abrdn.com
abrdn UK Smaller
Companies Growth Trust plc
Annual Report 30 June 2022
Capturing the growth potential of UK smaller companies
Investments in the
Software and Computer
Services sector include
Kainos, Bytes Technology
and Auction Technology.
abrdn UK Smaller Companies Growth Trust plc 1
“For the year ended 30 June 2022, the Company’s
NAV total return, calculated on the basis that all
dividends received are reinvested in additional
shares, was -27.3%. The share price total return,
calculated on the same basis, was -34.3%.”
Liz Airey, Chairman
“The period was a challenging one for performance
for the Company, particularly during the second
half of the financial year, with our style being out
of favour in the market as “top down” global
macro factors have taken the lead over
“bottom up” stock picking”
Harry Nimmo and Abby Glennie,
abrdn
2 abrdn UK Smaller Companies Growth Trust plc
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION. If you are in any doubt about the
action you should take, you are recommended to seek
your own financial advice from your stockbroker, bank
manager, solicitor, accountant or other financial adviser
authorised under the Financial Services and Markets Act
2000 (as amended by the Financial Services Act 2012) if
you are in the United Kingdom or, if not, from another
appropriately authorised financial adviser.
If you have sold or otherwise transferred all your Ordinary
shares in abrdn UK Smaller Companies Growth Trust plc,
please forward this document, together with the
accompanying documents immediately to the purchaser
or transferee, or to the stockbroker, bank or agent through
whom the sale or transfer was effected for transmission to
the purchaser or transferee.
To find out more about abrdn UK Smaller Companies
Growth Trust plc, please visit:
abrdnuksmallercompaniesgrowthtrust.co.uk
Overview
Performance Highlights and Financial Calendar 3
Strategic Report
Chairman’s Statement 8
Overview of Strategy 12
Promoting the Success of the Company 19
Performance 23
Investment Manager’s Review 26
Investment Process 31
Portfolio
Ten Largest Investments 36
Investment Portfolio 37
Sector Distribution of Investments 39
Investment Portfolio by Sector 40
Market Cap Exposure 41
Investment Case Studies 42
Governance
Board of Directors 46
Directors’ Report 49
Directors’ Remuneration Report 60
Audit Committee’s Report 64
Financial Statements
Statement of Directors’ Responsibilities 70
Independent Auditor’s Report 71
Statement of Comprehensive Income 77
Statement of Financial Position 78
Statement of Changes in Equity 79
Statement of Cash Flows 80
Notes to the Financial Statements 81
Alternative Performance Measures 99
Corporate Information
Information about the Investment Manager 103
Investor Information 104
Glossary of Terms 108
Your Company’s Share Capital History 111
AIFMD Disclosures (Unaudited) 114
General
Notice of Annual General Meeting 116
Contact Addresses 121
Contents
abrdn UK Smaller Companies Growth Trust plc 3
Net asset total return
AB
Share price total return
AB
–27.3% –34.3%
2021 +41.9% 2021 +46.9%
Total dividends per share Discount to net asset value
AB
8.10
p
14.6%
2021 7.70p 2021 5.4%
Revenue return per share Ongoing charges ratio
ABC
9.07
p
0.82%
2021 6.43p 2021 0.88%
A
Considered to be an Alternative Performance Measure. See pages 99 to 101 for more information.
B
A Key Performance Indicator (“KPI”). See page 13 for more information on the Company’s KPIs.
C
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.
Net asset value per share Share price Dividends per share
At 30 June – pence At 30 June – pence Year ended 30 June – pence
552.9
539.5
527.7
738.0
530.4
18 19 20 21 22
500.0
491.5
482.0
698.0
453.0
18 19 20 21 22
7.00
7.70 7.70 7.70
8.10
18 19 20 21 22
Performance Hi
g
hli
g
hts and Financial Calendar
4 abrdn UK Smaller Companies Growth Trust plc
Financial Calendar
Annual General Meeting (London)
20 October 2022
Payment of final dividend for year ending 30 June 2022
28 October 2022
Half year end
31 December 2022
Expected announcement of results for the
six months ending 31 December 2022
February 2023
Payment of interim dividend for year ending 30 June 2023
7 April 2023
Financial year end
30 June 2023
Expected announcement of results for year ending 30 June 2023
September 2023
Performance Hi
g
hli
g
hts and Financial Calendar
Continued
abrdn UK Smaller Companies Growth Trust plc 5
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Financial Highlights
30 June 2022 30 June 2021 % change
Capital return
Total assets (as defined on page 110) £538.6m £793.2m (32.1%)
Equity shareholders’ funds £498.6m £728.2m (31.5%)
Market capitalisation
A
£425.9m £688.8m (38.2%)
Net asset value per share (as defined on page 109) 530.37p 737.97p (28.1%)
Share price 453.00p 698.00p (35.1%)
Discount to NAV
B
14.6% 5.4%
Net gearing
B
5.1% 5.7%
Reference index 5,520.20 6,977.10 (20.9%)
Dividends and earnings
Revenue return per share
C
9.07p 6.43p 41.1%
Total dividends per share
D
8.10p 7.70p 5.2%
Operating costs
Ongoing charges ratio
BE
0.82% 0.88%
A
Represents the number of Ordinary shares in issue in the Company multiplied by the Company’s share price.
B
Considered to be an Alternative Performance Measure, as defined on pages 99 and 100.
C
Measures the revenue earnings for the year divided by the weighted average number of Ordinary shares in issue (see Statement of Comprehensive Income).
D
The figures for dividend per share reflect the years in which they were earned (see note 8 on page 87).
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 abrdn UK Smaller Companies Growth Trust plc
Strategic
Report
Investments in the Electronics and
Technology Hardware sectors
include XP Power and discoverIE.
abrdn UK Smaller Companies Growth Trust plc 7
The Company is an investment
trust with a premium listing on the
London Stock Exchange.
The Company's objective is to
achieve long-term capital growth
by investment in UK-quoted
smaller companies.
8 abrdn UK Smaller Companies Growth Trust plc
Last year I stated that “underperformance in any period is
obviously disappointing”, but last year that disappointment
was offset somewhat by the positive absolute
performance of more than 40%. This year we are in a
more challenging position; the share price and net asset
value (“NAV”) total returns are both negative and have
also underperformed the reference index.
Performance
For the year ended 30 June 2022, the Company’s NAV
total return, calculated on the basis that all dividends
received are reinvested in additional shares, was -27.3%.
The share price total return, calculated on the same basis,
was -34.3%. By contrast, the total return of the Company’s
reference index, the Numis Smaller Companies plus AIM
(ex investment companies) Index, was -19.0%.
The fall in equity values in the first half of 2022 was a global
phenomenon; most major equity indices were trading at
lower levels on 30 June 2022 than they were in December
2021, on the back of macro-economic concerns related
to the threat of supply-chain issues in the post-Covid
recovery and then the impact of the Russian invasion of
Ukraine in February 2022. The initial reaction to these
concerns was a very severe rotation out of what the
market classifies as “growth” stocks into “value” stocks,
which began at the beginning of 2022. These rotations are
a fact of economic life and take place from time to time.
They are uncomfortable while they last but, thankfully,
they typically do not last for long. The historic phasing and
triggers for these rotations is illustrated in the graph on
page 27, demonstrating the impact on performance in the
current cycle.
The tangible effect of this is that any shareholder who
made an initial investment in the Company in the last two
years will be nursing unrealised losses, and those who
invested at the highs in September 2021 could be over
30% lower on their purchase price. While everyone should
recognise that this is an unavoidable risk of investing in
equities, we appreciate that it is nonetheless deeply
disappointing. However, we should note that this outcome
is not unique to shareholders in the Company; as shown in
the table on page 23, the peer group weighted average
NAV total return for the year was -22.7% and the peer
group weighted average share price total return was -
28.4%. This highlights how the challenging market
backdrop is the significant driver of performance across
the sector.
As the Investment Manager sets out in its report on pages
26 to 30, its expertise is in stock picking using a set of
metrics, which have been rigorously back tested, to
screen companies and help it select those with the desired
growth and quality characteristics for the portfolio. During
a significant rotation such as we are experiencing, the
whole portfolio comes under pressure. The Investment
Manager’s challenge is to identify whether the market is
misjudging and mispricing the outlook for an individual
company, or whether the underlying investment thesis has
changed, and adjust the holdings accordingly. The
Investment Manager believes that the fact the portfolio
holdings are out of favour with the market is explained by
a change in sentiment and not by a change in the
fundamentals of the companies in which the portfolio is
invested, and has confidence in its investment approach.
For the year ended 30 June 2022, the
Company’s NAV total return,
calculated on the basis that all
dividends received are reinvested in
additional shares, was -27.3%. The
share price total return, calculated on
the same basis, was -34.3%.
The Board considers the Investment Manager’s process to
be tried and tested and it has yielded good results over the
past two decades - as can be seen from the chart on
page 23 - albeit interspersed with periods of
underperformance at times of market turbulence such as
this. The Board monitors the performance, composition of
the portfolio and focus on quality and growth as this is the
basis upon which our shareholders have invested in the
Company. Whilst a cautious approach, including on
gearing, is appropriate as the UK economy faces
significant challenge in the period ahead, any style drift or
process change would increase risk significantly. The
Board continues to believe that the opportunities remain
for superior returns over the cycle.
Chairman’s Statement
abrdn UK Smaller Companies Growth Trust plc 9
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Earnings and Dividends
The revenue return per share (“EPS”) for the year ended
30 June 2022 was 9.07p (2021: 6.43p). The increase of
41.1% reverses the declines in the past two years and is
the highest EPS the Company has ever generated,
exceeding the 8.80p in 2019. The EPS was enhanced by
0.26p per share (2.9%) as a result of share buy backs
undertaken during the year, but the level of investment
income of £11.1 million is also £1.1 million higher than it
was in 2019. It is helpful to be able to report that the
contribution by special dividends was less than 1.5% of
total income, which provides a degree of confidence in
the potential of the portfolio in the coming year.
This higher level of earnings provides the Board with the
capacity to increase the level of the final dividend, thereby
increasing the total dividend per share for the year, which
has been held at 7.70p for the last three years. The Board
is therefore proposing a final dividend of 5.40p per share,
making a total dividend for the year of 8.10p per share, a
5.2% increase on the dividend for 2021. In addition, over
£1.1 million will be transferred to the Revenue Reserves,
which will equate to approximately 4.0p per share after
the proposed final dividend has been paid.
In making this decision, the Board is very aware of the
challenging outlook for the UK economy and does not
wish to raise the dividend to a level that might prove
unsustainable in future years.
Subject to approval by shareholders at the Annual
General Meeting, the final dividend will be paid on 28
October 2022 to shareholders on the register on 7
October 2022, with an associated ex-dividend date of 6
October 2022.
Ongoing Charges
The ongoing charges ratio (“OCR”) for the year ended 30
June 2022 was 0.82 % (2021: 0.88%). The reduction is
largely a function of a higher average NAV during the year
as compared to 2021, and we would expect to see a
reversal in this ratio in the coming year.
Discount Control and Share Buy Backs
At the year end the discount of the share price to the cum
income NAV was 14.6% (2021: 5.4%).
Over the year, the Board bought back 4.7 million shares,
equating to 4.7% of the Company’s issued share capital, at
a total cost of £29.7 million and a weighted average price
of 632.2p per share. The weighted average discount at
which the shares were repurchased was 9.1%. The Board
calculates that this has added 2.9p per share to the NAV
for remaining Shareholders.
The fall in equity values in the first half
of 2022 was a global phenomenon on
the back of macro-economic
concerns related to the threat of
supply-chain issues in the post-Covid
recovery and then the impact of the
Russian invasion of Ukraine in
February 2022.
The Company has been more active in buying back
shares in the last 12 months than in any previous year
since it last undertook a tender offer in 2015, buying back
shares on over 130 days last year. The increased activity
has been caused by the level of the discount, which has
been wider than the 8% target that the Board references
in normal market conditions.
Given the backdrop has been unfavourable for the UK
smaller companies sector as a whole, it is to be expected
that we would see the discount widen as it has across
most of our peer group. The Board remains committed to
its target of 8% and will continue to be active in the
market when it believes it to be in the best interests
of shareholders.
Full details of the Board’s discount control policy can be
found on page 17 and a five-year chart of the movement
in the discount compared to the peer group and the
discount control mechanism threshold can be found on
page 24. The average discount for the year as a whole
was 8.2%.
10 abrdn UK Smaller Companies Growth Trust plc
Gearing
The Board has given the Investment Manager discretion to
vary the level of gearing between 5% net cash and 25%
net gearing (at the time of drawdown). The Company has
a £40 million revolving credit facility and a £25 million
fixed-rate loan, providing it with total borrowing facilities of
£65 million. At the year-end, £15 million of the revolving
credit facility and the £25 million fixed-rate loan were
drawn. The gross level of borrowings was offset by cash
and cash equivalents of £15.0 million resulting in net
gearing of 5.1% (2021: 5.7%).
The existing facilities will expire on 31 October 2022.
The Board has reviewed its options and a range of
proposals and is expecting to refinance the facilities
when they expire.
The Investment Team
The Board noted the announcement by abrdn on 5
September 2022 that Harry Nimmo is retiring from the
business on 31 December 2022. On behalf of the Board
and shareholders, I would like to thank Harry for all that he
has done for the Company. Harry was appointed as the
portfolio manager of the Company when Standard Life
Investments, as it then was, took on the mandate on 31
August 2003. At that time, the share price was 47.75p and
net assets were £44 million. 19 years later, the share price
was 482p and net assets are almost £500 million. With
dividends reinvested, the total return is over 12 times the
amount invested. To put this in context, the FTSE All-Share
Index has delivered a total return of less than 3 times and
the reference index has returned less than 5 times. We
would like to wish Harry a long and happy retirement.
The mantle for managing the portfolio is being passed to
Abby Glennie who has been co-manager of the portfolio
since November 2020. With Harry’s retirement, Abby will
be supported by Amanda Yeaman as deputy manager.
Their biographies are contained on page 103. The Board
has been working with Abby now for several years and is
pleased to have her and Amanda responsible for the
portfolio and is comfortable that the change in personnel
will not lead to a change of process.
The Board
There have been no changes to the Board which has now
had consistent membership since 2019. We do, however,
continue to review regularly the balance of attributes on
our Board including skills, experience and diversity in all its
forms to ensure the Board retains the right mix to carry out
its role. Following our discussions on rounding out Board
skills and enhancing diversity, we decided to participate in
the Board Apprentice programme. This has been running
for a number of years and is dedicated to increasing
diversity on boards by increasing the pool of board-ready
candidates. After interviewing a number of candidates,
we were pleased to appoint Jessica Norell Neeson in this
role for a 12-month period from May 2022. She will attend
all Board and committee meetings and will take part in
discussions when invited to do so. The role is
unremunerated.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) will take
place at 12 noon on Thursday 20 October 2022 at the
offices of abrdn plc, Bow Bells House, 1 Bread Street,
London EC4M 9HH. The meeting will include a
presentation from the Investment Manager and will be
followed by lunch. This is a good opportunity for
shareholders to meet the Board and Manager and we
would encourage you to attend. The Notice of the Meeting
is contained on pages 116 to 120.
The Company’s Annual General
Meeting (“AGM”) will take place at
12 noon on Thursday 20 October 2022
at the offices of abrdn plc, Bow
Bells House, 1 Bread Street, London
EC4M 9HH.
Continued
Chairman’s Statement
abrdn UK Smaller Companies Growth Trust plc 11
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Shareholders will be able to submit questions in advance
of the AGM at the following email address:
abrdnuksmallercompaniesgrowthtrust@abrdn.com.
Should you be unable to attend the AGM, the Investment
Manager’s presentation will be made available to
shareholders on the Company’s website shortly after the
meeting. The results of the AGM will also be published on
the website.
In the meantime, the Board strongly encourages all
shareholders to exercise their votes in respect of the AGM
in advance of the meeting, and to appoint the Chairman
of the meeting as their proxy, by completing the enclosed
form of proxy form, or letter of direction for those who
hold shares through the abrdn Investment Trust savings
plans. This should ensure that your votes are registered.
Outlook
Anticipating the future is never easy, but given the
severity of the economic and political turmoil that
exists, giving guidance to shareholders right now is
particularly complex.
The challenges facing Liz Truss as the UK’s new Prime
Minister are multi-fold and daunting, with inflation running
into double digits for the first time in almost 40 years,
expectation of a recession and interest rates on a rising
trajectory. Action will need to be taken urgently on the
cost-of-living crisis, most notably the rapidly rising cost of
energy, but at the time of writing the policy decisions,
which will impact the whole of the UK economy,
are unclear.
The problem for UK policy is that the root causes of these
issues are primarily driven by external events; the energy
crisis caused by the Russian invasion of Ukraine in
February coming on top of existing climate change
challenges and the effects of global policy responses to
the Covid pandemic. The aftermath of Covid has seen
significant global economic disruption and social change
which is still unfolding.
Against this backdrop, markets as a whole are likely to
remain volatile, responding to economic and geo-political
developments as they unfold. However, it is important to
remember that the Investment Manager invests in
companies and their management teams, not in markets,
and the share prices of individual companies, particularly
small cap companies, will not track the market pound for
pound. This is especially the case when the companies are
market leaders in their, often, specialist fields. As a Board,
we will be looking to ensure that the Investment Manager
maintains a laser focus on identifying the next generation
of market leading companies.
Liz Airey
Chairman
7 September 2022
12 abrdn UK Smaller Companies Growth Trust plc
Business
The Company is an investment trust with a premium listing
on the London Stock Exchange.
Investment Objective
The Company’s objective is to achieve long-term capital
growth by investment in UK-quoted smaller companies.
Investment Policy
The Company intends to achieve its investment objective
by investing in a diversified portfolio consisting mainly of
UK-quoted smaller companies. The portfolio will normally
comprise between 50-60 holdings representing the
Investment Manager’s highest conviction investment
ideas. In order to reduce risk in the Company without
compromising flexibility, no holding within the portfolio
should exceed 5% of total assets at the time of acquisition.
The Company may use derivatives for portfolio hedging
purposes (i.e. only for the purpose of reducing, transferring
or eliminating the investment risks in its investments in
order to protect the Company’s portfolio).
Within the Company’s Articles of Association, the
maximum level of gearing is 100% of net assets. The
Directors have set parameters of between 5% net cash
and 25% net gearing (at the time of drawdown) for the
level of gearing that can be employed in normal market
conditions. The Directors have delegated responsibility to
the Investment Manager for the operation of the gearing
level within the above parameters.
Board Investment Limits
The Directors have set additional guidelines in order to
reduce the risk borne by the portfolio:
· Companies with a market capitalisation of below
£50 million should not represent more than 5% of
total assets.
· Companies involved in “Blue Sky” products should not
represent more than 5% of total assets.
· No more than 50% of the portfolio should be invested in
companies that are constituents of the FTSE AIM All-
Share Index.
Investment Process
The Investment Manager’s investment process combines
asset allocation, stock selection, portfolio construction, risk
management, and dealing. The investment process has
evolved out of the Investment Manager’s ‘Focus on
Change’ philosophy and is led by Quality, Growth and
Momentum. The Investment Manager’s stock selection led
investment process involves compiling a shortlist of
potential investments using a proprietary screening tool
known as “The Matrix” which reflects Quality, Growth and
Momentum based factor analysis. The final portfolio is the
result of intensive research and includes face to face
meetings with senior management of these potential
investments. This disciplined process has been employed
for many years and has delivered a consistency of
performance through economic and market cycles.
Further information on the investment process is
contained on pages 31 to 33.
Reference Index
The Company’s reference index is the Numis Smaller
Companies plus AIM (ex investment companies) Index.
Delivering 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, via the Alternative Investment Fund
Manager (the “AIFM”), to the Investment Manager.
Promoting the Success of the Company
The Board’s statement on pages 19 to 22 describes how
the Directors have discharged their duties and
responsibilities over the course of the financial year under
section 172 (1) of the Companies Act 2006 and how they
have promoted the success of the Company for the
benefit of the members as a whole.
Overview of Strate
g
y
abrdn UK Smaller Companies Growth Trust plc 13
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Board believes that the success of the Company is best served through the
measurement of Key Performance Indicators (“KPIs”), details of which are
included below.
Key Performance Indicators (“KPIs”)
The Board assesses the performance of the Company against the range of KPIs shown below over a variety of
timeframes, but has particular focus on the long-term, which the Board considers to be at least five years.
KPI Description
Net asset value (“NAV”) total return performance The Board measures the Company’s NAV total return performance against
the total return of the reference index (the Numis Smaller Companies plus AIM
(ex investment companies) Index) and its peer group of investment trusts.
The figures for this year and for the past three, five and ten years are shown in
the table on page 23.
Share price total return performance The Board measures the Company’s share price total return performance
against the total return of the reference index and its peer group of
investment trusts.
The figures for this year and for the past three, five and ten years are shown in
the table on page 23.
Discount/premium to NAV The Board compares the discount or premium of the Ordinary share price to
the NAV per share to the discount of the peer group and also to the threshold
of the Company’s discount target on a rolling 12 month basis.
A summary of the discount for the past ten years is included in the table in
page 25. A chart showing the discount over five years for the Company and
the peer group, measured against the discount target level, is shown in page
24. The average discount for the year as a whole was 8.2%.
Ongoing charges The Board monitors the Company’s ongoing charges ratio against prior years
and other similar sized companies in the peer group.
A summary of the ongoing charges ratio (“OCR”) for the past ten years is
included in the table in page 25. The OCR for the year ended 30 June 2022
was 0.82%, including look-through costs. This compares to the range of the
most recently reported full year OCRs, including performance fees, for
comparable investment trusts in the UK smaller companies sector of between
0.80% and 1.38%.
14 abrdn UK Smaller Companies Growth Trust plc
Principal and Emerging Risks
and Uncertainties
The Board carries out a regular review of the risk
environment in which the Company operates, changes to
the environment and individual risks. The Board also
considers emerging risks which might affect the
Company. During the year, the key risk was inflation and
the resultant volatility that it created in global stock
markets. In addition, recent events in Ukraine have
created geo-political uncertainty which has further
increased market risk and volatility.
There are a number of other risks which, if realised, could
have a material adverse effect on the Company and its
financial condition, performance and prospects. The
Board has carried out a robust assessment of the
Company’s principal and emerging risks, which include
those that would threaten its business model, future
performance, solvency, liquidity or reputation.
The principal risks and uncertainties faced by the
Company are reviewed by the Audit Committee in the
form of a risk matrix and the Committee also gives
consideration to the emerging risks facing the Company.
The principal risks and uncertainties facing the Company
at the current time, together with a description of the
mitigating actions the Board has taken, are set out in the
table below.
In terms of its appetite for risk, the Board has identified
what it considers to be the key risks to which the Company
is exposed and seeks to take a proportionate approach to
the control of these risks. In particular, by considering the
likelihood and impact of a specific risk, if the potential
exposure is rated as Critical or Significant, the Board
ensures that significant mitigation is in place to reduce the
likelihood of occurrence whilst recognising that this may
not be possible in all cases.
The principal risks associated with an investment in the
Company’s shares are published monthly in the
Company’s factsheet and they can be found in the
pre-investment disclosure document (“PIDD”) published
by the Manager, both of which are available on the
Company’s website.
Risk Mitigating Action
Strategy - the Company’s objectives or the
investment trust sector as a whole become
unattractive to investors, leading to a fall in
demand for the Company’s shares.
Through regular updates from the Manager, the Board monitors the discount/
premium at which the Company’s shares trade relative to the NAV. It also holds an
annual strategy meeting and receives feedback from the Company’s
Stockbroker and shareholders and updates from the Manager’s investor relations
team at Board meetings.
Investment performance - the appointment or
continuing appointment of an investment
manager with inadequate resources, skills or
experience, or the adoption of inappropriate
strategies in pursuit of the Company’s
objectives could result in poor investment
performance, a loss of value for shareholders
and a widening discount.
The Board meets the Manager on a regular basis and keeps investment
performance under close review. Representatives of the Investment Manager
attend all Board meetings and a detailed formal appraisal of the Manager is
carried out by the Management Engagement Committee on an annual basis.
The Board sets and monitors the investment restrictions and guidelines and
receives regular reports which include performance reporting on the
implementation of the investment policy, the investment process, ESG matters,
risk management and application of the investment guidelines.
Key person risk - a change in the key
personnel involved in the investment
management of the portfolio could impact
on future investment performance and
lead to loss of investor confidence.
The Board discusses key person risk and succession planning with the Manager
and Investment Manager on a regular basis.
The Investment Manager employs a standardised investment process for the
management of the portfolio. The well-resourced smaller companies team has
grown in size over a number of years. These factors mitigate against the impact
of the departure of any one member of the investment team.
Biographies of the team members involved with the management of the
Company’s portfolio are included on page 103.
Overview of Strate
g
y
Continued
abrdn UK Smaller Companies Growth Trust plc 15
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Risk Mitigating Action
Share price - failure to manage the discount
effectively or an inappropriate marketing
strategy could lead to a fall in the share price
relative to the NAV per share.
The Company operates a discount control mechanism and aims to maintain a
discount level of less than 8% to the cum-income NAV under normal market
conditions. Details of the discount control mechanism are contained on page 17.
The Directors undertake a programme of inviting major shareholders to discuss
issues of governance or strategy with the Chairman or Senior Independent
Director. In addition, the Company participates in the Manager’s investment trust
promotional programme where the Manager has an annual programme of
meetings with institutional shareholders and reports back to the Board on
these meetings.
Financial instruments - insufficient oversight or
controls over financial risks, including market
price risk, liquidity risk and credit risk could result
in losses to the Company.
As stated above, the Board sets investment guidelines and restrictions which
are reviewed regularly and the Manager reports on compliance with them at
Board meetings.
Further details of the Company’s financial instruments and risk management
are included in note 17 to the financial statements.
Financial obligations - inadequate controls over
financial record keeping and forecasting, the
setting of an inappropriate gearing strategy or
the breaching of loan covenants could result
in the Company being unable to meet its
financial obligations, losses to the Company
and impact its ability to continue trading as a
going concern.
At each Board meeting, the Board reviews management accounts and receives a
report from the Administrator, detailing any breaches during the period under
review. The Board sets gearing limits and monitors the level of gearing and
compliance with the main financial covenants at Board meetings. The Company’s
annual financial statements are audited by the Independent Auditor.
The Audit Committee meets representatives from the Manager’s Compliance
and Internal Audit teams on at least an annual basis and discusses any findings
and recommendations relevant to the Company.
