abrdn.com
Dunedin Income Growth
Investment Trust PLC
Annual Report 31 January 2022
Targeting growth of income and capital from a portfolio invested
mainly in UK companies that meet the Company’s sustainable and
responsible investing criteria
The Company targets growth of income
and capital from a portfolio invested
mainly in UK companies that meet the
Company’s sustainable and responsible
investing criteria.
Dunedin Income Growth Investment Trust PLC 1
“We have seen a re-rating of the shares and the
Board believes a consistent rating of the Company’s
shares close to the underlying asset value is of
significant benefit to shareholders. “
David Barron, Chairman
“We consider the portfolio to be in good shape with
our focus on higher quality companies, an emphasis
on investments that can deliver both income and
capital growth, as well as the application of
sustainable and responsible investing principles,
positioning us to be able to cope with what may be
difficult market conditions ahead.”
Ben Ritchie, Rebecca Maclean and Samantha Brownlee,
Aberdeen Asset Managers Limited
2 Dunedin Income Growth Investment 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 independent 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 Dunedin Income Growth Investment 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.
Overview
Performance Highlights 3
Calendar and Financial Highlights 4
Strategic Report
Chairman’s Statement 8
Overview of Strategy 12
Promoting the Success of the Company 19
Performance 22
Investment Process 26
Investment Manager’s Review 34
Information About the Investment Manager 37
Portfolio
Ten Largest Investments 40
Portfolio 41
Portfolio Sector Breakdown 42
Sector Analysis 43
Investment Case Studies 45
Governance
Board of Directors 50
Directors’ Report 53
Directors’ Remuneration Report 59
Audit Committee’s Report 63
Financial Statements
Statement of Directors’ Responsibilities 68
Independent Auditor’s Report 69
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
Corporate Information
Investor Information 102
Glossary of Terms 105
Your Company’s History 107
Your Company’s Share Capital History 108
AIFMD Disclosures (Unaudited) 109
Alternative Performance Measures 110
General
Notice of Annual General Meeting 113
Contact Addresses 121
Contents
Dunedin Income Growth Investment Trust PLC 3
Net asset value total return
AB
Earnings per share (revenue)
+8.1% 12.87
p
2021 (0.3)% 2021 10.90p
Ongoing charges
A
Share price total return
A
0.59% +12.5%
2021 0.67% 2021 +0.1%
Premium/(discount) to net asset value
AB
Dividends per Ordinary share
0.31% 12.90
p
2021 (3.57%) 2021 12.80p
A
Alternative Performance Measure (see pages 110 and 111).
B
With debt at fair value, dividends reinvested (see page 92).
Net Asset Value per share
– debt at fair value
Share price Dividends per share
At 31 January – pence At 31 January – pence Year ended 31 January - pence
290.6
266.8
312.2
297.6
309.0
18 19 20 21 22
260.0
242.0
301.0
287.0
310.0
18 19 20 21 22
12.10
12.45
12.70 12.80 12.90
18 19 20 21 22
Performance Hi
g
hli
g
hts
4 Dunedin Income Growth Investment Trust PLC
Calendar
Online shareholder presentation
16 May 2022
Annual General Meeting (London)
24 May 2022
Payment dates of quarterly dividends
27 May 2022
26 August 2022
25 November 2022
24 February 2023
Half year end
31 July 2022
Expected announcement of results for the
six months ending 31 July 2022
September 2022
Financial year end
31 January 2023
Expected announcement of results for the
year ending 31 January 2023
April 2023
Calendar and Financial Hi
g
hli
g
hts
Dunedin Income Growth Investment Trust PLC 5
Financial Highlights
31 January 2022 31 January 2021 % change
Total assets (£’000) (see page 106 for definition) 507,344 491,819 +3.16
Equity shareholders’ funds (£’000) 464,579 448,293 +3.63
Market capitalisation (£’000) 459,310 425,233 +8.01
Net asset value per Ordinary share 313.56p 302.56p +3.63
Net asset value per Ordinary share with debt at fair value
A
309.03p 297.64p +3.83
Share price (mid) 310.00p 287.00p +8.01
FTSE All-Share Index 4,191.81 3,641.93 +15.10
Premium/(discount) (difference between share price and net asset value)
Premium/(discount) where borrowings are deducted at fair value
A
0.31% (3.57)%
Gearing (see page 105 for definition)
Net gearing
A
8.41% 8.82%
Dividends and earnings
Total return per share 23.78p (1.81p)
Revenue return per share 12.87p 10.90p +18.07
Total dividend per share for the year 12.90p 12.80p +0.78
Dividend cover
A
1.00 0.85
Revenue reserves
Prior to payment of third and final (2021 – fourth interim) dividends
B
15.95p 15.87p
After payment of third and final (2021 – fourth interim) dividends
BC
9.05p 9.07p
Operating costs
Ongoing charges
AD
0.59% 0.67%
A
Considered to be an Alternative Performance Measure as defined on pages 110 and 111.
