the Company to invest no more than
15% of its gross assets in other listed investment
companies and no more than 15% of its gross assets
in any one company.
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.
Investment Process
The Investment Manager believes that many investors
could materially improve their long-run returns and/or
reduce risk by having a more diversified portfolio. The
Investment Manager’s aim is to build a genuinely
diversified portfolio consisting of a wide range of assets,
each with clear, fundamental performance drivers that
will deliver an attractive return for the Company’s
shareholders. The Investment Manager engages all of its
research capabilities, including specialist macro and asset
class researchers, to identify appropriate investments.
The approach, which incorporates a robust risk
framework, is not constrained by a benchmark mix
of assets. This flexibility ensures that the Investment
Manager does not feel compelled to invest
shareholders’ capital in investments which they
believe to be unattractive.
The Company’s portfolio consists of investments from a
wide range of asset classes including, but not limited to,
Private Markets (such as private equity, private credit, real
estate, infrastructure, natural resources and unlisted
alternatives), Listed Equities (including global equities,
European green infrastructure, UK mid-cap equities as
well as listed alternatives, such as royalties and litigation
finance) and Fixed Income and Credit (such as global
loans, asset backed lending, and emerging/frontier
market debt). Detailed investment research (including
operational due diligence for unlisted funds managed by
third parties) is carried out on each potential opportunity
by specialist teams within the Investment Manager (see
pages 25 to 29 for further information).
The weighting ascribed to each investment in the portfolio
reflects the perceived attractiveness of the investment
case, including the contribution to portfolio diversification.
The Investment Manager also ensures that the weighting
is in keeping with its overall strategic framework for the
portfolio based on the return and valuation analysis of the
Investment Manager’s Research Institute. The
fundamental and valuation drivers of each investment are
reviewed on an ongoing basis.
Overview of Strate
g
y
Continued
Aberdeen Diversified Income and Growth Trust plc 13
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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, all of which are Alternative Performance
Measures (see page 114 to 117 for further information), are shown in the table below.
KPI Description
Investment performance The Board reviews the performance of the portfolio as well as the net asset
value and share price for the Company over a range of time periods in light of
the Company’s investment objective to seek to provide income and capital
appreciation over the long term through investment in a globally diversified
multi-asset portfolio (see Alternative Performance Measures on pages 114 to
117). The Board also reviews NAV and share price performance in
comparison to the performance of competitors in the Company’s chosen
peer group.
The Board monitors the Company’s income yield. The Board reviews the
sustainability of the Company’s dividend policy and regularly reviews revenue
forecasts and analysis provided by the Investment Manager on the sources of
portfolio income in order to monitor the extent to which dividends are
covered by net earnings. The Company’s performance returns may be found
on page 21.
Premium/discount to net asset value (“NAV”) The Board monitors the level of the Company’s premium or discount to NAV
and considers strategies for managing this.
The Manager seeks to generate attractive risk adjusted returns by investing in,
or committing to, new or existing opportunities, whilst having particular regard
to the Company’s return target, and taking into account income, predicted
cash flows, market risk and liquidity requirements. It is proposed that where
such opportunities are limited due to market conditions, then subject to overall
liquidity needs, available cash may be used under the Company's share
buyback authority, granted annually by shareholders, to purchase Ordinary
shares of the Company, where to do so represents a better opportunity to
deliver long-term shareholder value without disrupting the overall portfolio.
In addition, the Company has adopted a formal policy for the issuance of new
shares and/or the sale of shares from treasury to meet demand for shares in
the market, and will only issue or sell shares from treasury where the
Company’s share price is trading at a minimum premium to its net asset value
per share (calculated including income, with debt at fair value, at the
Directors’ discretion).
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 on page 5 while the basis of calculation is set out on page 116.
14 Aberdeen Diversified Income and Growth Trust plc
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.
The Board has carried out a robust assessment of these 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 throughout the
year ended 30 September 2022.
The Board is monitoring the increasing political and economic uncertainty which emerged during the year ended 30
September 2022 and could affect markets, particularly the reaction to higher interest rates and the market volatility
associated with the conflict in Ukraine.
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 may be found under ‘Market Risk’.
Other than this, the Audit Committee does not consider that the principal risks and uncertainties have changed
materially during the year ended 30 September 2022.
Risk Mitigating Action
Performance risk
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. An inappropriate policy or strategy may lead
to poor performance, dissatisfied shareholders and a lower
premium or higher discount. The Company may invest in
unlisted investments (such as private credit, real estate,
infrastructure, natural resources, private equity and
alternatives). These types of investments are expected to have
a different risk and return profile to the rest of the Company’s
investment portfolio. They may be relatively illiquid and it may be
difficult for the Company to realise these investments over a
short time period, which may have a negative impact on
performance.
To manage these risks the Board reviews the Company’s
investment mandate and long term strategy at least annually
and monitors, at each Board meeting, that appropriate limits are
in place on the overall level of unlisted alternative assets and
gearing. It is expected that around 55% of the Company’s total
assets, at the time of investment, may be invested in aggregate
in unlisted alternative assets.
The Investment Manager provides the Board with an
explanation of significant investment decisions, the rationale for
the composition of the investment portfolio and movements in
the level of gearing. The Board monitors the maintenance of an
adequate spread of investments in order to minimise the risks
associated with particular countries or factors specific to
particular sectors, based on the diversification requirements
inherent in the Company’s investment policy.
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Aberdeen Diversified Income and Growth Trust plc 15
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Risk Mitigating Action
Portfolio risk
Risk analysis for a multi-asset portfolio needs to consider the
interaction of asset classes and how these might correlate, or
offset each other, under various scenarios.
The Board employs several strategies to monitor and assess that
portfolio risk is appropriate. These include regular analysis of
various risk metrics including asset class risk attribution, asset
class returns and contributions to performance, particularly in
periods of equity market stress, and how the current portfolio
would perform in various forward-looking and
historical scenarios.
Gearing risk
The Company has the authority to borrow money or increase
levels of market exposure through the use of derivatives and
may do so when the Investment Manager is confident that
market conditions and opportunities exist to enhance
investment returns. However, if the investments fall in value, any
borrowings will magnify the extent of this fall in value.
All borrowings require the approval of the Board and gearing
levels are reviewed regularly by the Board and the Investment
Manager. Borrowings (including the Bonds) would not normally
be expected to exceed 20% of shareholders’ funds. Total
gearing, including net derivative exposure, would not normally
be expected to result in net economic equity exposure in
excess of 120%.
Income/dividend risk
The amount of dividends received will depend on the
Company’s underlying portfolio. Any change in the tax
treatment of the dividends or interest received by the
Company (including as a result of withholding taxes or
exchange controls imposed by jurisdictions in which the
Company invests) may reduce the level of earnings
available for distribution to shareholders.
The Board monitors this risk through the receipt of detailed
income forecasts and considers the level of income and
expenses at each meeting.
Regulatory risk
The Company operates as an investment trust in accordance
with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As
such, the Company is exempt from capital gains tax on the
profits realised from the sale of its investments. Following
authorisation under the Alternative Investment Fund Managers
Directive (“AIFMD”), the Company and its appointed AIFM are
subject to the risk that the requirements of this Directive are not
correctly complied with.
The Investment Manager monitors investment movements, the
level and type of forecast income and expenditure and the
amount of proposed dividends, if any, to ensure that the
provisions of Chapter 4 of Part 24 of the Corporation Tax Act
2010 are not breached and the results are reported to the Board
at each meeting. The Board and the AIFM also monitor changes
in government policy and legislation which may have an impact
on the Company.
Operational risk
In common with most other investment trust companies, the
Company has no employees. The Company therefore relies
upon the services provided by third parties and is dependent on
the control systems of the Manager and the Depositary.
The security of the Company’s assets, dealing procedures,
accounting records and maintenance of regulatory and legal
requirements depends on the effective operation of the systems
in place with third parties. These systems are regularly tested
and monitored throughout the year, including in relation to cyber
risk, through their industry-standard controls reports which
provide assurance on the effective operation of internal controls.
The controls reports are assessed independently by their
reporting accountants.
16 Aberdeen Diversified Income and Growth Trust plc
Risk Mitigating Action
Market risk
Market risk arises from volatility in the prices or valuation of the
Company’s investments. It represents the potential loss the
Company might suffer through holding investments in the face
of negative market movements.
The Company invests in global assets across a range of
countries and changes in general economic and market
conditions in certain countries, such as interest rates, exchange
rates, rates of inflation, industry conditions, competition, political
events and trends, tax laws, national and international conflicts,
economic sanctions and other factors can also substantially and
adversely affect the securities and, as a consequence, the
Company’s prospects and share price.
The risk posed by Covid-19, in driving stock market volatility and
uncertainty, appears to be receding as the global economy
starts to return to previous levels, although this is tempered by
rising concerns over the war in Ukraine, supply chain constraints
and associated inflation.
The Board considers the diversification of the portfolio, asset
allocation, stock selection, unlisted investments and levels of
gearing on a regular basis and has set investment restrictions
and guidelines which are monitored and reported on by
the Investment Manager. The Board monitors the
implementation and results of the investment process
with the Investment Manager.
The Board assesses climate change as an emerging risk in terms
of how it develops, including how investor sentiment is evolving
towards climate change within investment portfolios, and will
consider how the Company may mitigate this risk, any other
emerging risks, if and when they become material.
The Board regularly engages with the Manager to understand
how climate change, represented by environmental factors as
part of ESG, is a key consideration within the Manager’s
investment process (see also pages 39 to 42 for further
information on the Manager’s ESG).
Financial risks
The Company’s investment activities expose it to a variety of
financial risks which include foreign currency risk and interest
rate risk.
Further details are disclosed in note 17 to the financial
statements, together with a summary of the policies for
managing these risks.
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: aberdeendiversified.co.uk
Gearing
As at 30 September 2022, the Company had in place structural gearing in the form of £16,096,000 6.25% Bonds 2031
(the “Bonds”). The Board is responsible for determining the gearing strategy for the Company, with day-to-day gearing
decisions being made by the Manager within the remit set by the Board. The Board has set its gearing limit at a
maximum of 20% of the net asset value at the time of draw down. The Board monitors the gearing position regularly and
considers alternative financing options.
Overview of Strate
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Aberdeen Diversified Income and Growth Trust plc 17
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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 may be found on
Board Diversity may be found in the Directors’ Report, on
pages 47 and 48.
Promoting the Company
The Board recognises the importance of promoting the
Company to prospective investors both for improving
liquidity and enhancing the value and rating of the
Company’s shares. The Board believes an effective way to
achieve this is through subscription to, and participation in,
the promotional programme (the “Programme”) run by
abrdn on behalf of a number of investment trusts under its
management. The Company’s financial contribution to
the Programme is matched by abrdn which regularly
reports to the Board, including analysis of the
effectiveness of the Programme as well as updates on the
shareholder register and any changes in the composition
of that register.
The purpose of the Programme is both to communicate
effectively with existing shareholders and to gain new
shareholders with the aim of improving liquidity and
enhancing the value and rating of the Company’s shares.
Communicating the long-term attractions of the
Company is key and therefore the Company also
supports abrdn’s investor relations programme which
involves regional roadshows, promotional and public
relations campaigns.
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 Directors review 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. Further details on the Manager's
Environmental, Social and Governance (“ESG”)
engagement process, including a case study, can be
found on pages 39 to 42.
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 full text of the Manager’s
response to the FRC’s Stewardship Code 2020 may be
found on its website.
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 as part of its ESG policy.
18 Aberdeen Diversified Income and Growth Trust plc
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 five
year period from the date of shareholders’ approval of this
Report. The five year review period was selected because
it is aligned with the medium term performance period of
five years over which the Company is assessed in relation
to its investment objective to seek to provide income and
capital appreciation over the long term through
investment in a globally diversified multi-asset portfolio.
The Board considers that this period reflects a balance
between looking out over a long term horizon and the
inherent uncertainties of looking out further than
five years.
In assessing the viability of the Company over the
review period, the Directors have focused upon the
following factors:
· the principal risks and uncertainties detailed on pages
14 to 16 and the steps taken to mitigate these risks;
· the relevance of the Company’s investment objective
and investment policy, in the current yield environment,
which targets a truly diversified multi-asset approach to
generate highly attractive long-term income and
capital returns;
· the proportion of the Company’s investment portfolio is
invested in securities which are realisable within a short
timescale;
· the Company’s reduced cash outflows due to lower
interest payments following the repurchase of the
Bonds;
· the annual continuation vote to be put to shareholders
at the AGM on 28 February 2023; and
· the level of demand for the Company’s shares.
The five-year review considers the Company’s cash flow,
cash distributions and other key financial ratios over the
period. The five-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.
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 undertook scenario analysis in reaching
its conclusions, but recognised 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.
Considering the liquidity of the portfolio 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 five years from
the date of this Report, subject to shareholders’ approval
of the continuation vote at each AGM, noting the level of
comprehensive support given at the last AGM.
Outlook
The Board’s view on the general outlook for the Company
can be found in the Chairman’s Statement on page 10
under “Outlook” while the Investment Manager’s views on
the outlook for the portfolio are included in its report on
pages 28 and 29.
On behalf of the Board
Davina Walter
Chairman
20 December 2022
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Aberdeen Diversified Income and Growth Trust plc 19
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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.
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 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, investee companies and funds, service providers
and the holders of the Company’s Bonds.
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.
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 on pages 25 to 29 details the key investment decisions taken
during the year. The Investment Manager has continued to manage the Company’s assets in
accordance with the mandate provided by shareholders, with the oversight of the Board.
The Board regularly reviews the Company’s performance against its investment objective and
the Board undertakes an annual strategy review to ensure that the Company is positioned well
for the future delivery of its objective for its stakeholders.
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 on pages 48 and 49.
Promotin
g
the Success of the Company
20 Aberdeen Diversified Income and Growth Trust plc
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. Further details
are provided on pages 39 to 42.
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.
Debt Providers On behalf of the Board, the Manager maintains a positive working relationship with Law
Debenture Trust p.l.c. as trustee on behalf of the holders of the Company’s Bonds, ensuring
compliance with its covenants.
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 following
decisions undertaken during the year ended 30 September 2022.
Independent evaluation of the Board
In July 2022, the Company engaged Lintstock Ltd to undertake an independent external evaluation of the effectiveness
of the Board. Further information may be found in the Directors’ Report on page 49.
Dividends Paid to Shareholders
The level, frequency and timing of dividends paid are key considerations for the Board, taking into account net earnings
for the year and the Company’s objective of providing shareholders with dependable income and capital appreciation
over the long term through investment in a globally diversified multi-asset portfolio.
The total dividends per share of 5.60p in respect of the Year, representing an increase of 1.4% on the prior year, and the
Company’s dividend policy to make four equal to shareholders throughout the year, reflects this.
Share Buy Backs
During the Year the Company bought back 871,424 Ordinary shares to be held in treasury, providing a small accretion
to the NAV and a degree of liquidity to the market at times when the discount to the NAV per share had widened
during normal market conditions. The Board is of the view that the proposed investment-led policy around share
buybacks remains in the best interests of all shareholders.
Promotin
g
the Success of the Company
Continued
Aberdeen Diversified Income and Growth Trust plc 21
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Performance (total return)
31 March 2017
B
– 31 December 2020
C
–
30 September 2022 30 September 2022 1 year 3 years 5 years
% return % return % return % return % return
Net asset value – debt at par
A
+12.8 +7.2 –0.2 +5.3 +9.3
Net asset value – debt at fair value
A
+21.0 +9.3 +1.2 +12.9 +15.6
Share price
A
+3.0 –2.3 –5.0 –1.9 –3.7
A
Considered to be an Alternative Performance Measure. Total return represents the capital return plus dividends reinvested. Further details can be found on page 117.
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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total revenue (£’000) 22,382 23,608 23,120 23,265 17,961 23,262 22,106 20,783 18,878 17,959
Per Ordinary share (p)
Net revenue return 6.6 7.0 7.1 7.6 5.3 6.2 5.7 5.6 5.1 5.0
Total return 19.3 9.3 (4.5) 1.3 8.0 2.8 2.6 (1.4) 6.7 (0.2)
Net dividends payable 6.252 6.44 6.54 6.54 5.89 5.24 5.36 5.44 5.52 5.60
Net asset value per Ordinary share (p)
Debt at par value 144.5 147.5 136.6 131.6 132.7 130.3 128.1 121.7 123.5 117.8
Debt at fair value 139.3 143.3 131.0 123.6 126.4 124.2 119.9 113.4 121.7 117.6
Equity shareholders’ funds (£’000) 418,345 426,865 374,832 351,521 436,767 428,129 413,679 386,230 382,118 363,358
Performance and Results
22 Aberdeen Diversified Income and Growth Trust plc
Total Return of NAV (debt at fair value) and Share Price
Year ended 30 September 2022
94
96
98
100
102
104
106
108
30/09/21 30/11/21 31/01/22 31/03/22 31/05/22 31/07/22 30/09/22
Source: Morningstar & Lipper
Share Price
NAV
Target 6%
Total Return of NAV (debt at fair value) and Share Price
30 September 2017 to 30 September 2022 (all figures rebased to 100 at 30 September 2017)
80
90
100
110
120
130
140
30/09/17 30/09/18 30/09/19 30/09/20 30/09/21 30/09/22
Source: Morningstar & Lipper
Share Price
NAV
Target 6%
Performance and Results
Continued
Aberdeen Diversified Income and Growth Trust plc 23
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
abrdn Fund Managers Limited
The Company’s Manager is abrdn Fund Managers Limited, a subsidiary of abrdn plc which manages a combined
£508 billion (as at 30 June 2022) in assets for a range of clients, including individuals and institutions, through mutual
and segregated funds.
The Investment Team
Nalaka De Silva
Head of Private
Markets Solutions
Nalaka has 20 years’ experience
in developing, implementing and
managing strategies across the
Public and Private Markets
spectrum. This includes
investments across Private
Equity, Infrastructure, Real
Estate, Natural Resources and
Private Credit on a global basis.
Solutions based strategies are
designed around client
outcomes including growth,
income and proactive
ESG strategies.
Nalaka joined abrdn in 2012.
Prior to this, Nalaka held senior
roles at Australian and European
Investment management firms.
He has lead M&A activity, off-
market acquisitions and
divestments of assets together
with offshore and onshore
capital raising in debt and equity
markets. Nalaka is a qualified
Chartered Accountant and
holds a postgraduate degree
in Commercial Law
and Accounting.
Heather McKay
Head of Global
Active Allocation
Heather leads the Global Active
Allocation Portfolio
Management team within Multi-
Asset Solutions, with more than a
decade of experience in
managing a range of strategic
multi-asset growth mandates.
Heather joined abrdn following
the SWIP acquisition in April
2014. Prior to joining the SWIP
Multi-Asset team in 2010,
Heather was a Credit Analyst
within the Fixed Income team
covering autos, financials and
insurance sectors. Heather
joined SWIP from Baillie Gifford &
Co, where she was an equity
analyst for more than four years.
Heather graduated with a First
Class Honours BAcc with
Finance degree from the
University of Glasgow. She is IMC
qualified and is a CFA®
charterholder.
Simon Fox
Senior Investment
Director
Simon is a Senior Director in the
Global Active Allocation team
within Multi-Asset and
Investment Solutions. Prior to
joining in 2015, Simon was at
Mercer for twelve years, initially
as a senior client consultant
responsible for advising on
investment strategy, portfolio
structuring, manager selection,
and performance monitoring.
Later on, he joined Mercer's
Alternatives boutique as a
Director of Research with client
consulting responsibilities,
including coverage of macro,
currency and commodity
strategies and multi-asset
investments; and sat on the
Alternatives Investment
Committee. Throughout this
period, Simon was a regular
contributor to Mercer's broader
intellectual capital - from hedge
funds to commodities,
timberland and agriculture.
Simon has a Masters in European
Politics and Policy from the LSE
and an MA(Oxon) in
Mathematics from Oxford
University. He is also a
CFA® charterholder.