Regulatory - failure to comply with relevant
laws and regulations could result in fines, loss
of reputation and potential loss of investment
trust status.
The Board receives updates on relevant changes in regulation from the Manager,
industry bodies and external advisers and the Board and Audit Committee
monitor compliance with regulations by review of checklists and internal control
reports from the Manager. Directors are encouraged to attend relevant external
training courses.
Operational - the Company is dependent on
third parties for the provision of all systems and
services (in particular those of the Manager
and the Depositary) and any control failures
and gaps in their systems and services could
result in a loss or damage to the Company.
The Audit Committee reviews reports from the Manager on its internal controls
and risk management (including an annual ISAE Report) and considers
assurances from all its other significant service providers on at least an annual
basis, including on matters relating to business continuity and cyber security. The
Audit Committee meets representatives from the Manager’s Compliance and
Internal Audit teams on at least an annual basis and discusses any findings and
recommendations relevant to the Company. Written agreements are in place
with all third party service providers.
The Manager monitors closely the control environments and quality of services
provided by third parties, including those of the Depositary, through service level
agreements, regular meetings and key performance indicators.
A formal appraisal of the Company’s main third party service providers is carried
out by the Management Engagement Committee on an annual basis.
The operational requirements of the Company, including its service providers,
were subject to rigorous testing during the Covid-19 pandemic, including
increased use of online communication and out of office working and reporting.
16 abrdn UK Smaller Companies Growth Trust plc
Risk Mitigating Action
Geopolitical - the effects of geopolitical
instability or change could have an adverse
impact on stock markets and the value of the
Company’s investment portfolio.
Current geopolitical risks include the Covid-19 pandemic, climate change, the
war in Ukraine and the impact of increased inflation. The Investment Manager’s
focus on quality companies, the diversified nature of the portfolio and a
managed level of gearing all serve to provide a degree of protection in
times of market volatility.
Promotional Activities
The Board recognises the importance of promoting the
Company to prospective investors both for improving
liquidity and enhancing the rating of the Company’s
shares. The Board believes one effective way to achieve
this is through subscription to, and participation in, the
promotional programme run by the Manager on behalf of
a number of investment trusts under its management. The
Company also supports the Manager’s investor relations
programme which involves regional roadshows,
promotional and public relations campaigns. During the
Covid-19 pandemic, a number of events that are usually
held physically were substituted with virtual events. The
Manager’s promotional and investor relations teams
report to the Board on a quarterly basis giving analysis of
the promotional activities as well as updates on the
shareholder register and any changes in the make-up of
that register.
The purpose of the promotional and investor relations
programmes 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. The promotional
programme includes commissioning independent paid for
research on the Company, most recently from Edison
Investment Research Limited. A copy of the latest
research note is available from the Company's website.
The cost to the Company of participating in these
programmes is matched by the Manager through the
provision of the necessary resources to carry out the
marketing and promotional activities.
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.
Modern Slavery Act
Due to the nature of its business, being a company that
does not offer goods and services to customers, the Board
considers that the Company 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. In any event, the Board
considers the Company’s supply chains, dealing
predominantly with professional advisers and service
providers in the financial services industry, to be low risk in
relation to this matter.
Environmental, Social and Governance
(“ESG”) Matters
The Investment Manager’s approach to ESG matters is
included on page 33. The Board supports the Investment
Manager’s approach to ESG considerations which are fully
embedded into the investment process. A detailed
explanation of the Investment Manager’s overall
approach to ESG was contained in last year’s Annual
Report and will be included on the Company’s website.
Overview of Strate
g
y
Continued
abrdn UK Smaller Companies Growth Trust plc 17
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The UK Stewardship Code and Proxy Voting
The Company supports the UK Stewardship Code, and
seeks to play its role in supporting good stewardship of the
companies in which it invests. 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.
abrdn plc is a tier 1 signatory of the UK Stewardship Code
which aims to enhance the quality of engagement by
investors with investee companies in order to improve
their socially responsible performance and the long-term
investment return to shareholders. While delivery of
stewardship activities has been delegated to the
Manager, the Board acknowledges its role in setting the
tone for the effective delivery of stewardship on the
Company’s behalf.
The Board has also given discretionary powers to the
Manager to exercise voting rights on resolutions proposed
by the investee companies within the Company’s portfolio.
The Manager reports on a quarterly basis on stewardship
(including voting) issues.
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.
Discount Control Policy
The Board operates a discount control mechanism which
targets a maximum discount of the share price to the
cum-income net asset value of 8% under normal market
conditions. In pursuit of this objective, the Board closely
monitors the level of the discount and buys back shares in
the market when it believes it is in the best interests of
shareholders as a whole to do so. At each Annual General
Meeting, the Board seeks shareholder approval to buy
back up to 14.99% of the Company’s share capital. Share
buy-backs will only be made where the Board believes it
to be in the best interests of shareholders as a whole and
the making and timing of share buy-backs will be at the
discretion of the Board.
The Company has a tender offer mechanism in place and
the Board intends to continue to seek shareholder
approval at each Annual General Meeting to enable it to
carry out tender offers on a discretionary basis in
circumstances where the Board believes that share buy-
backs are not sufficient to maintain the discount at an
appropriate level, although it expects that buy-backs
should be the primary mechanism for managing the
discount.
Viability Statement
The Board considers that the Company, which does not
have a fixed life, is a long-term investment vehicle and, for
the purposes of this statement, has decided that five years
is an appropriate period over which to consider its viability.
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.
Taking into account the Company’s current financial
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.
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 Company is invested in readily-realisable listed
securities in normal market conditions and there is a
spread of investments held.
· The Company is closed ended in nature and therefore it
is not required to sell investments when shareholders
wish to sell their shares.
· The Company’s long-term performance record as
shown on page 23.
18 abrdn UK Smaller Companies Growth Trust plc
· The Company’s level of gearing. The Company had net
gearing of 5.1% as at 30 June 2022. The Company has a
£65 million unsecured loan facility agreement with The
Royal Bank of Scotland International Limited which
matures on 31 October 2022. The Board has set overall
limits for borrowing and reviews regularly the
Company’s level of gearing, cash flow projections and
compliance with banking covenants. The Board has also
performed stress testing and liquidity analysis. The
Board has reviewed its options and a range of proposals
and is expecting to refinance the facility when it expires.
However, in the event that the facility is not refinanced,
there is considered to be sufficient portfolio liquidity to
enable borrowings to be repaid.
· The Company typically has cash balances which,
including money market funds, at 30 June 2022
amounted to £15.0 million. These balances allow the
Company to meet liabilities as they fall due.
· The level of ongoing charges.
· There are no capital commitments currently foreseen
that would alter the Board’s view.
· The robustness of the operations of the Company’s third
party service suppliers.
In assessing the Company’s future viability, the Board has
assumed that shareholders will wish to continue to have
exposure to the Company’s activities in the form of a
closed ended entity, performance will continue to be
satisfactory, and the Company will continue to have
access to sufficient capital.
In making its assessment, the Board is also aware that
there are other matters that could have an impact on the
Company’s prospects or viability in the future, including
the current events in Ukraine, economic shocks or
significant stock market volatility caused by other factors,
and changes in regulation or investor sentiment.
Future Strategy
The Board intends to maintain the strategic direction
set out in the Strategic Report for the year ending
30 June 2023 as it believes that this is in the best
interests of shareholders.
On behalf of the Board
Liz Airey
Chairman
7 September 2022
Overview of Strate
g
y
Continued
abrdn UK Smaller Companies Growth Trust plc 19
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Introduction
Section 172 (1) of the Companies Act 2006 (the “Act”)
requires each Director to act in the way he/she considers,
in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole.
The Board is required to describe to the Company’s
shareholders how the Directors have discharged their
duties and responsibilities over the course of the financial
year under that provision of the Act (the “Section 172
Statement”). This statement provides an explanation of
how the Directors have promoted the success of the
Company for the benefit of its members as a whole, taking
into account, among other things, the likely long-term
consequences of decisions, the need to foster
relationships with all stakeholders and the impact of the
Company’s operations on the environment.
The Purpose of the Company and Role
of the Board
The purpose of the Company is to act as an investment
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 at the end of 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 and provided with 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 and Investment Manager operate at its
meetings and receives regular reporting and feedback
from the other key service providers. The Board is very
conscious of the ways it promotes the Company’s culture
and ensures as part of its regular oversight that the
integrity of the Company’s affairs is foremost in the way
that the activities are managed and promoted. The Board
works very closely with the Manager and Investment
Manager in reviewing how stakeholder issues are handled,
ensuring good governance and responsibility in managing
the Company’s affairs, as well as visibility and openness in
how the affairs are conducted.
The Company’s main stakeholders have been identified
as its shareholders, the Manager (and Investment
Manager), service providers, investee companies, debt
providers and, more broadly, the environment and
community at large.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings
and receives feedback on the Manager’s interactions
with them.
Promotin
g
the Success of the Company
20 abrdn UK Smaller Companies Growth Trust plc
Promotin
g
the Success of the Company
Continued
Stakeholder How We Engage
Shareholders Shareholders are key stakeholders and the Board places great importance on
communication with them. The Board welcomes all shareholders’ views and aims to act fairly
to all shareholders. The Manager and Company’s Stockbroker regularly meet with current
and prospective shareholders to discuss performance and shareholder feedback is
discussed by the Directors at Board meetings. In addition, Directors meet shareholders at the
Annual General Meeting and the Chairman offers to meet with the Company’s larger
shareholders to discuss their views.
The Company subscribes to the Manager’s investor relations programme in order to
maintain communication channels with the Company’s shareholder base.
Regular updates are provided to shareholders through the Annual Report, Half Yearly Report,
monthly factsheets, Company announcements, including daily net asset value
announcements, and the Company’s website.
The Company’s Annual General Meeting provides a forum, both formal and informal, for
shareholders to meet and discuss issues with the Directors and Manager. The Board
encourages as many shareholders as possible to attend the Company’s Annual General
Meeting and to provide feedback on the Company.
Manager (and Investment Manager) The Investment Manager’s Review on pages 26 to 30 details the key investment decisions
taken during the year. The Investment Manager has continued to manage the portfolio and
other assets in accordance with the mandate agreed with the Company, with oversight
provided by the Board.
The Board regularly reviews the Company’s performance against its investment objective
and the Board undertakes an annual strategy review meeting 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 page 54.
Service Providers The Board seeks to maintain constructive relationships with the Company’s service providers
either directly or through the Manager with regular communications and meetings.
The Management Engagement 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, carrying out their responsibilities and providing value
for money.
abrdn UK Smaller Companies Growth Trust plc 21
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Investee Companies Responsibility for 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 Board has also given discretionary powers to the Manager to exercise voting rights on
resolutions proposed by the investee companies within the Company’s portfolio. The
Manager reports on a quarterly basis on stewardship (including voting) issues.
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 page 17.
The Board monitors investments made and divested and questions the rationale for
investment and voting decisions made.
Debt Providers On behalf of the Company, the Manager maintains a positive working relationship with The
Royal Bank of Scotland International Limited, the provider of the Company’s loan facility, and
provides regular updates on business activity and compliance with its loan covenants.
Environment and Community The Board and Manager are committed to investing in a responsible manner and the
Investment Manager embeds Environmental, Social and Governance (“ESG”) considerations
into its research and analysis as part of the investment decision-making process. Further
details are provided on page 33.
Specific Examples of Stakeholder
Consideration During the Year
While the importance of giving due consideration to the
Company’s stakeholders is not a new requirement, and is
considered during every significant Board decision, the
Directors were particularly mindful of stakeholder
considerations as part of the following decisions made
during the year ended 30 June 2022. Each of these
decisions was made after taking into account the short
and long-term benefits for stakeholders.
Portfolio
The Investment Manager’s Review on pages 26 to 30
details the key investment decisions taken during the year.
The overall shape and structure of the investment
portfolio is an important factor in delivering the
Company’s stated investment objective and is reviewed at
every Board meeting. Accordingly, at each Board meeting
the Directors discuss performance in detail with the
Investment Manager. In addition, during the year, the
Board considered in detail how the Investment Manager
incorporates ESG issues into its research and analysis
work that forms part of the investment decision process.
As explained in more detail on page 54 during the year,
the Management Engagement Committee decided that
the continuing appointment of the Manager is in the best
interests of shareholders.
Dividends
The Board is recommending payment of a final dividend
for the year of 5.40p per Ordinary share. Following
payment of the final dividend, total dividends for the year
will amount to 8.10p per Ordinary share, an increase of
5.2% compared to the previous year.
Share Buy Backs
In accordance with the discount control policy included on
page 17, during the year the Company bought back
4,670,519 Ordinary shares to be held in treasury, providing
a small accretion to the NAV per share and a degree of
liquidity to the market at times when the discount to the
NAV per share has widened in normal market conditions. It
is the view of the Board that this policy is in the interest of
all shareholders.
22 abrdn UK Smaller Companies Growth Trust plc
Promotin
g
the Success of the Company
Continued
‘Meet the Manager’ Presentation
In order to give shareholders an opportunity to meet the
Board and the Investment Manager, the Board held an
investor presentation in the Manager’s office in London on
20 May 2022. The event was well attended and a number
of questions were asked and responded to by the
Investment Manager.
The Board places a great deal of importance on
communications with shareholders and believes that
events such as this provide good opportunities for it to
receive feedback from shareholders.
Board Apprentice
To help grow the pool of young diverse candidates
available to serve as non-executive directors of listed
companies, during the year the Board conducted a
process that resulted in the recruitment of a Board
Apprentice, Jessica Norell Neeson, for a period of 12
months. Further details are provided in the Chairman’s
Statement on page 10.
On behalf of the Board
Liz Airey
Chairman
7 September 2022
abrdn UK Smaller Companies Growth Trust plc 23
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Performance (total return)
1 year return 3 years return 5 years return 10 years return
% % % %
Net asset value
AB
–27.3 +2.7 +26.9 +184.1
Share price
B
–34.3 –3.7 +13.1 +159.9
Reference Index –19.0 +10.1 +10.8 +133.7
Peer Group weighted average (NAV) –22.7 +7.4 +15.6 +167.7
Peer Group weighted average (share price) –28.4 +2.9 +16.9 +189.8
A
Cum-income NAV with debt at fair value.
B
Considered to be an Alternative Performance Measure (see pages 100 and 101).
Source: Thomson Reuters Datastream
Long Term Total return of NAV v Share Price v Reference Index
(rebased to 100 at 31 August 2003)
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
Source: Thomson Reuters Datastream
Share price total return Net asset value total return Reference Index total return
Performance
24 abrdn UK Smaller Companies Growth Trust plc
Premium/(discount) of Share Price to NAV v Peer Group
Five years ended 30 June 2022
-15%
-10%
-5%
0%
5%
30/06/17 29/06/18 28/06/19 30/06/20 30/06/21 30/06/22
Source: Thomson Reuters Datastream
Company premium/(discount) Peer group discount Discount control mechansim threshold
Performance
Continued
abrdn UK Smaller Companies Growth Trust plc 25
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Ten Year Financial Record
Year to 30 June 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Per Ordinary share (p)
Net revenue return 4.58 5.05 6.76 6.76 6.42 7.24 8.80 6.74 6.43 9.07
Ordinary dividends paid/proposed 4.05 4.50 5.80 6.60 6.70 7.00 7.70 7.70 7.70 8.10
Net asset value
A
281.58 298.92 336.89 345.43 456.60 552.93 539.54 527.73 737.97 530.37
Share price 280.50 281.25 300.00 316.00 431.00 500.00 491.50 482.00 698.00 453.00
Discount(%)
A
0.4 5.9 10.9 8.5 5.6 9.6 8.9 8.7 5.4 14.6
Ongoing charges ratio (%)
B
1.28 1.19 1.19 1.13 1.08 1.04 0.90 0.91 0.88 0.82
Gearing ratio (%)
C
8.8 (4.6) 4.1 3.6 1.7 3.6 1.5 (0.3) 5.7 5.1
Shareholders’ funds (£m)
D
193 219 243 241 324 408 543 528 728 499
Revenue reserves (£m)
E
3.69 4.34 5.83 6.50 6.26 8.30 10.87 8.80 7.53 8.81
A
Calculated with debt at par value and diluted for the effect of Convertible Unsecured Loan Stock conversion from 31 March 2011 until 30 June 2017. From 30 June 2018, net asset
value is calculated with debt at par value.
B
Calculated as an average of shareholders’ funds throughout the year and in accordance with updated AIC guidance issued in October 2020, to include the Company’s share of
costs of holdings in investment companies on a look-through basis.
C
Net gearing ratio calculated as debt less cash invested in AAA-rated money market funds and short-term deposits divided by net assets at the year end.
D
Increase in 2018 included the effect of the merger with Dunedin Smaller Companies Investment Trust PLC.
E
Revenue reserves are reported prior to paying the final dividend for the year.
26 abrdn UK Smaller Companies Growth Trust plc
The net asset value (“NAV”) total return for the Company
for the year ended 30 June 2022 was -27.3%, while the
share price total return was -34.3%. By comparison, the UK
smaller companies sector as represented by the Numis
Smaller Companies plus AIM (ex investment companies)
Index (the “reference index”) delivered a total return of -
19.0%. Over the same period, the FTSE 100 Index of the
largest UK listed companies delivered a total return of 5.8%.
abrdn has managed the Company since 1 September 2003.
The Company’s share price at that time was 47.75p,
compared to 453.0p at 30 June 2022. The share price total
return over that period was 1,153.1% compared with the
reference index’s total return of 452.2%. The FTSE 100
Index’s total return was 245.3% over the same period.
Equity Markets
The UK stock market, as represented by the FTSE All-
Share Index, gained a small amount of ground over the
year under review with a total return of 1.6%,
outperforming many of its international counterparts. The
picture is more mixed beneath the positive headline figure.
Whilst the FTSE 100 Index of the UK’s largest companies
proved resilient, smaller companies, which are typically
more focused on the domestic economy, came under
significant pressure from the start of 2022. Investors
continued to grapple with the fallout from the Covid-19
pandemic during the spring of 2021. Nonetheless, the
easing of lockdown restrictions following an effective
vaccine rollout built economic and stock market
momentum for most of the period until the end of 2021,
other than occasional market sell-offs as Covid-19 cases
flared up.
Investors generally brushed off the threat of the Omicron
variant at the end of 2021. The highly transmissible variant
spread globally in December, with record daily cases in
the US and most of Europe.
It has been a tough time for global stock markets in 2022,
with investors rattled by soaring inflation, rising interest
rates and the shock of the Russian invasion of Ukraine.
Tensions escalated in Eastern Europe in early February
when Russia deployed its armed forces to Ukraine’s
borders. However, the sharpest market falls came on 24
February when the invasion commenced. The macro
driven impacts of steep inflation and rising interest rates
have started to impact demand, particularly across
consumer exposed areas, with a squeeze on disposable
incomes, and a cost of living crisis for many in the UK on
lower incomes. Whilst the UK large cap stock market has
displayed relative resilience, small cap markets have been
challenging. The FTSE 100 Index is home to many energy
and mining companies, whose shares have benefited
from high commodity prices, particularly after the Russian
invasion. The small cap market in the UK has sold off
sharply however, driven by the ‘risk-off’ trade where
investors typically make a flight towards the perceived
safety of larger cap areas. Smaller Companies also do not
benefit from the support of the large weightings in areas
such as resources, banks and energy that are prevalent
within the FTSE 100 Index.
Inflation has continued to rise in the UK, with annual
consumer price inflation hitting a 40-year high of 9.4% for
the 12 month period to 30 June 2022. Soaring energy costs
compounded by the war in Ukraine, post-pandemic
supply problems and labour shortages are among the
main reasons for escalating prices. The Bank of England
(“BoE”) reacted to rising inflation by steadily increasing
base rates. Most recently, in August, it increased the rate
by 50 basis points (“bps”), taking it to a 13-year high of
1.75%. Further interest rate rises are expected this year.
The period was a challenging one for
performance for the Company,
particularly during the second half of
the financial year, with our style being
out of favour in the market as “top
down” global macro factors have
taken the lead over “bottom up” stock
picking.
Performance
The period was a challenging one for performance for the
Company, particularly during the second half of the
financial year, with our style being out of favour in the
market as “top down” global macro factors have taken the
lead over “bottom up” stock picking. Smaller companies
markets have been difficult, seeing dramatic falls during
2022 after having been relatively stable in the second half
of 2021. The first half of the period was stronger for our
process, with quality growth names holding up well given
the fragility and stop/start of the Covid-19 recovery.
However, there has been a strong value tilt to the market
since the turn of the year, with investors favouring
cheaper, value driven companies. Profit taking has
occurred extensively in our typical quality growth
businesses despite their earnings resilience and continuing
growth.
Investment Mana
g
er’s Review
abrdn UK Smaller Companies Growth Trust plc 27
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
It is disappointing that our investment process has not
provided resilience in a bear market, which has been
typical in the past. The difference this time has been the
market’s focus on the “top-down”, as inflation has risen,
exacerbated by the implications of the continuing war in
Ukraine.
The chart below goes some way to highlight the
environments where, historically, we have relatively
underperformed, and our investment process and style
have been out of favour. These are typically environments
which are macro driven, and where top-down factors are
the key drivers of stock markets. Often, these are in the
first periods of recovery following a market collapse, when
the market favours value and recovery stocks, economic
growth is on an improving pathway and markets typically
care less about quality and areas such as balance sheet
strength. 2022 has been a different environment, where
we have seen a strong sell off, but characterised by a
market focused on inflation and interest rate rises, and an
economic environment where investors have discounted
growth stocks.
The five leading performers during the year were
as follows:
· Telecom Plus 118bps* (shares +72%): supportive end
market conditions given the exit of low-priced
competitors from the industry, and the strong position
the nPower contract has in Utility Warehouse’s pricing
offering. Sales force fully engaged again post Covid-19.
Strong cash generation and dividends. An investment
case study for Telecom Plus is included on page 42.
· Safestore 90bps* (+12%): solid demand in the self-
storage industry with the constant of the 3Ds (divorce,
death, dislocation). Rate increases and strong utilisation
have ensured consistent earnings and dividend growth.
· Alpha Financial Markets 77bps* (+10%): continues to take
market share as consultant specialists in asset
management, as well as expanding into insurance and
alternatives through the acquisition of Lionpoint.
28 abrdn UK Smaller Companies Growth Trust plc
· Clipper Logistics 51bps* (+4%): strong growth through
new and improving relationships with a range of
retailers, given its full service offering and strong
customer service proposition. Clipper was bid for by
GXO Logistics during the year.
· Hilton Food 40bps* (-6%): resilient demand in the food
industry, with a broad global presence, and with strong
contracts and relationships with the supermarkets
ensuring margin protection. Hilton has expanded in the
fish protein market through acquisitions.
The five worst performers during the year were as follows:
· Gamma Communications -102bps* (shares -46%):
disappointing growth in Europe given a slow recovery in
corporate decision making and investment post Covid-
19. However, Gamma offers a reliable and resilient
revenue stream with high visibility, and continues to
innovate in the latest service offerings.
· XP Power -94bps* (-49%): has navigated the challenges
of the supply chain and Vietnam factory challenges well,
to ensure continued delivery of products to customers.
Shares were hit by the loss of a legal dispute, which
came through an acquisition.
· Future -90bps* (-45%): has continued to deliver strong
earnings growth, however the shares have been hit by
sentiment around consumer exposure, as well as
headwinds from energy and paper costs. Future
continues to drive growth opportunities, both organically
and through bolt on acquisitions.
· Impax Asset Management -82bps* (-46%): despite
resilient asset inflows, the shares have been de-rated
given the earnings downgrades from lower market
levels. Impax continues to be a highly respected asset
manager in the ESG space, which remains a growth
market.
· GB Group -80bps* (-52%): whilst the Company’s
performance has remained solid, the shares were hit by
a poorly managed placing to fund the Acuant
acquisition. Since then, there has been a continued solid
execution from the business, and good integration of
the deal.
(* relative to the reference index)
Dealing and Activity
Turnover remained modest during the year, not out of line
with previous periods. Over the year we have added nine
new positions into the portfolio, and exited ten holdings.
We participated in two IPOs during the year; Big
Technologies, the electronic monitoring tag business
predominantly for the criminal justice system, operating
globally; and LBG Media, the digital media business
operating under brands including Lad Bible. Both are
founder run businesses, in growth end markets, where
they have strong market positions. LBG Media is a leading
multi-brand, multi-channel digital content publisher, with a
global audience of 264 million social media followers. As
well as creating and distributing bespoke content through
its ten brands, LBG also work directly with brands, creating
content as a producer. Big Technologies produces
industry leading electronic monitoring systems, and
through its long-term contracts with governments and
justice systems globally, has strong revenue visibility. New
positions included Volution (leading supplier of ventilation
products), YouGov (data services provider, a key business
globally with products such as BrandIndex, and Profiles),
Marlowe (UK leader in business-critical services and
software), and Tatton Asset Management (discretionary
fund management platform delivering strong growth).
We also added new holdings in Watkin Jones (developer,
builder and manager of new homes for rent across the UK
and Ireland), Alliance Pharma (leading international
healthcare business) and Serica Energy (North Sea
producer of natural gas).
Turnover remained modest during the
year, not out of line with previous
periods. Over the year we have added
nine new positions into the portfolio,
and exited ten holdings.
Other significant purchases included CVS (veterinary
practices and services) where we see improving
execution and structural growth trends, Robert Walters
(global recruitment company) which is well positioned in a
positive environment given active recruitment markets
and candidate confidence to move, and Hollywood Bowl
(ten pin bowling and mini-golf leisure) which is delivering
strong trading and cash generation post Covid-19.
We exited three holdings in the portfolio which were
subject to bid approaches; Sumo (video games
development) which was acquired by Tencent which
already held 9.99% of the shares, Sanne (fund
administration) which was acquired in a competitive bid
process won by Apex), and Clipper Logistics (logistics for
the retail industry) which was bid for by US peer GXO
Investment Mana
g
er’s Review
Continued
abrdn UK Smaller Companies Growth Trust plc 29
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Logistics in a cash and shares deal. As holders, we would
have ended up with US listed equity so we exited the
holding following the bid.
We exited the holdings in AO World and Avon Protection
after they initially reported earnings downgrades, from
fundamental operational challenges in their businesses. In
neither case did we foresee a near term resolution, so
moved on from these investments. These proved to be the
correct decisions, with both companies subsequently
experiencing continued downgrades and strategic reviews.