B
Calculated by dividing the revenue reserve per the Statement of Financial Position on page 78 by the number of shares in issue at the reporting date per note 16 on page 91.
C
Third interim dividend for the year ended 31 January 2022 of 3.00p per share (2021 – 3.00p). Final dividend for the year ended 31 January 2022 of 3.90p per share (2021 – fourth
interim dividend of 3.80p). See note 16 on page 91 for further details.
D
Calculated in accordance with the latest AIC guidance issued in October 2020 to increase the scope of reporting the look-through costs of holdings in investment companies.
6 Dunedin Income Growth Investment Trust PLC
Strategic
Report
2.9% of the Company’s total assets are invested in
the Industrial Engineering sub-sector.
Dunedin Income Growth Investment 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 growth of income and
capital from a portfolio
invested mainly in companies
listed or quoted in the United
Kingdom that meet the
Company’s sustainable and
responsible investing criteria
as set by the Board.
8 Dunedin Income Growth Investment Trust PLC
Performance
In the year ended 31 January 2022, your company
delivered a positive absolute return but a weak relative
outcome in what was a strong year for UK equities. The
Company’s net asset value (“NAV”) increased by 8.1% on a
total return basis, underperforming the FTSE All-Share
Index which produced a total return of 18.9%. The share
price total return for the year of 12.5% exceeded the NAV
total return, reflecting a move from a discount to NAV to a
small premium at the end of the year.
After a number of years of strong relative investment
performance, this year, and particularly the second half of
the financial year, brought a much more challenging
investment environment for your Investment Manager’s
approach. Shareholders will recall that, at the interim
stage, NAV performance was behind the benchmark but
only by 1.5%. Since then, the changes in stock market
trends have been marked. Large capitalisation companies
whose share prices were viewed as standing at a discount
to their underlying valuations, sometimes referred to as
value stocks, benefitted from an increase in share prices
as economies bounced back from the receding impact of
the pandemic and from increasing interest rate
expectations. This type of rotation in markets, as
companies with certain characteristics move into favour
having previously languished, is not uncommon, but was
particularly significant this year. The types of companies
that benefitted from this recent style rotation were
precisely the types of companies the Investment Manager
has made a very deliberate decision to not invest in over
recent years.
After a number of years of strong
relative investment performance, this
year, and particularly the second half
of the financial year, brought a much
more challenging investment
environment for your Investment
Manager’s approach.
While the total return performance this year is
disappointing, it is important to note that the longer term
performance remains sound. The NAV total return of the
Company is ahead of our benchmark over three and five
years and the Company’s shares traded at a small
premium to the NAV at the end of the year.
Encouragingly,
dividends from the portfolio holdings have rebounded
more sharply than we expected, driving a significant uplift
in the revenue return per share.
A major change during the reporting period was the
change to the investment objective to formally
incorporate sustainable and responsible investment
principles which was approved by shareholders at the
AGM in June. The required changes to the portfolio have
been implemented and, on an underlying basis, the
portfolio has continued to evolve over the year in line with
our strategy to create a more active, better quality and
higher growth investment proposition.
The Board believes that this continues to position your
company to deliver both faster dividend growth and
enhanced risk adjusted capital performance as well as
providing greater differentiation from its peers and
widening its investor base. The move to the Company’s
shares trading at a premium to the NAV during the year is,
we believe, a continued recognition that the strategy we
have pursued will benefit shareholders over the long term.
Earnings
Shareholders may recall that, in the previous financial
year, our income declined by 10.6% relative to a fall in
income from the companies within the FTSE All-Share
Index of over 30%. It is pleasing therefore to report that the
portfolio’s income generation recovered strongly after
falling much less than the market during the pandemic.
Income increased by 17.3% during the year, reflecting a
rebound in dividend distributions following the pandemic
affected year of 2020/21, where a number of companies
suspended or cut their dividends, as well as healthy
underlying income growth from the portfolio and the
receipt of special dividends. At the bottom line, the
revenue return per share increased by a slightly higher
amount, up by 18.1%, taking it back to above the pre-
pandemic level and an all-time high of 12.87p.
Chairman’s Statement
Dunedin Income Growth Investment Trust PLC 9
Dividend
Having paid three quarterly dividends of 3.0p per share,
we are proposing a final dividend of 3.9p per share. This
will make a total dividend of 12.9p per share for the year,
an increase of 0.8% on last year. This will be the 38
th
year
out of the past 42 that the Company has grown its
dividend, with the distribution maintained in the other
four years.
Following payment of the final dividend, we will have
utilised 0.03p of the Company’s revenue reserves,
meaning that 9.05p per share will be available to support
future distributions, representing 70% of the current
annual dividend cost.
Having paid three quarterly dividends
of 3.0p per share, we are proposing a
final dividend of 3.9p per share. This
will make a total dividend of 12.9p per
share for the year.