Nic Baddeley
Investment
Manager
Nic has 8 years’ experience in
investment analysis and
management working across
public and private asset classes.
He is responsible for the
management of private markets
portfolios undertaken by the
Private Markets Solutions desk,
as well as the continual
development of investment
processes, portfolio
management and risk
management techniques. Prior
to joining the current team, Nic
worked as an analyst with the
global listed real estate team,
responsible for sector coverage
of the Chinese housebuilders,
portfolio construction, and
risk measurement.
Nic joined abrdn in 2015, prior to
which he worked as a data
scientist for a global data
consultancy, and as an
investment analyst at Mercer
focussing on strategy analysis
and fund recommendations for
institutional investors. Nic
graduated from the University of
Edinburgh with an MA (Hons)
degree in Psychology and is a
CFA® charterholder.
Information about the Mana
g
er
24 Aberdeen Diversified Income and Growth Trust plc
Investment Manager’s Process
Risk management is embedded in the Investment
Manager’s process. The approach is based around four
pillars: Diversification principles, Risk models, Scenario
analysis and Peer review. In addition, liquidity risk is also
actively monitored, both by the Investment Manager and
via regular independent stress tests.
Further detail on each of the pillars is provided below:
· Diversification principles
The Investment Manager believes that diversification is
a necessary element of any robust multi-asset portfolio,
reducing portfolio volatility in the short term and
reducing the reliance on any one asset class over the
medium to long-term. Diversification benefits arise from
the range of assets that are considered within the
Company’s portfolio; the longer-term modelling that is
used to establish the strategic framework; and they are
also actively considered as part of the day to day
decision making for the portfolio. The Investment
Manager seeks to ensure that there is not a
disproportionate exposure or contribution to portfolio
risk from any one asset class or investment.
· Risk models
The second pillar of the risk management approach is
the use of quantitative risk models. Although the
Investment Manager acknowledges that risk models
can have their limitations, it believes that they are a
valuable input into the broader process. In particular,
they can provide an efficient, clear and objective view
on the portfolio’s risk exposures at any given time.
· Scenario analysis
While the risk models include certain historic stress test
scenarios in their analysis, it is important to also consider
how investments in the portfolio might be expected to
behave in various hypothetical scenarios. The scenario
analysis harnesses both the experience of the
investment team and the broader insights gained from
across abrdn. From this analysis, the Investment
Manager is seeking to gain comfort that the potential
risk of, and impact from, any given scenario is
acceptable. This helps to ensure that the portfolio is
resilient to the wide range of scenarios that might play
out over time.
· Peer review
To ensure that the Investment Manager is capturing the
best ideas within the portfolio, the investment process
has been designed to source views from across the
business and reflect back its own insights. On a formal
basis, the peer review process also includes oversight
from a monthly meeting of the Investment Manager’s
Diversified Asset Review Group as well as input from
abrdn’s independent risk team and liquidity stress tests
undertaken by the dealing desk.
Investment Mana
g
er’s Process
Aberdeen Diversified Income and Growth Trust plc 25
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Markets over the last twelve months have been volatile
and tough to navigate for many investors. This time last
year, the main topic of conversation was whether inflation
was transitory or more permanent. Inflation is still the
number one factor driving markets, but the debate has
moved on to how high for how long, and how appropriate
central banks’ responses have been.
Alongside rising interest rates, there have been additional
shocks including a significant strengthening of the US
dollar, political instability in the UK, China’s zero Covid-19
policy and military conflict in Ukraine, each buffeting
markets and providing little relief for investors, resulting in
a traditional portfolio, comprising 60% in equities and 40%
in bonds, on track for its worst performance since 1936.
As inflation continued above target, central banks had to
respond fast and hard, led by the US Federal Reserve
which has raised its base rate 3% in 6 months. Global
government bonds have lost considerable capital value as
a result, but the drive to combat inflation via higher rates
has also had a significant impact on other risk assets
as well.
Investors in floating rate credit (both public and private)
were partly protected from the direct impact in higher
rates, given their link to interest rates. But credit spreads in
general have risen, and there is an indirect impact of
higher yields on default risk, both of which mean capital
values have still reduced.
Equity markets also provided little respite for investors, as
central bank action increased the likelihood of an
economic slowdown or recession. Towards year end in
many sectors companies started reducing their profit
forecasts for the coming years, to reflect the more
pessimistic outlook. Countering this trend, of course, were
energy stocks globally as countries, particularly in Europe,
secured and stored supplies ahead of winter, given
shutdowns in pipelines from Russia.
In Private Markets, the global economic outlook had
varying impacts. While private equity deal activity
declined in the second half of 2022, across Europe
quarter-over-quarter deal value was down 31.6% and
deal count was down by 9.6% (Source: Pitchbook, October
2022) as the external headwinds impacted private equity.
However, despite this, opportunities across sectors such as
IT still exist as long-term trends of digitalisation and tech
innovation are still areas of growth. Within infrastructure,
power generating assets and investments with inflation
linked revenues provided positive returns as inflation
forecasts were sequentially lifted, and power prices,
particularly in Europe, spiked. The returns generated by
power producing assets has brought them under the
microscope of law makers, with windfall taxes and price
caps mooted. In terms of transactions, we saw a
slowdown in activity globally across H2 2022. Deal volume
fell to $185.4bn across 701 deals from $255.1bn across
800 transactions in Q3 2021 (Source: Inframation, October
2022) . However, activity did vary across sectors as
transport and telecommunication sectors proved resilient
with deal count increasing across both. Overall
opportunity still exists with infrastructure assets
potentially offering better protection against inflation
than other assets.
In real estate, the increasing cost of debt financing is
impacting all sectors of the asset class, with many Real
Estate Investment Trusts trading at wide discounts to NAV
in anticipation of lower valuations. The speed of the cost of
debt shifts have also disrupted transactional activity for
commercial property, particularly in the UK. Indices of
residential valuations are falling in the US, Sweden, and
Australia amongst other countries, as previously red-hot
housing markets cooled rapidly in response to sharp
increases in mortgage costs. Given the recession starting
in Q4 this year and stretching into 2023, capital values are
likely to decline. It is vital to focus on quality as long-term
sector fundamentals are unchanged.
A diversified, simplified strategy and
a stable portfolio
Against this difficult backdrop, the Company has
managed to preserve capital and pay out income, with a
NAV total return (including income, with debt measured at
fair value) of 1.2%. While this is below the stated return
target of 6% annualised on a five year rolling basis, it
demonstrates the portfolio’s robustness and diversification
in a highly testing environment.
Through building a well-diversified portfolio of
investments, including a substantial exposure to
infrastructure and real assets, the Company has
responded well to the inflationary pressures that have
dominated the markets during the last year. The
Company has been able to take a long-term view
regarding how economies will evolve, supported by the
breadth of research and investment capabilities across
the abrdn franchise. The goal of delivering a suite of
diversified returns is achievable due to the latitude of the
mandate, and it has been pleasing to see the defensive
core of the portfolio play its role.
Investment Mana
g
er’s Report
26 Aberdeen Diversified Income and Growth Trust plc
The task from here is to maintain the resilience of the
portfolio to the challenges posed by the current
environment. The investment strategy seeks to achieve
diversification across asset classes within a simplified
framework under three main headings: Private Markets,
Fixed Income & Credit, and Listed Equities. Exposure to
the broad expertise of abrdn across these asset classes,
including approximately 350 Private Markets-focused
investment professionals, allows the Company to
allocate to best in class opportunities, both internally
and externally.
Investment portfolio breakdown as at 30 September 2022
Private markets
During the year, the Company’s Private Markets exposure
increased from 44% to 55%, as commitments to previously
made investments were drawn by managers. The largest
draw down was into Bonaccord Capital Partners I (BCP I),
which buys stakes in private markets asset managers and
pays out income from said managers’ fee-related
earnings. BCP I called 75% of the capital the Company
had committed, and has a current weight of 4.1% in the
portfolio vs 0.1% at the start of the year. A significant
amount of capital was also called by the abrdn Andean
Social Infrastructure Fund I (ASIF I) to fund the building of a
new port in Colombia and two hospitals in Mexico, the
latter leased to the Mexican government. This moved the
ASIF I exposure up 1.9% to 3.4% of total investments over
the year.
The Private Markets basket was the largest driver of
positive returns, contributing +4.8% over the year. Most
sub-asset classes were positive, but returns were driven
mostly by Infrastructure. The core infrastructure positions
in the Company’s portfolio have in place long term
revenue contracts with inflation linkage built in, so the
current inflationary environment has been positive for
their cashflows and valuations, allowing the Company to
deliver steady performance through a time of inflationary
and volatile markets.
The largest single driver of performance was in the
Aberdeen Global Infrastructure Partners Fund II, where
the value of the I-77 toll road asset in the US was up 40%.
The asset uses dynamic pricing, and was able to charge a
significantly higher price for use of the road than
anticipated in the base case. Overall, AGIP II contributed
1.4% to the Company’s NAV performance. There was also
positive performance from the SL Capital Infrastructure II
fund, which contributed 0.8% as Central European
Renewable Investments, which is the largest portfolio of
solar energy assets in Poland, increased in value in
response to power prices, while the other assets including
a fleet of trains in the UK, also grew in value due to their
revenues’ contracted linkage to inflation. Finally, within
infrastructure, the BlackRock Renewable Income UK fund
also grew in value, as the market price for energy in the
UK increased.
Investment Mana
g
er’s Report
Continued
Aberdeen Diversified Income and Growth Trust plc 27
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
While the current level of inflation was not our base case
coming into the year, the Company is diversified with
multiple drivers of returns, of which inflation linkage has
been the largest driver this year. The Private Markets
portfolio has a unique set of long-term drivers which may
not be easily accessed elsewhere, and forms part of the
reason why we believe the Company is well placed to
generate long term attractive returns for shareholders.
In the future, we expect to maintain the proportion of the
Company’s portfolio in Private Market investments at
around current levels as these specialist managers
identify attractive opportunities which can be funded from
the maturation of existing Private Market investments. We
anticipate that there will be £5 million of additional net
investments into the current Private Market investments
over the next 12 months with future investments slightly
outweighing capital returned.
Case studies
Aberdeen Global Infrastructure Partners II
AGIP II invests in public private partnerships in the US and
Australia, with a portfolio of assets including Perth Stadium,
a group of eight schools in Western Australia, Canberra
Light Railway, and a series of express lanes on the I-77 into
Charlotte, North Carolina. The Q1 2022 valuation for the I-
77 toll road was marked up significantly, driving 1.4% of
NAV gain at the Company level. The increase in valuation
was due to a significantly higher forecast of revenue over
the life of the project. The express lanes are managed
travel lanes that run adjacent to the I-77 original general
purpose lanes. There are 11 segments, and motorists are
able to decide at each one whether they want to join or
exit the lanes. The toll road has the ability to change price
every 5 minutes to reflect changing demand aimed at
maintaining a 48mph minimum speed at all times. The toll
rates are varied based on real time traffic conditions
throughout the entire corridor, and uses electric gating
with ANPR cameras to monitor use and automatically bill
customers. Based on driver behaviour over the first years
of the asset life, the average price that can be charged
per mile is $0.42, versus the previous assumption of $0.31.
SL Capital Infrastructure Fund II
SLCI II invests in core economic infrastructure projects in
the UK and Europe. The portfolio contains district heating
assets in Finland, a fleet of trains leased for use in the UK, a
network of liquid bulk storage facilities in Germany, a
growing broadband cable network in the UK, and the
largest portfolio of operational solar farms in Poland. Over
the last 12 months, SLCI II has contributed 0.8% to
Company performance.
The largest driver of performance in this fund was the
portfolio of solar farms in Poland, known as Central
European Renewable Investment (CERI). The portfolio is
spread throughout Poland, with a concentration in the
west, and north-east of the country. Performance was
driven by strong production in H1 2022, namely favourable
weather conditions in March, with high levels of irradiation
combined with low temperatures. Weather conditions
were also supportive in May and June. The Russian
invasion of Ukraine had a significant impact on energy
markets, and while revenues are underpinned by Poland’s
contract for difference regime, CERI has been able to
capture some of the upside associated with the elevated
power price environment. The contract for difference
regime should shield the portfolio from any adverse
effects should there be a sudden reversal in power
prices trends.
Fixed income & credit
Fixed Income & Credit weight was reduced over the year
to fund the Private Market investments, with the allocation
towards Junior ABS reduced and switched partly into
Mezzanine ABS to reduce the impact of a potential
recession, and a trim to Emerging Market bonds as our
internal research group moved the outlook from
overweight to neutral.
Fixed Income & Credit contributed -1.4% to performance.
All sub-asset classes had negative contributions, with the
exception of the Global Loans portfolio which was flat. The
largest detractor was TwentyFour Asset Backed
Opportunities. TwentyFour, which invests in UK and
European residential mortgage backed securities and
collateralised loan obligations, saw growth in its dividend
pay-out due to the floating rate nature of its investments,
however, concerns around future defaults caused by high
interest costs meant that its share price declined. Other
negatives in the portfolio were the Russian bonds within
the Emerging Market bonds portfolio. While we had been
reducing weight to this exposure at the start of 2022 due
to increased military activity on the border with Ukraine,
we did not have invasion as a base case, and so were left
with a small position which was written down to zero value
due to the sanctions applied to Russia. We were able to
exit this position at the end of the year at a value above
zero, clawing back some performance.
28 Aberdeen Diversified Income and Growth Trust plc
Listed equities
The proportion of the portfolio in Listed Equities (including
the Listed Alternatives portfolio reported on separately in
the previous Annual Report) was reduced from 45% to
38% over the year as we sold holdings to fund certain
Private Markets investments. The principal funding source
was the UK Mid-Cap Equity Fund, which was reduced over
the year, but then fully exited in early September due to
the headwinds facing the UK economy. This proved
prescient, as the poorly received “mini-budget”
announced by the then new Chancellor Kwasi Kwarteng
at the end of September caused market turmoil which
outweighed its intended growth agenda. We also reduced
exposure to the global sustainable core equity sub-fund
due to the pessimistic near-term economic outlook.
Listed Equities contributed -2.0% to performance. At a
sub-asset class level, most sectors delivered negative
performance over the last 12 months, with the exception
of the listed infrastructure basket, which contributed 0.7%.
The top performing names in this basket were the wind
and solar energy production names as wholesale market
prices increased, boosting revenue streams. There were
some headwinds at the end of the year as gilts rose,
reducing their valuations, but the basket ended the year in
positive territory which was pleasing.
ESG factors as part of risk management
ESG considerations form a key part of our investment
analysis and decision making when making new
investments. In Private Markets we consider the following
ESG factors: environment, social capital, human capital,
business models and leadership & governance. These
factors are considered throughout the investment
process from the point of idea generation, through to
portfolio construction, implementation, monitoring and risk
management. Key issues are identified and scored over
time through the use of our systematic ESG analysis
framework (based on the Sustainable Accounting
Standards Board Framework) which identifies key
materiality issues by sector. Investments are then scored
across operational and governance dimensions which
encompass elements including climate change, labour
management, corporate behaviour and corporate
governance, and these scores then inform investment
decision-making.
Expected revenue return per share versus
dividends per share
As we have moved through the portfolio transition, we
have made use of the Company’s revenue reserves to
cover the planned slight shortfall in income received
versus dividends paid out this year. Revenue reserves are a
feature of investment companies which allow them to
withhold a proportion of annual income which can be
drawn upon in the future, as required.
Outlook
The global economy continues to face many headwinds,
which is likely to lead to a deeper and earlier global
recession than previously forecast. The UK and EU
economies are facing a commodity price induced real
income squeeze, amplified by central bank actions. We
expect interest rate hikes from the US Federal Reserve, the
European Central Bank and the Bank of England, as they
seek to control inflation. To a degree, markets have
already responded to this uncertainty: equity valuations
are cheaper and credit spreads wider than they were at
the start of the year – as such, many asset classes look
more attractive now on a 5-year view. However, the
compounding effects of these various shocks will mean
that the investment environment will remain volatile and
we may see further weakness across asset classes in
the shorter-term. In this respect, the Company should
benefit from the diversified public private nature of its
investment policy.
Firstly, this provides a wide universe in which to invest,
meaning we are able to access niche areas where there is
idiosyncratic growth. Secondly, this allows the Company
to access Private Markets investments that have the
potential to deliver returns in excess of those available
from public markets. Finally, there is the income
generation capability that we expect to be available from
holdings in Fixed Income & Credit, where good quality
assets are available at prices which imply a high dividend
pay-out.
Investment Mana
g
er’s Report
Continued
Aberdeen Diversified Income and Growth Trust plc 29
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
While fundraising has reduced in the second half of the
year, there already exists a high level of cash available to
be invested in Private Markets (also known as ‘dry
powder’). While we expect a lower level of private equity
transactions, there will still be competition for quality
assets. However, the specialist managers working on
behalf of the Company have a history of targeting
selected direct and indirect opportunities to capture the
growth potential, and have demonstrated positive
performance over the volatile period of the last 12 months.
Further market dislocation could also provide good entry
points for the managers in the Company’s portfolio who
have money to invest still, boosting returns over the
longer term.
Investor appetite for infrastructure remains stable,
especially for social and economic infrastructure where
there is potential for long-term, inflation-linked contracts
providing yield and inflation protection. In addition, as the
world goes through the energy transition, demand for
climate and renewable infrastructure is ever increasing,
remaining supportive of investment opportunities in
this space.
In Private Credit, we believe that there will be opportunities
for private financing as companies face a slightly tighter
lending environment. However, the quality of deals
remains crucial, as company earnings are reduced, the
ability to cover interest payments is tested, and default
levels increase.
Within real estate, residential markets are expected to
come under strain with mortgage burdens weighing on
consumers. However, a reduction in mortgage
affordability will mean that many people will remain in
rented accommodation, to the benefit of the Build To Rent
sector to which the Aberdeen European Residential
Opportunities Fund is looking to sell its assets into. The
focus on any further investments in this sector remains on
assets with the highest conviction and long-term securely
contracted income.
The Company has a good degree of protection for the
current inflationary environment as evidenced by the
pockets of positive performance over the last 12 months.
The Company has a reasonably high weighting to
infrastructure and real estate assets, both within its Private
Markets and Public exposures. Were we to see inflation
continue to be persistent, we would expect these assets to
keep contributing positively. In addition, the portfolio is
exposed to floating rate credit instruments across Private
Markets, Fixed Income & Credit with a focus on quality,
which should benefit in a rising interest rate environment.
That being said, we continue to monitor market conditions
closely, and are prepared to rotate the portfolio as
appropriate to the changing situation.
Finally, the specialist investments in vehicles such as
Healthcare Royalty Partners IV and Burford Opportunity
Fund (litigation finance) have demonstrated their low
correlation with the business cycle and economic climate,
and we expect these holdings to continue to provide
steady returns with upside potential in the future.
Ultimately, we feel that the Company is well protected in
the current environment, and ready to take advantage of
growth opportunities when the outlook improves.
Nalaka De Silva, Head of Private Markets Solutions
Heather McKay, Head of Global Active Allocation
Simon Fox, Investment Director
Nic Baddeley, Investment Manager
abrdn Investments Limited
Investment Manager
20 December 2022
30 Aberdeen Diversified Income and Growth Trust plc
Portfolio
Aberdeen Diversified Income and Growth Trust plc 31
The portfolio consists of a wide range
of assets managed by specialist
teams within abrdn and also selected
third party managers. Some of these
investments are longer term in
nature and are not otherwise readily
available to private investors.
32 Aberdeen Diversified Income and Growth Trust plc
As at 30 September 2022
At At
30 September 30 September
2022 2021
% of Total % of Total
investments investments
TwentyFour Asset Backed Opportunities Fund 6.8 6.8
Investments in mortgages, SME loans originated in Europe
SL Capital Infrastructure II
AB
5.2 3.8
European economic infrastructure
Aberdeen Standard Global Private Markets Fund
A
5.1 4.4
Multi-strategy private markets exposure
Aberdeen Global Infrastructure Partners II (USD)
AB
4.8 2.5
Invests in social infrastructure projects, in Australia, the USA and New Zealand
Burford Opportunity Fund
B
4.7 3.3
Diverse portfolio of litigation finance investments initiated by Burford Capital
Bonaccord Capital Partners I-A
B
4.1 1.6
Targets investment in alternative asset management companies.