Trustpilot and Victorian Plumbing are both IPOs that we
took part in, but we have since moved on. Trustpilot
management are not showing a focus and discipline on
profitability, rather choosing to focus on top line growth,
which does not sit with our investment process. Victorian
Plumbing profits were heavily impacted by supply chain
disruptions and tight consumer spending.
We exited James Fisher (marine services) where
management change and control of the business were a
concern, and AB Dynamics (simulation and testing for
autonomous vehicles) where the near term looked
challenging and required investment. We also chose to
exit RWS following the departure of the CEO, and the
acquisition of SDL where we were unsure of the natural fit.
We also reduced exposure to AJ Bell over the period, with
the platform industry businesses all requiring investment,
which pressures margins in a declining fee industry.
Sector Exposure
The sector exposures remain broadly consistent to the
position at the interim stage. The leading sector exposures
are to Financials, Media, Software and Industrial Support
Services. We have reduced exposure to Financials,
through reducing exposure to asset managers. We have
also reduced exposure to Software, but have increased
the weighting to Media where the portfolio holds a diverse
mix of companies. We have increased the exposure in
Telecoms through increasing exposure to Telecom Plus
(multi utility provider to consumers). The portfolio
continues to have low exposures to Resources, Personal
Goods, Electronics, and Construction.
Discount
As at 30 June 2022, the cum-income discount to NAV
stood at 14.6%. The simple average discount for the close
peers as a whole was 13.6%. Whilst we have been
disappointed with the widening of the discount during the
year, it has not been out of line with the sector. As
explained in more detail in the Chairman’s Statement, the
Company has been active in buying back shares.
The leading sector exposures are to
Financials, Media, Software and
Industrial Support Services. The
Portfolio continues to have low
exposures to Resources, Personal
Goods, Electronics, and Construction.
Gearing
The level of gearing at 30 June 2022 was 5.1%. We expect
gearing to remain around current levels, reflecting our
positive view over the medium to long-term of the asset
class. We have held higher cash positions in recent
months due to our caution of a short-term market sell-off.
Dividends
The dividend outlook of the Company, seen through its
income generation from underlying holdings, improved
through the year. The earnings resilience and growth
being delivered by the companies in the portfolio is being
reflected in the dividend growth they are providing. The
confidence in the outlooks for the companies has also
been emphasised by management teams’ conviction in
continuing strong dividend payments to shareholders,
aided by balance sheet strength.
Whilst companies have broadly returned to their pre-
Covid dividend policies, the portfolio, at time of writing,
held ten positions which were non-dividend payers during
the year. These companies constitute around 15% of the
portfolio. Hotel Chocolat has focused on continued
investment in its business for growth post Covid and
therefore not returned to paying dividends yet. However,
many of the others are more recent listings to the stock
market over the past couple of years and, whilst they have
the potential to pay dividends in the future, are not yet
doing so.
One risk, if we do enter a recessionary period, is that the
combination of more cautious attitudes, as well as
earnings pressures in some markets, may see a more
challenging dividend environment.
30 abrdn UK Smaller Companies Growth Trust plc
Outlook
At the time of writing, the market is dominated by macro
conditions, particularly the direction of interest rates and
inflation. Control of Covid-19 remains an issue in some
regions, particularly China. The Russian invasion of Ukraine
sadly rumbles on. The combination of these factors
creates a very uncertain environment, which continues to
see markets selling off.
We see two potential environments emerging, and in both
scenarios we believe the Company has a place to play.
We remain confident that our
unchanged quality, growth and
momentum investment process
generates strong returns from smaller
companies in the long-term. Our
process has been seasoned by four
full economic cycles.
In a recessionary environment, or continued low
economic growth, we believe the market will look to move
more towards quality; resilience, reliability, visible revenue
streams and strong balance sheets. In which case, on a
relative basis, our Quality focus should become
increasingly attractive to the market. In that economic
situation where growth becomes scarcer, what growth is
around tends to become more valuable. Our ability to
identify companies which can deliver sustained earnings
growth in that environment should be rewarded. In the
Global Financial Crisis, the market cared about quality and
earnings; it did not care about value seen through the
underperformance of perceived cheap stocks.
In a recovery phase, small and mid-cap stocks tend to
lead that market recovery, and we believe the outlook for
the asset class would be attractive. Particularly in this
cycle, we have seen small and mid-caps in the UK heavily
underperform large caps. This disparity has been wider
than seen in other geographical markets, accentuated by
the sector composition of FTSE 100 Index towards oil and
gas, energy, resources and banks. In that environment, we
believe the small cap asset class can produce some
attractive return potential, as markets recover and as the
disparity to large cap narrows.
Since our appointment as Investment Manager in 2003,
including the current downturn, there have been falls in
the market of over 40% on three occasions. Markets
anticipate improvements, and indeed turning points in the
past have always been when the outlook is bleakest.
During the banking crisis in November 2008, it looked quite
likely that the world banking system was in danger of
collapse. 2009, however, saw a swift recovery with super
normal profits available for the brave (it must be stressed,
however, that future performance does not reflect past
performance). The Company’s discount to NAV is at a
level not seen since 2009. It is also the case that the share
price has traded at a premium to the NAV from time to
time over the past decade.
Smaller company markets have higher levels of risk and
volatility which in part reflects the potential for higher
returns in the long run. Thus, Smaller Companies as an
asset class should be viewed as a long-term multi-year
investment to achieve these potential strong returns that
have historically been available.
Our investment process features quality and resilience. It is
fair to say that, so far in this downturn, the holdings in the
portfolio are, on the whole, trading well, and some indeed
are seeing earnings forecast upgrades even in these
difficult times. Markets really need to see inflation come
under control and the shape of any potential imminent
recession. A resolution to the very serious geo-political
issues and a proper end to the Covid-19 emergency in the
Far East would also be helpful. Clarity, particularly, on the
first issue could see a sharp turn in markets. However, we
may be some months away from that occurring.
We remain confident that our unchanged Quality, Growth
and Momentum investment process generates strong
returns from smaller companies in the long-term. Our
process has been seasoned by four full economic cycles.
Harry Nimmo and Abby Glennie
abrdn
7 September 2022
Investment Mana
g
er’s Review
Continued
abrdn UK Smaller Companies Growth Trust plc 31
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
abrdn UK Smaller Companies Growth
Trust plc offers an actively managed
portfolio of equity shares of smaller
and mid-sized companies listed in the
UK. Over the longer term, smaller
company returns have outstripped
those of their large-cap peers.
Management
The Company’s Manager is abrdn Fund Managers Limited
(“aFML”, the “AIFM” or the “Manager”). aFML is a wholly
owned subsidiary of abrdn plc. The Company's portfolio is
managed by abrdn Investment Management Limited (the
“Investment Manager”) by way of a group delegation
agreement in place between it and aFML. Harry Nimmo
has been the Portfolio Manager since 2003 and Abby
Glennie was appointed as Co-manager in November
2020. They are part of a team focusing on investing in
smaller and mid-sized companies.
Investment Philosophy and Process
The Board has identified that abrdn has a proven and
repeatable investment process, which has delivered
strong returns to shareholders over the last 19 years. The
investment process adheres to the abrdn Smaller
Companies’ Quality, Growth and Momentum led
philosophy. The Investment Manager aims to select lower
risk smaller companies in growing markets where
business momentum is positive, predictable and
improving. The Investment Manager has a long-term
investment horizon, aiming to maximise returns by running
winners in the long-term and cutting losers. The
investment process embeds abrdn’s Environmental, Social
and Governance principles.
The Matrix
In managing the Company’s investment portfolio, the
Quality, Growth and Momentum philosophy is enhanced
by using abrdn’s proprietary screening tool, ‘The Matrix’, to
focus research efforts and the stock selection process.
The Matrix is a quantitative screening tool assessing
potential and current investments on 12 separate proven
indicators of financial performance. It is a powerful tool in
helping the Investment Manager identify a shortlist of
investable stocks for further analysis and monitoring the
performance and prospects of the portfolio. Stocks that
are identified in this way are then subjected to further
analysis and may be selected for the portfolio following
discussions with company management.
Investment Process
32 abrdn UK Smaller Companies Growth Trust plc
When building a portfolio of smaller
companies, the Investment Manager
screens stocks using the Matrix and
also considers a number of qualitative
factors to help identify the best
investment opportunities.
1. Sustainable growth
Companies in the portfolio will often produce niche
products or services where demand is forecast to rise as
these characteristics are the most predictive of future
earnings and dividend growth.
2. Quality
The strength of each company’s relationships with its
customers or clients, the existence and importance of
long-term contracts and the degree to which the
company has any element of pricing power is important
as it allows the company to pass on any cost increases
and thereby maintain margins. The Investment Manager
will typically avoid companies with high or unsustainable
levels of debt.
3. Buy for the long-term
Identify the great companies of tomorrow and then hold
them for the long-term. This reduces the financial drag of
high trading volumes.
4. Concentrate the effort
The Matrix helps identify the likely candidates for inclusion
in the portfolio and reduces the risk that effort is spent on
stocks that will not fulfil the criteria for inclusion within
the portfolio.
5. Management longevity
Founders retaining positions of authority within the
companies after flotation, along with longevity of tenure
by CEOs are a positive signal.
6. Valuation is secondary
Invest in companies which demonstrate positive earnings
momentum as the team believes that it is a reliable
predictor of future performance.
Investment Process
Continued
abrdn UK Smaller Companies Growth Trust plc 33
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Although environmental, social and
governance (“ESG”) factors are not
the over-riding criteria in relation to
the investment decisions taken by the
Investment Manager, significant
prominence is placed on ESG and
climate related factors throughout the
investment process.
ESG Factors
The Investment Manager considers ESG risks and
opportunities for all of its investments and thus, ESG
considerations are inextricably embedded into the
investment process in order to achieve a successful and
sustainable performance for the longer term. There is a
broad understanding within abrdn and the Smaller
Companies Team that a full and thorough assessment of
ESG factors allows better investment decisions to be
made that lead to better outcomes for clients; with ESG
aspects considered alongside other financial and
fundamental factors in order to make the best possible
investment decisions at a stock picking and at a portfolio
construction level.
ESG analysis is a core constituent in the “Quality” analysis
of the team’s fundamental research. Especially for smaller
companies, both risks and opportunities matter, and thus
the research approach and analysis reviews this
accordingly. All of the team’s equity analysts are required
to carry out an ESG quality assessment which will be
reflected in the research note provided for each of the
companies under coverage.
The Smaller Companies Team has a very close
relationship with the ESG specialists within abrdn, while at
the same time having an on-desk ESG analyst to assist in
the research process and ESG engagements with
companies. Through the utilisation of third party provided
research such as MSCI and, more recently abrdn’s in-
house ESG rating tools, the team is able to identify, where
appropriate, leaders and laggards, areas of weakness and
areas of strength. Ratings processes for smaller
companies can be less accurate given data availability
and coverage, and therefore the engagement and
fundamental research the Investment Manager and ESG
equity analyst do with the investee companies is critical in
adding value and ensuring the most important ESG risks
and opportunities are well identified. Given the
importance of ESG matters, these factors are reviewed on
an ongoing basis in addition to monitoring companies’
actions to assess the need for further engagement and/or
changes to the internal investment view. Finally, as part of
broader stewardship activities, the team participates
actively in the voting process of the holdings, in line with
best practice.
34 abrdn UK Smaller Companies Growth Trust plc
Portfolio
Investments in the Food
Producers sector include
Hilton Food and Cranswick.
abrdn UK Smaller Companies Growth Trust plc 35
The Investment Manager aims to select
lower risk smaller companies in growing
markets where business momentum is
positive, predictable and improving. The
Investment Manager has a long-term
investment horizon, aiming to maximise
returns by running winners in the long-
term and cutting losers.
36 abrdn UK Smaller Companies Growth Trust plc
As at 30 June 2022
Safestore
Kainos
Safestore is a self-storage business
operating in the UK and France.
Kainos is a digital services company
offering information technology products
and services to clients in a range of
markets, including government,
healthcare and financial services.
Telecom Plus
Alpha Financial Markets
Telecom Plus is a multi-utility provider to
UK consumers, operating through a
direct sales channel.
Alpha Financial Markets is a founder-led
consultancy firm, with a focus on asset
management and insurance industries. It
is UK and US focused and is growing
through organic growth and
complementary accretive bolt
on acquisitions.
Hilton Food
Cranswick
Hilton Food is a founder-run beef and fish
packer. It works closely with food
retailers across Europe and Australasia.
Cranswick is a high quality vertically
integrated pork and chicken products
company operating in the UK.
Focusrite
Mortgage Advice Bureau
Focusrite provides software and
hardware for audio content creation and
is a global leader in its market.
Mortgage Advice Bureau is a leading
mortgage network as well as the UK's
most recognised intermediary network
of advisers.
Future
Ergomed
Future publishes special-interest
consumer magazines, applications
and websites.
Ergomed provides specialised services to
the pharma industry, around clinical
research and regulatory demands.
Ten Lar
g
est Investments
abrdn UK Smaller Companies Growth Trust plc 37
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
As at 30 June 2022
Valuation Total Valuation
2022 portfolio 2021
Company Sector £’000 % £’000
Safestore Real Estate Investment Trusts 21,795 4.2 19,471
Kainos Software and Computer Services 21,199 4.0 30,624
Telecom Plus Telecommunications Service Providers 20,999 4.0 9,706
Alpha Financial Markets Industrial Support Services 20,033 3.8 18,451
Hilton Food Food Producers 18,858 3.6 20,313
Cranswick Food Producers 14,181 2.7 19,659
Focusrite Leisure Goods 14,143 2.7 16,344
Mortgage Advice Bureau Finance and Credit Services 13,733 2.6 16,634
Future Media 13,377 2.6 37,256
Ergomed Pharmaceuticals and Biotechnology 13,189 2.5 13,338
Top ten investments 171,507 32.7
XP Power Electronic and Electrical Equipment 13,121 2.5 26,674
Diploma Industrial Support Services 13,064 2.5 18,621
Bytes Technology Software and Computer Services 12,934 2.5 17,141
Marshalls Construction and Materials 12,567 2.4 16,733
Next 15 Communications Media 12,477 2.4 14,722
JTC Investment Banking and Brokerage Services 12,196 2.3 11,861
Watches of Switzerland Personal Goods 12,018 2.3 12,992
Sirius Real Estate Real Estate Investment and Services 11,855 2.3 13,427
discoverIE Group Technology Hardware and Equipment 11,662 2.2 17,266
Gamma Communications Telecommunications Service Providers 11,110 2.1 31,807
Top twenty investments 294,511 56.2
Morgan Sindall Construction and Materials 10,896 2.1 12,900
Hill & Smith Industrial Metals and Mining 10,841 2.1 14,011
Auction Technology Software and Computer Services 10,204 1.9 15,414
Midwich Industrial Support Services 10,012 1.9 10,082
GlobalData Media 9,593 1.8 15,479
Treatt Chemicals 8,921 1.7 12,769
CVS Consumer Services 8,715 1.7 7,145
Big Technologies Software and Computer Services 8,701 1.7 –
GB Group Software and Computer Services 8,570 1.6 16,628
Impax Asset Management Investment Banking and Brokerage Services 8,451 1.6 22,322
Top thirty investments 389,415 74.3
Investment Portfolio
38 abrdn UK Smaller Companies Growth Trust plc
As at 30 June 2022
Valuation Total Valuation
2022 portfolio 2021
Company Sector £’000 % £’000
Robert Walters Industrial Support Services 8,363 1.6 7,302
4imprint Media 8,336 1.6 8,155
Big Yellow Real Estate Investment Trusts 8,036 1.5 8,005
Henry Boot Real Estate Investment and Services 7,942 1.5 7,011
Hollywood Bowl Travel and Leisure 7,923 1.5 3,554
Games Workshop Leisure Goods 7,770 1.5 18,736
Intermediate Capital Investment Banking and Brokerage Services 7,370 1.4 13,682
Team 17 Leisure Goods 7,264 1.4 17,502
Mattioli Woods Investment Banking and Brokerage Services 6,118 1.2 6,380
Marlowe Industrial Support Services 5,861 1.1 –
Top forty investments 464,398 88.6
Liontrust Asset Management Investment Banking and Brokerage Services 5,769 1.1 14,567
Jet2 Travel and Leisure 5,731 1.1 7,482
Hotel Chocolat Food Producers 5,513 1.0 4,327
Moonpig Retailers 4,685 0.9 4,900
AJ Bell Investment Banking and Brokerage Services 4,663 0.9 14,052
Inspecs Personal Goods 3,703 0.7 5,481
Gooch & Housego Technology Hardware and Equipment 3,649 0.7 5,982
Motorpoint Retailers 3,640 0.7 6,701
Serica Energy Oil, Gas and Coal 3,483 0.7 –
LBG Media Media 3,451 0.7 –
Top fifty investments 508,685 97.1
Watkin Jones Household Goods and Home Construction 2,900 0.5 –
Tatton Asset Management Investment Banking and Brokerage Services 2,555 0.5 –
Volution Construction and Materials 2,458 0.5 –
YouGov Media 2,265 0.4 –
Molten Ventures (previously
known as Draper Esprit)
Investment Banking and Brokerage Services 2,211 0.4 –
Alliance Pharma Pharmaceuticals and Biotechnology 1,819 0.4 –
Gear4Music Leisure Goods 1,244 0.2 9,321
Total portfolio 524,137 100.0
All investments are equity investments.
Investment Portfolio
Continued
abrdn UK Smaller Companies Growth Trust plc 39
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
As at
30
June
2022
Portfolio wei
g
htin
g
2022 2021
% %
Basic Materials 3.8 3.5
Chemicals 1.7 1.7
Industrial Metals and Minin
g
2.1 1.8
Consumer Discretionary 24.7 27.4
Consumer Services 1.7 0.9
Household Goods and Home Construction 0.5 –
Leisure Goods 5.8 9.2
Media 9.5 9.8
Personal Goods 3.0 2.4
Retailers 1.6 3.6
Travel and Leisure 2.6 1.5
Consumer Staples 7.3 5.8
Food Producers 7.3 5.8
Ener
g
y 0.7 –
Oil, Gas and Coal 0.7 –
Financials 12.0 15.8
Finance and Credit Services 2.6 2.2
Investment Bankin
g
and Brokera
g
e Services 9.4 13.6
Health Care
2.9 1.7
Pharmaceuticals and Biotechnolo
g
y 2.9 1.7
Industrials 18.4 19.7
Aerospace and Defence – 0.8
Construction and Materials 5.0 3.9
Electronic and Electrical Equipment 2.5 3.5
Industrial En
g
ineerin
g
– 0.3
Industrial Support Services 10.9 11.0
Industrial Transportation – 0.2
Real Estate 9.5 6.3
Real Estate Investment and Services 3.8 2.7
Real Estate Investment Trusts 5.7 3.6
Technolo
g
y 14.6 14.4
Software and Computer Services 11.7 11.4
Technolo
g
y Hardware and Equipment 2.9 3.0
Telecommunications 6.1 5.4
Telecommunications Service Providers 6.1 5.4
Total 100.0 100.0
Sector Distribution of Investments
40 abrdn UK Smaller Companies Growth Trust plc
24.7%
18.4%
14.6%
12.0%
9.5%
7.3%
6.1%
3.8%
2.9%
0.7%
Consumer Discretionary
Industrials
Technology
Financials
Real Estate
Consumer Staples
Telecommunications
Basic Materials
Health Care
Energy
Sector allocation 2022
27.4%
19.7%
15.8%
14.4%
6.3%
5.8%
5.4%
3.5%
1.7%
Sector allocation 2021
Consumer Discretionary
Industrials
Financials
Technology
Real Estate
Consumer Staples
Telecommunications
Basic Materials
Health Care
Investment Portfolio by Sector
abrdn UK Smaller Companies Growth Trust plc 41
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
66.7%
25.3%
6.6%
1.4%
Market cap exposure 2022
Numis Smaller Companies plus AIM (ex investment companies)
FTSE 250*
FTSE AIM*
FTSE 100*
57.7%
28.8%
10.9%
1.8%
0.8%
Market cap exposure 2021
Numis Smaller Companies plus AIM (ex investment companies)
FTSE 250*
FTSE AIM*
FTSE 100*
Other**
* Consists of holdings which are not constituents of the Numis Smaller Companies plus AIM (ex investment companies) Index.
** Companies which have come to the market since the last rebalancing of the above indices
Market Cap Exposure
42 abrdn UK Smaller Companies Growth Trust plc
Telecom Plus
As the UK’s only fully integrated multi-service provider,
Telecom Plus derives significant ongoing operating
efficiencies by spreading a single set of overheads across
multiple revenue streams it receives from its customers.
The business has a unique route to market that uses a
highly motivated network of around 48,000 self-employed
partners and word of mouth to drive customer numbers.
Trading under the brand name ‘Utility Warehouse’, the
customer proposition is compelling. The company bundles
together customers’ home services - energy, broadband,
mobile and insurance - into one, great value, monthly bill,
saving customers time and money by providing all their
home services in one. The company has a unique buying
contract with npower that works on the basis of a circa
15% discount to the price cap, so effectively moves with
the cap. This means the company’s profit increases as the
price increases. We are obviously in unprecedented times
and so account will need to be taken of any government
decisions to protect households from price increases, but
the Investment Manager believes that the outcome should
be broadly unchanged for Telecom Plus.
General public perception of utility markets and providers
is changing, and switching suppliers to achieve short-term
savings has become just one factor to be considered,
alongside the stability and continuity of supply (especially
in relation to broadband). The energy supply market has
also gone through fundamental change, with half of the
suppliers ceasing to trade last year and Ofgem
recognising that a reset is required. Now, Ofgem will no
longer allow businesses to be funded by customer
deposits. There will be far greater regulatory scrutiny of
new market entrants - a marked contrast to the previous
‘free-for-all’ regime. Telcom Plus’s business model should
be ideally placed to succeed in these market conditions.
Against this backdrop, the Investment Manager believes
that the business is at the start of a material upgrade
cycle. Telecom Plus has a 2.5% share of UK households, so
there is considerable space for growth. Market share
gains are likely to be organic and achieved by leveraging
the partner network.
As a sizeable supplier of electricity and gas to households
throughout the UK, the company has a significant role to
play in the transition to net zero. Recognising the
challenge ahead, management is fully committed to
playing an active part in reducing the company’s impact
on the climate. Management’s ambitions and
commitments align with the UN Sustainable
Development Goals.
Investment Case Studies
abrdn UK Smaller Companies Growth Trust plc 43
Watches of Switzerland
The market for luxury brands is largely immune from the
vagaries of economic cycles and so offers investors a
source of steady and reliable returns. Close relationships
with its high-quality brand suppliers, an ambitious
management team and clear ESG commitments
combine to ensure that Watches of Switzerland (“WOS”)
continues to operate impressively.
WOS operates in a relatively stable market where
demand far outstrips supply. The average waiting list for
the Rolex, Patek Philippe, Cartier and Breitling
masterpieces it sells is often measured in years. Luxury
watches never go out of fashion and, despite their hefty
price tags, demand is largely immune from dips in
economic prosperity.
The success of UK-based WOS has been built by the
management team as painstakingly as Swiss
watchmakers craft the timepieces that the company sells.
WOS nurtures very close relationships with leading watch
brands and demonstrates its commitment to these
relationships through the outstanding customer service it
offers to watch owners. In fact, WOS is an authorised
dealer for more Swiss brands than any other retailer in the
UK. Its 2,000-strong workforce is based at stores,
warehouses and offices in the UK and US. The company is
now expanding further into Europe and into selling
branded jewellery.
The Investment Manager added the holding to the
portfolio at the beginning of 2021, impressed by the quality
of the management team and clear evidence of its
leadership succession planning. Management has
displayed both operational talent and strong investor
communications, enabling the Investment Manager to
regularly discuss with the team the challenges it faces,
such as the evolution of smartwatches and how it plans to
continue building the business.
The company scrutinises its supply chain to ensure there is
sustainability and transparency. Luxury goods such as
expensive watches fit the circular economy model well,
and the pre-owned market for them is buoyant. As a
result, coveted and long-lasting timepieces avoid the
‘make, use, dispose’ pattern familiar across much of the
retail sector. Instead, each watch’s extended lifespan
reduces the need to constantly replenish product ranges.
This eases the depletion of the planet’s raw-material
sources and cuts down the ‘carbon miles’ required for
their production and distribution.
44 abrdn UK Smaller Companies Growth Trust plc
Governance
Investments in the Construction and
Materials sector include Marshalls and
Morgan Sindall.
abrdn UK Smaller Companies Growth Trust plc 45
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.
All Directors are considered by the Board
to be independent of the Company and
the Manager and free of any material
relationship with the Manager.
46 abrdn UK Smaller Companies Growth Trust plc
Liz Airey
Independent Non-Executive Chairman
Experience:
Liz Airey was, until March 2020, non-executive Chairman
of Jupiter Fund Management plc. She is a non-executive
director of BlackRock Frontiers Investment Trust plc and
Kirk Lovegrove & Company Limited, an advisory board
member of Ownership Capital BV, a member of the
Investments Committee of the Institute of Chartered
Accountants in England and Wales, and Chair of Trustees
of the Rolls-Royce UK Pension Fund. She has previously
been a non-executive director of Tate & Lyle plc, Dunedin
Enterprise Investment Trust plc, JP Morgan European
Smaller Companies Trust plc, Zetex plc and AMEC plc. In
her executive career, Liz was Finance Director of
Monument Oil and Gas plc, a post she held from 1990 until
the sale of the company to Lasmo plc in 1999.
Length of service:
3 years, appointed a Director on 21 August 2019 and
Chairman on 31 March 2020
Committee membership:
Management Engagement Committee and Nomination
Committee (Chairman)
Contribution:
The Board has reviewed the contribution of Liz Airey in
light of her proposed re-election at the AGM and has
concluded that she has chaired the Company expertly
since her appointment as Chairman on 31 March 2020,
fostering a collaborative spirit between the Board and
Manager whilst ensuring that meetings remain focused on
the key areas of stakeholder relevance. In addition, she
has provided significant insight to the Board through her
financial and corporate experience and knowledge of the
investment management sector.
Ashton Bradbury
Independent Non-Executive Director
Experience:
Ashton Bradbury has previously held roles at
Charterhouse Tilney, Hill Samuel Investment Management
and HSBC Asset Management Europe and was, until 2014,
a fund manager with Old Mutual Global Investors Limited,
where he established its Small and Mid-Cap equities team.
Ashton is currently a non-executive director of British Golf
Association Limited and is non-executive Chairman of
Golf Union of Wales Limited. Ashton holds a BSc in Banking
and Finance from Loughborough University of
Technology.