Over the past six years your Investment Manager has
been reducing the Company’s dependence on higher
yielding, lower growth companies and enhancing the
Company’s longer term potential for both faster dividend
growth and better capital performance. That strategic
shift has been completed. The Company delivered a
record level of earnings per share during the year and,
although the rate of dividend increase for the year lags
the rate of inflation, the increased dividend of 12.9p per
share represents a yield of 4.2% based on the share price
of 310.0p at the end of the year, compared to a notional
yield of 3.0% from the FTSE All-Share Index. Our
distribution policy remains to grow the dividend faster
than inflation over the medium term and, with the
Company’s robust revenue reserves and the healthy
underlying dividend growth of the companies within the
portfolio, we believe that the policy remains well
supported, although its delivery may prove more
challenging if inflation remains persistently high.
Market Background
After the remarkable economic, market and social
developments in 2020/21, 2021/22 proved to be a
somewhat less turbulent year for markets and UK equities
delivered a very strong return both in absolute terms and
relative to other major markets. After a number of years of
poor performance for the UK market, it is pleasing to see
such a rebound in sentiment.
2021 saw a general global narrative of economic
recovery combined with societies gradually re-opening
from the pandemic. While the potential threat of vaccine
immunity from the Omicron strain of Covid-19
temporarily roiled markets in November, fortunately its
impact has been relatively less significant than some of
the earlier waves of the virus and we may be hopeful that
the worst of the pandemic is behind us.
Overall, though, it was a year of strong economic growth
as economies benefitted from the annualisation effect
from the year before, the residual impact of government
stimulus and still loose monetary policy conditions.
As we moved through the period, sustained inflationary
pressures, most notably in the United States, but
developing across much of the global economy, started to
shift the tone and actions from central banks. In the UK, in
December, the Bank of England became the first G7
central bank to raise interest rates and the last two
months of the financial year saw a significant increase in
expectations for the level of short term interest rates
across major economies. We also saw longer term real
bond yields move sharply upwards. The combined effect
of this was to trigger the very significant rotation of capital
out of more highly valued companies in sectors such as
Technology, Healthcare and Consumer Goods into
cheaper sectors, particularly those deemed to be gaining
additional earnings support from higher inflation and
higher interest rates, such as Banks, Energy and Mining, as
referred to earlier.
At the year-end, we had not yet seen the Russian invasion
of Ukraine, above all a human tragedy, which has had a
terrible impact on the people of that country. The impact
on global economies and stock markets is likely to be felt
for many years to come. In the immediate aftermath,
commodity prices have soared and equities have fallen,
with investors looking to add both classically defensive
assets and also inflation hedges. At this early stage, the
implications are unclear, but we can say with some
certainty that inflation is now likely to be much higher and
more sustained and that economic growth is likely to be
more constrained, particularly in Europe, but exactly how
substantial the impact on growth will be remains
uncertain. How central banks react will also be key as will
the actions on fiscal policy from governments. However, a
year that many forecasters were expecting to be another
one of strong global growth is certainly likely to be a good
deal more volatile than had been expected.
10 Dunedin Income Growth Investment Trust PLC
While events in Ukraine and the growing energy crisis in
Europe are seen by some commentators as a clear signal
of the folly of focusing on environmental, social and
governance (“ESG”) factors, we believe that, in stark
contrast, such events will actually intensify investor focus on
all elements related to ESG. While many energy-related
companies may continue to perform well in the short and
perhaps medium term, and governments may face
pressure to revisit their policies on addressing the energy
transition, we believe that the war in Ukraine has highlighted
a growing realisation that accelerating the provision of
lower carbon energy sources, energy efficiency and
energy security go hand in hand. Likewise, in terms of social
elements, the pressure on companies to act in a way
deemed socially, morally and politically responsible has
been unprecedented. From a governance perspective, the
importance of investors aligning with the right
governments, regulators and owners again cannot be
clearer. A clear appreciation of the risks to companies from
poor management of ESG risks and an understanding of
the potential opportunities has never been more important.
As we stated at the time, we put the changes to our
objective to shareholders, this focus on ESG risks was a
longer-term development, which was both a natural
evolution of our strategy, and an approach that would
improve the risk-return characteristics of the portfolio, and
its ability to deliver dependable dividends to shareholders.
Gearing
The Board believes that the sensible use of modest
financial gearing, while amplifying market movements in
the short term, will enhance returns of both capital and
income to shareholders over the long term. We also
recognise the benefit that having a reasonable proportion
of long-term fixed rate funding provides to managing the
Revenue Account, through greater certainty over
financing costs.
The Company currently employs two sources of gearing.
The £30 million loan notes maturing in 2045, and a £30
million multi-currency revolving credit facility that was
renegotiated during this financial year and expires in July
2023. Under the terms of the facility, the Company has the
option to increase the level of the commitment from £30
million to £40 million at any time, subject to the lender’s
credit approval. A Sterling equivalent of £13.0 million was
drawn down at the year end.
With debt valued at par, the Company’s net gearing
decreased from 8.8% to 8.4% during the year. The Board
believes this remains a relatively conservative level of
gearing and, with part of the revolving credit facility
undrawn, this provides the Company with financial
flexibility should opportunities to deploy additional
capital arise.