Healthcare Royalty Partners IV
B
3.6 2.8
Invests in healthcare royalty streams primarily in the US
Neuberger Berman CLO Income Fund 3.6 4.0
Floating-rate exposure to securitised non-investment grade corporate bonds
Andean Social Infrastructure Fund I
AB
3.4 1.5
Infrastructure project investments in the Andean region of South America
TrueNoord Co-Investment
B
2.7 2.0
Aircraft leasing company which specialises in regional aircraft
A
Denotes abrdn plc managed products
B
Unlisted holdings
Ten Lar
g
est Investments
Aberdeen Diversified Income and Growth Trust plc 33
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
As at 30 September 2022
Valuation Total investments Valuation
2022 2022 2021
Company £’000 % £’000
Private Equity
Bonaccord Capital Partners I-A
B
15,255 4.1 6,274
TrueNoord Co-Investment
B
9,976 2.7 8,011
Aberdeen Standard Secondary Opportunities Fund IV
AB
9,385 2.4 5,478
ASI Hark III
AB
4,088 1.1 –
Maj Invest Equity 5
B
2,492 0.7 1,785
HarbourVest International Private Equity VI
B
2,100 0.6 3,020
Maj Invest Equity 4
B
1,335 0.3 2,806
Mesirow Financial Private Equity IV
B
882 0.2 1,272
HarbourVest VIII Buyout Fund
B
260 0.1 353
Mesirow Financial Private Equity III
B
228 0.1 214
Top ten holdings 46,001 12.3
Other holdings 254 0.1
Total Private Equity 46,255 12.4
Real Estate
Aberdeen Property Secondaries Partners II
AB
9,851 2.6 12,568
Aberdeen European Residential Opportunities Fund
AB
9,769 2.6 11,869
Cheyne Social Property Impact Fund
B
4,813 1.3 5,196
Total Real Estate 24,433 6.5
Infrastructure
SL Capital Infrastructure II
AB
19,581 5.2 14,745
Aberdeen Global Infrastructure Partners II (USD)
AB
17,755 4.8 9,705
Andean Social Infrastructure Fund I
AB
12,691 3.4 5,886
BlackRock Renewable Income – UK
B
8,523 2.3 8,055
Aberdeen Global Infrastructure Partners II (AUD)
AB
6,840 1.8 5,949
Pan European Infrastructure Fund
B
1,697 0.5 4,352
Total Infrastructure 67,087 18.0
Private Markets Investments
34 Aberdeen Diversified Income and Growth Trust plc
As at 30 September 2022
Valuation Total investments Valuation
2022 2022 2021
Company £’000 % £’000
Natural Resources
Agriculture Capital Management Fund II
B
4,258 1.1 3,575
Total Natural Resources 4,258 1.1
Private Credit
PIMCO Private Income Fund Offshore Feeder I LP
B
8,796 2.4 7,416
Mount Row Credit Fund II
B
7,494 2.0 9,850
Total Private Credit 16,290 4.4
Other
Aberdeen Standard Global Private Markets Fund
AB
19,122 5.1 17,251
Burford Opportunity Fund
B
17,520 4.7 12,794
Healthcare Royalty Partners IV
B
13,522 3.6 10,779
Markel CATCo Reinsurance Fund Ltd – LDAF 2018 SPI
B
298 0.1 1,058
Markel CATCo Reinsurance Fund Ltd – LDAF 2019 SPI
B
281 0.1 1,305
Total Other 50,743 13.6
Total Private Markets 209,066 56.0
A
Denotes abrdn plc managed products
B
Unlisted holdings
Continued
Private Markets Investments
Aberdeen Diversified Income and Growth Trust plc 35
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
As at 30 September 2022
Valuation Total investments Valuation
2022 2022 2021
Company £’000 % £’000
Structured Credit
TwentyFour Asset Backed Opportunities Fund 25,509 6.8 26,708
Neuberger Berman CLO Income Fund 13,315 3.6 15,499
Blackstone/GSO Loan Financing 3,468 0.9 6,878
Fair Oaks Income Fund 1,089 0.3 1,971
Total Structured Credit 43,381 11.6
Syndicated Loans
Aberdeen Standard Alpha – Global Loans Fund
A
2,347 0.6 5,042
Total Syndicated Loans 2,347 0.6
Country
Mexico Bonos Desarr Fix Rt 10% 05/12/24 1,775 0.5 1,895
Secretaria Tesouro 10% 01/01/31 1,755 0.4 485
Mexico (Utd Mex St) 6.75% 09/03/23 M Mxn 1,421 0.4 –
Indonesia (Rep of) 8.375% 15/03/34 1,346 0.4 1,265
Brazil (Fed Rep of) 10% 01/01/25 1,313 0.3 1,107
Indonesia (Rep of) 8.125% 15/05/24 1,309 0.3 1,224
Indonesia (Rep Of) 8.375% 15/03/24 Fr70 Idr 1,219 0.3 –
South Africa (Rep of) 8.75% 31/01/44 1,034 0.3 1,040
South Africa (Rep of) 8% 31/01/30 995 0.3 1,067
Malaysia (Govt of) 3.828% 05/07/34 988 0.3 888
Top ten holdings 13,155 3.5
Other holdings 18,992 5.1
Total Emerging Market Debt 32,147 8.6
Total Fixed Income & Credit 77,875 20.8
A
Denotes abrdn plc managed products
Fixed Income & Credit Investments
36 Aberdeen Diversified Income and Growth Trust plc
As at 30 September 2022
Valuation Valuation Valuation
2022 2022 2021
Company £’000 % £’000
ESG Enhanced Equity Sub-Fund
Apple 1,329 0.4 1,248
Microsoft 941 0.3 1,031
Alphabet 543 0.1 555
Amazon.com 524 0.1 638
Tesla 390 0.1 303
Top five holdings 3,727 1.0
Other holdings 23,285 6.2
Total ESG Enhanced Equity Sub-Fund 27,012 7.2
Total European Green Infrastructure Sub-Fund 419 0.1
Infrastructure Sub-Fund
HICL Infrastructure 3,627 1.0 3,876
3I Infrastructure 2,532 0.7 4,771
Cordiant Digital Infrastructure 2,336 0.6 935
International Public Partnerships 2,194 0.6 1,009
Sequoia Economic Infrastructure Income 1,570 0.4 1,900
Top five holdings 12,259 3.3
Other holdings 891 0.2
Total Infrastructure Sub-Fund 13,150 3.5
Real Estate Sub-Fund
Assura 2,271 0.6 1,860
PRS REIT 1,673 0.4 1,851
Home REIT 1,449 0.4 1,263
Residential Secure Income 1,060 0.3 1,984
Supermarket Income REIT 804 0.2 1,965
Top five holdings 7,257 1.9
Other holdings 1,739 0.5
Total Real Estate Sub-Fund 8,996 2.4
Listed Equities
Aberdeen Diversified Income and Growth Trust plc 37
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
As at 30 September 2022
Valuation Valuation Valuation
2022 2022 2021
Company £’000 % £’000
Alternative Income Sub-Fund
BioPharma Credit 6,267 1.7 10,071
Round Hill Music Royalty Fund 3,446 0.9 3,644
Pollen Street (formerly Honeycomb Investment Trust) 3,249 0.9 4,769
Tufton Oceanic Assets 2,936 0.8 3,444
GCP Asset Backed Income Fund 2,440 0.6 2,761
Top five holdings 18,338 4.9
Other holdings 633 0.2
Total Alternative Income Sub-Fund 18,971 5.1
Renewables Infrastructure Sub-Fund
Greencoat Renewables 2,700 0.7 2,798
Greencoat UK Wind 2,643 0.7 5,751
Gresham House Storage Fund 1,904 0.5 1,612
Bluefield Solar Income Fund 1,834 0.5 2,597
NextEnergy Solar Fund 1,739 0.5 2,957
Top five holdings 10,820 2.9
Other holdings 7,273 2.0
Total Renewables Infrastructure Sub-Fund 18,093 4.9
Reinsurance Sub-Fund
CATCo Reinsurance Opportunities Fund 150 0.0 953
Total Reinsurance Sub-Fund 150 0.0
Total Equities 86,791 23.2
38 Aberdeen Diversified Income and Growth Trust plc
As at 30 September 2022
Valuation Net assets Valuation Net assets
2022 2022 2021 2021
£’000 % £’000 %
Total investments 373,732 102.9 390,446 102.2
Cash and cash equivalents
A
8,984 2.5 7,315 1.9
Forward contracts (4,922) (1.4) (2,917) (0.8)
6.25% Bonds 2031 (15,694) (4.3) (15,664) (4.1)
Other net assets 1,258 0.3 2,938 0.8
Net assets 363,358 100.0 382,118 100.0
A
Includes outstanding settlements
Net Assets Summary
Aberdeen Diversified Income and Growth Trust plc 39
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Manager does not judge the suitability of an investment from an ESG perspective on a purely binary basis. Instead, a
dynamic approach is taken, investing in companies where the greatest alignment to mitigating the risks can be seen or
pursued further through their commitment to improving their ESG profile. The Manager believes in active engagement
with its investments and potential investments: from providing initial guidance on suitable metrics through to holding the
company to account for delivering on its promises. It is through this filter that the Manager is comfortable investing in, for
example, sectors such as mining and oil & gas, subject to the belief that a company is taking the necessary action to
address the energy transition. The Manager has high expectations for these companies given that many commodities
are necessary for the transition to a low carbon future.
Core beliefs: Assessing Risk, Enhancing Value
There are three core principles which underpin the Investment Manager’s integrated ESG approach. Firstly, ESG factors
can materially impact financial returns and the long term success of the investment strategy. Secondly, by integrating
ESG factors into investment decisions the Investment Manager generates a better understanding of how well
companies are managing ESG risks and opportunities and this insight supports better decision making. Finally, active
engagement with company management teams is central to enhancing value and a standard part of the Investment
Manager’s ongoing stewardship programme.
Responsible Investing – Integration of ESG into the Investment Manager's Process
“By embedding ESG factors into the active equity investment process, we aim to reduce risk, enhance potential value for
investors and foster companies that can contribute positively to the world.” abrdn
Financial Returns ESG factors can be financially material – the level of consideration they are given in a company will
ultimately have an impact on corporate performance, either positively or negatively. Those
companies that take their ESG responsibilities seriously tend to outperform those that do not.
Fuller Insight Systematically assessing a company’s ESG risks and opportunities alongside other financial
metrics allows the Investment Manager to make better investment decisions.
Corporate Advancement Informed and constructive engagement helps foster better companies, protecting and enhancing
the value of the Company’s investments.
“We believe that the market systematically undervalues the importance of ESG
factors. We believe that in-depth ESG analysis is part of both fundamental company
research and portfolio construction and will lead to better client outcomes.” abrdn
Mana
g
er’s ESG En
g
a
g
ement
40 Aberdeen Diversified Income and Growth Trust plc
Researching Companies: Deeper Company Insights for Better Investor Outcomes
The Investment Manager’s portfolio managers, sector analysts, ESG equity analysts and central ESG Investment Team
collaborate to generate a deep understanding of the ESG risks and opportunities associated with each company. The
central ESG team also produces research into specific themes (e.g. labour relations or climate change), sectors (e.g.
forestry) and ESG topics to understand and highlight best practice.
Global Networks: Working Together on Climate Change
The Investment Manager is a signatory to the UN Principles for Responsible Investment and actively collaborates on ESG
issues with global asset managers and asset owners. Climate change is a particular area of focus because the physical
and transition risks related to climate change have the potential to be financially material for many companies. The
Investment Manager has been actively involved in initiatives such as Climate Action100+ and Institutional Investors Group
on Climate Change (“IIGCC”) Net Zero Framework and also supports the Task Force on Climate Related Disclosures
(“TCFD”) which aims to strengthen climate related reporting globally. Portfolio Management Team
ESG House Score ESG Investment Team Equity ESG Quality Score
· Responsibility of ESG analyst
· Based on quantitative data
· Incorporates abrdn’s views on
materiality and sector specific risks
· Uses wide range of data sources
including MSCI, Trucost, voting
analysis and abrdn’s investment
insights
· Aims to be forward looking
· Global insights
· Thematic research
· Co-ordination across asset classes
· Responsibility of portfolio manager
and sector analysts
· Based on fundamental bottom up
analysis of individual companies by
on-desk analysts
· Assesses the ESG quality of
companies
· Reflective of equity analyst expertise
· Incorporates engagement with
companies on ESG issues
Portfolio Managers & Sector Analysts All of the Investment Manager’s equity portfolio managers and sector analysts seek to
engage actively with companies to gain insight into their specific risks and provide a
positive ongoing influence on their corporate strategy for governance, environmental and
social impact.
ESG Equity Analysts The Investment Manager has dedicated and highly experienced ESG equity analysts
located across the UK, US, Asia and Australia. Working as part of individual investment teams,
rather than as a separate department, these specialists are integral to pre-investment due
diligence and post-investment ongoing company engagement. They are also responsible
for taking thematic research produced by the central ESG Investment Team, interpreting
and translating it into actionable insights and engagement programmes for its regional
investment strategies.
ESG Investment Team This central team of more than 20 experienced specialists based in Edinburgh and London
provides ESG consultancy and insight for all asset classes. Taking a global approach both
identifies regions, industries and sectors that are most vulnerable to ESG risks and identifies
those that can take advantage of the opportunities presented. Working with portfolio
managers, the team is key to the Investment Manager’s active stewardship approach of
using shareholder voting and corporate engagement to drive positive change.
Mana
g
er’s ESG En
g
a
g
ement
Continued
Aberdeen Diversified Income and Growth Trust plc 41
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Listed Equities
ESG Research Process: Introduction
The Investment Manager employs around 150 equity
professionals globally. A systematic and globally-applied
approach to evaluating stocks allows the Investment
Manager to compare companies consistently on their ESG
credentials – both regionally and against their peer group.
The Investment Manager uses a combination of external
and proprietary in-house quantitative scoring techniques
to complement and cross-check analyst-driven ESG
assessments. ESG analysis is peer-reviewed within
the equities team, and ESG factors impacting both
sectors and stocks are discussed as part of the formal
sector reviews.
ESG House Score
The ESG House Score is produced by the ESG Equity
Analysts. The ESG House Score framework has two main
pillars which include detailed operational and governance
metrics. The underlying key performance indicators are
weighted according to how material they are for each
sector and country and populated from proprietary and
external data sources such as MSCI and Trucost. The
scores are standardised to allow the Investment Manager
to see how individual companies rank in a global context.
These scores complement the fundamental analysis of
the equity analysts and the ranking of companies from
Laggards to Best in Class.
Equity ESG Quality Score
The Investment Manager’s equity sector analysts have a
fully integrated approach to ESG analysis. Within the
equity investment process, every company is given a
proprietary Quality Rating which has five components:
industry analysis, business model analysis, analysis of the
company’s moat or competitive advantage, consideration
of ESG factors, assessment of management and analysis
of financials. In considering the ESG Quality Score the
analyst considers these key questions:
· Which ESG issues are relevant for this company, how
material are they, and how are they being addressed?
· What is the assessment of the quality of this company’s
governance, ownership structure and management?
· Are incentives and key performance indicators aligned
with the company’s strategy and the interests of
shareholders?
Having considered the regional universe and peer group in
which the company operates, the Investment Manager’s
equity team then allocates it an ESG Quality rating
between one and five (see below). This is applied across
every stock that the Investment Manager covers globally.
To be considered ‘best in class’, the management of ESG
factors must be a material part of the company’s core
business strategy; management must provide excellent
disclosure of data on key risk; management must also
have clear policies and strong governance structures,
among other criteria.
Working with Companies: Staying Engaged,
Driving Change
The Investment Manager continuously monitors and
actively engages with the companies in which it invests to
maintain ESG focus and improvement. This stewardship of
client's assets consists of four interconnected and equally
important activities by the Investment Manager to
monitor, contact, engage and act.
The Investment Manager actively and regularly engages
with the management teams of companies in which they
are invested in order to share examples of best practice
seen in other companies and to effect positive change.
The Investment Manager also actively engages with
management teams to explain voting decisions at
company annual general meetings.
The Investment Manager’s engagement extends beyond
the company’s management team and can include many
other stakeholders such as non-government agencies,
industry and regulatory bodies, as well as activists and the
company’s clients.
Priorities for engagement are established by the use of the
ESG House Score, in combination with bottom-up
research insights from investment teams across asset
classes, and areas of thematic focus from our company-
level stewardship activities. What gets measured gets
managed, so the Investment Manager strongly
encourages companies to set clear targets or key
performance indicators on all material ESG risks.
42 Aberdeen Diversified Income and Growth Trust plc
There are three core principles which underpin the Investment Manager’s investment approach (shown below) and the time
it dedicates to ESG analysis as part of its overall fundamental equity research process:
How the Investment Manager embeds ESG into its Investment Process
01. Investment Insight 02. Active Ownership 03. Risk & Monitoring 04. Our People
High quality fundamental and
first hand research
Assessment of ESG for all
stocks under coverage
Engage and vote with aim of
improving financial resilience
and investment performance
Raise standards in companies
and industries we invest in,
and help drive industry
best practice
Combine in-house and
external scoring to inform view
Active tracking of portfolio
holdings against ESG objectives
Over 130 equity professionals,
and 40+ central and on-desk
ESG specialists across
the world
Mana
g
er’s ESG En
g
a
g
ement
Continued
Aberdeen Diversified Income and Growth Trust plc 43
Governance
The Company is registered as a public
limited company and has been
approved by HM Revenue & Customs
as an investment trust. The Company
is committed to high standards of
corporate governance and applies the
principles identified in the UK
Corporate Governance Code and the
AIC Code of Corporate Governance
The Directors of the Company, who
were in office during the year ended
30 September 2022, and as the date
of approval of this Annual Report, may
be found on pages 44 and 45.
44 Aberdeen Diversified Income and Growth Trust plc
Davina Walter
Chairman
Experience:
Appointed a Director on 1 February 2019,
Senior Independent Director on 27 February
2019 and Chairman on 26 February 2020,
Davina Walter is an experienced investment
professional who has been actively involved
with investment trusts since 1985 when she
joined Henderson (now Janus Henderson) as
a fund manager. Having started her career
at Cazenove & Co, ending up as Head of US
equity research, she then spent over 16 years
as an investment manager, most recently, as
a Managing Director at Deutsche Asset
Management. She is Chairman of CT
Property Trust Ltd and a non-executive
director of Miton UK MicroCap Trust plc.
Length of service:
3 years
Last re-elected to the Board:
2022
Committee membership:
Management Engagement Committee
(Chairman) and Nomination Committee
(Chairman)
Contribution:
The Nomination Committee, chaired by the
Senior Independent Director, has reviewed
the contribution of Davina Walter in light of
her proposed re-election at the forthcoming
AGM and has concluded that she continues
to chair the Company expertly, fostering a
collaborative spirit between the Board and
Manager while ensuring that meetings
remain focussed on the key areas of
stakeholder relevance.
Tom Challenor
Senior Independent Non-Executive Director
and Chairman of the Audit Committee
Experience:
Appointed a Director on 6 April 2017 and
Chairman of the Audit Committee on 31
October 2018, Tom Challenor is a non-
executive director and Chair of the Audit
Committee of Vanguard Group (Ireland)
Limited and its fund companies, and is also a
non-executive director of Threadneedle
India Fund Limited. Until March 2022, Tom
was Senior Independent Director of
Euroclear UK & International Limited. Tom is
also a former non-executive director of
Aberdeen UK Tracker Trust plc, Cofunds
Limited, Xtrakter Limited and Threadneedle
Lux (SICAV). At Threadneedle Asset
Management he was Director of Strategy
and Risk from 2005 to 2009 and Chief
Financial Officer from 1997 to 2005.