Length of service:
4 years, appointed a Director on 2 July 2018
Committee membership:
Audit Committee, Management Engagement Committee
and Nomination Committee
Contribution:
The Board has reviewed the contribution of Ashton
Bradbury in light of his proposed re-election at the AGM
and has concluded that he continues to provide significant
investment insight to the Board and knowledge of the
investment management sector.
Board of Directors
abrdn UK Smaller Companies Growth Trust plc 47
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Alexa Henderson
Independent Non-Executive Director
Experience:
Alexa Henderson has over 30 years’ experience in finance,
accounting and audit having worked with KPMG, Arthur
Andersen and Deutsche Bank (WM Company). She is
currently a non-executive director of CT Property Trust
Limited and Chairman of JP Morgan Japan Smaller
Companies Trust PLC. In addition, Alexa is a director of
Bravura Solutions Limited, a company incorporated in
Australia. Previous directorships include Dunedin Smaller
Companies Investment Trust PLC, Scottish Building
Society (which she chaired for four years) and Adam &
Company Group PLC. Alexa Henderson holds a BSc in
Economics and Accounting from Edinburgh University and
is a Chartered Accountant.
Length of service:
4 years, appointed a Director on 8 October 2018
Committee membership:
Audit Committee, Management Engagement Committee
and Nomination Committee
Contribution:
The Board has reviewed the contribution of Alexa
Henderson in light of her proposed re-election at the AGM
and has concluded that she continues to provide
significant financial and corporate insight to the Board and
knowledge of the investment trust sector.
Caroline Ramsay
Independent Non-Executive Director and Chairman of the
Audit Committee
Experience:
Caroline Ramsay is a member of the Supervisory Board of
Aegon NV and was previously a non-executive director of
Aegon UK PLC, Scottish Equitable plc, Scottish Equitable
Holdings Limited and Cofunds Limited. She is also a non-
executive director of Tesco Underwriting Limited, Brit
Syndicates Limited and Ardonagh Speciality Holdings
Limited, and is a member of the Financial Conduct
Authority’s Regulatory Decisions Committee. Until June
2015, Caroline was the Group Chief Auditor for RSA plc
having held previous senior positions at RSA plc, including
UK Chief Financial Officer. After qualifying and practising
as a chartered accountant with KPMG, she held various
roles within Aviva Plc.
Length of service:
6 years, appointed a Director on 22 August 2016
Committee membership:
Audit Committee (Chairman), Management Engagement
Committee and Nomination Committee
Contribution:
The Board has reviewed the contribution of Caroline
Ramsay in light of her proposed re-election at the AGM
and has concluded that she has chaired the Audit
Committee expertly throughout the year and continues to
provide significant financial insight to the Board.
48 abrdn UK Smaller Companies Growth Trust plc
Tim Scholefield
Senior Independent Non-Executive Director and
Chairman of the Management Engagement Committee
Experience:
Tim Scholefield previously held roles at Royal Sun Alliance
Investments and Scottish Widows Investment Partnership.
He was, until 2014, Head of Equities at Baring Asset
Management. Tim is currently Chairman of Invesco Bond
Income Plus Limited and a non-executive director of CT
UK Capital and Income Investment Trust PLC and Allianz
Technology Trust PLC. In addition, he is a non-executive
director of Jupiter Unit Trust Managers Limited and a
consultant to Gresham House Asset Management.
Length of service:
5 years, appointed a Director on 20 February 2017
Committee membership:
Audit Committee, Management Engagement Committee
(Chairman) and Nomination Committee
Contribution:
The Board has reviewed the contribution of Tim
Scholefield in light of his proposed re-election at the AGM
and has concluded that he has continued to chair the
Management Engagement Committee expertly
throughout the year as well as acting as the Senior
Independent Director. He continues to provide significant
investment insight to the Board and knowledge of the
investment management and investment trust sectors
Board of Directors
Continued
abrdn UK Smaller Companies Growth Trust plc 49
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Directors present their report and the audited
financial statements of the Company for the year ended
30 June 2022.
Results and Dividends
The financial statements for the year ended 30 June 2022
are contained on pages 77 to 98. An interim dividend of
2.70p per Ordinary share was paid on 8 April 2022 and the
Directors recommend a final dividend of 5.40p per
Ordinary share, payable on 28 October 2022 to
shareholders on the register on 7 October 2022. The ex-
dividend date is 6 October 2022.
Principal Activity and Status
The Company is registered as a public limited company in
Scotland under company number SC145455, is an
investment company within the meaning of Section 833 of
the Companies Act 2006 and carries on business as an
investment trust.
The Company has applied for and has been accepted as
an investment trust under Sections 1158 and 1159 of the
Corporation Tax Act 2010 and Part 2 Chapter 1 of
Statutory Instrument 2011/2999. This approval relates to
accounting periods commencing on or after 1 July 2012.
The Directors are of the opinion that the Company has
conducted its affairs so as to be able to retain such
approval.
The Company intends to manage its affairs so that its
Ordinary shares continue to be a qualifying investment for
inclusion in the stocks and shares component of an
Individual Savings Account.
Capital Structure and Voting Rights
The Company’s issued share capital at 30 June 2022
consisted of 94,012,047 (2021: 98,682,566) Ordinary
shares of 25 pence each and there were 10,152,375
(2021: 5,481,856) Ordinary shares held in treasury,
representing 10.8% of the issued share capital as at that
date (excluding treasury shares).
During the year, 4,670,519 Ordinary shares were bought
back into treasury.
Since the year end, the Company has bought back a
further 988,429 Ordinary shares into treasury. Accordingly,
as at the date of this Report, the Company’s issued share
capital consisted of 93,023,618 Ordinary shares of 25
pence each and 11,140,804 Ordinary shares held
in treasury.
Each ordinary shareholder is entitled to one vote on a
show of hands and, on a poll, to one vote for every
Ordinary share held.
Management Agreement
The Company has appointed abrdn Fund Managers
Limited (“aFML”) (previously Aberdeen Standard Fund
Managers Limited, prior to a change of name of that
Company on 1 August 2022), a wholly owned subsidiary of
abrdn plc, as its Alternative Investment Fund Manager (the
“Manager”). aFML has been appointed to provide
investment management, risk management,
administration and company secretarial services, and
promotional activities to the Company. The Company's
portfolio is managed by abrdn Investment Management
Limited (the “Investment Manager”) by way of a group
delegation agreement in place between it and aFML. In
addition, aFML has sub-delegated administrative and
secretarial services to Aberdeen Asset Management PLC
and promotional activities to Aberdeen Asset
Managers Limited.
The management fee is calculated quarterly in arrears as
0.85% per annum applying to the first £250 million of the
Company’s net assets, 0.65% per annum applying to net
assets above this threshold until £550 million, and 0.55%
applying to net assets above this threshold.
In addition, the Manager receives a secretarial and
administration fee of £75,000 plus VAT per annum with
effect from 1 January 2021. Prior to this date, the
secretarial and administration fee was £110,000 per
annum, as uprated by movements in RPI. A fee of 0.02% of
the net asset value of the Company in excess of £70
million was also payable and the fee was capped at
£150,000 plus VAT in total per annum.
The Manager also receives a separate fee for the
provision of promotional activities to the Company. This
fee amounted to £246,000 plus VAT for the year (2021:
£150,000 plus VAT).
Further details of the fees payable to the Manager are
shown in notes 4 and 5 to the financial statements.
The management agreement is terminable on not less
than six months’ notice. 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.
Directors’ Report
50 abrdn UK Smaller Companies Growth Trust plc
Company Name
Following approval by shareholders at the Annual General
Meeting held on 21 October 2021, the Company’s name
changed from Standard Life UK Smaller Companies Trust
plc to abrdn UK Smaller Companies Growth Trust plc.
Directors
Biographies of the Directors of the Company are shown
on pages 46 to 48. Liz Airey is the Chairman and Tim
Scholefield is the Senior Independent Director.
All of the Directors will retire and, being eligible, will offer
themselves for re-election at the Annual General Meeting.
The Directors attended scheduled Board and Committee
meetings during the year ended 30 June 2022 as follows
(with their eligibility to attend the relevant meetings
in brackets):
Board
Meetings
Audit
Committee
Meetings
Management
Engagement
Committee
Meetings
Nomination
Committee
Meetings
Liz Airey 5 (5) - (-) 1 (1) 1 (1)
Ashton
Bradbury 5 (5) 2 (2) 1 (1) 1 (1)
Alexa
Henderson 5 (5) 2 (2) 1 (1) 1 (1)
Caroline
Ramsay 5 (5) 2 (2) 1 (1) 1 (1)
Tim
Scholefield 5 (5) 2 (2) 1 (1) 1 (1)
The Board meets more frequently when business needs
require. During the year ended 30 June 2022 this included
two Board meetings to discuss share buy backs and the
implications for the Company of the Manager’s
rebranding. In addition, there were two Board Committee
meetings to approve the annual and half yearly financial
statements. All Directors attended the Annual General
Meeting held on 21 October 2021.
The Board believes that all the Directors seeking re-
election remain 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. The
biographies of each of the Directors are shown on pages
46 to 48, setting out their range of skills and experience as
well as length of service and their contribution to the
Board during the year. The Board believes that each
Director has the requisite high level and range of business,
investment and financial experience which enables the
Board to provide clear and effective leadership and
proper governance of the Company. Following formal
performance evaluations, each Director’s performance
continues to be effective and demonstrates commitment
to the role, and their individual performances contribute to
the long-term sustainable success of the Company. In
addition, all Directors have demonstrated that they have
sufficient time to fulfil their directorial roles with the
Company. The Board therefore recommends the
re-election of each of the Directors at the Annual
General Meeting.
External Agencies
The Board has contractually delegated to external
agencies, including the Manager and other service
providers, certain services including: the management of
the investment portfolio, the day-to-day accounting and
company secretarial requirements, the depositary
services (which include cash monitoring, the custody and
safeguarding of the Company’s financial instruments and
monitoring the Company’s compliance with investment
limits and leverage requirements) and the share
registration services. Each of these contracts was entered
into after full and proper consideration by the Board of the
quality and cost of services offered in so far as they relate
to the affairs of the Company. In addition, ad hoc reports
and information are supplied to the Board as requested.
Directors’ Report
Continued
abrdn UK Smaller Companies Growth Trust plc 51
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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. In view of its size, the Board will
continue to ensure that all appointments are made on the
basis of merit against the specification prepared for each
appointment. In doing so, the Board will seek to meet the
targets set out in the FCA’s Listing Rule 9.8.6R (9)(a), which
are set out below.
Although the Company is not required to report against
these targets until the 2023 Annual Report, the Board has
resolved to do so on a voluntary basis for the year ended
30 June 2022. In accordance with the LR 9.8.6R (9), (10)
and (11) the Board has provided the following information
in relation to its diversity.
Board Gender as at 30 June 2022
Number of Board
members
Percentage of the
Board
Number of senior
positions on the Board
Number in executive
management
Percentage of executive
management
Men 2 40% 1
B
n/a n/a
Women 3 60%
A
2
CD
n/a n/a
A
exceeds target of 40% as set out in LR 9.8.6R (9)(a)(i)
B
the position of Senior Independent Director is held by a man
C
the positions of Chairman of the Board and Chairman of the Audit Committee are held by women
D
exceeds target of 1 as set out in LR 9.8.6R (9)(a)(ii)
Board Ethnic Background as at 30 June 2022
Number of
Board
members
Percentage of
the Board
Number of senior
positions on the
Board
Number in
executive
management
Percentage of
executive
management
White British or other White
(including minority-white groups)
5 100% 3 n/a n/a
Minority ethnic 0
A
0% 0 n/a n/a
A
is less than the target of 1 as asset out in LR 9.8.6R (9)(a)(iii)
As shown in the above table, the Company has not as yet
met the target set out in LR 9.8.6R (9)(a)(iii), which formally
comes into effect for the financial year ending 30 June
2023, in relation to the ethnic background of the Board. As
set out in the biographical details of the Directors on pages
46 to 48, the most recent Board appointment was in
August 2019. It is the Board’s intention that the target as
set out in LR 9.8.6R (9)(a)(iii) will be taken into account at
the time of the next appointment.
The information included above in relation to the gender
and ethnic background of the Board has been obtained
following confirmation from the individual Directors.
There have been no changes since the year end that have
affected the Company’s ability to meet the targets set in
LR 9.8.6R (9)(a).
52 abrdn UK Smaller Companies Growth Trust plc
Board’s Policy on Tenure
In normal circumstances, it is the Board’s expectation that
Directors will not serve beyond the Annual General
Meeting following the ninth anniversary of their
appointment. However, the Board takes the view that
independence of individual Directors is not necessarily
compromised by length of tenure on the Board and that
continuity and experience can add significantly to the
Board’s strength. The Board believes that
recommendation for re-election should be on an
individual basis following a rigorous review which assesses
the contribution made by the Director concerned, but also
taking into account the need for regular refreshment
and diversity.
It is the Board’s policy that the Chairman of the Board will
not normally serve as a Director beyond the Annual
General Meeting following the ninth anniversary of his or
her appointment to the Board. However, this may be
extended in certain circumstances or to facilitate effective
succession planning and the development of a diverse
Board. In such a situation the reasons for the extension will
be fully explained to shareholders and a timetable for the
departure of the Chairman clearly set out.
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 acts upon the results of the Board
evaluation process by recognising strengths and
addressing any weaknesses and also ensures that the
Board engages with major shareholders and 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.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a
situation where a Director has a 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 approve 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 his or her wider
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 Company has a policy of conducting its business in an
honest and ethical manner. The Company takes a zero-
tolerance approach to bribery and corruption and has
procedures in place that are proportionate to the
Company’s circumstances to prevent them. The Manager
also adopts a group-wide zero-tolerance approach and
has its own detailed policy and procedures in place to
prevent bribery and corruption. Copies of the Manager’s
anti-bribery and corruption policies are available on
its website.
In relation to the corporate offence of failing to prevent tax
evasion, it is the Company’s policy to conduct all business
in an honest and ethical manner. The Company takes a
zero-tolerance approach to facilitation of tax evasion
whether under UK law or under the law of any foreign
country and is committed to acting professionally,
fairly and with integrity in all its business dealings
and relationships.
Directors’ Report
Continued
abrdn UK Smaller Companies Growth Trust plc 53
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Directors’ and Officers’ Liability Insurance
The Company’s Articles of Association provide for each of
the Directors to be indemnified 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. Directors’ and Officers’ liability insurance
cover has been maintained throughout the financial year
at the expense of the Company.
Corporate Governance
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
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. It
includes an explanation of how the AIC Code adapts the
principles and provisions set out in the UK Code to make
them relevant for investment companies.
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
complied with the principles and provisions of the AIC
Code and the relevant provisions of the UK Code, except
as set out below.
The UK Code includes provisions relating to:
· interaction with the workforce (provisions 2, 5 and 6);
· the role and responsibility of the chief executive
(provisions 9 and 14);
· previous experience of the chairman of a remuneration
committee (provision 32); and
· executive directors’ remuneration (provisions 33 and
36 to 41).
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.
Full details of the Company’s compliance with the AIC
Code of Corporate Governance can be found on
its website.
Matters Reserved for the Board
The Board sets the Company’s objectives and ensures
that its obligations to its shareholders are met. It has
formally adopted a schedule of matters which are
required to be brought to it for decision, thus ensuring that
it maintains full and effective control over appropriate
strategic, financial, operational and compliance issues.
These matters include:
· the maintenance of clear investment objectives and risk
management policies;
· the monitoring of the business activities of the Company
ranging from analysis of investment performance
through to review of quarterly management accounts;
· monitoring requirements such as approval of the Half-
Yearly Report and Annual Report and financial
statements and approval and recommendation of any
dividends;
· setting the range of gearing in which the Manager may
operate;
· major changes relating to the Company’s structure
including share buy-backs and share issuance;
· Board appointments and removals and the related
terms;
· authorisation of Directors’ conflicts or possible conflicts
of interest;
· terms of reference and membership of Board
Committees;
· appointment and removal of the Manager and the
terms and conditions of the Management Agreement
relating thereto; and
· London Stock Exchange/Financial Conduct Authority -
responsibility for approval of all circulars, listing
particulars and other releases concerning matters
decided by the Board.
54 abrdn UK Smaller Companies Growth Trust plc
Full and timely information is provided to the Board to
enable it to function effectively and to allow the Directors
to discharge their responsibilities.
Board Committees
The Board has appointed a number of Committees, as set
out below. Copies of their terms of reference, which
clearly 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
64 to 67.
Management Engagement Committee
The Management Engagement Committee comprises
the full Board and is chaired by Tim Scholefield. The main
responsibilities of the Management Engagement
Committee include:
· monitoring and evaluating the performance of the
Manager;
· reviewing, at least annually, the continued retention of
the Manager;
· reviewing, at least annually, the terms of appointment of
the Manager including, but not limited to, the level and
method of remuneration and the notice period of the
Manager; and
· reviewing the performance and remuneration of the
other key service providers to the Company.
The Management Engagement Committee met once
during the year to 30 June 2022.
During the year, through the work of the Management
Engagement Committee, the Board engaged an
independent external firm, Lintstock Limited, to facilitate a
review of the Manager. The process involved the
completion of questionnaires by each Director and the
production of a report to the Board by Lintstock Limited
summarising the findings of the review. The review
covered all services provided by the Manager, including
investment management, compliance, internal audit,
marketing, company secretarial and administration
services, and also gave consideration to the
appropriateness of the management fee arrangements.
Following the review process, the Management
Engagement Committee recommended to the Board
that the continuing appointment of the Manager was in
the best interests of the shareholders and the Company
as a whole. In reaching this decision, the Management
Engagement Committee considered the Company’s
long-term performance record and concluded that it
remained satisfied with the capability of the abrdn Group
to deliver satisfactory investment performance, that its
investment screening processes are thorough and robust
and that it employs a well-resourced team of skilled and
experienced fund managers. In addition, the
Management Engagement Committee is satisfied that
the abrdn Group has the appropriate compliance,
secretarial, administrative and promotional skills required
for the effective operation and administration of
the Company.
Nomination Committee
The Nomination Committee comprises the full Board and
is chaired by Liz Airey. The main responsibilities of the
Nomination Committee include:
· regularly reviewing the structure, size and composition
(including the skills, knowledge, experience, diversity and
gender) of the Board;
· undertaking succession planning, taking into account
the challenges and opportunities facing the Company
and identifying candidates to fill vacancies;
· recruiting new Directors, undertaking open advertising
or engaging external advisers to facilitate the search, as
appropriate, with a view to considering candidates from
a wide range of backgrounds, on merit, and with due
regard for the benefits of diversity on the Board, taking
care to ensure
· that appointees have enough time available to devote
to the position;
· ensuring that new appointees receive a formal letter of
appointment and suitable induction and ongoing
training;
· arranging for annual Board performance evaluations to
ensure that Directors are able to commit the time
required to properly discharge their duties;
· making recommendations to the Board as to the
positions of Chairman, Senior Independent Director and
Chairmen of the Nomination, Audit and Management
Engagement Committees;
· assessing, on an annual basis, the independence of
each Director;
Directors’ Report
Continued
abrdn UK Smaller Companies Growth Trust plc 55
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
· approving the re-election of any Director, subject to the
UK Code, the AIC Code, or the Articles of Association, at
the Annual General Meeting, having due regard to their
performance, ability to continue to contribute to the
Board in the light of the knowledge, skills and experience
required and the need for progressive refreshing of the
Board; and determining the Directors’ remuneration
policy and level of remuneration, including for the
Chairman.
During the year, through the work of the Nomination
Committee, the Board engaged an independent external
firm, Lintstock Limited, to facilitate a review of the Board,
its Committees and the performance of individual
Directors. The process involved the completion of
questionnaires by each Director and the production of a
report to the Board by Lintstock Limited summarising the
findings of the review. The results of the process were
discussed by the Board following its completion, with
appropriate action points made. The main action points
were for the Board to:
· develop a deeper understanding of marketing activities
undertaken by the Manager on behalf of the Company;
· improve engagement with retail shareholders;
· arrange additional training for Directors in the form of a
legal/regulatory update;
· give due consideration to Board succession planning,
including in relation to the diversity of the Board; and
· consider length and presentation of Board papers.
Consideration of these matters is already in progress and
will be addressed in more detail by the Board during the
current financial year.
As part of the process, the Chairman met with each of the
Directors to discuss their individual performance reviews.
The review of the Chairman was overseen by the Senior
Independent Director.
Following the evaluation process, Lintstock Limited
concluded that the Board operates well and effectively
and is focussing on the right issues in its work to promote
the success of the Company and that each Director
makes a significant contribution to the Board.
Substantial Interests
Information provided to the Company by major
shareholders pursuant to the FCA’s Disclosure, Guidance
and Transparency Rules are published by the Company
via a Regulatory Information Service.
The table below sets out the interests in 3% or more of the
issued share capital of the Company, of which the Board
was aware as at 30 June 2022.
Shareholder
Number of
Ordinary shares
% held
Hargreaves Lansdown 10,441,080 11.1
Interactive Investor 9,439,853 10.0
Brewin Dolphin 8,513,959 9.1
abrdn Retail Plans 6,673,821 7.1
1607 Capital Partners 5,975,394 6.4
AJ Bell 4,336,875 4.6
Rathbones 4,277,148 4.6
City of London Investment
Management
2,839,946 3.0
Investec Wealth & Investment 2,822,892 3.0
The Company has not been notified of any changes to the
above holdings since the end of the year.
56 abrdn UK Smaller Companies Growth Trust plc
Going Concern
The Company’s assets consist mainly of equity shares in
companies listed on recognised stock exchanges and are
considered by the Board to be realisable within a short
timescale under normal market conditions. The Board has
set overall limits for borrowing and reviews regularly the
Company’s level of gearing, cash flow projections and
compliance with banking covenants. The Board has also
performed stress testing and liquidity analysis.
As at 30 June 2022, the Company had a £65 million
unsecured loan facility agreement with The Royal Bank of
Scotland International Limited which matures on 31
October 2022. This consists of a five year, fixed-rate term
loan facility of £25 million and a revolving credit facility of
£40 million. The Board has reviewed its options and a
range of proposals and is expecting to refinance the
facility when it expires. However, in the event that the
facility is not refinanced, there is considered to be
sufficient portfolio liquidity to enable borrowings to
be repaid.
The Directors are mindful of the Principal Risks and
Uncertainties disclosed in the Strategic Report on pages
14 to 16 and they believe that the Company has adequate
financial resources to continue its operational existence
for a period of not less than 12 months from the date of
approval of this Report. They have arrived at this
conclusion having confirmed that the Company’s
diversified portfolio of realisable securities is sufficiently
liquid and could be used to meet short-term funding
requirements were they to arise. The Directors have also
reviewed the revenue and ongoing expenses forecasts for
the coming year and considered the Company’s
Statement of Financial Position as at 30 June 2022 which
shows net current liabilities of £25.5 million at that date.
Taking all of this into account, the Directors believe that it is
appropriate to continue to adopt the going concern basis
in preparing the financial statements.
Accountability and Audit
The respective responsibilities of the Directors and the
Independent Auditor in connection with the financial
statements appear on pages 70 and 71 to 76.
The Directors confirm that, so far as they are each aware,
there is no relevant audit information of which the
Company’s Independent Auditor was unaware, and that
each Director has taken all the steps that they might
reasonably be expected to have taken as a Director to
make themselves aware of any relevant audit information
and to establish that the Company’s Independent Auditor
was aware of that information.
Independent Auditor
Shareholders approved the re-appointment of KPMG LLP
as the Company’s Independent Auditor at the AGM on 21
October 2021 and resolutions to approve its re-
appointment for the year to 30 June 2023 and to authorise
the Directors to determine its remuneration will be
proposed at the Annual General Meeting.
Financial Instruments
The financial risk management objectives and policies
arising from financial instruments and the exposure of
the Company to risk are disclosed in note 17 to the
financial statements.
Relations with Shareholders
The Directors place a great deal of importance on
communications with shareholders. Shareholders and
investors may obtain up to date information on the
Company through its website and the Manager’s
Customer Services Department (see Contact Addresses).
Aberdeen Asset Management PLC (“AAM”) has been
appointed Company Secretary to the Company. Whilst
AAM is a wholly owned subsidiary of the abrdn Group,
there is a clear separation of roles between the Manager
and Company Secretary with different board
compositions and different reporting lines in place. The
Board notes that, in accordance with Market Abuse
Regulations, procedures are in place to control the
dissemination of information within the abrdn plc group of
companies when necessary. Where correspondence
addressed to the Board is received there is full disclosure
to the Board. This is kept confidential if the subject matter
of the correspondence requires confidentiality.
The Board’s policy is to communicate directly with
shareholders and their representative bodies without the
involvement of the management group (including the
Company Secretary or the Manager) in situations where
direct communication is required, and representatives
from the Manager meet with major shareholders on at
least an annual basis in order to gauge their views, and
report back to the Board on these meetings.
Directors’ Report
Continued
abrdn UK Smaller Companies Growth Trust plc 57
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Company’s Annual General Meeting provides a forum
for communication primarily with private shareholders
and is attended by the Board. The Manager makes a
presentation to the meeting and all shareholders have the
opportunity to put questions to both the Board and the
Manager at the meeting. The Board also hosts a regular
‘Meet the Manager’ session at which the Investment
Manager and members of the Board are present and to
which all shareholders are invited, last held on
20 May 2022.
The notice of the Annual General Meeting is sent out at
least 20 working days in advance of the meeting. All
shareholders have the opportunity to put questions to the
Board and Manager at the meeting.
Additional Information
Where not provided elsewhere in the Directors’ Report, the
following provides the additional information required to
be disclosed by Part 15 of the Companies Act 2006.
There are no restrictions on the transfer of, or voting rights
attaching to, Ordinary shares in the Company other than
certain restrictions which may from time to time be
imposed by law (for example, the Market Abuse
Regulation). The Company is not aware of any
agreements between shareholders that may result in a
transfer of securities and/or voting rights.
The rules governing the appointment of Directors are set
out in the Directors’ Remuneration Report on pages 60 to
63. The Company’s Articles of Association may only be
amended by a special resolution passed at a general
meeting of shareholders.
The Company is not aware of any significant agreements
to which it is a party that take effect, alter or terminate
upon a change of control of the Company following a
takeover. Other than the management agreement with
the Manager, further details of which are set out on page
49, the Company is not aware of any contractual or other
agreements which are essential to its business which
could reasonably be expected to be disclosed in the
Directors’ Report.