Discount
The price of the Company’s shares relative to the NAV
moved over the course of the year from a discount of
3.57% at the beginning of the year to a small premium of
0.31% as at 31 January 2022 (on an ex-income basis with
borrowings stated at fair value).
During this time no shares were bought back or issued
although, subsequent to the year-end, the Company has
issued 100,000 shares from treasury at a premium to the
NAV per share.
The price of the Company’s shares
relative to the NAV moved over the
course of the year from a discount of
3.57% at the beginning of the year to a
small premium of 0.31% as at 31
January 2022 (on an ex-income basis
with borrowings stated at fair value).
As stated above, the Board believes that the successful
implementation by the Investment Manager of the
investment strategy should enhance the Company’s
longer-term potential for improved performance. We
have seen a re-rating of the shares and the Board believes
a consistent rating of the Company’s shares close to the
underlying asset value is of significant benefit to
shareholders.
As in previous years, we will seek shareholders’ permission
at the forthcoming AGM to buy back shares and issue
new shares.
Annual General Meeting and Online
Shareholder Presentation
AGM
The AGM will be held at 12 noon on 24 May 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.
We encourage all shareholders to complete and return
the Proxy Form enclosed with the Annual Report so as to
ensure that your votes are represented at the meeting. If
you hold your shares in the Company via a share plan or a
platform and would like to attend and/or vote at the AGM,
then you will need to make arrangements with the
administrator of your share plan or platform. For this
purpose, investors who hold their shares in the Company
via the abrdn Investment Plan for Children, Share Plan or
Chairman’s Statement
Continued
Dunedin Income Growth Investment Trust PLC 11
ISA will find a Letter of Direction enclosed. Shareholders
are encouraged to complete and return their Proxy Forms
/ Letters of Direction in accordance with the instructions.
Given the evolving nature of the Covid-19 pandemic,
should circumstances change significantly, rendering an
in-person AGM inadvisable or not permissible, we will
notify shareholders of any changes to the arrangements
by updating the Company’s website,
dunedinincomegrowth.co.uk,
and through a stock
exchange announcement, where appropriate, with as
much notice as possible.
The Notice of the Meeting is contained on pages 113
to 117.
Online Shareholder Presentation
In order to encourage as much interaction as possible with
our shareholders, and especially for those who are unable
to attend the AGM, we will also be hosting an Online
Shareholder Presentation, which will be held at 10.00 am
on 16 May 2022. At this event you will receive a
presentation from the Investment Manager and have the
opportunity to ask live questions of the Chairman and the
Investment Manager. The online presentation is being held
ahead of the AGM to allow shareholders to submit their
proxy votes prior to the meeting.
Full details on how to register for the online event
can be found at:
www.workcast.com/register?cpak=7925691640699593
Details are also contained on the Company’s website.
Should you be unable to attend the online event, the
Investment Manager’s presentation will be made available
on the Company’s website shortly after the presentation.
Outlook
Over the past six years, the Company has undergone a
significant shift in its portfolio to focus more on total return
and dividend growth and adjusted its mandate to formally
incorporate a greater focus on sustainability. While this
financial year, and particularly the second half of it, has
been a difficult period for relative performance, the Board
believes that this is the right strategy to deliver earnings
and dividend growth over the longer term. The volatile
economic and political environment that has been
unleashed by the conflict in Ukraine should further support
a focus on resilience.
We cannot predict when a semblance
of normality will return to markets and
economies, but the Board is confident
that the Company is well-positioned
to deliver relative total return
outperformance over the medium and
long term.
It is likely that continued outperformance from
commodity-related sectors will prove to be a headwind to
relative performance given the scale of those sectors
within the UK equity market and the challenge of gaining
exposure, given the Company’s focus on both higher
quality companies and sustainability. Against this very
complex backdrop, the Investment Manager’s focus on
investing in companies with pricing power, strong balance
sheets and with greater exposure to structural rather than
cyclical growth should offer greater resilience in both
capital and income generation. The Company’s track
record over the past five years adopting this strategy is
very creditable.
We cannot predict when a semblance of normality will
return to markets and economies, but the Board is
confident that the Company is well-positioned to deliver
relative total return outperformance over the medium and
long term which, combined with the portfolio’s income
growth potential, should enable the Company’s shares to
continue to trade close to NAV.
David Barron
Chairman
6 April 2022
12 Dunedin Income Growth Investment 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 growth of income
and capital from a portfolio invested mainly in companies
listed or quoted in the United Kingdom that meet the
Company’s sustainable and responsible investing criteria
as set by the Board.
Investment Policy
In pursuit of its objective, the Company's investment policy
is to invest in high quality companies with strong income
potential and providing an above-average portfolio yield.
The Company may only make material changes to its
investment policy (including the level of gearing set by the
Board) with the approval of shareholders in the form of an
ordinary resolution.
Risk Diversification
The Company maintains a diversified portfolio consisting,
substantially, of equity or equity-related securities, and it
can invest in other financial instruments. The Company is
invested mainly in companies listed or quoted in the
United Kingdom and can invest up to 20% of its gross
assets overseas.