Length of service:
5 years
Last re-elected to the Board:
2022
Committee membership:
Audit Committee (Chairman),
Management Engagement Committee
and Nomination Committee
Contribution:
The Nomination Committee has reviewed
the contribution of Tom Challenor in light of
his proposed re-election at the forthcoming
AGM and has concluded that he continues to
occupy the role of Senior Independent
Director to chair the Audit Committee
expertly, as well as bringing to the Board his
experience of internal controls and risk
management in an investment setting.
Trevor Bradley
Independent Non-Executive Director
Experience:
Appointed a Director on 1 August 2019,
Trevor Bradley was a partner and member
of the Management Board at Ruffer LLP. He
was responsible for growing and leading the
firm's institutional investment business and
managed over £1 billion of multi-asset
portfolios for pension funds, charities and
other institutions. Prior to Ruffer, he was a
management consultant at McKinsey &
Company and a UK equity portfolio manager
at Mercury Asset Management. He is a
Trustee Director of BBC Children in Need and
Chair of its Investment Committee.
Length of service:
3 years
Last re-elected to the Board:
2022
Committee membership:
Audit Committee, Management
Engagement Committee and Nomination
Committee
Contribution:
The Nomination Committee has reviewed
the contribution of Trevor Bradley in light of
his proposed re-election at the forthcoming
AGM and has concluded that he continues to
bring to the Board his knowledge of
investment management as well as
experience in investment companies.
Board of Directors
Aberdeen Diversified Income and Growth Trust plc 45
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Alistair Mackintosh
Independent Non-Executive Director
Experience:
Appointed a Director on 1 May 2021, Alistair
was a partner with Actis LLP, a leading
investor in growth markets across Africa, Asia
and Latin America from its inception in 2004
until 2018. He served as Chief Investment
Officer for twelve years, and chaired the
Investment Committees of Actis’ Private
Equity, Infrastructure, Energy and Real Estate
funds. Previously, Alistair spent fifteen years
with PPM Capital Ltd (now Silverfleet
Capital), the mid-market private equity
business of Prudential plc.
Length of service:
21 months
Elected to the Board:
2022
Committee membership:
Audit Committee, Management
Engagement Committee and Nomination
Committee
Contribution
The Nomination Committee has reviewed
the contribution of Alistair Mackintosh in light
of his proposed re-election at the
forthcoming AGM and has concluded that he
brings to the Board considerable expertise in
Private Markets.
Anna Troup
Independent Non-Executive Director
Experience:
Appointed a Director on 1 August 2019, Anna
Troup qualified as a solicitor with Slaughter
and May. She has been employed in the
financial services industry since 1997, having
spent over 10 years at Goldman Sachs and
more than 12 years as an investment
management professional, most recently as
head of UK Bespoke Solutions at Legal &
General Investment Management. She is
non-executive chairman of MS Amlin
Investment Management Limited and a
non-executive director of Marathon Asset
Management Limited and the Pension
Protection Fund.
Length of service:
3 years
Last re-elected to the Board:
2022
Committee membership:
Audit Committee, Management
Engagement Committee and Nomination
Committee
Contribution:
The Nomination Committee has reviewed
the contribution of Anna Troup in light of her
proposed re-election at the forthcoming
AGM and has concluded that she continues
to bring to the Board her expertise in
investment management and the wider
financial services sector.
46 Aberdeen Diversified Income and Growth Trust plc
The Directors present their report and the audited
financial statements for the year ended
30 September 2022.
Results and Dividends
The financial statements for the year ended 30
September 2022 may be found on pages 74 to 106. The
Company’s revenue return was 4.99p per share for the
year ended 30 September 2022 (2021 - 5.14p).
First, second and third interim dividends, each of 1.40p per
Ordinary share, were paid on 31 March 2022, 14 July 2022
and 20 October 2022, respectively.
The Directors declared, on 15 December 2022, a fourth
interim dividend of 1.40p per Ordinary share payable on
19 January 2023 to shareholders on the register on 23
December 2022. The ex-dividend date is 22 December
2022. The Company intends to pay four interim dividends
each year and, in line with corporate governance best
practice, a resolution in respect of this dividend policy will
be put to shareholders at each Annual General Meeting.
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 2022 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 2022
consisted of 308,447,314 Ordinary shares (2021 -
309,318,738) with voting rights and 29,304,492 Ordinary
shares (2021 - 28,433,068) held in treasury. A total of
871,424 Ordinary shares were bought back into treasury
during the year ended 30 September 2022 (2021 –
8,011,500). A total of 297,076 Ordinary shares were
bought back into treasury between 1 October 2022 and
the date of approval of this Annual Report resulting in
308,150,238 Ordinary shares in issue, with voting rights,
and 29,601,568 Ordinary shares in treasury.
In the event of the share price trading at a premium to the
NAV per share, Ordinary shares can be re-issued out of
treasury less expensively than new Ordinary shares can
be issued. Although shares may be held in treasury
indefinitely the Board is mindful of the total number of
shares held and has, therefore, decided to adopt a policy
such that, in the event that the number of treasury shares
represents more than 10% of the Company’s issued share
capital (excluding treasury shares) at the end of any
financial year, the Company will cancel a proportion of its
treasury shares such that the remaining balance will equal
7.5% of the issued share capital (excluding treasury
shares). The Company’s policy is to cancel treasury
shares, on 30 September each year, to ensure that the
number of shares in treasury represents no more than
10% of the Company’s issued share capital (excluding
treasury shares). As the treasury shares represented 9.5%
of the issued share capital (excluding treasury shares) as
at 30 September 2022, no additional treasury shares were
cancelled.
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.
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’ Report
Aberdeen Diversified Income and Growth Trust plc 47
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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. In calculating the NAV, the
6.25% bonds due 2031 are valued at fair value. The value
of any investments in ETFs, 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.
Corporate Governance
The Statement of Corporate Governance, which forms
part of the Directors’ Report, may be found on page 54.
Directors
As at the date of this Report, the Board consisted of a non-
executive Chairman and four non-executive Directors, all
of whom served throughout the year ended 30
September 2022. 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 following information in
relation to its diversity.
The FCA has identified senior board positions as
comprising the chair, senior independent director (“SID”), a
chief executive officer (“CEO”) and a chief financial officer
(“CFO”). As an externally managed investment company,
the Board employs no executive staff and therefore
appoints neither a CEO nor a CFO. Instead, the Board
considers the Chair of the Audit Committee to be a senior
board position and the following disclosure is made on this
basis. Although Tom Challenor is appointed as both SID
and Chairman of the Audit Committee, these positions are
recognised separately resulting in three senior board
positions for the Company; Chairman, SID and Chairman
of the Audit Committee.
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 2022 and the date of approval of
this report. The following information has been provided
by each Director.
48 Aberdeen Diversified Income and Growth Trust plc
Board diversity as at 30 September 2022
Number of Board
members
Percentage of the
Board
Number of senior
positions
on the Board
Men 3 60% 2
Women 2 40% 1
Number of
Board members
Percentage of
the Board
Number of senior positions
on the Board
White British or other White
(including minority-white groups)
5 100.0% 3
Minority ethnic 0 0% 0
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 on pages
59 to 62.
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
Directors’ Report
Continued
Aberdeen Diversified Income and Growth Trust plc 49
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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.
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 on pages 55 to 58, the
Nomination Committee determines the level of Directors’
fees and there is no separate remuneration committee.
The Directors attended scheduled meetings of the Board
and Board Committees during the year ended 30
September 2022 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
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
8 (8) - (-) 1 (1) 1 (1)
Tom
Challenor
8 (8) 2 (2) 1 (1) 1 (1)
Trevor
Bradley
8 (8) 2 (2) 1 (1) 1 (1)
Anna Troup 7 (8) 2 (2) 1 (1) 1 (1)
Alistair
Mackintosh
2 (2) 2 (2) 1 (1) 1 (1)
A
Davina Walter, as Chairman of the Board, is not a member of the Audit Committee
The names and biographies of each of the current
Directors are shown on pages 44 and 45 and indicate
their range of skills and experience as well as their
length of service.
An external evaluation was undertaken in August 2022
by Lintstock Ltd, an independent external board
evaluation service provider which has no other
connection with the Company.
Assisted by Lintstock Ltd, the Board has assessed that it
had in place the appropriate balance of skills, experience,
length of service and knowledge of the Company while
recognising the advantages of diversity. Details of the
individual contribution provided by each Director during
the year are set out on pages 44 and 45.
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.
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,
Anna Troup 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
2022 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, Anna Troup 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.
50 Aberdeen Diversified Income and Growth Trust plc
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.
Going Concern
The Financial Statements of the Company have been
prepared on a going concern basis. This conclusion is
consistent with the Company’s longer term Viability
Statement on page 18.
The Directors are mindful of the principal risks and
uncertainties disclosed on pages 14 to 16 and have
reviewed forecasts detailing revenue and liabilities. 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.
While the Company is obliged to hold a continuation vote
at the 2023 AGM, as ordinary resolution 12, 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 more appropriate to prepare
financial statements on a going concern basis unless a
continuation vote has already been triggered and
shareholders have voted against continuation.
Substantial Interests
As at 30 September 2022, 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
abrdn Retail Plans
A
32,329,679 10.5
Interactive Investor
A
31,700,652 10.3
Hargreaves Lansdown
A
26,089,010 8.5
Investec Wealth & Investment 14,596,226 4.7
Evelyn Partners 12,397,770 4.0
1607 10,930,570 3.5
Charles Stanley 9,237,153 3.0
A
Non-beneficial interest
B
Based on 308,447,314 Ordinary shares in issue (excluding treasury shares) as at 30
September 2022
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:
aberdeendiversified.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 on the Company
through its website or via abrdn Investment Trusts
Customer Services Department (see page 125 for details).
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
Directors’ Report
Continued
Aberdeen Diversified Income and Growth Trust plc 51
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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.
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 auditor in
connection with the financial statements appear on
pages 63 and pages 70 to 71.
Each Director confirms that, so far as they are aware,
there is no relevant audit information of which the
Company’s auditor is 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 auditor is aware of that information.
Annual General Meeting
The Annual General Meeting will be held at 12.30 p.m. on
28 February 2023 at the South Place Hotel, 3 South Place,
London, EC2M 2AF. The Notice of the Meeting is included
on pages 119 to 123. Resolutions including the following
business will be proposed:
Continuation of the Company (Resolution 12)
In accordance with Article 175 of the Articles of
Association of the Company adopted by shareholders on
23 February 2021, the Directors are required to propose
an ordinary resolution at each AGM, that the Company
continue as an investment trust. Accordingly, the Directors
are proposing, as ordinary resolution 12, that the
Company continues as an investment trust and
recommend that shareholders support the continuation
of the Company.
Allotment of Shares (Resolution 13)
Resolution 13 will be proposed as an ordinary resolution to
confer an authority on the Directors, in substitution for any
existing authority, to allot up to 10% of the issued Ordinary
share capital of the Company (excluding treasury shares)
as at the date of the passing of the resolution (up to a
maximum aggregate nominal amount of £7.7m based on
the number of Ordinary shares in issue as at the date of
this Report) in accordance with Section 551 of the
Companies Act 2006. The authority conferred by this
resolution will expire at the next Annual General Meeting
of the Company or, if earlier, 31 March 2024 (unless
previously revoked, varied or extended by the Company in
general meeting).
The Directors consider that the authority proposed to be
granted by resolution 13 is necessary to retain flexibility.
Limited Disapplication of Pre-emption Provisions
(Resolution 14)
Resolution 14 will be proposed as a special resolution and
seeks to give the Directors power to allot Ordinary shares
or to sell Ordinary shares held in treasury (see below) (a)
by way of a rights issue (subject to certain exclusions); (b)
by way of an open offer or other offer of securities (not
being a rights issue) in favour of existing shareholders in
proportion to their shareholdings (subject to certain
exclusions); and (c) to persons other than existing
shareholders for cash up to a maximum aggregate
nominal amount representing 10% of the Company’s
issued Ordinary share capital as at the date of the passing
of the resolution (up to an aggregate nominal amount of
£7.7m based on the number of Ordinary shares in issue as
at the date of this Report), without first being required to
offer such shares to existing shareholders pro rata to their
existing shareholding.
This power will expire at the conclusion of the next Annual
General Meeting of the Company or, if earlier, 31 March
2024 (unless previously revoked, varied or extended by
the Company in general meeting).
52 Aberdeen Diversified Income and Growth Trust plc
The Company may buy back and hold shares in treasury
and then sell them at a later date for cash rather than
cancelling them. Such sales are required to be on a pre-
emptive, pro rata basis to existing shareholders unless
shareholders agree by special resolution to disapply such
pre-emption rights. Accordingly, in addition to giving the
Directors power to allot unissued Ordinary share capital
on a non pre-emptive basis, resolution 14 will also give the
Directors power to sell Ordinary shares held in treasury on
a non pre-emptive basis, subject always in both cases to
the limitations noted above. Pursuant to this power,
Ordinary shares would only be issued for cash, and
treasury shares would only be sold for cash, at a premium
to the net asset value per share (calculated after the
deduction of prior charges at market value). Treasury
shares are explained in more detail under the heading
“Market Purchase of the Company’s own Ordinary
Shares” below.
Market Purchase of the Company’s own Ordinary Shares
(Resolution 15)
Resolution 15 will be proposed as a special resolution to
authorise the Company to make market purchases of its
own Ordinary shares. The Company may do either of the
following things in respect of its own Ordinary shares
which it buys back and does not immediately cancel but,
instead, holds in treasury:
· sell such shares (or any of them) for cash (or its
equivalent); or
· ultimately cancel the shares (or any of them).
Treasury shares may be resold quickly and cost
effectively. No dividends will be paid on treasury shares
and no voting rights attach to them.
The Manager seeks to generate attractive risk adjusted
returns by investing in, or committing to, new or existing
opportunities, whilst having particular regard to the
Company’s return target, and taking into account income,
predicted cash flows, market risk and liquidity
requirements. It is proposed that where such
opportunities are limited due to market conditions, then
subject to overall liquidity needs, available cash may be
used under the Company's share buyback authority,
granted annually by shareholders, to purchase Ordinary
shares of the Company, where to do so represents a
better opportunity to deliver long-term shareholder value
without disrupting the overall portfolio.
Shareholders have the opportunity to endorse this revised
policy, which the Board believes is better being
investment-led, by voting in favour of Resolution 15 which
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
46 million Ordinary shares). The minimum price which
may be paid for an Ordinary share is 25p (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 2024 (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 16)
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 16,
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.
Directors’ Report
Continued
Aberdeen Diversified Income and Growth Trust plc 53
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
This power will expire at the conclusion of the next Annual
General Meeting of the Company or, if earlier, 31 March
2024 (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 271,202 Ordinary shares,
representing 0.1% of the issued share capital (excluding
treasury shares).
By order of the Board
abrdn Holdings Limited
Company Secretary
1 George Street
Edinburgh EH2 2LL
20 December 2022
54 Aberdeen Diversified Income and Growth Trust plc
Aberdeen Diversified Income and Growth Trust 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 2022.
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 on page 48 and 49 and, in
respect of the Audit Committee, on page 59;
· the Board’s policy on diversity is on page 47;
· the Company’s approach to internal control and risk
management is detailed on pages 59 and 60;
· the contractual arrangements with, and annual
assessment of, the Manager are set out on pages 47 to
49, respectively;
· the Company’s capital structure and voting rights are
summarised on page 46;
· the substantial interests disclosed in the Company’s
shares are listed on page 50;
· the rules concerning the appointment and replacement
of Directors are contained in the Company’s Articles of
Association and are summarised on page 55. 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 on pages 51 and 52.
By order of the Board
abrdn Holdings Limited
Company Secretary
1 George Street
Edinburgh
EH2 2LL
20 December 2022
Statement of Corporate Governance
Aberdeen Diversified Income and Growth Trust plc 55
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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 at the AGM on 26 February 2020 where
99.1% of the votes were cast in favour of the relevant
resolution while 0.9% were cast against; the
Remuneration Policy is due to be put to shareholders,
as resolution 2, at the AGM on 28 February 2023;
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 auditor to audit certain of
the disclosures provided in the Directors’ Remuneration
Report. Where disclosures have been audited, they are
indicated as such. The auditor’s opinion is included in the
report on pages 64 to 71.
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 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 shareholder ordinary resolution.
The level of fees for the years ended 30 September 2022 and
2021 is set out in the following table. Fees are reviewed
annually and increased, if considered appropriate.
30 September
2022
£
30 September
2021
£
Chairman 44,600 43,750
Chairman of Audit Committee 32,600 32,000
Senior Independent Director 29,600 29,000
Director 27,500 27,000
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 re-imbursement 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.
Directors’ Remuneration Report
56 Aberdeen Diversified Income and Growth Trust plc
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 2021. The Board carried out a review of
Directors’ annual fees during the Year by reference to
inflation, as measured by the increase of 8.6% in the
Consumer Prices Index (including owner occupiers
housing costs) for the year to August 2022 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
2022, to the following rates per annum: £48,400
(Chairman), £35,400 (Audit Committee Chairman),
£32,100 (Senior Independent Director) and £29,900 for
each other Director.
Company Performance
The graph below shows the share price return (assuming
all dividends are reinvested) to Ordinary shareholders
compared to a 6% total return over the ten year period
ended 30 September 2022 (rebased to 100 at 30
September 2012). This index was chosen for comparison
purposes as it is the objective used for investment
performance measurement purposes.
100
120
140
160
180
12 13 14 15 16 17 18 19 20 21 22
Share Price Total Return Target 6%
Statement of Voting at General Meeting
At the Company’s last AGM, held on 22 February 2022,
shareholders approved, as Resolution 2, the Directors’
Remuneration Report (other than the Directors’
Remuneration Policy) in respect of the year ended
30 September 2021.
The proxy votes shown in the following table were
received on the Resolution:
Resolution For and
Discretionary
Against Withheld
2. Receive and adopt the
Directors’ Remuneration Report
(excluding the Directors’
Remuneration Policy)
101.7m
(99.1%)
893,774
(0.9%)
604,156
Spend on Pay
As the Company has no employees, the Directors do not
consider it meaningful to present a table comparing
remuneration paid to employees with distributions to
shareholders. The total fees paid to Directors are shown in
the table.
Audited Information
Directors’ Interests in the Company
The Directors are not required to have a shareholding in
the Company. The Directors (including their connected
persons) at 30 September 2022 and 30 September 2021
had no interest in the share capital of the Company other
than those interests, all of which are beneficial, shown in
the following table. In addition, no Director had any interest
in the Company’s 6.25% Bonds 2031 during the year under
review or up to and including the date of approval of
this Report.
Directors’ Remuneration Report
Continued
Aberdeen Diversified Income and Growth Trust plc 57
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
30 September 2022 30 September 2021
Ordinary shares Ordinary shares
Davina Walter 31,785 31,785
Tom Challenor 159,129 158,262
Trevor Bradley 50,000 50,000
Anna Troup 5,000 5,000
Alistair Mackintosh
A
25,000 25,000
A
Held via a family investment company
There have been no changes to the Directors’ interests in
the share capital of the Company since 30 September
2022 up to the date of approval of this Report other than
the purchase by Tom Challenor of a total of 288 shares
on 20 and 24 October 2022, in relation to dividend
reinvestment.