Annual General Meeting
The Notice of the Annual General Meeting (“AGM”), which
will be held at 12 noon on Thursday, 20 October 2022, and
related notes, may be found on pages 116 to 120.
Resolutions including the following business will be
proposed.
Issue of Ordinary Shares
Resolution 11, which is an ordinary resolution, will, if passed,
renew the Directors’ authority to allot new Ordinary shares
up to 10% of the issued share capital of the Company
(excluding treasury shares) as at the date of this Report.
Resolution 12, which is a special resolution, will, if passed,
renew the Directors’ existing authority to allot new
Ordinary shares or sell treasury shares for cash without
the new Ordinary shares first being offered to existing
shareholders in proportion to their existing holdings. This
will give the Directors authority to make limited allotments
or sell shares from treasury of up to 10% of the total
ordinary issued share capital (excluding treasury shares)
as at the date of this Report.
The authority to issue shares on a non pre-emptive basis
includes shares held in treasury (if any) which the
Company sells or transfers, including pursuant to the
authority conferred by resolution 11.
New Ordinary shares will only be issued at prices
representing a premium to the last published net asset
value per share.
The authorities being sought under resolutions 11 and 12
shall expire at the conclusion of the Company’s next AGM
in 2023 or, if earlier, on the expiry of 15 months from the
date of the passing of the resolutions, unless such
authorities are renewed prior to such time. The Directors
have no current intention to exercise these authorities and
will only do so if they believe it is advantageous and in the
best interests of shareholders.
58 abrdn UK Smaller Companies Growth Trust plc
Purchase of the Company’s Ordinary Shares
Resolution 13, which is a special resolution, seeks to renew
the Board’s authority to make market purchases of the
Company’s Ordinary shares in accordance with the
provisions contained in the Companies Act 2006 and the
FCA’s Listing Rules. Accordingly, the Company will seek
authority to purchase up to a maximum of 14.99% of the
issued share capital (excluding treasury shares) at the
date of passing of the resolution at a minimum price of 25
pence per share (being the nominal value). Under the
Listing Rules, the maximum price that may be paid on the
exercise of this authority must not exceed the higher of: (i)
105% of the average of the middle market quotations (as
derived from the Daily Official List of the London Stock
Exchange) for the shares over the five business days
immediately preceding the date of purchase; and (ii) the
higher of the last independent trade and the highest
current independent bid on the trading venue on which
the purchase is carried out.
The Board does not intend to use this authority to
purchase the Company’s Ordinary shares, unless to do so
would result in an increase in the net asset value per
Ordinary share and would be in the best interests of
shareholders. Any Ordinary shares purchased shall either
be cancelled or held in treasury. The authority being
sought shall expire at the conclusion of the AGM in 2023 or,
if earlier, on the expiry of 15 months from the date of the
passing of the resolution unless such authority is renewed
prior to such time.
The Company bought back 4,670,519 Ordinary shares
during the year ended 30 June 2022, representing 4.7% of
the issued share capital. These buy backs were
conducted in accordance with the Company’s discount
control policy which is included on page 17. It is the view of
the Board that this policy is in the best interests of
shareholders as a whole. The use of the share buy back
authority during the year is set out in the Chairman’s
Statement on page 9.
Tender Offers
In addition to the authority that is being sought by the
Company under resolution 13 to purchase its own
Ordinary shares of 25 pence each, resolution 14, which is a
special resolution, grants the Board the authority to
implement one or more tender offers and to repurchase
up to a maximum of 10% of the Company’s issued share
capital in the financial year prior to the conclusion of the
next AGM. If resolution 14 is passed, the tender offers will
be structured by way of an on-market offer by a market-
maker and the price will be an amount equal to the
realisation value of the assets attributable to the shares
tendered, as at the latest practicable date before such
tender, less an exit charge of 2%. The shares will
subsequently be bought back by the Company from the
market-maker at the same price and cancelled or held
in treasury.
If resolution 14 is passed, such authority will expire at the
conclusion of the Company’s AGM in 2023 or, if earlier, on
the expiry of 15 months from the date of the passing of the
resolution unless renewed prior to that date.
Any future tender offers will be conducted at the Board’s
discretion in circumstances where the Board believes that
share buy-backs are not sufficient to maintain the
discount at an appropriate level. Any tender offers will be
conducted in accordance with the FCA’s Listing Rules and
the rules of the London Stock Exchange. If the Board
decides to implement a tender offer, shareholders will be
notified prior to each tender offer of the full terms and
conditions of the tender offer and the procedure for
tendering shares.
Directors’ Report
Continued
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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Notice of Meeting
Under the Companies Act 2006, the notice period for the
holding of general meetings of the Company is 21 clear
days unless shareholders agree to a shorter notice period
and certain other conditions are met. Resolution 15, which
is a special resolution, will seek to authorise the Directors to
call general meetings of the Company (other than Annual
General Meetings) on not less than 14 clear days’ notice,
as permitted by the Companies Act 2006 amended by the
Companies (Shareholders’ Rights) Regulations 2009.
It is currently intended that this flexibility to call general
meetings on shorter notice will only be used for non-
routine business and where it is considered to be in the
interests of all shareholders. If resolution 15 is passed, the
authority to convene general meetings on not less than 14
clear days’ notice will remain effective until the conclusion
of the AGM in 2023.
Recommendation
The Board considers that the resolutions to be proposed
at the AGM are in the best interests of the Company and
most likely to promote the success of the Company for the
benefit of its members as a whole. Accordingly, the Board
recommends that shareholders vote in favour of the
resolutions as they intend to do in respect of their own
beneficial shareholdings, amounting to 64,900 Ordinary
shares, representing 0.07% of the issued share capital.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
1 George Street
Edinburgh EH2 2LL
7 September 2022
60 abrdn UK Smaller Companies Growth Trust plc
This Directors’ Remuneration Report comprises
three parts:
1. a Remuneration Policy which is subject to a binding
shareholder vote every three years (or sooner if varied
during this interval) – most recently voted on at the
Annual General Meeting on 21 October 2020;
2. an Implementation Report which is subject to an
advisory vote on the level of remuneration paid during
the year; and
3. an Annual Statement.
Company law requires the Company’s Independent
Auditor to audit certain of the disclosures provided in the
Directors’ Remuneration Report. Where disclosures have
been audited, they are indicated as such. The
Independent Auditor’s report is included on pages 71 to 76.
As the Company has no employees, and the Board is
comprised wholly of non-executive Directors, and given
the size and nature of the Company, the Board has not
established a separate Remuneration Committee. The
Director’s Remuneration Policy and level of Directors’
remuneration are determined by the Nomination
Committee, which is chaired by Liz Airey and comprises all
of the Directors.
Remuneration Policy
The Directors’ Remuneration Policy takes into
consideration the principles of UK corporate governance
and the AIC’s recommendations regarding the application
of those principles to investment companies.
No shareholder views have been sought in setting the
remuneration policy (approved by shareholders at the
Annual General Meeting on 21 October 2020) and no
communication was received from shareholders during
the year regarding Directors’ remuneration.
The Company’s policy is that the remuneration of the
Directors, all of whom are non-executive, should reflect
the experience of the Board as a whole and be fair and
comparable to that of other investment trusts with a
similar capital structure and similar investment objectives.
Directors are remunerated exclusively in the form of fees,
payable monthly in arrears to the Director personally. The
fees for the Directors are determined within the limits set
out in this Remuneration Policy which limits the aggregate
of the fees payable to the Directors to £200,000 per
annum. It is intended that the fees payable to the Directors
should reflect their duties, responsibilities, and the value
and amount of time committed to the Company’s affairs,
and should also be sufficient to enable candidates of a
high quality to be recruited and retained. There is no
performance-related remuneration scheme and
therefore the Directors do not receive bonuses, pension
benefits, share options, long-term incentive schemes or
other benefits, and the fees are not specifically related to
the Directors’ performance, either individually or
collectively.
The levels of fees at the year-end are set out in the table
below. Fees are reviewed annually and, if considered
appropriate, increased accordingly.
30 June 2022
£
30 June 2021
£
Chairman 37,400 35,000
Chairman of the Audit
Committee
29,700 27,800
Chairman of the Management
Engagement Committee
27,000 25,200
Director 25,300 23,700
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.
· The terms of appointment provide that Directors should
retire and be subject to election at the first Annual
General Meeting after their appointment. The
Company’s Articles of Association require all Directors to
retire by rotation at least every three years. However,
notwithstanding the Articles of Association, the Board
has agreed that all Directors should retire annually and,
if appropriate, seek re-election at the 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.
Directors’ Remuneration Report
abrdn UK Smaller Companies Growth Trust plc 61
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
· The Company indemnifies its Directors for all costs,
charges, losses, expenses and liabilities which may be
incurred in the discharge of duties as a Director of
the Company.
Performance, Service Contracts, Compensation
and Loss of Office
· 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.
· There is no notice period and no provision for
compensation upon early termination of appointment,
save for any arrears of fees which may be due.
· No Director is entitled to any other monetary payment
or any assets of the Company.
Directors’ & Officers’ liability insurance cover is maintained
by the Company on behalf of the Directors.
There were no changes to the Directors’ Remuneration
Policy during the year nor are there any proposals for
changes in the foreseeable future. The Remuneration
Policy is reviewed by the Nomination Committee on an
annual basis and it is the Committee’s intention that this
Remuneration Policy will apply for the three year period
ending 30 June 2023.
Statement of Voting at General Meeting
At the Annual General Meeting held on 21 October 2020,
shareholders approved the Directors’ Remuneration
Policy. 99.3% of proxy votes were in favour of the
resolution, 0.6% were against and 0.1% abstained.
Implementation Report
Review of Directors’ Fees
The Nomination Committee carried out a review of the
level of Directors’ fees during the year, which included
consideration of fees paid by comparable investment
trusts and the sector as a whole. Following this review, the
Nomination Committee concluded that fees would be
increased with effect from 1 July 2022 to £38,500 for the
Chairman, £31,000 for the Chairman of the Audit
Committee, £27,750 for the Chairman of the
Management Engagement Committee and £26,000 for
the other Directors. The Nomination Committee was not
provided with advice or services by any person in respect
of its consideration of the Directors’ remuneration.
Company Performance
The graph below shows the share price total return
(assuming all dividends are reinvested) to Ordinary
shareholders compared to the total return from the Numis
Smaller Companies plus AIM (ex investment companies)
Index for the ten year period to 30 June 2022 (rebased to
100 at 30 June 2012). This index was chosen for
comparison purposes as it is the reference index used for
investment performance measurement purposes.
100
150
200
250
300
350
400
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Share price total return Reference index total return
Statement of Voting at General Meeting
At the Company’s last Annual General Meeting, held on 21
October 2021, shareholders approved the Directors’
Remuneration Report (excluding the Directors’
Remuneration Policy) in respect of the year ended 30
June 2021. 98.9% of proxy votes were in favour of the
resolution, 0.7% were against and 0.4% abstained.
A resolution to approve the Directors’ Remuneration
Report (excluding the Directors’ Remuneration Policy) in
respect of the year ended 30 June 2022 will be proposed
at the Annual General Meeting.
Spend on Pay
As the Company has no employees, the Directors do not
consider it appropriate to present a table comparing
remuneration paid to employees with distributions to
shareholders. The total fees paid to Directors are
shown below.
62 abrdn UK Smaller Companies Growth Trust plc
Audited Information
Directors’ Remuneration
The Directors who served during the year received the following emoluments in the form of fees and taxable expenses:
Year ended 30 June 2022 Year ended 30 June 2021
Fees
£
Taxable
Expenses
£
Total
£
Fees
£
Taxable
Expenses
£
Total
£
Liz Airey 37,400 - 37,400 35,000 118 35,118
Ashton Bradbury 25,300 203 25,503 23,700 - 23,700
Alexa Henderson 25,300 - 25,300 23,700 - 23,700
Caroline Ramsay 29,700 151 29,851 27,800 - 27,800
Tim Scholefield 27,000 172 27,172 25,200 - 25,200
Total 144,700 526 145,226 135,400 118 135,518
The above amounts exclude any employers’ national insurance contributions, if applicable. All fees are at a fixed rate
and there is no variable remuneration. Fees are pro-rated where a change takes place during a financial year. There
were no payments to third parties included in the fees referred to in the table above. There are no further fees to disclose
as the Company has no employees, chief executive or executive directors.
Annual Percentage Change in Directors’ Remuneration
The table below sets out the annual percentage change in Directors’ fees for the past three years.
Year ended
30 June 2022
Year ended
30 June 2021
Year ended
30 June 2020
Fees
%
Fees
%
Fees
%
Liz Airey
A
6.9 50.4 n/a
Ashton Bradbury 6.8 - 3.0
Alexa Henderson
B
6.8 - 40.9
Caroline Ramsay 6.8 - 3.0
Tim Scholefield 7.1 - 2.9
A
Appointed a Director on 21 August 2019 and Chairman on 31 March 2020
B
Appointed a Director on 8 October 2018
Directors’ Remuneration Report
Continued
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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
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 June 2022 and 30 June 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.
30 June 2022 30 June 2021
Ordinary shares Ordinary shares
Liz Airey 40,000 40,000
Ashton Bradbury 10,000 10,000
Alexa Henderson 4,391 4,391
Caroline Ramsay 4,545 4,545
Tim Scholefield 5,964 5,964
There have been no changes to the Directors’ interests in
the share capital of the Company since the year end up to
the date of approval of this Report.
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 to 30 June 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.
On behalf of the Board
Liz Airey
Chairman
7 September 2022
64 abrdn UK Smaller Companies Growth Trust plc
The Audit Committee presents its Report for the year
ended 30 June 2022.
Committee Composition
The Audit Committee comprises all of the non-executive
Directors other than the Chairman of the Board. The Audit
Committee is chaired by Caroline Ramsay who is a
Chartered Accountant and has recent and relevant
financial experience. The Board is satisfied that the Audit
Committee as a whole has competence relevant to the
investment trust sector.
Functions 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 Audit 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 on request.
The Committee’s main functions are listed below:
· to review and monitor the internal control systems and
risk management systems on which the Company is
reliant and internal audit and compliance reports
relating thereto (including review of non-financial risks)
(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 and any formal
announcements relating to the Company’s financial
performance, 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, and
any formal announcements relating to the Company’s
financial performance;
· 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 Independent Auditor to review the
proposed audit programme of work and the findings of
the Independent Auditor. The Audit 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 Independent Auditor to supply non-audit services. All
non-audit services must be approved in advance by the
Audit Committee and will be reviewed in the light of
relevant guidance and statutory requirements
regarding the provision of non-audit services by the
external audit firm, and the need to maintain the
Auditor’s independence. There were no non-audit fees
paid to the Independent Auditor during the year under
review or during the previous year;
· to obtain and review a statement from the abrdn Group
detailing the arrangements in place within the group
whereby staff may, in confidence, escalate concerns
about possible improprieties in matters of financial
reporting or other matters;
· to make recommendations to the Board in relation to
the appointment of the Independent Auditor and to
approve the remuneration and terms of engagement of
the Independent Auditor; and
· to monitor and review the Auditor’s independence,
objectivity, effectiveness, resources and qualification,
taking into consideration relevant UK professional and
regulatory requirements;
Activities During the Year
The Audit Committee met twice during the year when,
amongst other things, it reviewed and updated the
Company’s risk matrix, with particular consideration given
to new and emerging risks. At these meetings the
Committee also considered in detail the Annual Report
and the Half-Yearly Financial Report. Representatives of
the abrdn Group’s internal audit, risk and compliance
departments reported to the Audit Committee at these
meetings on matters such as internal control systems, risk
management and the conduct of the business in the
context of its regulatory environment. No significant
weaknesses in the control environment were identified
and it was also noted that there had not been any adverse
comment from the Independent Auditor and that the
Independent Auditor had not identified any significant
issues in its audit report. The Committee, therefore,
concluded that there were no significant issues which
required to be escalated to the Board.
Audit Committee’s Report
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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
The Audit Committee also considered the implications for
the Company as a result of the spread of the Covid-19
virus, including the resilience of the reporting and control
systems in place for both the Manager and other
service providers.
Internal Controls and Risk Management
The Audit Committee confirms that there is an ongoing
process for identifying, evaluating and managing the
Company’s significant business and operational risks, that
has been in place for the year ended 30 June 2022 and up
to the date of approval of the Annual Report, which is
regularly reviewed by the Audit Committee and accords
with the FRC’s guidance on internal controls.
The Board has overall responsibility for ensuring that there
is a system of internal controls and risk management in
place and a process for reviewing its effectiveness. Day-
to-day measures have been delegated to the Manager
with an effective process of reporting to the Board for
supervision and control. The system of internal controls
and risk management is designed to meet the Company’s
particular needs and the risks to which it is exposed.
Accordingly, the system of internal control and risk
management is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives
and, by its nature, can only provide reasonable and not
absolute assurance against material misstatement or loss.
The design, implementation and maintenance of controls
and procedures to safeguard the assets of the Company
and to manage its affairs properly extends to operational
and compliance controls and risk management. The
Board, through the Audit Committee, has prepared its
own risk register which lists potential risks as summarised
in the Strategic Report on pages 14 to 16. The Audit
Committee considers the potential cause and possible
effect of these risks as well as reviewing the controls in
place to mitigate them.
Clear lines of accountability have been established
between the Board and the Manager. The Audit
Committee receives regular reports covering key
performance and risk indicators and considers control
and compliance issues brought to its attention. In carrying
out its review, the Audit Committee has had regard to the
activities of the abrdn Group, including its internal audit
and compliance functions, and the Independent Auditor.
The Audit Committee has reviewed the abrdn Group’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 Audit Committee
has also reviewed the effectiveness of the abrdn Group’s
system of internal control as it relates to the Company,
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 Organization”. Any weaknesses
identified that may be relevant to the Company are
reported to the Audit Committee and timetables are
agreed for implementing improvements to systems.
The implementation of any remedial action required
is monitored and feedback provided to the
Audit Committee.
The key components designed to provide effective
internal control are outlined below:
· 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;
· written agreements are in place which specifically
define the roles and responsibilities of the Manager and
other third party service providers. These agreements
are reviewed periodically by the Board;
· the Manager prepares forecasts and management
accounts which allow the Board to assess the
Company’s activities and review its performance;
· as a matter of course the abrdn Group’s internal audit
and compliance departments continually review its
operations;
· bi-annually, the Audit Committee carries out an
assessment of internal controls by considering
documentation from the abrdn Group, including the
internal audit and compliance functions and reports to
the Board on its conclusions; and
· the Audit Committee reviews internal control reports
provided by the Depositary.
66 abrdn UK Smaller Companies Growth Trust plc
The Audit Committee has considered the need for an
internal audit function. However, the Company has no
employees and the day-to-day management of the
Company’s assets has been delegated to the abrdn
Group which has its own compliance and internal control
systems and internal audit department which provides
reports to the Audit Committee for discussion. The Audit
Committee has therefore decided to place reliance on
those systems and internal audit procedures and has
concluded that it is not necessary for the Company to
have its own internal audit function.
Financial Statements and Significant Matters
During its review of the Company’s financial statements
for the year ended 30 June 2022, the Audit Committee
considered the following significant matters, in particular
those communicated by the Independent Auditor during
its planning and reporting of the year end audit:
Valuation, Existence and Ownership of Investments
How the matter was addressed - the Company uses the
services of an independent depositary (BNP Paribas Trust
Corporation UK Limited) (the “Depositary”) to hold the
assets of the Company. An annual internal control report is
received from the Depositary and reviewed by the Audit
Committee. This provides details of the Depositary’s
control environment. The investment portfolio is
reconciled regularly by the Manager. The portfolio is
reviewed and verified by the Manager on a regular basis
and management accounts, including a full portfolio
listing, are prepared quarterly and are considered at the
quarterly meetings of the Board. The Audit Committee
also considered the Independent Auditor’s work and
conclusions in this area.
The valuation of investments is undertaken in accordance
with the accounting policies disclosed in note 2 (b) to the
financial statements.
The Audit Committee satisfied itself that there were
no issues associated with the valuation, existence and
ownership of the investments which required to
be addressed.
Recognition of Dividend Income
How the matter was addressed - the recognition of
dividend income is undertaken in accordance with
accounting policy note 2 (d) to the financial statements.
Special dividends are allocated to the capital or revenue
accounts according to the nature of the payment and the
specific circumstances. Management accounts are
reviewed by the Board on a quarterly basis and
discussions take place with the Manager regarding the
allocation of any special dividends that have been
received. The Audit Committee also considered the
Independent Auditor’s work and conclusions in this area.
The Audit Committee concluded that there were no issues
associated with the recognition of dividend income which
required to be addressed.
Review of Financial Reporting
The Audit Committee, when considering the draft Annual
Report and financial statements for the year ended 30
June 2022, concluded that, taken as a whole, they are fair,
balanced and understandable and provide the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy, and that a recommendation could be made
to the Board for it to reach this conclusion. As part of its
considerations, the Audit Committee assumed that the
reader of the Annual Report and financial statements
would have a reasonable knowledge of the investment
industry in general and of investment trusts in particular.
Review of Independent Auditor
The Audit Committee has reviewed the effectiveness of
the Independent Auditor, KPMG LLP (“KPMG”), including:
· Independence - the Independent Auditor discusses with
the Audit Committee, at least annually, the steps it takes
to ensure its independence and objectivity and makes
the Audit 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 working relationship with
management (the Independent Auditor has a
constructive working relationship with the Manager).
Audit Committee’s Report
Continued
abrdn UK Smaller Companies Growth Trust plc 67
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
· Quality of people - 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 partner).
· Quality of service - as represented by points arising from
the FRC’s annual audit quality inspection.
· Fees - including current and proposed fees for
future years.
The Independent Auditor’s report is included on pages
71 to 76. Details of the amounts paid to KPMG during the
year for audit services are set out in note 5 to the
financial statements.
Tenure of the Independent Auditor
KPMG was initially appointed as the Company’s
Independent Auditor at the Annual General Meeting on 26
October 2017. In accordance with present professional
guidelines the audit partner is rotated after no more than
five years and the year ended 30 June 2022 is the fifth
year for which the present audit partner, Philip Merchant,
has served. A new audit director has been introduced to
the Audit Committee.
In compliance with the appropriate regulations, the next
audit tender of the Company is due to take place by 2027.
The Audit Committee is satisfied with the quality of the
work and service carried out by KPMG and with the level
of fees. The Audit Committee is also satisfied that KPMG is
independent and therefore supports the
recommendation to the Board that the re-appointment of
KPMG be put to shareholders for approval at the Annual
General Meeting.
On behalf of the Audit Committee
Caroline Ramsay
Chair of the Audit Committee
7 September 2022
68 abrdn UK Smaller Companies Growth Trust plc
Financial Statements
Investments in the Leisure Goods sector
include Focusrite.
abrdn UK Smaller Companies Growth Trust plc 69
For the year ended 30 June 2022, the
Company’s Net Asset Value (“NAV”)
total return was -27.3% and the
share price total return was -34.3%.
These returns compare to the total
return of the Company’s reference
index, the Numis Smaller Companies
plus AIM (ex investment companies)
Index, of -19.0%.
70 abrdn UK Smaller Companies Growth Trust plc
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 they 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;
· assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern; and
· prepare the financial statements on the going concern
basis of accounting unless they either intend to liquidate
the Company or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They
are 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, and 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 the
content of any information included 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.
Responsibility Statement of the Directors in
Respect of the Annual Financial Report
The Directors confirm that to the best of their knowledge:
· the financial statements have been prepared in
accordance with applicable accounting standards and
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company;
· 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; and
· the Annual Report taken as a whole, is fair, balanced and
understandable and it provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
On behalf of the Board
Liz Airey
Chairman
7 September 2022
Statement of Directors’ Responsibilities in Respect of the
Annual Report and the Financial Statements
abrdn UK Smaller Companies Growth Trust plc 71
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
1. Our Opinion is Unmodified
We have audited the financial statements of abrdn UK
Smaller Companies Growth Trust plc (the “Company”) for
the year ended 30 June 2022 which comprise the
Statement of Comprehensive Income, Statement of
Financial Position, Statement of Changes in Equity,
Statement of Cash Flows, and the related notes, including
the accounting policies in note 2.
In our opinion the financial statements:
· give a true and fair view of the state of the Company’s
affairs as at 30 June 2022 and of its return for the year
then ended;
· have been properly prepared in accordance with UK
accounting standards, including FRS 102 ‘The Financial
Reporting Standard applicable in the UK and Republic of
Ireland’; and
· have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on
26 October 2017. The period of total uninterrupted
engagement is for the five financial years ended 30 June
2022. We have fulfilled our ethical responsibilities under,
and we remain independent of the Company in
accordance with, UK ethical requirements including the
FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard
were provided.
Overview
Materiality: financial statements as a whole
£5.4 million (2021: £7.9 million)
1% (2021: 1%) of Total Assets
Key audit matters vs 2021
Recurring risks Carrying amount of quoted investments ŻŹ
2. Key Audit Matters: Our Assessment of
Risks of Material Misstatement
Key audit matters are those matters that, in our
professional judgement, were of most significance in the
audit of the financial statements and include the most
significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, 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. We
summarise below the key audit matter (unchanged from
2021), in arriving at our audit opinion above, together with
our key audit procedures to address this matter and, as
required for public interest entities, our results from those
procedures. This matter was addressed, and our results
are based on procedures undertaken, in the context of,
and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon,
and consequently are incidental to that opinion, and we
do not provide a separate opinion on this matter.
Independent Auditor’s Report to the Members of
abrdn UK Smaller Companies Growth Trust plc
72 abrdn UK Smaller Companies Growth Trust plc
The risk Our response
Carrying amount of quoted investments
(£524.1 million; 2021: £770.0 million)
Refer to page 66 (Audit Committee
Report), pages 81 to 82 (accounting
policy) and page 88 (financial
disclosures).
Low risk, high value
The Company’s portfolio of quoted
investments makes up 97% (2021: 97%) of
the Company’s total assets (by value) and
is one of the key drivers of results. We do
not consider these investments to be at a
high risk of significant misstatement, or to
be subject to a significant level of
judgement because they comprise liquid,
quoted investments. However, due to their
materiality in the context of the financial
statements as a whole, they are
considered to be the area which had the
greatest effect on our overall audit
strategy and allocation of resources in
planning and completing
our audit.
We performed the detailed tests below
rather than seeking to rely on controls,
because the nature of the balance is
such that detailed testing is determined
to be the most effective manner of
obtaining audit evidence.
Our procedures included:
Tests of detail: Agreed the valuation of
100% of quoted investments in the
portfolio to externally quoted prices; and
Enquiry of Custodian:
Agreed 100% of
investment holdings in the portfolio to
independently received third party
confirmation from the Custodian.