It is the policy of the Company to invest no more than
15% of its gross assets in other listed investment
companies and no more than 15% of its gross assets
in any one company.
Gearing
The Board is responsible for determining the gearing
strategy for the Company, with day-to-day gearing
decisions being made by the Manager within the remit set
by the Board. The Board has set its gearing limit at a
maximum of 30% of the net asset value at the time of
draw down. Gearing is used selectively to leverage the
Company's portfolio in order to enhance returns where
and to the extent considered appropriate.
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 AIFM, to the Investment Manager.
Investment Process
The Investment Process adopted by the Investment
Manager is contained on pages 26 to 33.
Benchmark
The Company’s benchmark is the FTSE All-Share Index
(total return). Performance is measured on a net asset
value total return basis over the long-term.
Promoting the Success of the Company
The Board’s statement on pages 19 to 21 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.
Overview of Strate
g
y
Dunedin Income Growth Investment Trust PLC 13
Key Performance Indicators (“KPIs”)
The Board uses a number of financial performance measures to assess the Company’s success in achieving
its objective and determining the progress of the Company in pursuing its investment policy. The main KPIs
are shown in the table below.
KPI Description
Performance The Board considers the Company’s NAV total return figures to be the best single
indicator of performance over time. The figures for each of the past 10 years are set
out on page 24.
Performance of NAV against benchmark index
and comparable investment trusts
The Board measures the Company’s NAV total return performance against the total
return of the benchmark index – the FTSE All-Share Index. The figures for this year
and for the past three and five years, and a graph showing performance against the
benchmark index over the past five years are shown on page 22. The Board also
monitors performance relative to a peer group of investment trusts which have
similar objectives, policies and yield characteristics.
Revenue return per Ordinary share The Board monitors the Company’s net revenue return. The revenue returns per
Ordinary share for each of the past 10 years are set out on page 24.
Dividend per Ordinary share The Board monitors the Company’s annual dividends per Ordinary share. The
dividends per share for each of the past 10 years are set out on page 24.
Share price performance The Board monitors the performance of the Company’s share price on a total return
basis. The returns for this year and for the past three and five years, and a graph
showing the share price total return performance against the benchmark index
over the past five years are shown on page 22.
Premium/discount to NAV The premium/discount of the share price relative to the NAV per share is monitored
by the Board. The premium at the year end and the discount at the end of the
previous year are disclosed on page 5.
Ongoing charges The Board monitors the Company’s operating costs carefully. Ongoing charges for
the year and the previous year are disclosed on page 5.
14 Dunedin Income Growth Investment Trust PLC
Principal 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 most significant risk was
the continuing impact of the Covid-19 pandemic and its
implications for the future economic outlook.
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 and emerging risks and uncertainties faced
by the Company are reviewed by the Audit Committee in
the form of risk matrices.
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.
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
Investment objectives - a lack of demand for the
Company’s shares due to its objectives becoming
unattractive to investors could result in a widening
of the discount of the share price to its underlying
NAV and a fall in the value of its shares.
Board review. The Board formally reviews the Company’s objectives
and strategies for achieving them on an annual basis, or more regularly
if appropriate.
Shareholder communication. The Board is cognisant of the importance of
regular communication with shareholders. Directors attend meetings with the
Company’s largest shareholders and meet other shareholders at the Annual
General Meeting and, as explained in the Chairman’s Statement, the Company
will hold an online shareholder presentation in advance of the Annual General
Meeting this year including the opportunity for an interactive question and
answer session. The Board reviews shareholder correspondence and investor
relations reports and also receives feedback from the Company’s Stockbroker.
Discount monitoring. The Board, through the Manager, keeps the level of
discount under constant review. The Board is responsible for the Company’s
share buy back policy and is prepared to authorise the use of share buy backs
to provide liquidity to the market and try to limit any widening of the discount.
Investment strategies - the Company adopts
inappropriate investment strategies in pursuit of its
objectives which could result in investors avoiding
the Company’s shares, leading to a widening of
the discount and poor investment performance.
Adherence to investment guidelines. The Board sets investment guidelines and
restrictions which the Manager follows, covering matters such as asset
allocation, diversification, gearing, currency exposure and use of derivatives, as
well as the Company’s sustainable and responsible investment criteria. These
guidelines are reviewed regularly and the Manager reports on compliance with
them at Board meetings.
In order to ensure adequate diversification, the Board has set absolute limits on
maximum holdings and exposures in the portfolio at the time of investment,
which are in addition to the limits contained in the Company’s investment
policy, including the following:
· No more than 10% of gross assets to be invested in any single stock; and
· The top five holdings should not account for more than 40% of gross assets.
Regular shareholder communication and discount monitoring, as above.
Continued
Overview of Strate
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y
Dunedin Income Growth Investment Trust PLC 15
Risk Mitigating Action
Investment performance - the appointment or
continuing appointment of an investment
manager with inadequate resources, skills or
expertise or which makes poor investment
decisions. This could result in poor investment
performance, a loss of value for shareholders and
a widening discount.