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 2022 Year ended 30 September 2021
Fees
£
Taxable
Expenses
£
Total
£
Fees
£
Taxable
Expenses
£
Total
£
Davina Walter 44,600 186 44,786 43,750 - 43,750
Tom Challenor (see note below) 34,700 146 34,846 32,644 - 32,644
Trevor Bradley 27,500 224 27,724 27,000 - 27,000
Anna Troup 27,500 234 27,734 27,000 - 27,000
Alistair Mackintosh (appointed on 1 May 2021) 27,500 138 27,638 11,250 - 11,250
Julian Sinclair (resigned on 4 June 2021) - - - 19,656 - 19,656
Total 161,800 927 162,727 161,300 - 161,300
Taxable expenses refer to amounts claimed by Directors for travelling to attend meetings. The above amounts exclude
any employers’ national insurance contributions, if applicable. Due to Covid-19, there were no taxable expenses claimed
by Directors in the year ended 30 September 2021. 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 succeeded Julian Sinclair as Senior Independent Director on 4 June 2021 and is paid a composite annual
fee, incorporating his position as Chairman of the Audit Committee; this was equivalent to annual fees of £34,700 for the
year ended 30 September 2022 (2021 - £34,000). With effect from 1 October 2022, Tom Challenor’s composite annual
fee will be £37,700.
58 Aberdeen Diversified Income and Growth Trust plc
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 2022
Year ended 30
September 2021
Year ended 30
September 2020
Fees
%
Fees
%
Fees
%
Davina Walter (appointed a Director on 1 February 2019, SID
on 27 February 2019 and Chairman on 26 February 2020)
1.9 16.6 102.8
Tom Challenor (appointed SID on 4 June 2021) 6.3 3.6 6.1
Trevor Bradley (appointed a Director on 1 August 2019) 1.9 1.9 511.6
Anna Troup (appointed a Director on 1 August 2019) 1.9 1.9 511.6
Alistair Mackintosh (appointed a Director on 1 May 2021) 144.4 0.0 0.0
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 2022:
· 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.
Davina Walter
Chairman
20 December 2022
Directors’ Remuneration Report
Continued
Aberdeen Diversified Income and Growth Trust plc 59
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Audit Committee presents its Report for the year
ended 30 September 2022.
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 auditor to review the proposed audit
programme of work and the findings of the auditor. 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 auditor 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 auditor and to approve the
remuneration and terms of engagement of the auditor;
and
· to monitor and review the auditor’s independence,
objectivity, effectiveness, resources and qualification.
Activities During the Year
The Audit Committee met twice 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 2022 and up to the date of approval
of the Annual Report, which is regularly reviewed by the
Board and complies with the FRC’s guidance on internal
controls.
The Board 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.
Report of the Audit Committee
60 Aberdeen Diversified Income and Growth Trust plc
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
Board, through 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 Board 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 Board and the Manager. The Board 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 Board has had regard to the activities of
the Manager, including its internal audit and compliance
functions, and of the auditor.
The Board 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 Board 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 Board and timetables are agreed for
implementing improvements to systems. The
implementation of any remedial action required is
monitored and feedback provided to the Board.
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 Board 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 2022, the Audit Committee
carried out an annual assessment of internal controls for
the year ended 30 September 2022 by considering
documentation from the Manager, including the internal
audit and compliance functions, and taking account of
events since 30 September 2022.
The Board 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 Board 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 2022, the Audit
Committee considered, through review of reports and
other documentation, the following significant issues, in
particular those communicated by the auditor during its
planning and reporting of the year end audit:
Report of the Audit Committee
Continued
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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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 2018. Within the FRS 102 Fair Value
hierarchy, all investments are categorised as either Level 1
or 2 other than 30 investments (2021 - 30), totalling
£209.1m (2021 - £172.1m), which are categorised as Level
3. 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 Board 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.
Recognition of a Deferred Tax Asset
How the issue was addressed - as at 30 September 2022,
the Company has recognised a deferred tax asset of
£1.2m (2021 – £2.7m) as it is considered likely that
accumulated unrelieved management expenses and loan
relationship deficits will be extinguished in future years. In
arriving at the amount recognised, the Audit Committee
has considered and adopted the Manager’s estimate of
the future levels of taxable income forecast to be
generated by the Company and its utilisation of
management expenses.
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
Board meeting.
Allocation of finance costs and investment
management fees
The Company’s finance costs and investment
management fees were charged 60% to capital and 40%
to revenue during the year ended 30 September 2022.
This charging allocation is changing to 50% to capital and
50% to revenue with effect from 1 October 2022. This
reflects the Board’s currently anticipated split of future
investment returns further to the reshaping of the
investment portfolio after the strategic review undertaken
in 2020.
Review of Auditor
The Audit Committee has reviewed the effectiveness of
the auditor, PricewaterhouseCoopers LLP including:
· Independence - the auditor discusses 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 auditor 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 auditor, the Committee also took into
account the FRC’s latest Audit Quality Inspection Report
for PricewaterhouseCoopers LLP.
62 Aberdeen Diversified Income and Growth Trust plc
Audit Tender
This year’s audit of the Company’s Annual Report is the
third performed by PricewaterhouseCoopers LLP since
their appointment following an audit tender process held
by the Company in 2019 and is therefore the third year for
which the senior statutory auditor, Shujaat Khan,
has served.
Shareholders will have the opportunity to vote on the re-
appointment of PricewaterhouseCoopers LLP as auditor,
as Resolution 10, 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 auditor. 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 auditor 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 EU
Public Interest Entity’s independence requirements. All
non-audit services require the pre-approval of the
Committee. Non-audit fees paid to the auditor during the
year under review amounted to £15,750 (2021 - £20,000),
comprising £11,000 (2021 - £16,000) for the review of the
Half-Yearly Financial Report and £4,750 (2021 - £4,000) in
relation to covenant compliance requirements for the
6.25% Bonds 2031.
Tom Challenor
Chairman of the Audit Committee
20 December 2022
Report of the Audit Committee
Continued
Aberdeen Diversified Income and Growth Trust plc 63
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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’.
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 responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that the financial
statements 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.
We confirm that to the best of our 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 December 2022
Statement of Directors’ Responsibilities
64 Aberdeen Diversified Income and Growth Trust plc
Report on the audit of the
financial statements
Opinion
In our opinion, Aberdeen Diversified Income and Growth
Trust plc’s financial statements:
· give a true and fair view of the state of the Company’s
affairs as at 30 September 2022 and of its return 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 2022; 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.
Other than those disclosed in note 5, we have provided
no non-audit services to the Company in the period
under audit.
Our audit approach
Context
The Company is a standalone Investment Trust Company
and engages abrdn Fund Managers Limited (the “AIFM”)
to manage its assets.
Overview
Audit scope
· We conducted our audit of the financial statements
using information from the 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
· Valuation and existence of investments
· Income from investments
· Ability to continue as a going concern
(Continuation Vote)
Materiality
· Overall materiality: £3.6m (2021: £3.8m) based on
approximately 1% of Net assets
· Performance materiality: £2.72m (2021: £2.85m)
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.
Independent Auditors’ Report to the members of
Aberdeen Diversified Income and Growth Trust plc
Aberdeen Diversified Income and Growth Trust plc 65
Strategic Report Governance Overview General Portfolio Corporate Information 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.
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
Refer to the Audit Committee Report
(page 61), the Accounting Policies (pages
79 and 80) and the Notes to the Financial
Statements (pages 87 to 89).
Level 1 and 2 investments at the year end
are valued at £164.7m. Level 3
investments at year end were valued at
£209m.
We focused on the valuation and
existence of investments because they
represent the principal element of the net
asset value of the Company as disclosed
on the Statement of Financial Position in
the Financial Statements. In addition, the
valuation of Level 3 investments requires
significant judgement to be applied by the
Directors in considering the methodology
and assumptions applied by underlying
investment managers in valuing assets.
Changes to key inputs to the estimates
and/or the judgements made can result in
a material change to the fair value of Level
3 investments.
Investments for which a market price is available (Level 1 and 2 investments)
We tested the valuation of the level 1 and 2 investments by agreeing the prices used in
the valuation to independent third party sources and evidence.
We tested the existence of these investments by agreeing 100% of investment
holdings to an independent custodian confirmation.
No material misstatements were identified.
Investments for which a market price is not readily available (Level 3)
We understood and evaluated the valuation methodology applied by the Directors, in
consultation with the AIFM, by reference to the International Private Equity and
Venture Capital Valuation guidelines (IPEV) and the requirements of UK GAAP.
Furthermore, our testing of Level 3 investments included:
· Obtaining a reconciliation of the investments that summarised year on year
movements including any drawdowns and distributions in the period;
· Checking that the valuation used in the financial statements was consistent with the
company’s accounting records including the reconciliation;
· Testing the existence of the unquoted investment portfolio by agreeing a sample of
the holdings to independently obtained third party confirmations;
· Testing a sample of distributions and drawdowns to underlying supporting
documentation and ensured that the treatment of the distribution as either a return
of capital or revenue was consistent with this documentation;
· Checking the accuracy of the valuations recorded by the client to underlying
investment manager valuation reports which we obtained independently from the
underlying fund managers;
· Where investment manager valuation reports were not available as at the reporting
date, we considered the appropriateness of the valuation used by management
and any material changes applied to the most recent valuation reports received;
· We considered the methodology and valuation approach applied by investment
managers to check that it was in line with the requirements of IPEV; and
· In addition, for a sample, we engaged our internal valuation experts to consider
whether the valuations used by the company were considered to be within a
reasonable range and whether any publicly available evidence contradicted the
valuations recorded.
66 Aberdeen Diversified Income and Growth Trust plc
Independent Auditors’ Report to the members of
Aberdeen Diversified Income and Growth Trust plc
Continued
Key audit matter How our audit addressed the key audit matter
We also read the minutes of meetings of the AIFM’s internal Fair Value Pricing
Committee where the valuations of certain Level 3 investments were discussed and
adjustments to fair value were agreed to check the consistency of discussions with our
testing and understanding of the investments.
No material misstatements were identified.
Income from investments
Refer to the Audit Committee Report
(page 61), the Notes to the Financial
Statements (pages 82 and 88) and the
Accounting Policies (pages 78 to 80).
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
instance, we consider that ‘income’ refers
to all the Company’s income streams,
both revenue and capital (including gains
and losses on investments).
Income from investments comprised
dividend income, fixed interest income,
distributions from Level 3 investments, and
gains and losses on investments.
We focused on the accuracy,
completeness and occurrence of
investment income recognition as
incomplete or inaccurate income could
have a material impact on the Company’s
net asset value and return for the year.
We also focused on the accounting policy
for investment income recognition and
the presentation of investment income in
the Income Statement for compliance
with the requirements of The Association
of Investment Companies Statement of
Recommended Practice (the “AIC SORP”),
as incorrect application could indicate a
misstatement in income recognition.
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 been
accounted for in accordance with this stated accounting policy.
Dividend Income
We tested the accuracy of dividend receipts by agreeing the dividend rates from
investments to independent market data for all investments for which distribution
information was publicly available.
To test for completeness, we tested that the appropriate dividends had been received
in the year by reference to independent data of dividends for all listed investments
during the year, and no unrecorded dividends were found.
To test the occurrence assertion, we tested that all dividends recorded in the year had
been declared in the market by investment holdings, and we traced a sample of
dividends received to bank statements.
We also tested the allocation and presentation of dividend income between the
revenue and capital return columns of the Income Statement in line with the
requirements set out in the AIC SORP by determining reasons behind dividend
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.
Collective investment scheme income
For a sample of distributions from collective investment schemes 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. For unrealised gains and losses, we tested 100% of the
Level 1 and Level 2 investments and sample tested the valuation of the Level 3
investments at the year-end (see above), together with testing the reconciliation of
opening and closing investments. For 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.
Aberdeen Diversified Income and Growth Trust plc 67
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Key audit matter How our audit addressed the key audit matter
Ability to continue as a going concern
(Continuation Vote)
Refer to the Chairman's Statement (page
10), Viability Statement (page 18), the
Going Concern Statement (page 50), and
the Basis of Preparation and Going
Concern in the Notes to the Financial
Statements (page 78).
A continuation vote is due to take place at
the 2023 AGM in February, which, if
passed, will allow the Company to
continue as an investment trust for a
further 12 months. As such, the Directors
have considered and assessed the
potential impact on the ability of the
Company to continue as a going concern
Our audit procedures and findings in respect of going concern are set out in the
“Conclusions relating to Going Concern' section below.
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.
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 £3.6m (2021: £3.8m)
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% (2021: 75%) of overall
materiality, amounting to £2.72m (2021: £2.85m) for the company financial statements.
68 Aberdeen Diversified Income and Growth Trust plc
Independent Auditors’ Report to the members of
Aberdeen Diversified Income and Growth Trust plc
Continued
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
£181,000 (2021: £190,000) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the company’s ability to continue to adopt the going concern basis of
accounting included:
· evaluating the Directors' updated risk assessment and considering whether it considered relevant threats, including
the current economic environment as well as the impact of the war in Ukraine;
· evaluating the Directors' assessment of potential operational impacts, considering their consistency with
other available information and our understanding of the business and assessed the potential impact on the
financial statements;
· obtaining and evaluating the Directors' going concern assessment which reflects conditions up to the point of approval
of the Annual Report. We obtained evidence to support the key assumptions and forecasts driving the Directors'
assessment. This included reviewing the Directors' assessment of the Company's financial position and forecasts, their
assessment of liquidity and Bond covenant compliance as well as their review of the operational resilience of the
Company and oversight of key third-party service providers;
· assessing the implication of significant reductions in Net Asset Value (NAV) as a result of market performance on the
ongoing ability of the Company to operate.
· In addition, in relation to the continuation vote specifically, we considered:
- the recommendation of the Directors to support the continuation vote;
- the stability and diversity of the Company's shareholder register and the type of shareholders on the register;
- the results of the previous continuation vote at the AGM in February 2022;
- the Company's share price compared with its net asset value per share;
- the Company's recent investment performance compared with its benchmark during the financial year; and
- the discussions with and/or feedback received by the Board and its professional advisers from a wide range
of shareholders.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
In 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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
company's ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Aberdeen Diversified Income and Growth Trust plc 69
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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 2022 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 is materially consistent with the financial statements and our knowledge obtained
during the audit, and 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.
70 Aberdeen Diversified Income and Growth Trust plc
Independent Auditors’ Report to the members of
Aberdeen Diversified Income and Growth Trust plc
Continued
Our review of the directors’ statement regarding the longer-term viability of the group 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:
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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
· 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 three years, covering the years ended 30 September 2020 to 30 September 2022.
Shujaat Khan (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
20 December 2022
72 Aberdeen Diversified Income and Growth Trust plc
Financial
Statements
Aberdeen Diversified Income and Growth Trust plc 73
74 Aberdeen Diversified Income and Growth Trust plc
Year ended 30 September 2022 Year ended 30 September 2021
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 10 – 11,405 11,405 – 22,879 22,879
Foreign exchange (losses)/gains – (24,660) (24,660) – 6,839 6,839
Income 3 17,959 – 17,959 18,878 – 18,878
Investment management fees 4 (517) (776) (1,293) (528) (791) (1,319)
Administrative expenses 5 (940) 10 (930) (917) (63) (980)
Net return/(loss) before finance costs and taxation 16,502 (14,021) 2,481 17,433 28,864 46,297
Finance costs 6 (426) (639) (1,065) (563) (24,595) (25,158)
Net return/(loss) before taxation 16,076 (14,660) 1,416 16,870 4,269 21,139
Taxation 7 (637) (1,488) (2,125) (871) 500 (371)
Return/(loss) attributable to equity shareholders 15,439 (16,148) (709) 15,999 4,769 20,768
Return/(loss) per Ordinary share (pence) 9 4.99 (5.23) (0.23) 5.14 1.53 6.67
The total column of the Condensed 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 Comprehensive Income
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As at As at
30 September 2022 30 September 2021
Note £’000 £’000
Non-current assets
Investments at fair value through profit or loss 10 373,732 390,446
Deferred taxation asset 7 1,167 2,655
374,899 393,101
Current assets
Debtors 11 2,845 1,234
Derivative financial instruments 984 332
Cash and cash equivalents 7,179 7,201
11,008 8,767
Creditors: amounts falling due within one year
Derivative financial instruments (5,906) (3,249)
Other creditors 12 (949) (837)
(6,855) (4,086)
Net current assets 4,153 4,681
Total assets less current liabilities 379,052 397,782
Non-current liabilities
6.25% Bonds 2031 13 (15,694) (15,664)
Net assets 363,358 382,118
Capital and reserves
Called up share capital 14 91,352 91,352
Share premium account 116,556 116,556
Capital redemption reserve 26,629 26,629
Capital reserve 15 89,560 106,572
Revenue reserve 39,261 41,009
Total shareholders’ funds 363,358 382,118
Net asset value per Ordinary share (pence) 16
Bonds at par value 117.80 123.54
Bonds at fair value 117.63 121.73
The financial statements on pages 74 to 106 were approved by the Board of Directors and authorised for issue on 20 December 2022
and were signed on its behalf by:
Davina Walter, Chairman
The accompanying notes are an integral part of these financial statements.
Statement of Financial Position
76 Aberdeen Diversified Income and Growth Trust plc
For the year ended 30 September 2022
Called up Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 October 2021 91,352 116,556 26,629 106,572 41,009 382,118
Return after taxation – – – (16,148) 15,439 (709)
Ordinary shares purchased for treasury 14 – – – (864) – (864)
Dividends paid 8 – – – – (17,187) (17,187)
Balance at 30 September 2022 91,352 116,556 26,629 89,560 39,261 363,358
For the year ended 30 September 2021
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 October 2020 91,352 116,556 26,629 109,551 42,142 386,230
Return after taxation – – – 4,769 15,999 20,768
Ordinary shares purchased for treasury 14 – – – (7,748) – (7,748)
Dividends paid 8 – – – – (17,132) (17,132)
Balance at 30 September 2021 91,352 116,556 26,629 106,572 41,009 382,118
The accompanying notes are an integral part of these financial statements.
Statement of Chan
g
es in Equity
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Year ended Year ended
30 September 2022 30 September 2021
Note £’000 £’000
Operating activities
Net return before finance costs and taxation 2,481 46,297
Adjustments for:
Dividend income (15,202) (15,857)
Fixed interest income (2,689) (3,006)
Interest income 11 1
Other income (57) (14)
Dividends received 15,172 15,964
Fixed interest income received 2,742 3,414
Interest received (11) (1)
Other income received 57 14
Unrealised losses/(gains) on forward contracts 2,005 (1,082)
Foreign exchange (losses)/gains (550) 205
Gains on investments (11,405) (22,879)
(Increase)/decrease in other debtors (40) 12
Increase/(decrease) in accruals 286 (329)
Corporation tax paid (417) (382)
Taxation withheld (234) (237)
Net cash flow (used in)/from operating activities (7,851) 22,120
Investing activities
Purchases of investments (59,692) (181,599)
Sales of investments 86,057 243,544
Net cash flow from investing activities 26,365 61,945
Financing activities
Purchase of own shares to treasury (864) (7,748)
Repurchase of bonds 13 – (67,654)
Interest paid (1,035) (1,533)
Equity dividends paid 8 (17,187) (17,137)
Net cash flow used in financing activities (19,086) (94,072)
Decrease in cash and cash equivalents (572) (10,007)
Analysis of changes in cash and cash equivalents during the year
Opening balance 7,201 17,413
Foreign exchange 550 (205)
Decrease in cash and cash equivalents as above (572) (10,007)
Closing balance 7,179 7,201
–
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
78 Aberdeen Diversified Income and Growth Trust plc
1. Principal activity
The Company is a closed-end investment company, registered in Scotland No SC003721, with its Ordinary shares having a
premium 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 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 Directors are mindful of the principal risks and uncertainties disclosed on pages 14 to 16 and have reviewed
forecasts detailing revenue and liabilities. 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.
While the Company is obliged to hold a continuation vote at the 2023 AGM, as ordinary resolution 12, 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 more
appropriate to prepare financial statements on a going concern basis unless a continuation vote has already been
triggered and shareholders have voted against continuation.
A substantial proportion of the Company’s assets are invested in equity shares in companies and fixed interest securities
listed on recognised stock exchanges and in most circumstances, including in the current market environment, are
realisable within a short timescale. The Board has set limits for borrowing and regularly reviews cash flow projections and
compliance with banking covenants, including the headroom available.