Our results:
We found the carrying
amount of quoted investments to be
acceptable (2021: acceptable).
3. Our Application of Materiality and an
Overview of the Scope of our Audit
Materiality for the financial statements as a whole was set
at £5.4 million (2021: £7.9 million), determined with
reference to a benchmark of total assets, of which it
represents 1% (2021: 1%).
In line with our audit methodology, our procedures on
individual account balances and disclosures were
performed to a lower threshold, performance materiality,
so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual
account balances add up to a material amount across the
financial statements as a whole.
Performance materiality was set at 75% (2021: 75%) of
materiality for the financial statements as a whole, which
equates to £4.1 million (2021: £5.9 million). We applied this
percentage in our determination of performance
materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £270,000 (2021: £400,000), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
Our audit of the Company was undertaken to the
materiality and performance materiality levels specified
above and was performed by a single audit team.
The scope of the audit work performed was fully
substantive as we did not rely upon the Company’s
internal control over financial reporting.
Total Assets
£541.5 million (2021: £795.0 million)
Materiality
£5.4 million
(2021: £7.9 million)
£5.4 million
Whole financial
statements materiality
(2021: £7.9 million)
£4.1 million
Whole financial
statements performance
materiality
(2021: £5.9 million)
£270,000
Misstatements reported to
the Audit Committee
(2021: £400,000)
Independent Auditor’s Report to the Members of
abrdn UK Smaller Companies Growth Trust plc
Continued
Total Assets Materialit
y
abrdn UK Smaller Companies Growth Trust plc 73
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
4. Going Concern
The Directors have prepared the financial statements on
the going concern basis as they do not intend to liquidate
the Company or to cease its operations, and as they have
concluded that the Company’s financial position means
that this is realistic. They have also concluded that there
are no material uncertainties that could have cast
significant doubt over its ability to continue as a going
concern for at least a year from the date of approval of
the financial statements (the “going concern period”).
We used our knowledge of the Company, its industry, and
the general economic environment to identify the
inherent risks to its business model and analysed how
those risks might affect the Company’s financial
resources or ability to continue operations over the going
concern period. The risks that we considered most likely to
adversely affect the Company’s available financial
resources and its ability to operate over this period were:
· The impact of a significant reduction in the valuation of
investments and implications for the Company’s debt
covenants;
· The liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall
due; and
· The operational resilience of key service organisations.
We considered whether these risks could plausibly affect
the liquidity or covenant compliance in the going concern
period by assessing the degree of downside assumption
that, individually and collectively, could result in a liquidity
issue, taking into account the Company’s current and
projected cash and liquid investment position (and the
results of a reverse stress test).
We considered whether the going concern disclosure in
note 2 (a) to the financial statements gives a full and
accurate description of the Directors’ assessment of going
concern, including the identified risks and related
sensitivities.
Our conclusions based on this work:
· we consider that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
· we have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty
related to events or conditions that, individually or
collectively, may cast significant doubt on the
Company's ability to continue as a going concern for the
going concern period;
· we have nothing material to add or draw attention to in
relation to the Directors’ statement in note 2 (a) to the
financial statements on the use of the going concern
basis of accounting with no material uncertainties that
may cast significant doubt over the Company’s use of
that basis for the going concern period, and we found
the going concern disclosure in note 2 (a) to be
acceptable; and
· the related statement under the Listing Rules set out on
page 56 is materially consistent with the financial
statements and our audit knowledge.
However, as we cannot predict all future events or
conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the above
conclusions are not a guarantee that the Company will
continue in operation.
5. Fraud and Breaches of Laws and
Regulations - Ability to Detect
Identifying and Responding to Risks of Material
Misstatement due to Fraud
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or
provide an opportunity to commit fraud. Our risk
assessment procedures included:
· Enquiring of Directors as to the Company’s high-level
policies and procedures to prevent and detect fraud, as
well as whether they have knowledge of any actual,
suspected or alleged fraud;
· Assessing the segregation of duties in place between
the Directors, the Administrator and the Investment
Manager; and
· Reading Board and Audit Committee minutes.
We communicated identified fraud risks throughout the
audit team and remained alert to any indications of fraud
throughout the audit.
As required by auditing standards, we perform
procedures to address the risk of management override
of controls, in particular the risk that Company
management may be in a position to make inappropriate
accounting entries. We evaluated the design and
implementation of the controls over journal entries and
other adjustments and made inquiries of the Administrator
about inappropriate or unusual activity relating to the
processing of journal entries and other adjustments. We
74 abrdn UK Smaller Companies Growth Trust plc
substantively tested all material post-closing entries and,
based on the results of our risk assessment procedures
and understanding of the process, including the
segregation of duties between the Directors, Investment
Manager and the Administrator, no further high-risk
journal entries or other adjustments were identified.
On this audit we do not believe there is a fraud risk related
to revenue recognition because the revenue is non-
judgemental and straightforward, with limited opportunity
for manipulation. We did not identify any additional
fraud risks.
Identifying and Responding to Risks of Material
Misstatement due to Non-compliance with Laws and
Regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our general commercial and
sector experience and through discussion with the
Directors, the Investment Manager and the Administrator
(as required by auditing standards) and discussed with
the Directors the policies and procedures regarding
compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an
understanding of the control environment including
the entity’s procedures for complying with
regulatory requirements.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies
legislation), distributable profits legislation, and its
qualification as an Investment Trust under UK taxation
legislation, any breach of which could lead to the
Company losing various deductions and exemptions from
UK corporation tax, and we assessed the extent of
compliance with these laws and regulations as part of our
procedures on the related financial statement items.
We assessed the legality of the distributions made by the
Company in the period based on comparing the dividends
paid to the distributable reserves prior to each distribution,
including consideration of accounts filed during the year.
Secondly, the Company is subject to many other laws and
regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in
the financial statements, for instance through the
imposition of fines or litigation. We identified the following
areas as those most likely to have such an effect: money
laundering, data protection, bribery and corruption
legislation and certain aspects of company legislation
recognising the financial and regulated nature of the
Company’s activities and its legal form. Auditing standards
limit the required audit procedures to identify non-
compliance with these laws and regulations to enquiry of
the Directors and the Administrator and inspection of
regulatory and legal correspondence, if any. Therefore, if
a breach of operational regulations is not disclosed to us
or evident from relevant correspondence, an audit will not
detect that breach.
Context of the Ability of the Audit to Detect Fraud or
Breaches of Law or Regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our
audit in accordance with auditing standards. For example,
the further removed non-compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely the inherently
limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk
of non-detection of fraud, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls. Our audit procedures are
designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and
cannot be expected to detect non-compliance with all
laws and regulations.
6. We Have Nothing to Report on the Other
Information in the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial
statements audit work, the information therein is
materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the
other information.
Independent Auditor’s Report to the Members of
abrdn UK Smaller Companies Growth Trust plc
Continued
Independent Auditor’s Report to the Members of
abrdn UK Smaller Companies Growth Trust plc
Continued
abrdn UK Smaller Companies Growth Trust plc 75
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Strategic Report and Directors’ Report
Based solely on our work on the other information:
· we have not identified material misstatements in the
Strategic Report and the Directors’ Report;
· in our opinion the information given in those reports for
the financial year is consistent with the financial
statements; and
· in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ Remuneration Report
In our opinion the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Disclosures of Emerging and Principal Risks and Longer-
Term Viability
We are required to perform procedures to identify
whether there is a material inconsistency between the
Directors’ disclosures in respect of emerging and principal
risks and the viability statement, and the financial
statements and our audit knowledge.
Based on those procedures, we have nothing material to
add or draw attention to in relation to:
· the Directors’ confirmation within the viability statement
on pages 17 and 18 that they have carried out a robust
assessment of the emerging and principal risks facing
the Company, including those that would threaten its
business model, future performance, solvency and
liquidity;
· the principal risks and uncertainties disclosures
describing these risks and how emerging risks are
identified and explaining how they are being managed
and mitigated; and
· the Directors’ explanation in the viability statement of
how they have assessed the prospects of the Company,
over what period they have done so and why they
considered that period to be appropriate, and their
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 their assessment, including any related
disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability statement set
out on pages 17 and 18 under the Listing Rules. Based on
the above procedures, we have concluded that the above
disclosures are materially consistent with the financial
statements and our audit knowledge.
Our work is limited to assessing these matters in the
context of only the knowledge acquired during our
financial statements audit. As we cannot predict all future
events or conditions and as subsequent events may result
in outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the
absence of anything to report on these statements is not a
guarantee as to the Company’s longer-term viability.
Corporate Governance Disclosures
We are required to perform procedures to identify
whether there is a material inconsistency between the
Directors’ corporate governance disclosures and the
financial statements and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is materially consistent with the financial
statements and our audit knowledge:
· the Directors’ statement that they consider that the
Annual Report and financial statements taken as a
whole is fair, balanced and understandable, and
provides the information necessary for shareholders to
assess the Company’s position and performance,
business model and strategy;
· the section of the Annual Report describing the work of
the Audit Committee, including the significant issues that
the Audit Committee considered in relation to the
financial statements, and how these issues were
addressed; and
· the section of the Annual Report that describes the
review of the effectiveness of the Company’s risk
management and internal control systems.
We are required to review the part of the Corporate
Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for
our review.
We have nothing to report in this respect.
76 abrdn UK Smaller Companies Growth Trust plc
7. We Have Nothing to Report on the Other
Matters on Which we are Required to Report
by Exception
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
· adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
· the financial statements and the part of the Directors’
Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
· certain disclosures of Directors’ remuneration specified
by law are not made; or
· we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
8. Respective Responsibilities
Directors’ Responsibilities
As explained more fully in their statement set out on page
70, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they
give a true and fair view; 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; 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 they either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to
do so.
Auditor’s Responsibilities
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 our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance but does not
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 aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of the
financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
9. The Purpose of Our Audit Work and to
Whom we Owe our Responsibilities
This report is made solely to the Company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company
and the Company’s members, as a body, for our audit
work, for this report, or for the opinions we have formed.
Philip Merchant (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh EH1 2EG
7 September 2022
Continued
Independent Auditor’s Report to the Members of
abrdn UK Smaller Companies Growth Trust plc
abrdn UK Smaller Companies Growth Trust plc 77
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Year ended 30 June 2022 Year ended 30 June 2021
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Net (losses)/gains on investments held
at fair value
10 - (196,773) (196,773) - 213,905 213,905
Income 3 11,123 - 11,123 8,573 - 8,573
Investment management fee 4 (1,190) (3,569) (4,759) (1,149) (3,449) (4,598)
Other administrative expenses 5 (889) - (889) (828) - (828)
Net return before finance costs and
taxation
9,044 (200,342) (191,298) 6,596 210,456 217,052
Finance costs 6 (278) (833) (1,111) (204) (612) (816)
Return before taxation 8,766 (201,175) (192,409) 6,392 209,844 216,236
Taxation 7 - - - - - -
Return after taxation 8,766 (201,175) (192,409) 6,392 209,844 216,236
Return per Ordinary share (pence) 9 9.07 (208.10) (199.03) 6.43 211.01 217.44
The total column of this statement represents the profit and loss account of the Company. The ‘Revenue’ and ‘Capital’ columns
represent supplementary information prepared under guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the Financial Statements.
Statement of Comprehensive Income
78 abrdn UK Smaller Companies Growth Trust plc
As at As at
30 June 2022 30 June 2021
Notes £’000 £’000
Non-current assets
Investments held at fair value through profit or loss 10 524,137 770,003
Current assets
Debtors 11 2,413 2,238
Investments in AAA-rated money market funds 14,414 22,636
Cash and short term deposits 582 95
17,409 24,969
Current liabilities
Creditors: other amounts falling due within one year 12 (2,947) (1,775)
Bank loan 12 (39,988) (40,000)
(42,935) (41,775)
Net current liabilities (25,526) (16,806)
Total assets less current liabilities 498,611 753,197
Creditors: amounts falling due after more than one year
Bank loan 13 – (24,951)
Net assets 498,611 728,246
Capital and reserves
Called-up share capital 14 26,041 26,041
Share premium account 170,146 170,146
Special reserve – 20,132
Capital reserve 15 293,616 504,395
Revenue reserve 8,808 7,532
Equity shareholders’ funds 498,611 728,246
Net asset value per Ordinary share (pence) 16 530.37 737.97
The financial statements on pages 77 to 98 were approved by the Board of Directors on 7 September 2022 and were signed on its
behalf by:
Liz Airey
Chairman
The accompanying notes are an integral part of the Financial Statements.
Statement of Financial Position
abrdn UK Smaller Companies Growth Trust plc 79
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
For the year ended 30 June 2022
Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 30 June 2021 26,041 170,146 20,132 504,395 7,532 728,246
Return after taxation – – – (201,175) 8,766 (192,409)
Buyback of Ordinary shares into Treasury
(see note 14)
– – (20,132) (9,604) – (29,736)
Dividends paid (see note 8) – – – – (7,490) (7,490)
Balance at 30 June 2022 26,041 170,146 – 293,616 8,808 498,611
For the year ended 30 June 2021
Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 30 June 2020 26,041 170,146 28,534 294,551 8,804 528,076
Return after taxation – – – 209,844 6,392 216,236
Buyback of Ordinary shares into Treasury
(see note 14)
– – (8,402) – – (8,402)
Dividends paid (see note 8) – – – – (7,664) (7,664)
Balance at 30 June 2021 26,041 170,146 20,132 504,395 7,532 728,246
The capital reserve at 30 June 2022 is split between realised of £198,874,000 and unrealised of £94,742,000 (30 June 2021 – realised
£179,141,000 and unrealised £325,254,000).
The Company’s reserves available to be distributed by way of dividends or buybacks which includes the revenue reserve and the
realised element of the capital reserve amount to £207,682,000 (30 June 2021 – £186,673,000). The special reserve at 30 June 2022 is
£nil (30 June 2021 – the special reserve of £20,132,000 was available to fund share buy backs but could not be used to pay dividends).
The accompanying notes are an integral part of the financial statements.
Statement of Chan
g
es in Equity
80 abrdn UK Smaller Companies Growth Trust plc
Year ended Year ended
30 June 2022 30 June 2021
£’000 £’000
Operating activities
Net return before taxation (192,409) 216,236
Adjustment for:
Losses/(gains) on investments 196,773 (213,905)
Increase in accrued dividend income (792) (994)
Decrease in accrued interest income - 7
Finance costs 1,111 816
Increase in other debtors (2) (3)
Increase in other creditors 920 281
Net cash inflow from operating activities 5,601 2,438
Investing activities
Purchases of investments (94,258) (188,635)
Sales of investments 144,236 159,116
Purchases of AAA-rated money market funds (137,040) (150,977)
Sales of AAA-rated money market funds 145,262 154,806
Net cash inflow/(outflow) from investing activities 58,200 (25,690)
Financing activities
Bank and loan interest paid (1,088) (756)
Repurchase of Ordinary shares into Treasury (29,736) (8,282)
Drawdown of loan - 40,000
Repayment of loan (25,000) -
Equity dividends paid (7,490) (7,664)
Net cash (outflow)/inflow from financing activities (63,314) 23,298
Increase in cash 487 46
Analysis of changes in cash during the year
Opening balance 95 49
Increase in cash as above 487 46
Closing balance 582 95
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows
abrdn UK Smaller Companies Growth Trust plc 81
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
1. Principal activity
The Company is a closed-end investment company, registered in Scotland No SC145455, with its Ordinary shares being listed
on the London Stock Exchange.
2. Accounting policies
a) Basis of accounting and going concern. The financial statements have been prepared in accordance with Financial
Reporting Standard 102 and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust
Companies and Venture Capital Trusts’ issued in April 2021. They have also been prepared on the assumption that
approval as an investment trust will continue to be granted.
The Company’s assets consist mainly of equity shares in companies listed on recognised stock exchanges and are
considered by the Board to be realisable within a short timescale under normal market conditions. The Board has set
overall limits for borrowing and reviews regularly the Company’s level of gearing, cash flow projections and compliance
with banking covenants. The Board has also performed stress testing and liquidity analysis.
As at 30 June 2022, the Company had a £65 million unsecured loan facility agreement with The Royal Bank of Scotland
International Limited which matures on 31 October 2022. This consists of a five year, fixed-rate term loan facility of £25
million and a revolving credit facility of £40 million. The Board has reviewed its options and a range of proposals and is
expecting to refinance the facility when it expires. However, in the event that the facility is not refinanced, there is
considered to be sufficient portfolio liquidity to enable borrowings to be repaid.
The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report on pages 14 to 16 and
they believe that the Company has adequate financial resources to continue its operational existence for a period of not
less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that
the Company’s diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term
funding requirements were they to arise. The Directors have also reviewed the revenue and ongoing expenses forecasts
for the coming year and considered the Company’s Statement of Financial Position as at 30 June 2022 which shows net
current liabilities of £25.5 million at that date. Taking all of this into account, the Directors believe that it is appropriate to
continue to adopt the going concern basis in preparing the financial statements.
The accounting policies applied are unchanged from the prior year and have been applied consistently.
b) Investments. Investments have been designated upon initial recognition as fair value through profit or loss in accordance
with IAS 39. As permitted by FRS 102, the Company has elected to apply the recognition and measurement provisions of
IAS 39 Financial Instruments. 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.
Notes to the Financial Statements
For the year ended 30 June 2022
82 abrdn UK Smaller Companies 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 to be made 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. For listed investments, this is deemed to be bid
market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock
Exchange electronic trading service covering most of the market including all the FTSE All-Share and the most liquid
AIM constituents.
Gains and losses arising from changes in fair value are included 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.
c) AAA-rated money market funds. The AAA money market funds are used by the Company to provide additional short term
liquidity. Due to their short term nature, they are recognised in the Financial Statements as a current asset and are
included at fair value through profit and loss.
d) Income. Income from equity investments (other than special dividends), including taxes deducted at source, is included in
revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are credited to
revenue or capital in the Statement of Comprehensive Income, according to the circumstances of the underlying
payment. Foreign income is converted at the exchange rate applicable at the time of receipt. Interest receivable on
short-term deposits and money market funds is accounted for on an accruals basis.
e) Expenses and interest payable. Expenses are accounted for on an accruals basis. Expenses are charged to the capital
column of the Statement of Comprehensive Income when they are incurred in connection with the maintenance or
enhancement of the value of investments. In this respect, the investment management fee and relevant finance costs are
allocated 25% to revenue and 75% to the capital columns of the Statement of Comprehensive Income in line with the
Board’s expectation of returns from the Company’s investments over the long term in the form of revenue and capital
respectively (see notes 4 and 6).
Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement
of Comprehensive Income.
f) Dividends payable. Dividends are recognised in the period in which they are paid.
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.
Share premium account. The balance classified as share premium includes the premium above nominal value from the
proceeds on issue of any equity share capital comprising Ordinary shares of 25p. This reserve is not distributable.
Special reserve. The special reserve arose following court approval for the cancellation of the share premium account
balance at 24 June 1999 and on 13 October 2009. Court of Session approval was granted for the cancellation of the
Company’s entire share premium account and capital redemption reserve and subsequent creation of a special
distributable capital reserve. The special reserve is used to fund share purchases of its own Ordinary shares by the
Company. During the year the balance of the special reserve was utlised in full.
Capital reserve. Gains or losses on disposal of investments and changes in fair values of investments are transferred to the
capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any
associated tax relief is also credited to this reserve. The part of this reserve represented by realised capital gains is
available for distribution by way of share buybacks and dividends.
Notes to the Financial Statements
Continued
abrdn UK Smaller Companies Growth Trust plc 83
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Revenue reserve. Income and expenses which are recognised in the revenue column of the Statement of
Comprehensive Income are transferred to the revenue reserve. The revenue reserve is available for distribution
including by way of dividend.
h) Taxation. Tax expense represents the sum of tax currently payable and deferred tax. Any tax payable is based on
taxable profit for the period. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive
Income because it excludes items of income or expenses 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 have been enacted or substantively enacted by the year end date.
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the year end
date where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred
at the year end date measured on an undiscounted basis and based on enacted tax rates. 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.
Owing to the Company’s status as an investment trust company, and the intention to continue meeting the conditions
required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains
and losses arising on the revaluation or disposal of investments.
i) Foreign currency. Non-monetary assets and liabilities denominated in foreign currency carried at fair value through profit
or loss are converted into Sterling at the rate of exchange ruling at the year end date. Transactions during the year
involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising
from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the
Statement of Comprehensive Income.
j) Judgements and key sources of estimation uncertainty. Disclosure is required of judgements and estimates made by
management in applying the accounting policies that have a significant effect on the Financial Statements. There are no
significant estimates or judgements which impact these Financial Statements.
k) Cash and cash equivalents. Cash comprises bank balances and cash held by the Company. Cash equivalents are short-
term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
l) Bank borrowing. Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds
received, net of direct issue costs. They are subsequently measured at amortised cost. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the
Statement of Comprehensive Income using the straight line method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
m) Treasury shares. When the Company purchases its Ordinary shares to be held in treasury, the amount of the
consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction
from the special reserve. During the year the special reserve was utlised in full with subsequent costs being 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.
84 abrdn UK Smaller Companies Growth Trust plc
3. Income
2022 2021
£’000 £’000
Income from investments
UK dividend income 9,139 6,394
Property income distributions 734 867
Overseas dividend income 1,034 1,054
Special dividends 166 232
11,073 8,547
Other income
Interest from AAA-rated money market funds 50 26
Total income 11,123 8,573
4. Investment management fee
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 1,190 3,569 4,759 1,149 3,449 4,598
The balance due to abrdn Fund Managers Limited (“aFML”) at the year end was £2,083,000 (2021 – £1,264,000). For further
details see note 21 on page 98.
Notes to the Financial Statements
Continued
abrdn UK Smaller Companies Growth Trust plc 85
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
5. Administrative expenses (inclusive of VAT)
2022 2021
£’000 £’000
Secretarial fees
A
90 135
Promotional activities
A
295 180
Directors’ fees 145 135
Auditor’s remuneration:
– fees payable to the Company’s Independent Auditor for the audit of the
annual accounts (excluding VAT)
40 33
– VAT on audit fees 8 6
Registrar’s fees 27 26
Professional fees 12 45
Custody fees 32 29
Depositary fees 79 92
Other expenses 161 147
889 828
A
The Company has an agreement with aFML for the provision of secretarial services and promotional activities. Secretarial fees payable during the year, inclusive of
VAT, were £90,000 (2021 – £135,000) and the amount due to aFML at the year end was £45,000 (2021 – £68,000). Costs relating to promotional activities during the year,
inclusive of VAT, were £295,000 (2021 – £180,000) and the amount due to aFML at the year end was £115,000 (2021 – £60,000).
6. Finance costs
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Bank loan interest 258 774 1,032 177 532 709
Non-utilisation fees 11 31 42 18 52 70
Amortisation of loan arrangement expenses 9 28 37 9 28 37
278 833 1,111 204 612 816
86 abrdn UK Smaller Companies Growth Trust plc
7. Taxation
(a) Analysis of charge for year
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Tax charge – – – – – –
(b) Provision for deferred taxation. At 30 June 2022, the Company had unutilised management expenses and loan
relationship losses of £75,537,000 (2021 – £69,571,000). A deferred tax asset has not been recognised on the unutilised
management expenses and loan relationship losses as it is unlikely there will be suitable future taxable profits against
which these tax losses could be deducted. Therefore, it is unlikely that the Company will generate future taxable
revenue that would enable the existing tax losses to be utilised.
(c) Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2021 – 19%). The tax charge for the
year is lower (2021 – lower) than the standard rate of corporation tax in the UK of 19% (2021 – 19%). The differences are
explained in the following table.
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return before taxation 8,766 (201,175) (192,409) 6,392 209,844 216,236
Corporation tax at a rate of 19% (2021 –
19%)
1,666 (38,223) (36,557) 1,215 39,870 41,085
Effects of:
Non-taxable UK dividend income (1,768) – (1,768) (1,259) – (1,259)
Non-taxable overseas dividend income (196) – (196) (200) – (200)
Management expenses and loan
relationship losses not utilised
298 836 1,134 244 771 1,015
Non-taxable losses/(gains) on
investments
– 37,387 37,387 – (40,641) (40,641)
Total tax charge – – – – – –
Notes to the Financial Statements
Continued
abrdn UK Smaller Companies Growth Trust plc 87
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8. Dividends
2022 2021
£’000 £’000
Amounts recognised as distributions to equity holders in the period:
2021 final dividend of 5.00p per share (2020 – 5.00p) paid on 29 October 2021 4,885 4,986
2022 interim dividend of 2.70p per share (2021 – 2.70p) paid on 8 April 2022 2,605 2,678
7,490 7,664
The proposed 2022 final dividend is subject to approval by shareholders at the Annual General Meeting and has not been
included as a liability in these Financial Statements.
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 Section 1158–1159 of the Corporation Taxes Act 2010 are considered. The revenue available for distribution
by way of dividend for the year is £8,766,000 (2021 – £6,392,000).
2022 2021
£’000 £’000
Interim dividend 2022 of 2.70p per share (2021 – 2.70p) paid on 8 April 2022 2,605 2,678
Proposed final dividend 2022 of 5.40p per share (2021 – 5.00p) payable on 28
October 2022
5,023 4,894
7,628 7,572
The amount payable for the proposed final dividend is based on the Ordinary shares in issue as the date of approval of this
Report, 7 September 2022, which satisfies the requirement of Section 1159 of the Corporation Tax Act 2010.
9. Return per Ordinary share
2022 2021
p £000 p £000
Basic
Revenue return 9.07 8,766 6.43 6,392
Capital return (208.10) (201,175) 211.01 209,844
Total return (199.03) (192,409) 217.44 216,236
Weighted average number of Ordinary shares in issue 96,670,077 99,447,493
88 abrdn UK Smaller Companies Growth Trust plc
10. Investments held at fair value through profit or loss
2022 2021
£’000 £’000
Opening book cost 444,749 372,312
Opening investment holdings gains 325,254 154,728
Opening fair value 770,003 527,040
Additions at cost 94,523 188,543
Disposals – proceeds (143,616) (159,485)
(Losses)/gains on investments (196,773) 213,905
Closing fair value 524,137 770,003
2022 2021
£’000 £’000
Closing book cost 429,395 444,749
Closing investment holding gains 94,742 325,254
Closing fair value 524,137 770,003
All investments are in equity shares listed on the London Stock Exchange.