Monitoring of performance. The Board meets the Manager on a regular basis
and keeps under close review (inter alia) its resources and adherence to
investment processes, including in relation to the Company’s sustainable and
responsible investment criteria. The Board also keep under review the
adequacy of risk controls and investment performance.
Management Engagement Committee. A detailed formal appraisal of the
Manager is carried out annually by the Management Engagement Committee.
Income/dividends - the Company adopts an
unsustainable dividend policy resulting in cuts to or
suspension of dividends to shareholders, or one
which fails to meet investor demands.
Revenue forecasting and monitoring. The Manager presents detailed forecasts
of income and expenditure covering both the current and subsequent financial
years at Board meetings. Dividend income received is compared to forecasts
and variances analysed.
Use of reserves. The Company has built up revenue reserves which are
available to smooth dividend distributions to shareholders should there be a
shortfall in revenue returns.
Financial/market - insufficient oversight or controls
over financial risks, including market risk, foreign
currency risk, liquidity risk and credit risk could
result in losses to the Company.
Management controls. The Manager has a range of procedures and controls
relating to the Company’s financial instruments, including a review of
investment risk parameters by its Investment Risk department and a review of
credit worthiness of counterparties by its Counterparty Credit Risk team.
Foreign currency hedging. It is not the Company’s policy to hedge foreign
currency exposure but the Company may, from time to time, partially mitigate
it by drawing down borrowings in foreign currencies.
Board review. 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 19 to the financial statements.
Gearing - gearing accentuates the effect of rises
or falls in the market value of the Company’s
investment portfolio on its NAV. An inappropriate
level of gearing at a time of falling values could
result in a significant fall in the value of the
Company’s net assets and share price. Such a fall
in the value of the Company’s net assets could
result in a breach of loan covenants and trigger
demands for early repayment or require
investments to be sold to meet any shortfall. This
could result in further losses.
Gearing restrictions. The Board sets gearing limits within which the Manager
can operate.
Monitoring. Both the limits and actual levels of gearing are monitored on an
ongoing basis by the Manager and at regular Board meetings. In the event of a
possible impending covenant breach, appropriate action would be taken to
reduce borrowing levels.
Scrutiny of loan agreements. The Board takes advice from the Manager and the
Company’s lawyers before approving details of loan agreements. Care is
taken to ensure that covenants are appropriate and unlikely to be breached.
Limits on derivative exposure. The Board has set limits on derivative exposures
and positions are monitored at regular Board meetings.
16 Dunedin Income Growth Investment Trust PLC
Risk Mitigating Action
Regulatory - changes to, or failure to comply with,
relevant regulations (including the Companies
Act, The Financial Services and Markets Act, The
Alternative Investment Fund Managers Directive,
accounting standards, investment trust
regulations, the Packaged Retail and Insurance-
based Investment Product Regulations, the Listing
Rules, Disclosure Guidance and Transparency
Rules and Prospectus Rules) could result in fines,
loss of reputation, reduced demand for the
Company’s shares and potentially loss of an
advantageous tax regime.
Board awareness. The Directors have an awareness of the more important
regulations and are provided with information on changes by the Association
of Investment Companies. In terms of day to day compliance with regulations,
the Board is reliant on the knowledge and expertise of the Manager. However,
where necessary, the Board engages the service of external advisers. In
addition, all Directors are encouraged to attend relevant training courses.
Management controls. The Manager’s company secretariat and accounting
teams use checklists to aid compliance and these are backed by the
Manager’s compliance monitoring programme and risk based internal
audit investigations
Operational - the Company is reliant on services
provided by third parties (in particular those of the
Manager and the Depositary) and any control
gaps and failures in their operations could expose
the Company to loss or damage.
Agreements. Written agreements are in place defining the roles and
responsibilities of all third party service providers.
Internal control systems of the Manager. The Board receives reports on the
operation and efficacy of the Manager’s IT and control systems, including
those relating to cyber-crime, and its internal audit and compliance functions.
Safekeeping of assets. The Depositary is ultimately responsible for the
safekeeping of the Company’s assets and its records are reconciled to those of
the Manager on a regular basis. Through a delegation by the Depositary, the
Company’s investments and cash balances are held in segregated accounts
by the Custodian.
Monitoring of other third party service providers. The Manager monitors closely
the control environments and quality of services provided by third parties,
including those of the Depositary. This includes controls relating to cyber-crime
and is conducted through service level agreements, regular meetings and key
performance indicators. The Directors review reports on the Manager’s
monitoring of third party service providers on a periodic basis.
Operational changes caused by Covid-19. The operational requirements of the
Company have been subject to rigorous testing during the Covid-19
pandemic, including increased use of online communications and out of office
working and reporting.
Geo-political – the impact of geo-political events
could result in losses to the Company.
Board and Manager awareness. Geo-political events over which the Company
has no control are always a risk. The Board and Manager do what they can to
address these risks where possible.