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.
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.
Notes to the Financial Statements
For the year ended 30 September 2022
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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 charged, during the year under review, 60% 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.
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 2022 would have been £1,720,000 (2021 – £1,698,000).
(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.
80 Aberdeen Diversified Income and Growth Trust plc
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 2018.
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 40% to revenue and
60% to capital in the Statement of Comprehensive Income up to 30 September 2022 to reflect the Company’s
investment policy and prospective income and capital growth.
In the prior year the Company has treated the £23,750,000 premium paid to repurchase the 6.25% Bonds 2031 early by
recognising it as a finance cost in the capital column of the Statement of Comprehensive Income. This is in line with
guidance contained within the AIC SORP published in April 2021 and differs from the presentation in the half yearly report
to 31 March 2021 where it was treated as a change in equity in the Statement of Changes in Equity. Further details can be
found in note 6 on page 84 and note 13 on page 90.
(g) Nature and purpose of reserves
Called up share capital. The Ordinary 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.
Capital redemption reserve. The capital redemption reserve is used to record the amount equivalent to the nominal value
of any of the Company’s own shares purchased and cancelled in order to maintain the Company’s capital. This reserve is
not distributable.
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.
Notes to the Financial Statements
Continued
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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.
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.
(h) Valuation of derivative financial instruments. Derivatives are classified as 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 in hand and demand deposits. Cash equivalents includes bank
overdrafts repayable on demand and short term, highly liquid, investments that are readily convertible to known
amounts of cash and that are subject to an 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.
82 Aberdeen Diversified Income and Growth Trust plc
3. Income
2022 2021
£’000 £’000
Income from investments
UK listed dividends 2,934 3,876
Overseas listed dividends 4,939 5,523
Unquoted Limited Partnership income 7,324 6,230
Stock dividends 5 228
Fixed interest income 2,689 3,006
17,891 18,863
Other income
Interest 11 1
Other income 57 14
68 15
Total income 17,959 18,878
4. Investment management fees
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 517 776 1,293 528 791 1,319
The investment management fee has been levied by 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 £315,000 (2021 – £111,000) was outstanding in respect of management fees due by
the Company.
Notes to the Financial Statements
Continued
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5. Administrative expenses
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Directors’ remuneration 162 – 162 161 – 161
Custody fees 42 – 42 38 – 38
Depositary fees 50 – 50 45 – 45
Shareholders’ services
A
263 – 263 263 – 263
Registrar’s fees 59 – 59 56 – 56
Transaction costs – 26 26 – 27 27
Legal and professional fees 103 – 103 82 – 82
Printing and postage 37 – 37 43 – 43
Irrecoverable VAT 50 – 50 71 – 71
Auditor’s remuneration:
– statutory audit 61 – 61 55 – 55
– other non-audit services
review of Bond compliance certificate 5 – 5 4 – 4
review of Half-yearly Report 11 – 11 16 – 16
Other expenses 97 (36) 61 83 36 119
940 (10) 930 917 63 980
A
Includes registration, savings scheme and other wrapper administration and promotional expenses, of which £260,000 (2021 – £260,000) was payable to aFML to cover
promotional activities during the year. There was £170,000 (2021 – £110,000) due to aFML in respect of these promotional activities at the year end.
84 Aberdeen Diversified Income and Growth Trust plc
6. Finance costs
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
6.25% Bonds 2031 414 622 1,036 555 24,583 25,138
Bank interest 12 17 29 8 12 20
426 639 1,065 563 24,595 25,158
The prior year charge above for 6.25% Bonds 2031 includes a fee of £105,000 which was incurred in relation to consultancy
advice on the early repayment of a portion of these bonds and the premium paid above amortised cost of £23,750,000.
7. Taxation
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
(a) Analysis of charge for the year
Current UK tax 502 – 502 437 – 437
Double taxation relief (62) – (62) (70) – (70)
Corporation tax prior year adjustment
A
22 – 22 318 – 318
Overseas tax suffered 175 1 176 186 41 227
Current tax charge for the year 637 1 638 871 41 912
Movement in deferred tax asset – 1,487 1,487 – (541) (541)
Total tax charge for the year 637 1,488 2,125 871 (500) 371
A
Adjustment in 2021 relates to tax payable upon the reclassification of income as taxable which had previously been identified as non-taxable.
Notes to the Financial Statements
Continued
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(b) Factors affecting the tax charge for the year. The tax assessed for the year is higher than the standard rate of
corporation tax of 19% (2021 – lower). The differences are explained as follows:
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return before taxation 16,076 (14,660) 1,416 16,870 4,269 21,139
Net return before taxation multiplied by the
standard rate of corporation tax of 19.0%
(2021 – same)
3,054 (2,785) 269 3,205 811 4,016
Effects of:
Non taxable (gains) on investments held at fair
value through profit or loss
– (1,793) (1,793) – (4,553) (4,553)
Exchange losses/(gains) not taxable – 4,305 4,305 – (1,094) (1,094)
Non taxable UK dividend income (346) – (346) (480) – (480)
Non taxable overseas dividend income (486) – (486) (591) – (591)
Disallowable expenses – 5 5 – 4,524 4,524
Overseas tax suffered 175 1 176 186 42 228
Double taxation relief (62) – (62) (69) – (69)
Corporation tax prior year adjustment 22 – 22 318 – 318
Utilisation of excess management expenses – (1,452) (1,452) – (1,387) (1,387)
Effect of not applying the marginal method of
allocation of tax relief
(1,720) 1,720 – (1,698) 1,698 –
Movement in deferred tax asset – 1,487 1,487 – (541) (541)
637 1,488 2,125 871 (500) 371
(c) Factors that may affect future tax charges. As at 30 September 2022, the Company has recognised a deferred tax asset
of £1,167,000 (2021 – £2,655,000) as it is considered likely that accumulated unrelieved management expenses and loan
relationship deficits of £5,304,000 (2021 – £13,059,000) will be extinguished in future years. In arriving at the amount
recognised, the Company has estimated the future levels of taxable income forecast to be generated and the utilisation
of management expenses. The deferred tax asset of £1,167,000 (2021 – £2,655,000) has been calculated using the
standard rates of corporation tax applicable, being 19% until 31 March 2023 and 25% thereafter.
2022 2021
(d) Movement in deferred tax asset £’000 £’000
Origination and reversal of timing differences 1,646 (368)
Impact of change in tax rate (159) (173)
1,487 (541)
86 Aberdeen Diversified Income and Growth Trust plc
8. Ordinary dividends on equity shares
2022 2021
£’000 £’000
Third interim dividend for 2021 – 1.38p (2020 – 1.36p) 4,269 4,317
Fourth interim dividend for 2021 – 1.38p (2020 – 1.36p) 4,267 4,255
First interim dividend for 2022 – 1.40p (2021 – 1.38p) 4,328 4,285
Second interim dividend for 2022 – 1.40p (2021 – 1.38p) 4,323 4,275
17,187 17,132
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 £15,439,000 (2021 – £15,999,000).
2022 2021
£’000 £’000
First interim dividend for 2022 – 1.40p (2021 – 1.38p) 4,328 4,285
Second interim dividend for 2022 – 1.40p (2021 – 1.38p) 4,323 4,275
Third interim dividend for 2022 – 1.40p (2021 – 1.38p) 4,319 4,269
Fourth interim dividend for 2022 – 1.40p
A
(2021 – 1.38p) 4,314 4,267
17,284 17,096
A
The amount reflected above for the cost of the fourth interim dividend for 2022 is based on 308,150,238 Ordinary shares, being the number of Ordinary shares in issue,
excluding shares held in treasury, at the date of this Report.
Notes to the Financial Statements
Continued
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9. Return per Ordinary share
2022 2021
p p
Revenue return 4.99 5.14
Capital (loss)/return (5.23) 1.53
Total (loss)/return (0.23) 6.67
The figures above are based on the following:
2022 2021
£’000 £’000
Revenue return 15,439 15,999
Capital (loss)/return (16,148) 4,769
Total (loss)/return (709) 20,768
Weighted average number of shares in issue
A
308,982,666 311,534,668
A
Calculated excluding shares held in treasury.
10. Investments
2022 2021
£’000 £’000
Held at fair value through profit or loss
Opening valuation 390,446 428,859
Opening investment holdings (gains)/losses (8,546) 17,375
Opening book cost 381,900 446,234
Movements during the year:
Purchases at cost 59,476 182,048
Sales – proceeds (87,527) (243,196)
Sales – losses (11,861) (3,042)
Accretion of fixed income book cost (68) (144)
Closing book cost 341,920 381,900
Closing investment holdings gains 31,812 8,546
Closing valuation of investments 373,732 390,446
88 Aberdeen Diversified Income and Growth Trust plc
2022 2021
The portfolio valuation £’000 £’000
UK equities 76,744 113,609
Overseas equities 40,113 44,148
Fixed interest 32,147 40,040
Loan investments 15,662 20,541
Unlisted holdings 209,066 172,108
373,732 390,446
2022 2021
Gains/(Losses) on investments £’000 £’000
Realised losses (11,861) (3,042)
Net movement in investment holdings gains 23,266 25,921
11,405 22,879
The Company received £87,527,000 (2021 – £243,196,000) from investments sold in the period. The book cost of these
investments when they were purchased was £99,388,000 (2021 – £246,238,000). 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:
2022 2021
£’000 £’000
Purchases 47 155
Sales 62 181
109 336
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.
Notes to the Financial Statements
Continued
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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 Global Infrastructure Partners II USD 11
Aberdeen European Residential Opportunities Fund B 85
Aberdeen Property Secondaries Partners II A-1 21
Aberdeen Standard Global Private Markets Fund GBP Acc 6
Andean Social Infrastructure Fund I USD 13
ASI Hark III USD 29
Bonaccord Capital Partners I-A USD 7
Cheyne Social Property Impact Fund GBP 3
Maj Equity Fund 4 DKK 3
Mount Row Credit Fund III A9 100
Secondary Opportunities Fund USD 6
SL Capital Infrastructure II EUR 4
11. Debtors
2022 2021
£’000 £’000
Amounts due from brokers 1,806 335
Prepayments and accrued income 950 852
Taxation recoverable 89 47
2,845 1,234
12. Creditors: amounts falling due within one year
2022 2021
£’000 £’000
Amounts due to brokers - 221
Interest on 6.25% Bonds 2031 55 55
Corporation tax payable 242 195
Other creditors 652 366
949 837
90 Aberdeen Diversified Income and Growth Trust plc
13. Creditors: amounts falling due after more than one year
2022 2021
£’000 £’000
6.25% Bonds 2031
A
Balance at beginning of year 15,664 59,540
Amortisation of discount and issue expenses 30 28
Repurchase of bonds – (43,904)
Balance at end of year 15,694 15,664
A
The fair value of the 6.25% Bonds using the last available quoted offer price from the London Stock Exchange as at 30 September 2022 was 100.7812p, a total of
£16,222,000 (2021 – 131.9155p, total of £21,233,000).
At the year end the Company had in issue £16,096,000 (2021 – £16,096,000) Bonds 2031 which were issued at 99.343%. During
the prior period, the Company repurchased £43,904,000 bonds at a cost of £67,654,000. The Company has treated the
£23,750,000 premium paid to repurchase the 6.25% Bonds 2031 early by recognising it as a finance cost in the capital column
of the Statement of Comprehensive Income. 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 are 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 and also during the period from the year end to the date of this Report.
14. Called up share capital
Ordinary Treasury Total
shares shares shares
(number) (number) (number) £’000
Allotted, called up and fully paid
Ordinary shares of 25p each
At 1 October 2021 309,318,738 28,433,068 337,751,806 91,352
Shares purchased for treasury (871,424) 871,424 – –
At 30 September 2022 308,447,314 29,304,492 337,751,806 91,352
During the year 871,424 (2021 – 8,011,500) Ordinary shares of 25p each were purchased to be held in treasury at a cost of
£864,000 (2021 – £7,748,000). There were no Ordinary shares of 25p issued from treasury during the year (2021 – same).
Since the year end 297,076 Ordinary shares of 25p each have been purchased to be held in treasury by the Company for a
total cost of £275,000.
Notes to the Financial Statements
Continued
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15. Capital reserve
2022 2021
£’000 £’000
At 1 October 106,572 109,551
Movement in investment holding gains 23,266 25,921
Losses on realisation of investments at fair value (11,861) (3,042)
Foreign exchange (losses)/gains (24,660) 6,839
Transaction and other costs 10 (63)
Finance costs (639) (24,595)
Purchase of own shares to treasury (864) (7,748)
Investment management fees (776) (791)
Overseas tax suffered (1) (41)
Deferred tax (1,487) 541
At 30 September 89,560 106,572
16. 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 2022 2021
Net asset value attributable (£’000) 363,358 382,118
Number of Ordinary shares in issue excluding treasury (note 14) 308,447,314 309,318,738
Net asset value per share (p) 117.80 123.54
Debt at fair value £’000 £’000
Net asset value attributable 363,358 382,118
Add: Amortised cost of 6.25% Bonds 2031 15,694 15,664
Less: Market value of 6.25% Bonds 2031 (16,222) (21,233)
362,830 376,549
Number of Ordinary shares in issue excluding treasury (note 14) 308,447,314 309,318,738
Net asset value per share (p) 117.63 121.73
92 Aberdeen Diversified Income and Growth Trust plc
17. 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 2022 there were 16 open positions in derivatives transactions (2021 – 33).
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 Investm
ent
Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to
consider investment strategy. Current strategy is detailed in the Chairman’s Statement on pages 8 to 10 and in the Investment
Manager’s Report on pages 25 to 29.
Notes to the Financial Statements
Continued
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The Board has agreed the parameters for net gearing/cash, which was 1.8% of net assets as at 30 September 2022 (2021 –
2.2%). 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 investment objective as set out on page 11. 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 on pages 25 to 29.
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. It is the Board’s policy to hold investments in the portfolio in a broad spread of asset classes in order to reduce the
risk arising from factors specific to a particular asset class.
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. Details of the 6.25% Bonds 2031 and interest rate
applicable can be found in note 13 on page 90.
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:
2022 2021
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 4,633 27,514 32,147 4,386 29,680 34,066
Exposure to floating interest rates
Fixed interest investments
A
– – – – 5,974 5,974
Loan investments
A
– 15,662 15,662 – 20,541 20,541
Cash and cash equivalents 7,179 – 7,179 7,201 – 7,201
11,812 43,176 54,988 11,587 56,195 67,782
A
Variable distributions received from investment holdings, which have an underlying portfolio of fixed interest securities.
Financial liabilities. The Company has borrowings by way of a bond issue, held at amortised cost of £15,694,000 (2021 –
£15,664,000) details of which are in note 13 on page 90. The fair value of this loan has been calculated at £16,222,000 as at
30 September 2022 (2021 – £21,233,000).
94 Aberdeen Diversified Income and Growth Trust plc
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 profit/(loss) 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 2022 would increase/decrease by £36,000 (2021 – increase/decrease £36,000). This is
attributable to the Company’s exposure to interest rates on its floating rate cash balances at 30 September 2022.
The capital return would decrease/increase by £4,384,000 (2021 – increase/decrease by £2,060,000) using VaR (“Value at
Risk”) analysis based on 100 observations of monthly VaR computations of fixed interest portfolio positions at each year end.
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
has entered 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 2022 30 September 2021
Net Total Net Total
monetary currency monetary currency
Investments items exposure Investments items exposure
£’000 £’000 £’000 £’000 £’000 £’000
US Dollar 150,252 (3,124) 147,128 128,398 (2,552) 125,846
Euro 52,268 (702) 51,566 61,334 249 61,583
Other 49,275 1,010 50,285 51,640 1,057 52,697
251,795 (2,816) 248,979 241,372 (1,246) 240,126
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.
Notes to the Financial Statements
Continued
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2022 2021
£’000 £’000
US Dollar 29,426 25,169
Euro 10,313 12,317
Other 10,057 10,539
49,796 48,025
Forward foreign currency contracts. The following forward foreign currency contracts were outstanding at the Statement of
Financial Position date:
Unrealised
gain/(loss)
30 September
Buy Sell Settlement Amount Contracted 2022
Date of contract Currency Currency date ‘000 rate £’000
1 September 2022 GBP AUD 7 December 2022 13,528 1.7359 324
1 September 2022 GBP CAD 7 December 2022 6,596 1.5350 41
1 September 2022 GBP NOK 7 December 2022 6,060 12.1588 292
1 September 2022 GBP NZD 7 December 2022 6,123 1.9745 239
1 September 2022 USD GBP 7 December 2022 222 1.1173 8
12 September 2022 EUR GBP 7 December 2022 1,205 1.1349 9
15 September 2022 USD GBP 7 December 2022 259 1.1173 8
29 September 2022 GBP USD 7 December 2022 3,445 1.1173 63
984
1 September 2022 GBP EUR 7 December 2022 65,989 1.1349 (943)
1 September 2022 GBP SEK 7 December 2022 6,055 12.3520 (15)
1 September 2022 GBP USD 7 December 2022 130,780 1.1173 (4,886)
1 September 2022 JPY GBP 7 December 2022 2,277 160.5538 (7)
7 September 2022 GBP USD 7 December 2022 1,466 1.1173 (39)
9 September 2022 GBP USD 7 December 2022 199 1.1173 (8)
22 September 2022 GBP USD 7 December 2022 251 1.1173 (2)
22 September 2022 GBP USD 7 December 2022 423 1.1173 (6)
(5,906)
96 Aberdeen Diversified Income and Growth Trust plc
Unrealised
gain/(loss)
30 September
Buy Sell Settlement Amount Contracted 2021
Date of contract Currency Currency date ‘000 rate £’000
1 September 2021 JPY GBP 9 December 2021 16,161 150.3681 137
1 September 2021 GBP EUR 9 December 2021 63,954 1.1619 43
1 September 2021 GBP NZD 9 December 2021 9,172 1.9558 18
7 September 2021 USD GBP 9 December 2021 819 1.3485 19
13 September 2021 JPY GBP 9 December 2021 1,855 150.3681 20
13 September 2021 GBP NZD 9 December 2021 646 1.9558 3
14 September 2021 EUR GBP 9 December 2021 327 1.1619 2
15 September 2021 EUR GBP 9 December 2021 3,224 1.1619 15
15 September 2021 USD GBP 9 December 2021 592 1.3485 15
16 September 2021 USD GBP 9 December 2021 2,092 1.3485 52
20 September 2021 USD GBP 9 December 2021 252 1.3485 4
20 September 2021 USD GBP 9 December 2021 77 1.3485 1
23 September 2021 USD GBP 9 December 2021 138 1.3485 3
332
1 September 2021 GBP AUD 9 December 2021 14,660 1.8662 (40)
1 September 2021 GBP SEK 9 December 2021 8,983 11.7898 (50)
1 September 2021 GBP NOK 9 December 2021 9,256 11.7781 (151)
1 September 2021 GBP CAD 9 December 2021 9,161 1.7084 (169)
1 September 2021 GBP USD 9 December 2021 114,704 1.3485 (2,584)
2 September 2021 GBP USD 9 December 2021 150 1.3485 (4)
7 September 2021 EUR GBP 9 December 2021 785 1.1619 (1)
13 September 2021 GBP EUR 9 December 2021 912 1.1619 (7)
13 September 2021 GBP NOK 9 December 2021 611 11.7781 (10)
13 September 2021 GBP SEK 9 December 2021 900 11.7898 (10)
13 September 2021 GBP AUD 9 December 2021 1,889 1.8662 (13)
13 September 2021 GBP CAD 9 December 2021 756 1.7084 (19)
13 September 2021 GBP EUR 9 December 2021 3,063 1.1619 (21)
13 September 2021 GBP USD 9 December 2021 1,056 1.3485 (28)
16 September 2021 GBP JPY 9 December 2021 279 150.3681 (1)
16 September 2021 GBP EUR 9 December 2021 436 1.1619 (4)
16 September 2021 GBP USD 9 December 2021 2,625 1.3485 (65)
17 September 2021 GBP USD 9 December 2021 320 1.3485 (7)
21 September 2021 GBP USD 9 December 2021 1,262 1.3485 (19)
28 September 2021 GBP USD 9 December 2021 6,084 1.3485 (46)
(3,249)
Notes to the Financial Statements
Continued
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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. 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 sector. The allocation of assets to international markets and the stock
selection process, as detailed on pages 11 and 12, both act to reduce market risk. The Manager actively monitors market
prices throughout the year and reports to the Board, which meets regularly in order to review investment 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 2022 would have increased/decreased by £32,592,000 (2021 – £32,834,000).
Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Within Within Within More than
1 year 1-3 years 3-5 years 5 years Total
£’000 £’000 £’000 £’000 £’000
6.25% Bonds 2031 – – – 16,096 16,096
Interest cash flows on 6.25% Bonds 2031 1,006 2,012 2,012 5,030 10,060
1,006 2,012 2,012 21,126 26,156
Management of the risk. The Company’s assets comprise sufficient readily realisable securities which can be sold to meet
funding commitments if necessary.
Credit risk. This is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to
incur a financial loss.
Management of the risk
– where the Manager makes an investment in a bond, corporate or otherwise, the credit ratings of the issuer are taken into
account so as to manage the risk to the Company of default;
– investments in quoted bonds are made across a variety of industry sectors and geographic markets so as to avoid
concentrations of credit risk;
– transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account
so as to minimise the risk to the Company of default;
– investment transactions are carried out with a number of brokers, whose credit-standing is reviewed periodically by the
Manager, and limits are set on the amount that may be due from any one broker;
– the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the daily review of failed
trade reports. In addition, both stock and cash reconciliations to the custodian’s records are performed daily to ensure
discrepancies are investigated in a timely manner. The Manager’s Compliance department carries out periodic reviews of the
custodian’s operations and reports its finding to the Manager’s Risk Management Committee; and
– cash is held only with reputable banks with acceptable credit quality. It is the Manager’s policy to trade only with A- and
above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties.
98 Aberdeen Diversified Income and Growth Trust plc
Credit risk exposure. In summary, compared to the amounts in the Statement of Financial Position, the maximum exposure to
credit risk at 30 September 2022 and 30 September 2021 was as follows:
2022 2021
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
£’000 £’000 £’000 £’000
Non-current assets
Securities at fair value through profit or loss 373,732 47,809 390,446 60,581
Current assets
Other debtors – 90 90
Amounts due from brokers 1,806 1,806 335 335
Accrued income 853 853 813 813
Derivatives 984 984 332 332
Cash and short term deposits 7,179 7,179 7,201 7,201
384,554 58,631 399,217 69,352
None of the Company’s financial assets are secured by collateral or other credit enhancements and none of the Company’s
financial assets are past due or impaired (2021 – £nil).
Credit ratings. The following table provides a credit rating profile using Standard and Poor’s credit rating for the bond portfolio
at 30 September 2022 and 30 September 2021.
2022 2021
£’000 £’000
A 792 995
A– 159 1,026
AA– – 265
B – 719
B– – 317
BB 4,285 2,857
BB– 2,264 3,489
BBB+ 4,324 5,088
BBB 760 467
BBB– 1,299 2,434
Non-rated 33,926 22,383
47,809 40,040
Whilst a substantial proportion of the fixed interest portfolio does not have a rating provided by a recognised credit ratings
agency, the Manager undertakes an ongoing review of their suitability for inclusion within the portfolio.
Notes to the Financial Statements
Continued
Aberdeen Diversified Income and Growth Trust plc 99
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
18. 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 2022 £’000 £’000 £’000 £’000
Financial assets/(liabilities) at fair value through profit or loss
Equity investments 91,349 25,509 209,065 325,923
Loan investments 15,662 15,662
Fixed interest instruments 32,147 32,147
Forward currency contracts – financial assets 984 984
Forward currency contracts – financial liabilities (5,906) (5,906)
Net fair value 91,349 68,396 209,065 368,810
100 Aberdeen Diversified Income and Growth Trust plc
Level 1 Level 2 Level 3 Total
As at 30 September 2021 £’000 £’000 £’000 £’000
Financial assets/(liabilities) at fair value through profit or loss
Equity investments 131,049 26,708 172,108 329,865
Loan investments – 20,541 – 20,541
Fixed interest instruments – 40,040 – 40,040
Forward currency contracts – financial assets – 332 – 332
Forward currency contracts – financial liabilities – (3,249) – (3,249)
Net fair value 131,049 84,372 172,108 387,529
Year ended Year ended
30 September 2022 30 September 2021
Level 3 Financial assets at fair value through profit or loss £’000 £’000
Opening fair value 172,108 117,208
Purchases including calls (at cost) 24,445 65,762
Disposals and return of capital (20,803) (20,175)
Transfers from level 1 70 –
Transfers from level 2 2,853 –
Total gains or losses included in losses on investments in the
Statement of Comprehensive Income:
– assets disposed of during the year 535 2,448
– assets held at the end of the year 29,857 6,865
Closing balance 209,065 172,108
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. The Level 3 equity investments comprise the following:
Continued
Notes to the Financial Statements
Aberdeen Diversified Income and Growth Trust plc 101
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Year ended Year ended
30 September 2022 30 September 2021
£’000 £’000
Aberdeen European Residential Opportunities Fund 9,769 11,869
Aberdeen Global Infrastructure Partners II (AUD) 6,840 5,949
Aberdeen Global Infrastructure Partners II (USD) 17,755 9,705
Aberdeen Property Secondaries Partners II 9,851 12,568
Aberdeen Standard Global Private Markets Fund 19,122 17,251
Aberdeen Standard Secondary Opportunities Fund IV 9,385 5,478
Agriculture Capital Management Fund II 4,258 3,575
Andean Social Infrastructure Fund I 12,691 5,886
ASI HARK III 4,088 –
BlackRock Renewable Income – UK 8,523 8,055
Blue Capital Alternative Income – 46
Bonaccord Capital Partners I-A 15,255 6,274
Burford Opportunity Fund 17,520 12,794
Cheyne Social Property Impact Fund 4,813 5,196
Dover Street VII 70 235
HarbourVest International Private Equity V 6 51
HarbourVest International Private Equity VI 2,100 3,020
HarbourVest VIII Buyout Fund 260 353
HarbourVest VIII Venture Fund 178 210
Healthcare Royalty Partners IV 13,522 10,779
Maj Invest Equity 4 1,335 2,806
Maj Invest Equity 5 2,492 1,785
Markel CATCo Reinsurance Fund Ltd – LDAF 2018 SPI 298 1,058
Markel CATCo Reinsurance Fund Ltd – LDAF 2019 SPI 281 1,305
Mesirow Financial Private Equity III 228 214
Mesirow Financial Private Equity IV 882 1,272
Mount Row Credit Fund II 7,494 9,850
Pan European Infrastructure Fund 1,697 4,352
PIMCO Private Income Fund Offshore Feeder I LP 8,796 7,416
SL Capital Infrastructure II 19,581 14,745
TrueNoord Co-Investment 9,976 8,011
209,065 172,108
102 Aberdeen Diversified Income and Growth Trust plc
During the year to 30 September 2022, the Company reviewed its exposure to holdings in Russia in light of the war in Ukraine
and decided to initially write down the fair value of holdings to £nil and subsequently value on the basis of net realisable sales
proceeds. The consequence of this is noted in transfer from Level 1 and Level 2 in the above table. There were no transfers
between levels for financial assets and financial liabilities during the year ended 30 September 2021.
For all other assets and liabilities (i.e. those not included in the hierarchy table) carrying value approximates to fair value with
the exception of the 6.25% Bonds 2031. The basis of their fair value is detailed in note 13 on page 90.
19. 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 on pages 55 to 58. The balance of fees due to Directors at the year end was £13,000 (2021 – £nil).
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 on page 82.
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 2022 that were managed by the Group. For the period to
30 September 2022 no fees were levied in respect of these funds.
Notes to the Financial Statements
Continued
Aberdeen Diversified Income and Growth Trust plc 103
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
30 September 2022
£’000
SL Capital Infrastructure II
B
19,581
Aberdeen Standard Global Private Markets Fund
B
19,122
Aberdeen Global Infrastructure Partners II (USD)
D
17,755
Andean Social Infrastructure Fund I
B
12,691
Aberdeen Property Secondaries Partners II
C
9,851
Aberdeen European Residential Opportunities Fund
B
9,769
Aberdeen Standard Secondary Opportunities Fund IV
C
9,385
Aberdeen Global Infrastructure Partners II (AUD)
D
6,840
ASI Hark III
B
4,088
Aberdeen Standard Alpha – Global Loans Fund
A
2,347
111,429
A
The Company is invested in a share class which is not subject to a management charge from the Group.
B
The value of this holding is removed from the management fee calculation to ensure that no double counting occurs.
C
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.
D
The invested capital commitment is removed from the management fee calculation to ensure than 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
on page 83.
20. Capital management policies and procedures
The current investment objective of the Company is to seek to provide income and capital appreciation over the long term
through investment in a globally diversified multi-asset portfolio.
The capital of the Company consists of debt (comprising Bonds) and 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 debt and 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 is disclosed on page 5 and the calculation basis is set out on pages 115 and 116);
– 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.
104 Aberdeen Diversified Income and Growth Trust plc
At the year end a covenant relating to the issue of the Bonds provides that the Company is 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. This covenant was met during the year and also during the period from the year end to the
date of this report. The Company is not subject to any other externally imposed capital requirements.
21. Analysis of changes in net debt
At Currency Non-cash At
1 October 2021 differences Cash flows movements 30 September 2022
£’000 £’000 £’000 £’000 £’000
Cash and cash equivalents 7,201 – (22) – 7,179
Forward contracts (2,917) (2,005) – – (4,922)
Debt due after one year (15,664) – – (30) (15,694)
Total (11,380) (2,005) (22) (30) (13,437)
At Currency Non-cash At
1 October 2020 differences Cash flows movements 30 September 2021
£’000 £’000 £’000 £’000 £’000
Cash and cash equivalents 17,413 5,411 (15,623) – 7,201
Forward contracts (3,999) 1,082 – – (2,917)
Debt due after one year (59,540) – 43,904 (28) (15,664)
Total (46,126) 6,493 28,281 (28) (11,380)
Notes to the Financial Statements
Continued
Aberdeen Diversified Income and Growth Trust plc 105
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
22. Commitments and contingent liabilities
At 30 September 2022 the Company had commitments of £276,021,000 of which £74,420,000 remained outstanding (2021 –
£80,158,000). Further details are given below. There were no contingent liabilities as at 30 September 2022 (2021 – £nil).
Undrawn commitments
30 September 2022
£’000
Aberdeen Standard Secondary Opportunities Fund IV 17,134
SL Capital Infrastructure II 10,374
Andean Social Infrastructure Fund I 8,880
Healthcare Royalty Partners IV 7,703
Burford Opportunity Fund 7,211
Aberdeen Global Infrastructure Partners II (AUD) 6,789
ASI Hark III 6,416
Bonaccord Capital Partners I-A 5,341
Aberdeen Property Secondaries Partners II 1,292
Aberdeen European Residential Opportunities Fund 1,215
Maj Equity 4 374
Agriculture Capital Management Fund II 361
Maj Equity 5 340
Pan-European Infrastructure Fund I 282
Dover Street VII 198
Mesirow Financial Private Equity IV 179
HarbourVest International Private Equity VI 156
HarbourVest VIII Buyout Fund 78
Mesirow Financial Private Equity III 56
HarbourVest International Private Equity V 29
HarbourVest VIII Venture Fund 9
Aberdeen Global Infrastructure Partners II (USD) 3
74,420
106 Aberdeen Diversified Income and Growth Trust plc
Undrawn commitments
30 September 2021
£’000
Aberdeen Standard Secondary Opportunities Fund IV 15,004
Andean Social Infrastructure Fund I 11,448
SL Capital Infrastructure II 11,259
Bonaccord Capital Partners I-A 8,915
Healthcare Royalty Partners IV 8,141
ASI Hark III 7,416
Burford Opportunity Fund 6,600
Aberdeen Global Infrastructure Partners II (AUD) 6,315
Aberdeen Property Secondaries Partners II 1,275
Aberdeen European Residential Opportunities Fund 1,190
Maj Equity 5 773
Agriculture Capital Management Fund II 511
Maj Equity 4 398
Pan-European Infrastructure Fund I 276
Dover Street VII 164
HarbourVest International Private Equity VI 153
Mesirow Financial Private Equity IV 148
Mesirow Financial Private Equity III 70
HarbourVest VIII Buyout Fund 65
HarbourVest International Private Equity V 28
HarbourVest VIII Venture Fund 7
Aberdeen Global Infrastructure Partners II (USD) 2
80,158
23. Subsequent events
Following a review of the expected long-term returns from the investment portfolio of the Company, the Board decided that
with effect from 1 October 2022, 50% of investment management fees and finance costs should be allocated to capital and
50% allocated to revenue.
Notes to the Financial Statements
Continued
Aberdeen Diversified Income and Growth Trust plc 107
Corporate Information
108 Aberdeen Diversified Income and Growth Trust plc
Pre-investment Disclosure Document
(“PIDD”)
The AIFMD (see Glossary on page 111) requires the
Manager, as the alternative investment fund manager of
the Company, to make available to investors certain
information prior to such investors’ investment in the
Company. Details of the leverage and risk policies which
the Company is required to have in place under AIFMD are
published in the Company’s Pre-Investment Disclosure
Document (“PIDD”) which can be found on its website. The
periodic disclosures required to be made by the Manager
under the AIFMD are set out on page 113.
Investor Warning: Be alert to share fraud and
boiler room scams
abrdn has been contacted by investors informing us that
they have received telephone calls and emails from
people who have offered to buy their investment trust
shares, purporting to work for abrdn.
abrdn has also been notified of emails claiming that
certain investment companies under our management
have issued claims in the courts against individuals. These
may be scams which attempt to gain your personal
information with which to commit identity fraud or could
be ‘boiler room’ scams where a payment from you is
required to release the supposed payment for your
shares. These callers/senders do not work for abrdn and
any third party making such offers/claims has no link
with abrdn.
abrdn does not ‘cold-call’ investors in this way. If you have
any doubt over whether a caller is genuine, do not offer
any personal information, end the call and contact the
Customer Services Department (see page 125 for
contact details).
The Financial Conduct Authority provides advice with
respect to share fraud and boiler room scams:
fca.org.uk/consumers/scams
Keeping You Informed
Further information on the Company can be found on its
own dedicated website: aberdeendiversified.co.uk. This
provides access to information on the Company’s share
price performance, capital structure, stock exchange
announcements and a Manager’s monthly factsheet.
Alternatively you can call 0808 500 0040 (free when
dialling from a UK landline) for information.
If you have any questions about the Company, the
Manager or performance, please telephone the abrdn
Customer Services Department (direct private investors)
on 0808 500 0040.
Alternatively, please send an email to
inv.trusts@abrdn.com or write to:
abrdn Investment Trusts
PO Box 11020
Chelmsford,
Essex CM99 2DB
In the event of queries regarding holdings of shares, lost
certificates, dividend payments or registered details,
shareholders holding their shares in the Company directly
should contact the Registrar, Computershare Investor
Services PLC (see page 125 for contact details). Calls may
be recorded and monitored randomly for security and
training purposes. Changes of address must be notified to
the Registrar in writing.
Dividend Tax Allowance
The annual tax-free personal allowance for dividend
income is £2,000 for the 2022/23 tax year (2021/22 tax
year - £2,000). Above this amount, individuals will pay tax
on their dividend income at a rate dependent on their
income tax bracket and personal circumstances. The
Company will provide registered shareholders with a
confirmation of dividends paid by the Company and this
should be included with any other dividend income
received when calculating and reporting to HMRC total
dividend income received. It is the shareholder’s
responsibility to include all dividend income when
calculating any tax liability.
How to Invest in the Company
Individual investors can buy and sell shares in the
Company directly through a stockbroker or indirectly
through a lawyer, accountant or other professional
adviser. Alternatively, for retail investors, shares can be
bought directly through the abrdn Share Plan, abrdn
Investment Trusts ISA or abrdn Investment Plan
for Children.
Investor Information
Aberdeen Diversified Income and Growth Trust plc 109
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
abrdn Investment Plan for Children
abrdn operates the abrdn Investment Plan for Children
(the “Children’s Plan”) which covers a number of
investment companies under its management including
the Company. Anyone can invest in the Children’s Plan,
including parents, grandparents and family friends
(subject to the eligibility criteria as stated within the terms
and conditions). All investments are free of dealing
charges on the initial purchase of shares, although
investors will suffer the bid-offer spread, which can, on
some occasions, be a significant amount. Lump sum
investments start at £150 per trust, while regular savers
may invest from £30 per month. Investors simply pay
Government Stamp Duty (currently 0.5%) where
applicable. Selling costs are £10 + VAT, if applicable. There
is no restriction on how long an investor need invest in the
Children’s Plan, and regular savers can stop or suspend
participation by instructing abrdn in writing at any time.
abrdn Share Plan
abrdn operates the abrdn Share Plan (the “Plan”) through
which shares in the Company can be purchased. There
are no dealing charges on the initial purchase of shares,
although investors will suffer the bid-offer spread, which
can, on some occasions, be a significant amount. Lump
sum investments start at £250, while regular savers may
invest from £100 per month. Investors simply pay
Government Stamp Duty (currently 0.5%) where
applicable. Selling costs are £10 + VAT, if applicable. There
is no restriction on how long an investor need invest in a
Plan, and regular savers can stop or suspend participation
by instructing abrdn in writing at any time.
abrdn Investment Trusts ISA
abrdn operates the abrdn Investment Trusts ISA (“ISA”)
through which an investment in the Company may be
made of up to £20,000 in the 2022/23 tax year.
The annual ISA administration charge is £24 + VAT, if
applicable, calculated annually and applied on 31 March
(or the last business day in March) and collected soon
thereafter either by direct debit or, if there is no valid direct
debit mandate in place, from the available cash in the Plan
prior to the distribution or reinvestment of any income, or,
where there is insufficient cash in the ISA, from the sale of
investments held in the ISA. Under current legislation,
investments in ISAs can grow free of capital gains tax.
Nominee Accounts and Voting Rights
All investments in the abrdn Share Plan, abrdn Investment
Trusts ISA or abrdn Investment Plan for Children are held
in nominee accounts and investors are provided with
the equivalent of full voting and other rights of
share ownership.
How to Attend and Vote at Company
Meetings
Investors who hold their shares in the Company via the
abrdn Share Plan, abrdn Investment Trusts ISA or abrdn
Investment Plan for Children and would like to attend and
vote at Company meetings (including AGMs) will be sent
for completion and return a Letter of Direction in
connection with the relevant meeting.
Investors who hold their shares via another platform or
share plan provider (for example Hargreaves Lansdown,
Interactive Investor or AJ Bell) and would like to attend and
vote at Company meetings (including AGMs) should
contact their platform or share plan provider directly to
make arrangements. Further details of how to attend and
vote if you hold your shares via a platform or share plan
provider are available at theaic.co.uk/aic/shareholder-
voting-consumer-platforms
ISA Transfer
You can choose to transfer previous tax year investments
to abrdn Investment Trusts which can be invested in the
Company while retaining your ISA wrapper. The minimum
lump sum for an ISA transfer is £1,000 and is subject to a
minimum per trust of £250.
Contact Details and Literature
Request Service
For information on the abrdn Share Plan, abrdn
Investment Trusts ISA or abrdn Investment Plan for
Children, including literature and application forms,
please contact:
abrdn Investment Trusts
PO Box 11020
Chelmsford
Essex CM99 2DB
Telephone: 0808 500 0040
(free when dialling from a UK landline.)
Website:
invtrusts.co.uk/en/investmenttrusts/literature-library
110 Aberdeen Diversified Income and Growth Trust plc
Terms and conditions for the abrdn Share Plan, abrdn
Investment Trusts ISA and abrdn Investment Plan for
Children can also be found under the literature section of
invtrusts.co.uk.