The Company received £143,616,000 (2021 – £159,485,000) from investments sold in the period. The book cost of these
investments when they were purchased was £109,878,000 (2021 – £116,107,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
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)/gains on investments in the
Statement of Comprehensive Income. The total costs were as follows:
2022 2021
£’000 £’000
Purchases 259 600
Sales 110 98
369 698
Notes to the Financial Statements
Continued
abrdn UK Smaller Companies Growth Trust plc 89
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
11. Debtors
2022 2021
£’000 £’000
Amounts due from brokers 11 631
Dividends receivable 2,380 1,587
Other debtors 22 20
2,413 2,238
12. Creditors: amounts falling due within one year
2022 2021
£’000 £’000
Amounts payable to brokers 385 120
Interest payable 108 121
Investment management fee payable 2,083 1,264
Sundry creditors 371 270
2,947 1,775
2022 2021
Bank loan £’000 £’000
Bank loan 40,000 40,000
Unamortised loan arrangement expenses (12) –
39,988 40,000
On 1 November 2017 the Company entered into a £45 million unsecured loan facility agreement arranged with The Royal
Bank of Scotland International Limited, which was increased to £65 million effective 10 May 2021. The facilities consist of a five
year fixed-rate term loan facility of £25,000,000 (the “Term Loan”) and a five year revolving credit facility of £40,000,000 (the
“RCF”). The Term Loan has a maturity date of 31 October 2022.
The Company had drawn down £25 million of the Term Loan at the year end, at an interest rate of 2.349% (2021 – 2.349%) and
£15 million of the RCF, at an interest rate of 2.090% (2021 – 1.201%), with a maturity date of 15 July 2022. Subsequent to the
year end, the loan was rolled over and £15 million was drawn down at the date of this Report at an approximate interest rate of
2.7402% until 1 November 2022.
The terms of the unsecured loan facility agreement (“the agreement”) contain covenants that the Consolidated Net Tangible
Assets as defined in the agreement must not be less than £200 million, the percentage of borrowings against the Adjusted
Portfolio Value as defined in the agreement shall not exceed 30%, and the portfolio contains a minimum of thirty eligible
investments (investments made in accordance with the Company’s investment policy). The Company complied with all
covenants throughout the year.
90 abrdn UK Smaller Companies Growth Trust plc
13. Creditors: amounts falling due after more than one year
2022 2021
£’000 £’000
Bank loan – 25,000
Unamortised loan arrangement expenses – (49)
– 24,951
14. Called-up share capital
2022 2021
Number £’000 Number £’000
Authorised 150,000,000 37,500 150,000,000 37,500
Issued and fully paid:
Ordinary shares of 25p each 94,012,047 23,503 98,682,566 24,671
Held in treasury: 10,152,375 2,538 5,481,856 1,370
104,164,422 26,041 104,164,422 26,041
Ordinary shares Treasury shares Total
Number Number Number
Opening balance 98,682,566 5,481,856 104,164,422
Share buybacks (4,670,519) 4,670,519 –
Closing balance 94,012,047 10,152,375 104,164,422
During the year the Company repurchased 4,670,519 (2021 – 1,382,632) Ordinary shares to treasury at a cost of £29,736,000
(2021 – £8,402,000). Subsequent to the year end, a further 988,429 Ordinary shares were repurchased to treasury at a cost of
£4,993,000.
Notes to the Financial Statements
Continued
abrdn UK Smaller Companies Growth Trust plc 91
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15. Capital reserve
2022 2021
£’000 £’000
Opening balance 504,395 294,551
Unrealised (losses)/gains on investment holdings (230,512) 170,527
Gains on realisation of investments at fair value 33,739 43,378
Management fee charged to capital (3,569) (3,449)
Finance costs charged to capital (833) (612)
Buyback of Ordinary shares into treasury (9,604) –
Closing balance 293,616 504,395
The capital reserve includes investment holding gains/(losses) amounting to £94,742,000 (2021 – gains of £325,254,000) as
disclosed in note 10 on page 88.
16. Net asset value per share
Total shareholders’ funds have been calculated in accordance with the provisions of applicable accounting standards. The
analysis of total shareholders’ funds on the face of the Statement of Financial Position reflects the rights, under the Articles of
Association, of the Ordinary shareholders on a return of assets.
2022 2021
Net assets attributable (£’000) 498,611 728,246
Number of Ordinary shares in issue at year end
A
94,012,047 98,682,566
Net asset value per share 530.37p 737.97p
A
Excluding shares held in treasury.
92 abrdn UK Smaller Companies Growth Trust plc
17. Financial instruments
The Company’s financial instruments comprise securities and other investments, cash balances, 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 for the purpose of
managing currency and market risks arising from the Company’s activities. No such transactions took place during the year.
The main risks the Company faces from its financial instruments are i) market price risk (comprising interest rate risk, currency
risk and other price risk), ii) liquidity risk and iii) credit risk. There was no material currency risk to the Company for the period
given its investing and financing activities are in the UK.
The Board regularly reviews and agrees policies for managing each of these risks. The Manager’s policies for managing these
risks are summarised below and have been applied throughout the year.
i) Market price risk. The fair value or future cash flows of a financial instrument held by the Company may fluctuate
because of changes in market prices. This market risk comprises three elements – interest rate risk, currency risk and
other price risk.
Interest rate risk
Interest rate movements may affect:
– the level of income receivable on cash deposits and money market funds;
– interest payable on the Company’s variable rate borrowings.
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.
It is the Company’s policy to increase its exposure to equity market price risk through the judicious use of borrowings.
When borrowed funds are invested in equities, the effect is to magnify the impact on Shareholders’ funds of changes –
both positive and negative – in the value of the portfolio.
As at 30 June 2022, the Company had drawn down £40 million (2021 – £65 million) of the £65 million (2021 – £65 million)
unsecured loan facility agreement arranged with The Royal Bank of Scotland International Limited. The facilities consist of
a five year fixed-rate term loan facility of £25 million and a five year revolving credit facility of £40 million.
Notes to the Financial Statements
Continued
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Interest risk profile. The interest rate risk profile of the portfolio of financial assets and liabilities at the year end date was
as follows:
Weighted average Weighted
period for which average Fixed Floating
rate is fixed interest rate rate rate
As at 30 June 2022 Years % £’000 £’000
Assets
Investments in AAA-rated money market funds – 1.17 – 14,414
Cash deposits – – – 582
Total assets – – – 14,996
Liabilities
Bank loan 0.33 2.35 25,000 –
Bank loan 0.08 2.09 15,000 –
Total liabilities – – 40,000 –
Weighted average Weighted
period for which average Fixed Floating
rate is fixed interest rate rate rate
As at 30 June 2021 Years % £’000 £’000
Assets
Investments in AAA-rated money market funds – 0.08 – 22,636
Cash deposits – – – 95
Total assets – – – 22,731
Liabilities
Bank loan 1.33 2.35 25,000 –
Bank loan 0.08 1.20 40,000 –
Total liabilities – – 65,000 –
The weighted average interest rate is based on the current yield of each asset, weighted by its market value.
The floating rate assets consist of investments in AAA-rated money market funds and cash deposits on call earning
interest at prevailing market rates.
All financial liabilities are measured at amortised cost.
94 abrdn UK Smaller Companies Growth Trust plc
Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates at
the year end date and with the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period in the case of instruments that have floating rates.
If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Company’s profit
for the year ended 30 June 2022 and net assets would increase/decrease by £150,000 (2021 – increase/decrease by
£227,000). This is mainly attributable to the Company’s exposure to interest rates on its floating rate cash balances and
money market funds.
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 the quoted investments.
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 and the stock selection process, as detailed on pages 31 to
33, 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. The investments held by the Company are mainly
listed on the London Stock Exchange.
Other price risk sensitivity. If market prices at the year end date had been 10% higher or lower while all other variables
remained constant, the return attributable to Ordinary Shareholders for the year ended 30 June 2022 would have
increased/decreased by £52,414,000 (2021 – increase/decrease of £77,000,000). This is based on the Company’s equity
portfolio held at each year end.
ii) Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with
financial liabilities.
Liquidity risk is not considered to be significant as the Company’s assets comprise mainly readily realisable securities and
AAA-rated money market funds, which can be sold to meet funding commitments if necessary. The maturity of the
Company’s existing borrowings is set out in the credit risk profile section of this note.
Due between
Expected Due within 3 months Due after
cash flows 3 months and 1 year 1 year
As at 30 June 2022 £’000 £’000 £’000 £’000
Bank loan 40,318 15,170 25,148 –
Due between
Expected Due within 3 months Due after
cash flows 3 months and 1 year 1 year
As at 30 June 2021 £’000 £’000 £’000 £’000
Bank loan 65,825 40,190 439 25,196
Notes to the Financial Statements
Continued
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iii) Credit risk. This is failure of the counter party to a transaction to discharge its obligations under that transaction that could
result in the Company suffering a loss.
The risk is not significant, and is managed as follows:
– investment transactions are carried out with a number of brokers, whose credit-standing is reviewed periodically by the
investment 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 review of failed
trade reports on a monthly basis. In addition, both stock and cash reconciliations to the Custodians’ records are performed
on a daily basis to ensure discrepancies are investigated on a timely basis.
– cash is held only with reputable banks with high quality external credit enhancements.
None of the Company’s financial assets are secured by collateral or other credit enhancements.
Credit risk exposure. In summary, compared to the amounts in the Statement of Financial Position, the maximum exposure
to credit risk at 30 June was as follows:
2022 2021
Statement of Maximum Statement of Maximum
Financial Position exposure Financial Position exposure
Current assets £’000 £’000 £’000 £’000
Debtors 11 11 631 631
Investments in AAA-rated money markets funds 14,414 14,414 22,636 22,636
Cash and short term deposits 582 582 95 95
15,007 15,007 23,362 23,362
None of the Company’s financial assets is past due or impaired.
18. Analysis of changes in net debt
At Non-cash At
30 June 2021 Cash flows movements 30 June 2022
£’000 £’000 £’000 £’000
Cash and cash equivalents 95 487 - 582
Investments in AAA-rated money market funds 22,636 (8,222) - 14,414
Debt due in less than one year (40,000) 25,000 (24,988) (39,988)
Debt due after more than one year (24,951) - 24,951 -
(42,220) 17,265 (37) (24,992)
96 abrdn UK Smaller Companies Growth Trust plc
At Non-cash At
30 June 2020 Cash flows movements 30 June 2021
£’000 £’000 £’000 £’000
Cash and cash equivalents 49 46 - 95
Investments in AAA-rated money market funds 26,465 (3,829) - 22,636
Debt due in less than one year - (40,000) - (40,000)
Debt due after more than one year (24,914) - (37) (24,951)
1,600 (43,783) (37) (42,220)
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences
from the above analysis.
19. Capital management
The investment objective of the Company is to achieve long term capital growth by investment in UK quoted
smaller companies.
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 Company’s capital comprises the following:
2022 2021
£’000 £’000
Equity
Equity share capital 26,041 26,041
Reserves 472,570 702,205
Liabilities
Bank loan 39,988 64,951
538,599 793,197
Notes to the Financial Statements
Continued
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The Company’s net gearing comprises the following:
2022 2021
£’000 £’000
Bank loans (39,988) (64,951)
Cash and investments in AAA-rated money market funds 14,996 22,731
Amounts due from brokers 11 631
Amounts payable to brokers (385) (120)
Net gearing (25,366) (41,709)
Net assets 498,611 728,246
Net gearing (%) 5.1 5.7
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 account of the Investment Manager’s views on the market;
– the level of equity shares;
– the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding
accounting period.
The Company does not have any externally imposed capital requirements.
20. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurement using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy has the following classifications:
Level 1: unadjusted quoted prices in an active market 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 (ie developed using market data) for the
asset or liability, either directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
All of the Company’s investments are in quoted equities (2021 – same) that are actively traded on recognised stock
exchanges, with their fair value being determined by reference to their quoted bid prices at the reporting date. The total value
of the investments (2022 – £524,137,000; 2021 – £770,003,000) have therefore been deemed as Level 1.
The investment in AAA rated money market funds of £14,414,000 (2021 – £22,636,000) is considered to be Level 2 under the
fair value hierarchy of FRS 102 due to not trading in an active market.
98 abrdn UK Smaller Companies Growth Trust plc
The fair value of the £25 million Term Loan as at the 30 June 2022 is £25,000,000, due to it now being short–term in nature,
(2021 – £25,742,000) with a par value per Statement of Financial Position of £24,988,000 (2021 – £24,951,000) using the interest
rate swap valuation technique. The £15 million revolving credit facility loan has a fair value of £15,000,000 due to it being short-
term in nature. Under the fair value hierarchy in accordance with FRS 102, these borrowings can be classified at Level 2.
21. Transactions with the Manager
The Company has an agreement with abrdn Fund Managers Limited for the provision of management services. The
management fee is calculated and payable quarterly in arrears at a rate of 0.85% per annum on the first £250 million of net
assets, 0.65% per annum on net assets between £250 million and £550 million and 0.55% on net assets above £550 million. The
contract is terminable by either party on six months notice. Details of fees payable during the year and fees outstanding at the
year end are disclosed in note 4 on page 84.
The Manager also receives a separate fee for the provision of secretarial services and promotional activities as disclosed in
note 5 on page 85.
22. Related party transactions
The Directors of the Company received fees for their services. Further details are provided in the Directors’ Remuneration
Report on page 62. The Directors’ shareholdings are detailed on page 63.
Notes to the Financial Statements
Continued
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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. Where the calculation of an APM is not detailed within the financial statements, an explanation of the
methodology employed is provided below:
Discount
A discount is the percentage by which the market price is lower than the Net Asset Value (“NAV”) per share.
30 June 2022 30 June 2021
Share price 453.00p 698.00p
Net Asset Value per share 530.37p 737.97p
Discount 14.6% 5.4%
Net gearing
Net gearing 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 amounts due from and to brokers at the period end as
well as cash and short-term deposits.
30 June 2022 30 June 2021
£’000 £’000
Total borrowings
A
(39,988) (64,951)
Cash and short term deposits 582 95
Investments in AAA-rated money market funds 14,414 22,636
Amounts due from brokers 11 631
Amounts payable to brokers (385) (120)
Total cash and cash equivalents
B
14,622 23,242
Net gearing (borrowings less cash & cash equivalents)
C=A+B
(25,366) (41,709)
Shareholders’ funds
D
498,611 728,246
Net gearing
C/D
5.1% 5.7%
Alternative Performance Measures
100 abrdn UK Smaller Companies Growth Trust plc
Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC, which is defined as the total of
investment management fees and recurring administrative expenses and expressed as a percentage of the average of published
daily net asset values throughout the year.
30 June 2022 30 June 2021
£’000 £’000
Investment management fee
A
4,759 4,598
Administrative expenses
B
889 828
Less: non-recurring charges
C
(6) (8)
Ongoing charges 5,642 5,418
Average daily net assets 696,750 624,000
Ongoing charges ratio (excluding look-through costs) 0.81% 0.87%
Look-through costs
D
0.01% 0.01%
Ongoing charges ratio (including look-through costs) 0.82% 0.88%
A
See note 4 on page 84.
B
See note 5 on page 85.
C
Comprises professional fees not expected to recur.
D
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 differs from the other ongoing costs figure reported in the Company’s Key Information Document
calculated in line with the PRIIPs regulations, which includes the ongoing charges ratio and the financing and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price have performed over a period of time in percentage terms,
taking into account both capital returns and dividends paid to shareholders. NAV total return assumes reinvesting the net dividend
paid by the Company back into the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend.
Share price total return assumes reinvesting the net dividend back into the share price of the Company on the date on which that
dividend goes ex-dividend.
NAV total return
Year ended 30 June 2022 2022 2021
Opening NAV 737.97p 527.73p
Closing NAV 530.37p 737.97p
(Decrease)/increase in NAV –207.60p 210.24p
% (Decrease)/increase in NAV –28.1% 39.8%
Uplift from reinvestment of dividends
A
0.8% 2.1%
NAV total return (decrease)/increase –27.3% 41.9%
A
The uplift from reinvestment of dividends assumes that the dividends of 5.0p in October 2021 and 2.7p in April 2022 (5.0p and 2.7p in 2020/21) paid by the Company were
reinvested in the NAV of the Company on the ex-dividend date.
Alternative Performance Measures
Continued
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Share price total return
Year ended 30 June 2022 2022 2021
Opening share price 698.00p 482.00p
Closing share price 453.00p 698.00p
(Decrease)/increase in share price –245.00p 216.00p
% (Decrease)/increase in share price –35.1% 44.8%
Uplift from reinvestment of dividends
A
0.8% 2.1%
Share price total return (decrease)/increase –34.3% 46.9%
A
The uplift from reinvestment of dividends assumes that the dividends of 5.0p in October 2021 and 2.7p in April 2022 (5.0p and 2.7p in 2020/21) paid by the Company were
reinvested in the shares of the Company on the ex-dividend date.
102 abrdn UK Smaller Companies Growth Trust plc
Corporate
Information
The Company was
incorporated in 1993 and
has been managed by
abrdn since August 2003.
Investments in the
Telecommunications sector
include Telecom Plus and
Gamma Communications.
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abrdn
The Company’s Investment Manager is abrdn Investment
Management Limited which is a wholly-owned subsidiary
of abrdn plc. The group’s assets under management and
administration were £508 billion as at 30 June 2022,
managed for a range of clients including 22 UK-listed
closed end investment companies.
The Investment Team Senior Managers
Harry Nimmo
Investment Leader, Smaller Companies
Co-manager of the Company
Harry Nimmo is Investment Leader within the Smaller
Companies Team at abrdn. In addition to abrdn UK
Smaller Companies Growth Trust plc, Harry is
co-manager of the abrdn UK Smaller Companies
Fund (OEIC).
Harry joined abrdn in 1985 and has held various
investment analyst and manager roles covering US equity
funds and larger UK quoted company funds. In February
2020 he stepped down from being Head of the Smaller
Companies Team after 27 years in that role.
Harry has an MA (Hons) degree in Geography from the
University of Dundee, an MBA from the University of
Edinburgh, and a Diploma in Surveying from the
University of Glasgow.
Abby Glennie
Deputy Head, Smaller Companies
Co-manager of the Company
Abby Glennie is Deputy Head of the Smaller Companies
Team at abrdn having been appointed to this role in
March 2020. She is lead manager of the UK mid-cap
strategies and co-manager of all the UK small-cap
strategies. She is co-manager of abrdn Smaller
Companies Income Trust plc.
Abby joined abrdn in February 2013 as a member of the
UK Equity Team, before transferring to the Smaller
Companies Team in January 2016. Prior to this she worked
at Kames Capital (previously Aegon Asset Management)
as a Graduate Trainee Investment Manager.
Abby has an MA (First Class Hons) degree in Economics
and Finance from the University of Aberdeen and is a CFA.
Amanda Yeaman
Investment Director, Smaller Companies
Amanda Yeaman is an Investment Director in the Smaller
Companies Team at abrdn, providing research support,
predominantly for the UK Smaller Companies strategy
within abrdn, but also to the wider Smaller Companies
Team. She is co-manager of abrdn Smaller Companies
Income Trust plc.
Amanda joined abrdn in 2019 from Investec, where she
was a small and mid-cap equity sales specialist.
Amanda has an MA (Hons) degree in Economics and
Accountancy from the University of Edinburgh and
has the IMC.
Information about the Investment Mana
g
er
104 abrdn UK Smaller Companies Growth Trust plc
Alternative Investment Fund Managers
Directive (“AIFMD”) and Pre-Investment
Disclosure Document (“PIDD”)
The Company has appointed abrdn Fund Managers
Limited as its Alternative Investment Fund Manager and
BNP Paribas Trust Corporation UK Limited as its Depositary
under the AIFMD.
The AIFMD requires abrdn Fund Managers Limited, as the
Company’s AIFM, 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 the AIFMD
are published in the Company’s PIDD which can be found
on its website: abrdnuksmallercompaniesgrowthtrust.co.uk.
The periodic disclosures required to be made by the AIFM
under the AIFMD are set out on page 114.
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
company shares, purporting to work for abrdn or for third
party firms. 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 the veracity of a caller, do not offer any
personal information, end the call and contact our
Customer Services Department.
The Financial Conduct Authority provides advice with
respect to share fraud and boiler room scams at:
fca.org.uk/consumers/scams
Shareholder Enquiries
For queries regarding shareholdings, lost certificates,
dividend payments, registered details and related
matters, shareholders holding their shares directly in the
Company are advised to contact the Registrars (see
Contact Addresses). Changes of address must be notified
to the Registrars in writing.
Any general queries about the Company should be
directed to the Company Secretary in writing (see
Contact Addresses) or by email to:
CEF.CoSec@abrdn.com.
For questions about an investment held through the abrdn
Investment Plan for Children, Investment Trust Share Plan
or Investment Trust Stocks and Shares ISA, please
telephone the Manager’s Customer Services Department
on 0808 500 0040, email inv.trusts@abrdn.com or write to:
abrdn Investment Trusts
PO Box 11020
Chelmsford
Essex CM99 2DB
Dividend Tax Allowance
The annual tax-free personal allowance for dividend
income for UK investors is £2,000 for the 2022/23 tax year.
Above this amount, individuals pay tax on their dividend
income at a rate dependent on their income tax bracket
and personal circumstances. The Company provides
registered shareholders with a confirmation of dividends
paid 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
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 clients, shares can be bought directly through the
abrdn Investment Plan for Children, Investment Trust
Share Plan or Investment Trust Stocks and Shares ISA, or
through the many stockbroker platforms which offer the
opportunity to acquire shares in investment companies.
Investor Information
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abrdn Investment Plan for Children
abrdn operates an 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
(subject to the eligibility criteria as stated within the terms
and conditions), including parents, grandparents and
family friends. 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 only pay Government Stamp Duty
(currently 0.5%) on purchase where applicable. Selling
costs are £10 + VAT. 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 Investment Trust Share Plan
abrdn operates an Investment Trust 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 only pay Government Stamp Duty (currently
0.5%) on purchase where applicable. Selling costs are £10
+ VAT. 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 Trust Stocks and
Shares ISA
abrdn operates an Investment Trust Stocks and Shares ISA
(“ISA”) through which an investment may be made of up to
£20,000 in the 2022/23 tax year.
There are no brokerage or initial charges for the ISA,
although investors will suffer the bid-offer spread which
can, on some occasions, be a significant amount. Investors
only pay Government Stamp Duty (currently 0.5%) on
purchases where applicable. Selling costs are £15 + VAT.
The annual ISA administration charge is £24 + VAT,
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 ISA 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.
ISA Transfer
Investors can choose to transfer previous tax year
investments to abrdn, which can be invested in the
Company while retaining their ISA wrapper. The minimum
lump sum for an ISA transfer is £1,000 and is subject to a
minimum per trust of £250.
Nominee Accounts and Voting Rights
All investments in the abrdn Investment Plan for Children,
Investment Trust Share Plan and Investment Trust Stocks
and Shares ISA 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 Investment Plan for Children, Investment Trust
Share Plan and Investment Trust Stocks and Shares ISA
and who 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.
Investors who hold their shares through platforms and
have their shares held through platform nominees, may
not necessarily receive notification of general meetings
and are advised to keep themselves informed of
Company business by referring to the Company’s
website. Where voting is required, and the Board
encourages shareholders to vote at all general meetings
of the Company, shareholders with their holdings in
nominees, need to instruct the nominee to vote on their
behalf and should do so in good time before the meetings.
106 abrdn UK Smaller Companies Growth Trust plc
Keeping You Informed
Further information about the Company may be found on
its dedicated website:
abrdnuksmallercompaniesgrowthtrust.co.uk.
This provides access to information on the Company’s
share price performance, capital structure, London Stock
Exchange announcements, current and historic Annual
and Half-Yearly Reports, and the latest monthly factsheet
on the Company issued by the Manager.
The Company’s Ordinary share price appears under the
heading ‘Investment Companies’ in the Financial Times.
Details are also available at: invtrusts.co.uk.
Twitter:
@abrdnTrusts
LinkedIn:
abrdn Investment Trusts
Key Information Document (“KID”)
The KID relating to the Company and published by the
Manager can be found on the Company’s website.
Literature Request Service
For literature and application forms for abrdn’s investment
trust products, please contact us through: invtrusts.co.uk.
Or telephone: 0808 500 4000
Or write to:
abrdn Investment Trusts
PO Box 11020
Chelmsford
Essex CM99 2DB
Terms and Conditions
Terms and conditions for abrdn managed savings
products can also be found at: invtrusts.co.uk.
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 who are
seeking long-term capital growth by investment in UK-
quoted smaller companies, and who understand and are
willing to accept the risks of exposure to equities.
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 so that the
securities issued by the Company can be recommended
by a financial adviser to ordinary retail investors in
accordance with the Financial Conduct Authority’s rules in
relation to non-mainstream pooled investments (“NMPIs”)
and intends to continue to do so for the foreseeable future.
The Company’s securities are excluded from the Financial
Conduct Authority’s restrictions which apply to NMPIs
because they are securities issued by an investment trust.
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 and Financial
Advice Association at: pimfa.co.uk.
Investor Information
Continued
abrdn UK Smaller Companies Growth Trust plc 107
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Financial Advisers
To find an adviser who recommends 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 at:
fca.org.uk/firms/financial-services-register
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 trust
shares purchased will immediately be reduced by the
difference between the buying and selling prices of the
shares, known as 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 104 to 107 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 Aberdeen Asset Managers Limited which is
authorised and regulated by the Financial Conduct
Authority in the United Kingdom.
108 abrdn UK Smaller Companies Growth Trust plc
abrdn Group or abrdn
The abrdn plc group of companies.
AIC
The Association of Investment Companies.
AIFMD
The UK version of the Alternative Investment Fund
Managers Directive and all implementing and delegating
legislation thereunder, as it forms part of UK law following
the UK’s departure from the EU. The AIFMD was originally
European legislation which created a European-wide
framework for regulating managers of ‘alternative
investment funds’ (“AIFs”). It is designed to regulate any
fund which is not a UCITS fund and which is managed
and/or marketed in the EU (and, now separately, the UK).
The Company has been designated as an AIF.
Alternative Performance Measures or APMs
Numerical measures of the Company’s current, historical
or future performance, financial position, other than the
financial measures defined or specified in the applicable
financial framework. The Company’s applicable financial
framework includes FRS102 and the AIC SORP.
Blue Sky Company
A company without a proven business track record as
defined by revenues and profitability, where the value of
the company is based on an idea without a tangible
operating model to back it up. Most often these are found
in the technology, biotech or resources sectors.