In relation to the recent events in Ukraine, the Board has liaised closely with the
Manager to establish the impact on the Company, including the performance
of individual holdings within the portfolio.
Overview of Strate
g
y
Continued
Dunedin Income Growth Investment Trust PLC 17
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 abrdn on behalf of a
number of investment trusts under its management. The
Company’s financial contribution to the programme is
matched by the Manager. 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 Kepler
Trust Intelligence. A copy of the latest research note is
available from the Key Literature section of the
Company's website.
Board Diversity Policy
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 the principle of diversity in its recruitment of
new Board members. The Board will not display any bias
for age, gender, race, sexual orientation, religion, ethnic or
national origins, or disability in considering the
appointment of its 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 and the Board does not therefore
consider it appropriate to set measurable objectives in
relation to its diversity.
At 31 January 2022, there were three male and two
female Directors on the Board.
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. 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 within the Investment Process on pages 26 to 33.
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.
18 Dunedin Income Growth Investment Trust PLC
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 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 relevance of the Company’s investment objective,
especially in the current low yield environment.
· The Company is invested in readily-realisable listed
securities.
· Share buy backs carried out in the past have not
resulted in significant reductions to the capital of the
Company.
· Although the Company’s stated investment policy
contains a maximum gearing limit of 30% of the NAV at
the time of draw down, the Board’s policy is to have a
relatively modest level of equity gearing and the
financial covenants attached to the Company’s
borrowings provide for significant headroom.
· Current and future market conditions caused by the
Covid-19 pandemic, including implications for the
operational activities of the Company and the ability of
key third party suppliers to continue to provide essential
services to the Company.
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.
Outlook
The Board’s view on the general outlook for the Company
can be found in the Chairman’s Statement on page 11
whilst the Investment Manager’s views on the outlook for
the portfolio are included on page 36.
On behalf of the Board
David Barron
Chairman
6 April 2022
Overview of Strate
g
y
Continued
Dunedin Income Growth Investment Trust PLC 19
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 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 a vehicle to
provide, over time, financial returns (both income and
capital) to its shareholders. Investment trusts, such as the
Company, are long-term investment vehicles and are
typically externally managed, have no employees, and
are overseen by an independent non-executive board of
directors.
The Board, which 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
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 regular meetings and receives
regular reporting and feedback from the other key service
providers. 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.
Further details are included in the table below.
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 between all
shareholders. The Manager and Company’s Stockbroker meet regularly with current and
prospective shareholders to discuss performance and shareholder feedback is discussed by the
Directors at Board meetings. In addition, the Manager meets with analysts who cover the
investment trust sector and the Directors attend meetings with the Company’s largest
shareholders and meet other shareholders at the Annual General Meeting.
The Company subscribes to the Manager’s investor relations programme in order to maintain
communication channels, in particular, with the Company’s institutional shareholder base.
Regular updates are provided to shareholders through the Annual Report, Half Yearly Report,
monthly factsheets, Company announcements, including daily NAV announcements, and the
Company’s website.
Promotin
g
the Success of the Company
20 Dunedin Income Growth Investment Trust PLC
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 and to provide feedback
on the Company. In addition to the Annual General Meeting, this year the Board will again hold an
interactive online shareholder presentation at which shareholders will receive updates from the
Chairman and Investment Manager and there will be the opportunity for an interactive question
and answer session.
Manager
(and Investment Manager)
The Investment Manager’s Review on pages 34 to 36 details the key investment decisions taken
during the year. The Investment Manager has continued to manage the Company’s assets in
accordance with the mandate provided by shareholders, with the oversight of the Board.
The Board regularly reviews the Company’s performance against its investment objective and the
Board undertakes an annual strategy review 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 56.
Service Providers The Board seeks to maintain constructive relationships with the Company’s suppliers either directly
or through the Manager, with regular communications and meetings.
The 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.
Investee Companies Responsibility for actively monitoring the activities of portfolio companies has been delegated by
the Board to the Manager which has sub-delegated that authority to the Investment Manager.
The 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 Manager reports regularly to the Board on investment and engagement activity.
Debt Providers On behalf of the Board, the Manager maintains a positive working relationship with The Bank of
Nova Scotia, London Branch, the provider of the Company’s multi-currency loan facility, and
provides regular updates on business activity and compliance with its loan covenants.
The Manager also provides regular covenant compliance certificates to the holders of the
Company’s £30 million Loan Notes.
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 the research
and analysis as part of the investment decision-making process. Further details are provided within
the Investment Process on pages 26 to 33.
Continued
Promotin
g
the Success of the Company
Dunedin Income Growth Investment Trust PLC 21
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 Board decision, the Directors
were particularly mindful of stakeholder considerations
during the following decisions undertaken during the year
ended 31 January 2022. Each of these decisions was
made after taking into account the short and long term
benefits for stakeholders.