There are a number of alternative ways in which you can
buy and hold shares in this Company.
Online dealing
There are a number of online dealing platforms for private
investors that offer share dealing, ISAs and other means to
invest in the Company. Real-time execution-only
stockbroking services allow you to trade online, manage
your portfolio and buy UK listed shares. These sites do not
give advice. Some comparison websites also look at
dealing rates and terms.
Discretionary private client stockbrokers
If you have a large sum to invest, you may wish to contact
a discretionary private client stockbroker. They can
manage your entire portfolio of shares and will advise you
on your investments. To find a private client stockbroker
visit The Personal Investment Management & Financial
Advice Association at pimfa.co.uk.
Financial advisers
To find an adviser on investment trusts, visit unbiased.co.uk.
Regulation of stockbrokers
Before approaching a stockbroker, always check that
they are regulated by the Financial Conduct Authority:
Tel: 0800 111 6768 or
at fca.org.uk/firms/systems-reporting/register/search
Email: register@fca.org.uk
Key Information Document
Investors should be aware that the PRIIPs Regulation
requires the Investment Manager, as PRIIP manufacturer,
to prepare a key information document ("KID") in respect
of the Company. This KID must be made available by the
Investment Manager to retail investors prior to them
making any investment decision and it may be viewed on
the Company's website. The Company is not responsible
for the information contained in the KID and investors
should note that the procedures for calculating the risks,
costs and potential returns are prescribed by the law.
The figures in the KID may not reflect the expected returns
for the Company and anticipated performance returns
cannot be guaranteed.
Suitable for Retail/NMPI Status
The Company’s shares are intended for investors,
primarily in the UK, including retail investors, professionally-
advised private clients and institutional investors seeking
income and capital appreciation over the long term
through investment in a globally diversified multi-asset
portfolio and who understand and are willing to accept
the risks of exposure to investing via a flexible multi-asset
approach. Investors should consider consulting a financial
adviser who specialises in advising on the acquisition of
shares and other securities before acquiring shares.
Investors should be capable of evaluating the risks and
merits of such an investment and should have sufficient
resources to bear any loss that may result.
The Company currently conducts its affairs, and intends to
continue to do so for the foreseeable future, in order that
its shares can be recommended by a financial adviser to
ordinary retail investors in accordance with the FCA’s rules
in relation to non-mainstream pooled investments.
The Company’s shares are excluded from the FCA’s
restrictions which apply to non-mainstream pooled
investment products because they are shares in an
investment trust.
Note
Please remember that past performance is not a guide to
the future. Stock market and currency movements may
cause the value of shares and the income from them to
fall as well as rise and investors may not get back the
amount they originally invested.
As with all equity investments, the value of investment
trusts purchased will immediately be reduced by the
difference between the buying and selling prices of the
shares, the market maker’s spread.
Investors should further bear in mind that the value of
any tax relief will depend on the individual circumstances
of the investor and that tax rates and reliefs, as well as
the tax treatment of ISAs, may be changed by
future legislation.
The information on pages 108 to 110 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 Investments Limited
which is authorised and regulated by the Financial
Conduct Authority.
Investor Information
Continued
Aberdeen Diversified Income and Growth Trust plc 111
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Abrdn or the Group
A company listed on the London Stock Exchange as
abrdn plc.
AIC
The Association of Investment Companies.
AIFMD
The Alternative Investment Fund Managers Directive - the
AIFMD is European legislation which created a European-
wide framework for regulating managers of ‘alternative
investment funds’. It is designed to regulate any fund
which is not a UCITS fund and which is managed and/or
marketed in the EU. The Company has been designated
as an AIF.
Alternative Performance Measure or APM
An alternative performance measure is a financial
measure of historical or future financial performance,
financial position, or cash flows, other than a financial
measure defined or specified in the applicable financial
reporting framework.
Closed-End Fund
A collective investment scheme which has a fixed number
of shares which are not redeemable from the fund itself.
Unlike open-ended funds, new shares/units are not
created by managers to meet demand from investors;
instead, shares are purchased (or sold) only in the market.
Closed-end funds are normally listed on a recognised
stock exchange, such as the London Stock Exchange, and
shares can be bought and sold on that exchange.
Discount
The amount by which the market price per share of an
Investment Trust is lower than the Net Asset Value per
share. The discount is normally expressed as a
percentage of the Net Asset Value per share.
Dividend Cover
Earnings per share divided by dividends per share
expressed as a ratio.
Dividend Yield
The annual dividend expressed as a percentage of the
share price.
FCA
Financial Conduct Authority.
Gearing
Net gearing is calculated by dividing total borrowings less
cash or cash equivalents, by shareholders’ funds
expressed as a percentage.
Investment Manager
abrdn Investments Limited (formerly Aberdeen Asset
Managers Limited, until 25 November 2022) is a wholly
owned subsidiary of abrdn plc and acts as the Company’s
investment manager. It is authorised and regulated by
the FCA.
Investment Trust
A type of Closed-End Fund which invests in other
securities, allowing shareholders to share the risks, and
returns, of collective investment.
Leverage
For the purposes of the Alternative Investment Fund
Managers Directive, leverage is any method which
increases the Company’s exposure, including the
borrowing of cash and the use of derivatives. It is
expressed as a ratio between the Company’s exposure
and its Net Asset Value and can be calculated on a gross
and a commitment method. Under the gross method,
exposure represents the sum of the Company’s positions
after the deduction of sterling cash balances, without
taking into account any hedging and netting
arrangements. Under the commitment method, exposure
is calculated without the deduction of sterling cash
balances and after certain hedging and netting positions
are offset against each other.
Manager or AFML
abrdn Fund Managers Limited (formerly Aberdeen
Standard Fund Managers Limited until 1 August 2022) is a
wholly owned subsidiary of abrdn plc and acts as the
alternative investment fund manager for the Company. It
is authorised and regulated by the FCA.
Net Asset Value or NAV
The value of total assets less liabilities. Liabilities for this
purpose include current and long-term liabilities. The Net
Asset Value divided by the number of shares in issue
produces the Net Asset Value per share.
Glossary
112 Aberdeen Diversified Income and Growth Trust plc
Ongoing Charges
Ratio of expenses as a percentage of average daily
shareholders’ funds calculated as per the AIC’s industry
standard method. This includes the Company’s share of
costs of holdings in investment companies on a look-
through basis.
Premium
The amount by which the market price per share of an
Investment Trust exceeds the Net Asset Value per share.
The premium is normally expressed as a percentage of
the Net Asset Value per share.
Price/Earnings Ratio
The ratio is calculated by dividing the market price per
share by the earnings per share. The calculation assumes
no change in earnings but in practice the multiple reflects
the stock market’s view of a company’s prospects and
profit growth potential.
Prior Charges
The name given to all borrowings including debentures,
loans and overdrafts that are to be used for investment
purposes, reciprocal foreign currency loans, currency
facilities to the extent that they are drawn down, index-
linked securities, and all types of preference or preferred
capital and the income shares of split capital trusts,
irrespective of the time until repayment.
Total Assets
Total Assets as per the balance sheet less current liabilities
(before deducting Prior Charges as defined above).
Total Return
Total Return involves reinvesting the net dividend in the
month that the share price goes ex-dividend. The NAV
Total Return involves investing the same net dividend in the
NAV of the Company on the date the dividend
was earned.
Glossary
Continued
Aberdeen Diversified Income and Growth Trust plc 113
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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
December 2022.
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 17 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 Remuneration Code, the AIFM’s remuneration policy is available from the Company Secretaries,
abrdn Holdings Limited, on request (see page 125 for contact details) and the remuneration disclosures in respect of
the Manager’s reporting period ended 31 December 2021 is available on the Company’s website.
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 2021 1.79:1 1.81:1
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 ASFML 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 on this page 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.
AIFMD Disclosures
(
Unaudited
)
114 Aberdeen Diversified Income and Growth Trust plc
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 2022 30 September 2021
£’000 £’000
Net asset value attributable 363,358 382,118
Add: Amortised cost of 6.25% Bonds 2031 15,694 15,664
Less: Market value of 6.25% Bonds 2031 (16,222) (21,233)
362,830 376,549
Number of Ordinary shares in issue excluding treasury shares 308,447,314 309,318,738
Net asset value per share (p) 117.63 121.73
Discount to net asset value per Ordinary share – debt at fair 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 2022 30 September 2021
Net asset value per Ordinary share (p) a 117.63 121.73
Share price (p) b 89.80 100.00
Discount (a-b)/a 23.7% 17.9%
Alternative Performance Measures
(
Unaudited
)
Aberdeen Diversified Income and Growth Trust plc 115
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Dividend cover
Revenue return per Ordinary share divided by dividends declared for the year per Ordinary share expressed as a ratio.
30 September 2022 30 September 2021
Revenue return per Ordinary share (p) a 4.99 5.14
Dividends declared (p) b 5.60 5.52
Dividend cover a/b 0.89 0.93
Dividend yield
The annual dividend per Ordinary share divided by the share price, expressed as a percentage.
30 September 2022 30 September 2021
Dividend per Ordinary share (p) a 5.60 5.52
Share price (p) b 89.80 100.00
Dividend yield a/b 6.2% 5.5%
Net gearing – debt at par value
Net 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 2022 30 September 2021
Borrowings (£’000) a 15,694 15,664
Cash (£’000) b 7,179 7,201
Amounts due to brokers (£’000) c – 221
Amounts due from brokers (£’000) d 1,806 335
Shareholders’ funds (£’000) e 363,358 382,118
Net gearing (a-b+c-d)/e 1.8% 2.2%
116 Aberdeen Diversified Income and Growth Trust plc
Net gearing – debt at fair value
Net gearing with debt at fair 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 year end, in addition to cash and short term deposits per the Statement of Financial Position.
30 September 2022 30 September 2021
Borrowings (£’000) a 16,222 21,233
Cash (£’000) b 7,179 7,201
Amounts due to brokers (£’000) c – 221
Amounts due from brokers (£’000) d 1,806 335
Shareholders’ funds (£’000) e 362,830 376,549
Net gearing (a-b+c-d)/e 2.0% 3.7%
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.
2022 2021
£ £
Investment management fees 1,293,000 1,319,000
Administrative expenses 930,000 980,000
Less: non-recurring charges
A
(37,000) (69,500)
Ongoing charges 2,186,000 2,229,500
Average net assets with debt at fair value 371,257,000 361,834,000
Ongoing charges ratio (excluding look-through costs) 0.59% 0.62%
Look-through costs
B
0.82% 0.83%
Ongoing charges ratio (including look-through costs) 1.41% 1.45%
A
Professional services considered unlikely to recur.
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:
aberdeendiversified.co.uk.
Alternative Performance Measures
(
Unaudited
)
Continued
Aberdeen Diversified Income and Growth Trust plc 117
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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 2022 (debt at par) (debt at fair value) Price
Opening at 1 October 2021 a 123.5p 121.7p 100.0p
Closing at 30 September 2022 b 117.8p 117.6p 89.8p
Price movements c=(b/a)-1 –4.6% –3.4% –10.2%
Dividend reinvestment
A
d 4.4% 4.6% 5.2%
Total return c+d –0.2% +1.2% –5.0%
NAV NAV Share
Year ended 30 September 2021 (debt at par) (debt at fair value) Price
Opening at 1 October 2020 a 121.7p 113.4p 91.5p
Closing at 30 September 2021 b 123.5p 121.7p 100.0p
Price movements c=(b/a)-1 1.5% 7.3% 9.3%
Dividend reinvestment
A
d 4.8% 5.2% 6.3%
Total return c+d +6.3% +12.5% +15.6%
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.
118 Aberdeen Diversified Income and Growth Trust plc
General
Aberdeen Diversified Income and Growth Trust plc 119
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Aberdeen Diversified Income and Growth Trust plc (the
"Company") will be held at 12.30 p.m. on 28 February 2023 at the South Place Hotel, 3 South Place, London, EC2M 2AF,
for the following purposes:
To consider and, if thought fit, pass the following resolutions as ordinary resolutions:
1. To receive the Directors' Report, the Auditor’s Report and the audited financial statements for the year ended
30 September 2022.
2. To receive and adopt the Directors' Remuneration Policy for the year ended 30 September 2022.
3. To receive and adopt the Directors' Remuneration Report (other than the Directors' Remuneration Policy) for the
year ended 30 September 2022.
4. To approve the Company’s dividend policy to continue to pay four quarterly interim dividends per year.
5. To re-elect Alistair Mackintosh as a Director of the Company.*
6. To re-elect Trevor Bradley as a Director of the Company.*
7. To re-elect Tom Challenor as a Director of the Company.*
8. To re-elect Anna Troup as a Director of the Company.*
9. To re-elect Davina Walter as a Director of the Company.*
10. To re-appoint PricewaterhouseCoopers LLP as auditor of the Company to hold office from the conclusion of the
Annual General Meeting of the Company until the conclusion of the next general meeting at which financial
statements and reports are laid before the Company.
11. To authorise the Directors to fix the remuneration of the auditor.
Continuation of the Company
12. To approve the continuation of the Company as an investment trust.
Authority to Allot
13. That the Directors be generally and unconditionally authorised in accordance with section 551 of the Companies
Act 2006 (the “Act”) to exercise all the powers of the Company to allot shares in the Company and to grant rights to
subscribe for, or to convert any security into, shares in the Company up to an aggregate nominal amount of
£7,703,755 (representing 10% of the total Ordinary share capital of the Company in issue as at the date of notice,
excluding treasury shares, or, if less, the number representing 10% of the issued Ordinary share capital of the
Company, excluding treasury shares, as of the date of the passing of this resolution) during the period expiring on
the date of the next annual general meeting of the Company or on 31 March 2024, whichever is the earlier, but so
that this authority, unless previously revoked, varied or renewed, shall allow the Company to make offers or
agreements before the expiry of this authority which would or might require shares to be allotted or rights to be
granted after such expiry and the Directors may allot shares and grant rights in pursuance of such an offer or
agreement as if such authority had not expired.
Notice of Annual General Meetin
g
120 Aberdeen Diversified Income and Growth Trust plc
To consider and, if thought fit, pass the following resolutions as special resolutions:
Disapplication of Pre-emption Rights
14. That the Directors be and they are hereby empowered, pursuant to sections 570 and 573 of the Act, to allot equity
securities (as defined in section 560 of the Act) for cash pursuant to the authority given in accordance with section
551 of the Act by resolution number 13 above as if section 561 of the Act did not apply to any such allotment,
provided that this power shall be limited to the allotment of equity securities:
a. during the period expiring on the date of the next annual general meeting of the Company or on 31 March 2024,
whichever is earlier, but so that this power shall, unless previously revoked, varied or renewed, enable the
Company to make offers or agreements before the expiry of this power which would or might require equity
securities to be allotted after the expiry of this power and the Directors may allot equity securities in pursuance of
such an offer or agreement as if such power had not expired;
b. up to an aggregate nominal amount of £7,703,755 representing 10% of the total Ordinary share capital of the
Company in issue, excluding treasury shares, as at the date of this notice, or, if less, the number representing 10%
of the issued Ordinary share capital of the Company, excluding treasury shares, as of the date of the passing of
this resolution); and
c. at a price greater than the net asset value per share from time to time (as determined by the Directors and
calculated excluding treasury shares).
This power applies to a sale of treasury shares which is an allotment of equity securities by virtue of section
560(3) of the Act as if in the first paragraph of this resolution the words "pursuant to the authority given in
accordance with section 551 of the Act by resolution number 13 above" were omitted.
Authority to Make Market Purchases of Shares
15. 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 46,191,720
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 25 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 2024, 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.
Continued
Notice of Annual General Meetin
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Aberdeen Diversified Income and Growth Trust plc 121
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Authority to Call General Meetings on not less than 14 Clear Days’ Notice
16. 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 pages 44 and 45.
By order of the Board
abrdn Holdings Limited
Company Secretary
20 December 2022
Registered Office
1 George Street
Edinburgh EH2 2LL
Notes
(1) Only those Shareholders registered in the Register at close of business on 24 February 2023 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 December 2022 (being the latest practicable day prior to the date of approval of this Report) the Company's issued share
capital consisted of 337,751,806 Ordinary shares (29,601,568 of which were held in treasury). Each Ordinary share carries the right
to one vote at general meetings. Therefore the total voting rights in the Company at 20 December 2022 were 308,150,238.
(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 (11) 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.
122 Aberdeen Diversified Income and Growth Trust plc
(7) 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.
(8) 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.
(9) 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.
(10) 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.
(11) 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 12.30 p.m. on 24 February 2023. 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 12.30 p.m. on 24 February 2023.
(12) 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.
Notice of Annual General Meetin
g
Continued
Aberdeen Diversified Income and Growth Trust plc 123
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
(13) 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.
(14) 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, aberdeendiversified.co.uk.
(15) 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.
(16) 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 auditor's report and the conduct of the audit) that are to be laid out
before the Annual General Meeting; or (b) any circumstance connected with an auditor 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 auditor 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.
(17) 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.
(18)
Participants in the abrdn Share Plan, abrdn Investment Trusts ISA or abrdn Investment Plan for Children are entitled to vote by
completing the enclosed Form of Direction and returning it in the accompanying envelope no later than 12.30 p.m. on
21 February 2023.
(19) 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
124 Aberdeen Diversified Income and Growth Trust plc
Aberdeen Diversified Income and Growth Trust plc 125
Directors
Davina Walter (Chairman)
Tom Challenor (Senior Independent Director and Audit
Committee Chairman)
Trevor Bradley
Alistair Mackintosh
Anna Troup
Company Secretaries & Registered Office
abrdn Holdings Limited (formerly Aberdeen Asset
Management PLC, until 25 November 2022)
1 George Street
Edinburgh EH2 2LL
Company Number
Registered in Scotland under Company Number
SC003721
Website
aberdeendiversified.co.uk
United States Internal Revenue Service
FATCA Registration Number (“GIIN”)
E3M4K6.99999.SL.826
Legal Entity Identifier Number (“LEI”)
2138003QINEGCHYGW702
Points of Contact
The Chairman or Company Secretaries at the
Registered Office of the Company
Twitter: @abrdnTrusts
LinkedIn: abrdn Investment Trusts
Customer Services and enquiries relating to
the abrdn Share Plan, abrdn Investment
Trusts ISA or abrdn Investment Plan for
Children
abrdn Investment Trusts
PO Box 11020
Chelmsford
Essex CM99 2DB
Freephone: 0808 500 00 40
Brochure Request Line Freephone: 0808 500 4000
Lines are open 9.00 a.m. to 5.00 p.m. Monday to Friday,
excluding public holidays
Email: inv.trusts@abrdn.com
Alternative Investment Fund Manager
abrdn Fund Managers Limited
280 Bishopsgate
London EC2M 4AG
Authorised and regulated by the Financial Conduct
Authority
Investment Manager
abrdn Investments Limited (formerly Aberdeen Asset
Managers Limited, until 25 November 2022)
1 George Street
Edinburgh EH2 2LL
Authorised and regulated by the Financial Conduct
Authority
Registrar (for direct shareholders)
Computershare Investor Services PLC operates a secure
online website where shareholdings can be managed
quickly and easily, including changing address or
arranging to pay dividends directly into a bank account or
receive electronic communications:
investorcentre.co.uk
Alternatively, please contact the registrar:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
E-mail is available via the above website
Telephone: 0330 303 1184
(UK calls cost 10p per minute plus network extras)
Lines are open 8.30 a.m. to 5.30 p.m. Monday to Friday,
excluding public holidays
Independent Auditors
PricewaterhouseCoopers LLP
Depositary
The Bank of New York Mellon (International) Limited
1 Canada Square
London E14 5AL
Solicitors
Dickson Minto W.S.
Stockbrokers
Stifel Nicolaus Europe Limited
Corporate Information
For more information visit aberdeendiversified.co.uk
abrdn.com