Capital Return per Share
The realised and unrealised gains and losses of the
investment portfolio net of costs, interest and tax of the
Company that have been allocated to capital, divided by
the weighted average number of shares in issue during
the year.
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.
Depositary
A depositary is responsible for cash monitoring, the
custody and safeguarding of the Company’s financial
instruments and monitoring the Company’s compliance
with investment limits and leverage requirements. During
the year the Depositary was BNP Paribas Securities
Services, London Branch. The depositary agreement was
novated to BNP Paribas Trust Corporation UK Limited on
30 June 2022.
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
Revenue return per share divided by dividends per share
expressed as a ratio.
Dividend per Share
The total of all dividends paid by the Company over the
year on a per share basis.
Dividend Yield
The annual Dividend per Share expressed as a
percentage of the share price.
Earnings per Share or EPS
The net income after tax of the Company divided by the
weighted average number of shares in issue during the
year. In an Investment Trust this is made up of the sum of
the Revenue EPS and Capital EPS.
FCA
Financial Conduct Authority.
Gearing or Net Gearing
Net gearing is calculated by dividing total borrowings less
cash and cash equivalents by Shareholders’ Funds,
expressed as a percentage.
Index
A market index calculates the average performance of its
constituents, normally on a weighted basis. It provides a
means against which the performance of individual
instruments can be assessed.
Glossary of Terms
abrdn UK Smaller Companies Growth Trust plc 109
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Investment Manager
abrdn Investment Management Limited is a 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.
Key Information Document or KID
The UK version of the Packaged Retail and Insurance-
based Investment Products (“PRIIPS”) Regulation (as it
forms part of UK law following the UK’s departure from the
EU) requires the Manager, as the Company’s PRIIP
‘manufacturer’, to prepare a Key Information Document
(“KID”) in respect of the Company. This KID must be made
available by the Manager to retail investors prior to them
making any investment decision and is available via 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 law. The figures in
the KID may not reflect the expected returns for the
Company and anticipated performance.
Leverage
For the purposes of the AIFMD, 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, AIFM or aFML
abrdn Fund Managers Limited (previously Aberdeen
Standard Fund Managers Limited, prior to a change of
name of that company on 1 August 2022) is a subsidiary of
abrdn plc and acts as the Alternative Investment Fund
Manager for the Company. It is authorised and regulated
by the FCA.
Market Capitalisation
The latest price of an Ordinary share multiplied by the
number of shares in issue.
Net Asset Value, NAV or Shareholders’ Funds
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 Ordinary share.
Ongoing Charges
Ratio of total expenses as a percentage of average daily
Shareholders’ Funds calculated as per the AIC’s industry
standard method.
Pre-Investment Disclosure Document
(“PIDD”)
The AIFM 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 PIDD, which can be
found on the Company’s website.
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
This 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, irrespective of the time until repayment.
Record Date
The date when an investor needs to be holding a share in
order to qualify for a forthcoming dividend.
110 abrdn UK Smaller Companies Growth Trust plc
Revenue Return Per Share
The net income from dividends and interest received,
after costs, interest and tax allocated to revenue, divided
by the weighted average number of shares in issue during
the year.
Total Assets
Total assets less current liabilities (before deducting Prior
Charges as defined above), as per the Statement of
Financial Position.
Total Return
The theoretical return including reinvesting each dividend
in additional shares in the Company on the day that the
shares go ex-dividend. The NAV Total Return involves
investing the same net dividend in the NAV of the
Company on the ex-dividend date.
Glossary of Terms
Continued
abrdn UK Smaller Companies Growth Trust plc 111
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Issued Share Capital at 30 June 2022
94,012,047 Ordinary shares of 25p (104,164,422 including treasury shares)
Treasury Shares at 30 June 2022
10,152,375 Ordinary shares
Share Capital History
Year ended 30 June 1994 The Company’s authorised share capital on incorporation was £15,000,000, divided into 60,000,000
Ordinary shares of 25p each. On 19 August 1993, 50,000,000 Ordinary shares (with one Warrant
attached for every five Ordinary shares) were issued at £1 each. On 25 March 1994, the authorised
share capital of the Company was increased to £75,000,000 by the creation of 50,000,000 limited
Conversion (“C”) shares of £1 each and 40,000,000 Ordinary shares of 25p each. On 28 March 1994, a
further 21,428,000 ‘C’ shares were issued at £1 each, at par. On 7 June 1994, the C shares of £1 each
were converted into Ordinary shares, resulting in the issue of 19,436,770 Ordinary shares (with one
Warrant for every five Ordinary shares).
Year ended 30 June 2007 32,629,217 Ordinary shares purchased for cancellation and 117,791 Warrants cancelled following the
tender offer which was approved by shareholders on 9 November 2006.
2,194,000 Ordinary shares purchased for cancellation.
Year ended 30 June 2008 559,175 Ordinary shares purchased to hold in treasury.
Year ended 30 June 2009 On 4 February 2009, as part of the merger with Gartmore Smaller Companies Trust plc (“Gartmore”),
31,189,825 Conversion (“C”) shares issued to former Gartmore shareholders. On 14 April 2009,
27,545,948 of the C shares were converted into 26,273,612 Ordinary shares. On 11 June 2009, the
remaining 3,643,877 C shares were converted into 3,687,639 Ordinary shares.
1,164,545 Warrants exercised as a result of the last exercise date of 30 September 2008, which resulted in
the issue of the same number of new Ordinary shares. 1,732,965 Warrants lapsed
without value.
Year ended 30 June 2011 3,670,243 Ordinary shares purchased to hold in treasury, 4,229,418 Ordinary shares sold from
treasury and 825,000 new Ordinary shares issued.
£25 million nominal of 3.5% Convertible Unsecured Loan Stock 2018 (“CULS”) issued.
Year ended 30 June 2012 425,000 new Ordinary shares issued.
22,003 new Ordinary shares issued as a result of the first conversion of CULS as at 30 September 2011. 5,346
new Ordinary shares issued as a result of the second conversion of CULS as at
31 March 2012.
Year ended 30 June 2013 1,650,000 new Ordinary shares issued.
4,679 new Ordinary shares issued as a result of the third conversion of CULS as at 30 September 2012.
11,404 new Ordinary shares issued as a result of the fourth conversion of CULS as at
31 March 2013.
Year ended 30 June 2014 2,900,000 new Ordinary shares issued.
1,038,382 new Ordinary shares issued as a result of the fifth conversion of CULS as at 30 September
2013. 779,216 new Ordinary shares issued as a result of the sixth conversion of CULS as at
31 March 2014.
Year ended 30 June 2015 2,307,155 Ordinary shares purchased to hold in treasury.
243,589 new Ordinary shares issued as a result of the seventh conversion of CULS as at 30 September
2014. 98,580 Ordinary shares issued from treasury as a result of the eighth conversion of CULS as at
31 March 2015.
Your Company’s Share Capital History
112 abrdn UK Smaller Companies Growth Trust plc
Year ended 30 June 2016 3,470,930 Ordinary shares purchased to hold in treasury following the tender offer which completed
on 28 July 2015.
669,513 Ordinary shares issued from treasury as a result of the ninth conversion of CULS as at
30 September 2015. 803,871 Ordinary shares issued from treasury as a result of the tenth conversion
of CULS as at 31 March 2016.
Year ended 30 June 2017 443,818 Ordinary shares purchased to hold in treasury.
378,514 Ordinary shares issued from treasury as a result of the eleventh conversion of CULS as at 30
September 2016. 895,583 Ordinary shares issued from treasury as a result of the twelfth conversion of
CULS as at 31 March 2017.
Year ended 30 June 2018 927,892 Ordinary shares issued from treasury as a result of the thirteenth conversion of CULS as at 30
September 2017. 4,658,405 new Ordinary Shares issued as a result of the final conversion of CULS as
at 31 March 2018.
Year ended 30 June 2019 27,878,842 new Ordinary shares issued as a result of the merger with Dunedin Smaller Companies
Investment Trust PLC which completed on 8 October 2018.
1,131,061 Ordinary shares purchased to hold in treasury.
Year ended 30 June 2020 520,213 Ordinary shares purchased to hold in treasury.
Year ended 30 June 2021 1,382,632 Ordinary shares purchased to hold in treasury.
Year ended 30 June 2022 4,670,519 Ordinary shares purchased to hold in treasury.
Your Company’s Share Capital History
Continued
abrdn UK Smaller Companies Growth Trust plc 113
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Share Capital History
Year
ended
30 June
Ordinary
shares
bought
back for
cancellation
Ordinary
shares
bought
back into
treasury
Ordinary
shares
issued
from
treasury
Ordinary
shares
issued
Ordinary
shares
in issue
(excluding
treasury
shares)
Convertible
Unsecured
Loan Stock
issued (£)
Convertible
Unsecured
Loan Stock
exercised (£)
Convertible
Unsecured
Loan Stock
total (£)
Warrants
exercised
Warrants
bought
back
Warrants
lapsed
Total
Warrants
In issue
1994 - - - - 69,436,770 - - - - - - 13,886,996
1995 - - - - 69,525,796 - - - 89,026 - - 13,797,970
1996 - - - - 69,527,676 - - - 1,880 - - 13,796,090
1997 - - - - 69,528,656 - - - 980 1,592,201 - 12,202,909
1998 - - - - 69,529,717 - - - 1,061 6,075,144 - 6,126,704
1999 - - - - 69,530,267 - - - 550 1,350,000 - 4,776,154
2000 - - - - 69,543,990 - - - 13,723 1,671,143 - 3,091,288
2001 - - - - 69,601,685 - - - 57,695 - - 3,033,593
2002 2,200,000 - - - 67,403,646 - - - 1,961 - - 3,031,632
2003 - - - - 67,403,646 - - - - - - 3,031,632
2004 - - - - 67,403,646 - - - - - - 3,031,632
2005 - - - - 67,404,646 - - - 1,000 - - 3,030,632
2006 - - - - 67,404,746 - - - 100 - - 3,030,532
2007 34,823,217 - - - 32,583,790 - - - 2,261 117,791 - 2,910,480
2008 - 559,175 - - 32,037,585 - - - 12,970 - - 2,897,510
2009 - - - 29,961,251 63,163,381 - - - 1,164,545 - 1,732,965 -
2010 - - - - 63,163,381 - - - - - - -
2011 - 3,670,243 4,229,418 825,000 64,547,556 25,000,000 - 25,000,000 - - - -
2012 - - - 452,349 64,999,905 - 64,929 24,935,071 - - - -
2013 - - - 1,666,083 66,665,988 - 38,184 24,896,887 - - - -
2014 - - - 4,717,598 71,383,586 - 4,312,437 20,584,450 - - - -
2015 - 2,307,155 98,580 243,589 69,418,600 - 811,868 19,772,582 - - - -
2016 - 3,470,930 1,473,384 - 67,421,054 - 3,495,770 16,276,812 - - - -
2017 - 443,818 1,274,097 - 68,251,333 - 3,022,923 13,253,889 - - - -
2018 - - 927,892 4,658,405 73,837,630 - 13,253,889 - - - - -
2019 - 1,131,061 - 27,878,842 100,585,411 - - - - - - -
2020 - 520,213 - - 100,065,198 - - - - - - -
2021 - 1,382,632 - - 98,682,566 - - - - - - -
2022 - 4,670,519 - - 94,012,047 - - - - - - -
114 abrdn UK Smaller Companies Growth Trust plc
abrdn Fund Managers Limited and the Company are required to make certain disclosures available to investors in
accordance with the Alternative Investment Fund Managers Directive (“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 October 2021.
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 aFML; 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 Secretary,
Aberdeen Asset Management PLC, on request, and the remuneration disclosures in respect of the AIFM’s reporting
period for the year ended 31 December 2021 are 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 3.00:1 2.00:1
Actual level at 30 June 2022 1.13:1 1.16:1
There have been no breaches of the maximum level during the period and no changes to the maximum level of
leverage employed by the Company. There have been no changes to the circumstances in which the Company
may be required to post assets as collateral and no guarantees granted under the leveraging arrangement. Changes
to the information contained either within this Annual Report or the PIDD in relation to any special arrangements in
place, the maximum level of leverage which aFML may employ on behalf of the Company, the right of use of collateral
or any guarantee granted under any leveraging arrangement, or any change to the position in relation to any discharge
of liability by the Depositary will be notified via a regulatory news service without undue delay in accordance with
the AIFMD.
The information 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
)
abrdn UK Smaller Companies Growth Trust plc 115
General
The Annual General Meeting will be held at the offices of
abrdn plc, Bow Bells House, 1 Bread Street, London EC4M
9HH on Thursday 20 October 2022 at 12 noon.
Investments in the Travel
and Leisure sub-sector
include Jet2.
116 abrdn UK Smaller Companies Growth Trust plc
NOTICE IS HEREBY GIVEN that the Annual General Meeting of abrdn UK Smaller Companies Growth Trust plc will be held
at the offices of abrdn plc, Bow Bells House, 1 Bread Street, London EC4M 9HH on Thursday 20 October 2022 at 12 noon
for the following purposes:
Ordinary Business
As ordinary business, to consider and, if thought fit, pass the following resolutions, in the case of numbers 1 to 11 inclusive,
as ordinary resolutions and, in the case of numbers 12 and 13, as special resolutions:
1. To receive and adopt the Directors’ Report and financial statements for the year ended 30 June 2022, together with
the Independent Auditor’s report thereon.
2. To receive and approve the Directors’ Remuneration Report for the year ended 30 June 2022.
3. To approve a final dividend for the year ended 30 June 2022 of 5.40 pence per Ordinary share.
4. To re-elect Ashton Bradbury as a Director of the Company.
5. To re-elect Alexa Henderson as a Director of the Company.
6. To re-elect Caroline Ramsay as a Director of the Company.
7. To re-elect Tim Scholefield as a Director of the Company.
8. To re-elect Liz Airey as a Director of the Company.
9. To re-appoint KPMG LLP as Independent Auditor of the Company to hold office until the conclusion of the next
Annual General Meeting at which accounts are laid before the Company.
10. To authorise the Directors to fix the remuneration of the Independent Auditor for the year to 30 June 2023.
11. Authority to allot shares
That, in substitution for any existing authority, but without prejudice to the exercise of any such authority prior to the
date hereof, the Directors of the Company be and they are hereby 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 (“Rights”) provided that such authority shall be limited to the allotment of shares and the grant of Rights in
respect of shares with an aggregate nominal value of up to £2,325,590 (representing 10% of the Company’s total
issued share capital (excluding treasury shares) as at 7 September 2022), such authority to expire at the conclusion
of the next Annual General Meeting of the Company after the passing of this resolution or on the expiry of 15 months
from the date of passing of this resolution, whichever is the earlier, unless previously revoked, varied, extended or
renewed by the Company in a general meeting, save that the Company may at any time prior to the expiry of this
authority make an offer or enter into an agreement which would or might require shares to be allotted or Rights to
be granted after the expiry of such authority and the Directors shall be entitled to allot shares or grant Rights in
pursuance of such an offer or agreement as if such authority had not expired.
Notice of Annual General Meetin
g
abrdn UK Smaller Companies Growth Trust plc 117
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
12. Disapplication of pre-emption rights
That, subject to the passing of resolution 11 set out above, and in substitution for any existing power but without
prejudice to the exercise of any such power prior to the date hereof, the Directors of the Company be and they are
hereby generally empowered (i), pursuant to Section 570 of the Companies Act 2006 (the “Act”), to allot equity
securities (as defined in Section 560 of the Act), including the grant of rights to subscribe for, or to convert securities
into Ordinary shares for cash pursuant to the authority given by resolution 11 set out above and (ii), pursuant to
Section 573 of the Act to sell equity securities for cash out of treasury as if Section 561(1) of the Act did not apply to
any such allotment, or sale out of treasury, of equity securities, provided that this power:
a) expires at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution
or on the expiry of 15 months from the date of passing of this resolution, whichever is the earlier, unless previously
revoked, varied, extended or renewed by the Company in a general meeting save that the Company may, at
any time prior to the expiry of this authority, make an offer or enter into an agreement which would or might
require equity securities to be allotted or sold out of treasury after such expiry and the Directors may allot or sell
out of treasury equity securities in pursuance of any such offer or agreement as if the power conferred hereby
had not expired; and
b) shall be limited to the allotment, or sale out of treasury, of equity securities with an aggregate nominal value of up
to £2,325,590 (representing 10% of the Company’s total issued share capital (excluding treasury shares) as at 7
September 2022).
This power shall apply in relation to the sale of equity securities for cash out of treasury as if in the opening paragraph
of this resolution the words “subject to the passing of resolution 11 set out above, and” were omitted.
13. Authority to make market purchases of shares
That the Company be and is hereby generally and, subject as hereinafter appears, unconditionally authorised in
accordance with Section 701 of the Companies Act 2006 (the “Act”) to make market purchases (within the meaning
of Section 693(4) of the Act) of Ordinary shares of 25p each in the capital of the Company (the “Shares”) either for
cancellation or for retention as treasury shares for future reissue, resale or transfer:
Provided always that:
a) the maximum aggregate number of Shares hereby authorised to be purchased is 13,944,240, or, if less, the
number representing 14.99% of the issued ordinary share capital of the Company (excluding treasury shares)
as at the date of the passing of this resolution;
b) the minimum price (exclusive of expenses) which may be paid for each Share shall be 25p;
c) the maximum price (exclusive of expenses) which may be paid for a Share is the higher of (i) 105% of the
average of the middle market quotations (as derived from the Daily Official List of the London Stock Exchange)
for the Shares over the five business days immediately preceding the date of purchase and (ii) the higher of the
last independent trade and the highest current independent bid on the trading venue on which the purchase is
carried out; and
d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the
Company after the passing of this resolution or on the expiry of 15 months from the date of passing of this
resolution, whichever is earlier, unless previously revoked, varied, extended or renewed by the Company in a
general meeting, save that the Company may, at any time prior to the expiry of this authority, enter into a
contract to purchase Shares under such authority which will or might be completed or executed wholly or partly
after the expiration of such authority and may make a purchase of Shares pursuant to any such contract.
118 abrdn UK Smaller Companies Growth Trust plc
Special Business
As special business, to consider and, if thought fit, pass resolutions 14 and 15 as special resolutions:
14. Tender offers
That, in addition to the authority given to the Company to purchase its own Ordinary shares of 25p each (the
“Shares”) pursuant to resolution 13 set out above and in accordance with the terms and conditions of the tender
offer(s) which may be set out in the circular to be sent electronically or, if requested in hard copy form to
shareholders, the Company be and is hereby authorised for the purpose of Section 701 of the Companies Act 2006
(the “Act”) to make market purchases (within the meaning of Section 693(4) of the Act) of its issued Shares either for
cancellation or for retention as treasury shares for future reissue, resale or transfer provided that:
a) the maximum number of Shares hereby authorised to be purchased pursuant to one or more tender offer(s) is
9,302,361, or, if less, the number representing 10% of the issued ordinary share capital of the Company
(excluding treasury shares) as at the date of the passing of this resolution;
b) the price which shall be paid for a Share pursuant to any such tender offer made by the Company under the
authority conferred hereby shall be an amount equal to 98% of realisation value of all the assets attributable to
the Shares tendered as at the latest practicable time before such tender offer; and
c) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the
Company after the passing of this resolution or on the expiry of 15 months from the date of passing of this
resolution, whichever is earlier, unless previously revoked, varied, extended or renewed by the Company in a
general meeting save that the Company may, prior to such expiry, enter into a contract to purchase Shares
which will or may be completed or executed wholly or partly after the expiration of such authority and may
make a purchase of Shares pursuant to any such contract.
15. Notice of General Meeting
That a general meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
1 George Street
Edinburgh EH2 2LL
7 September 2022
Registered Office
1 George Street
Edinburgh EH2 2LL
Notice of Annual General Meetin
g
Continued
abrdn UK Smaller Companies Growth Trust plc 119
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Notes
i. A shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak
and vote instead of him/her or on his/her behalf at the meeting. A proxy need not be a shareholder. The shareholder
may appoint more than one proxy, provided that each proxy is appointed to attend, speak and vote in respect of a
different share or shares. If you wish your proxy to speak on your behalf at the meeting, you will need to appoint your
own choice of proxy (not the chairman of the meeting) and give instructions directly to them. Appointing a proxy will
not prevent a shareholder from attending in person and voting at the meeting. A proxy form which may be used to
make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form and
believe that you should, or if you would like to appoint more than one proxy, please contact the Company’s Registrar,
Computershare Investor Services PLC on 0370 889 4076. In the case of joint holders, the vote of the first named in the
register of members of the Company who tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of other joint holders.
ii. To be valid, the appointment of a proxy, and the original or duly certified copy of the power of attorney or other
authority, if any, under which it is signed or authenticated, should be sent to the Company’s Registrar,
Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY so as to arrive not less than
48 hours (excluding non-working days) before the time fixed for the meeting.
iii. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those
shareholders registered in the register of members of the Company at close of business on 18 October 2022 (or, if
the meeting is adjourned, 48 hours (excluding non-working days) before the time fixed for the adjourned meeting)
shall be entitled to attend or vote at the meeting in respect of the number of Ordinary shares registered in their
name at that time. In each case, changes to entries on the register of members of the Company after that time shall
be disregarded in determining the rights of any person to attend or vote at the meeting.
iv. Any shareholder holding 3% or more of the total voting rights of the Company who appoints a person other than the
chairman of the meeting as his or her proxy(ies) will need to ensure that both he or she and his/her proxy(ies)
comply with their respective disclosure obligations under the FCA Disclosure, Guidance and Transparency Rules.
v. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service
may do so for the meeting and any adjournment(s) thereof by utilising the procedures described in the CREST
Manual and/or by logging in to the website www.euroclear. com/CREST. CREST personal members or other CREST
sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to
their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
vi. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International Limited’s (“EUI”)
specifications and must contain the information required for such instructions, as described in the CREST Manual.
The message must be transmitted so as to be received by the issuer’s agent (ID number 3RA50) by 12 noon on 18
October 2022 (or, if the meeting is adjourned, 48 hours (excluding non-working days) before the time fixed for the
adjourned meeting). 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 by enquiry to CREST in the manner prescribed by CREST.
vii. CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI 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 sponsored member or has appointed a
voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as
shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In
this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system
and timings.
120 abrdn UK Smaller Companies Growth Trust plc
viii. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of
the Uncertificated Securities Regulations 2001.
ix. A 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 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.
The statements of the rights of members in relation to the appointment of proxies in notes i and ii above do not apply
to a Nominated Person. The rights described in those Notes can only be exercised by registered members of
the Company.
x. The terms of appointment of the Directors of the Company are available for inspection on any day (except
Saturdays, Sundays and bank holidays) from the date of this notice until the date of the meeting during usual
business hours at the registered office of the Company and will, on the date of the meeting, be available for
inspection at the venue of the meeting from 15 minutes before the meeting until the conclusion of the meeting.
xi. Shareholders are advised that, unless otherwise stated, any telephone number, website or email address which may
be set out in this notice of Annual General Meeting or in any related documents (including the proxy form or form of
direction) is not to be used for the purposes of serving information or documents on, or otherwise communicating
with, the Company for any purposes other than those expressly stated.
xii. Following the meeting, the results of the voting at the meeting and the numbers of proxy votes cast for and against
and the number of votes actively withheld in respect of each of the resolutions will be announced via a Regulatory
Information Service and placed on the Company’s website: abrdnuksmallercompaniesgrowthtrust.co.uk
xiii. It is possible that, pursuant to requests made by members 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: (i) the
audit of the Company’s accounts (including the Independent Auditor’s report and the conduct of the audit) that are
to be laid before the meeting: or (ii) any circumstances 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. The Company will be required to do so once it has received such requests either from
members representing at least 5% of the voting rights of the Company or from at least 100 members who have a
relevant right to vote and hold shares in the Company on which there has been paid up an average sum per
member of at least £100. Such requests must be made in writing and must state the member’s full name and
address and be sent to the Company’s registered office. The Company may not require the members requesting
any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006.
xiv. As at 6.00pm on 7 September 2022 (being the last practicable date prior to publication of this notice) the Company’s
issued share capital comprised 93,023,618 Ordinary shares of 25p each. Each Ordinary share (other than any
Ordinary shares held in treasury) carries the right to one vote at a general meeting of the Company. Accordingly, the
total number of voting rights in the Company as at 7 September 2022 was 93,023,618.
xv. If you wish to attend the meeting in person, there will be a Members’ register for you to sign on arrival. Under section
319A of the Companies Act 2006, the Company must answer any question relating to the business being dealt with
at the meeting put by a member attending the meeting unless:
a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of
confidential information;
b) the answer has already been given on a website in the form of an answer to a question; or
c)
it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
xvi. Information regarding the Annual General Meeting, including information required by Section 311A of the
Companies Act 2006, is available from the Company’s website: abrdnuksmallercompaniesgrowthtrust.co.uk
Notice of Annual General Meetin
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Continued
abrdn UK Smaller Companies Growth Trust plc 121
Directors
Liz Airey (Chairman)
Ashton Bradbury
Alexa Henderson
Caroline Ramsay
Tim Scholefield
Registered Office and Company Secretary
Aberdeen Asset Management PLC
1 George Street
Edinburgh EH2 2LL
Email: CEF.CoSec@abrdn.com
Alternative Investment Fund Manager
abrdn Fund Managers Limited
1 George Street
Edinburgh EH2 2LL
Investment Manager
abrdn Investment Management Limited
1 George Street
Edinburgh EH2 2LL
abrdn Customer Services Department,
Investment Plan for Children, Share Plan and
ISA enquiries
abrdn Investment Trusts
PO Box 11020
Chelmsford
Essex CM99 2DB
Freephone: 0808 500 0040
(open Monday to Friday, 9.00 a.m. to 5.00 p.m.,
excluding public holidays in England and Wales)
Email: inv.trusts@abrdn.com
Company Registration Number
SC145455 (Scotland)
Website
abrdnuksmallercompaniesgrowthtrust.co.uk
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone: 0370 889 4076
Fax: 0370 703 6101
Website: investorcentre.co.uk
Depositary
BNP Paribas Trust Corporation UK Limited
10 Harewood Avenue
London NW1 6AA
Stockbroker
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Solicitors
Dickson Minto W.S.
16 Charlotte Square
Edinburgh EH2 4DF
Independent Auditor
KPMG LLP
319 St. Vincent Street
Glasgow G2 5AS
Legal Entity Identifier (“LEI”)
213800UUKA68SHSJBE37
Contact Addresses
For more information visit abrdnuksmallercompaniesgrowthtrust.co.uk
abrdn.com