Investment Objective and Portfolio
On 10 June 2021, shareholders voted at the Annual
General Meeting to approve the change of investment
objective “to achieve growth of income and capital from a
portfolio invested mainly in companies listed or quoted in
the United Kingdom that meet the Company’s sustainable
and responsible investing criteria as set by the Board”. The
Board believes very strongly that this change will allow the
Company to continue its focus on generating both income
and capital growth while being better prepared to meet
the significant environmental and social challenges
ahead, as well as further increasing its potential attraction
to a wider audience of potential investors. The Company’s
Sustainable and Responsible Investing Criteria are set out
within the Investment Process on pages 26 to 33.
During the year, the Investment Manager continued to
execute the Board’s investment strategy of focussing on
businesses of higher quality whilst balancing both income
and capital growth potential. The portfolio continues to
exhibit strong quality characteristics, while retaining a
premium yield to, and superior dividend growth to, the
market. At the same time, the Company’s portfolio has
high active share reflecting a differentiated approach to
the wider index. Following the Annual General Meeting in
June 2021, the process of implementing the changes to
the portfolio consistent with the adoption of the Board’s
sustainable and responsible investment criteria
was completed.
Dividend
Following the payment of the final dividend for the year, of
3.90p per Ordinary share, total dividends for the year will
amount to 12.90p per Ordinary share. This represents an
increase of 0.78% compared to the previous year and
compares to the rate of inflation of 4.9% for the 12 month
period to 31 January 2022 as measured by the Consumer
Price Index. This will be the 38th year out of the past 42
that the Company has grown its dividend, with the
distribution maintained in the other four years, and is in
accordance with its policy to grow total annual dividends
in real terms over the medium term.
Through meetings with shareholders and feedback from
the Manager and the Company’s Stockbroker, the Board
is conscious of the importance that shareholders place on
the level of dividends paid by the Company.
Bank Borrowings
During the year, the Company entered in to a £30 million
multi-currency revolving credit facility with The Bank of
Nova Scotia, London Branch (with the option to increase
the level of commitment to £40 million, subject to the
lender’s credit approval).
This facility replaced the expiring £15 million revolving
credit facility with Scotiabank (Ireland) Designated Activity
Company and is for a period of two years to 13 July 2023.
Following this change, the Company’s committed
borrowing facilities amount to £60 million in aggregate,
comprising the £30 million multi-currency revolving credit
facility and the £30 million loan notes maturing in 2045.
The Board believes that the modest use of gearing by the
Company is of long term benefit to shareholders.
Directorate
As explained in the Directors’ Report on page 54, following
a formal recruitment process, the Board decided to
appoint Ms Gay Collins as an independent Director on 1
July 2021 following the retirement of Ms Elisabeth Scott
from the Board at the Annual General Meeting on 10 June
2021. New appointments seek to achieve a good balance
of skills, experience, gender and ethnicity, reflecting the
objectives of the Company.
The Board believes that shareholders’ interests are best
served by ensuring a smooth and orderly refreshment of
the Board which serves to provide continuity and maintain
the Board’s open and collegiate style.
Online Shareholder Presentation
To encourage and promote stronger interaction and
engagement with the Company’s shareholders, the Board
will hold an interactive online shareholder presentation
which will be held at 12 noon on Monday 16 May 2022. At
the presentation, shareholders will receive updates from
the Chairman and Investment Manager and there will be
the opportunity for an interactive question and answer
session. The online presentation is being held ahead of the
Annual General Meeting to allow shareholders to submit
their proxy votes prior to the meeting.
On behalf of the Board
David Barron
Chairman
6 April 2022
22 Dunedin Income Growth Investment Trust PLC
Performance (total return)
1 year 3 year 5 year
% return % return % return
Total return (Capital return plus net dividends reinvested)
Net asset value
AB
+8.1% +31.7% +41.8%
Share price
B
+12.5% +45.0% +60.7%
FTSE All-Share Index +18.9% +21.7% +30.2%
Capital return
Net asset value
A
+3.8% +17.1% +14.3%
Share price +8.0% +28.1% +27.3%
FTSE All-Share Index +15.1% +9.6% +8.7%
A
Cum-income NAV with debt at fair value.
B
Considered to be an Alternative Performance Measure (see page 111)
Source: abrdn, Factset & Morningstar
Commparison of NAV and Share Price Total Return Performance of DIGIT to
FTSE All-Share Index (figures rebased to 100)
Five years to 31 January 2022
100
110
120
130
140
150
160
31/01/17 31/01/18 31/01/19 31/01/20 31/01/21 31/01/22
Source: abrdn, Morningstar & Lipper
Share price total return
NAV total return with debt
at fai r value
FTSE Al l-Share Index to tal
return
Performance
Dunedin Income Growth Investment Trust PLC 23
Comparison of NAV Total Return Performance of DIGIT to FTSE All-Share Index
Total Return for 5 years
12.0%
-3.9%
22.2%
-0.3%
8.1%
41.8%
11.3%
-3.8%
10.7%
-7.5%
18.9%
30.2%
Year to
31/01/18
Year to
31/01/19
Year to
31/01/20
Year to
31/01/21
Year to
31/01/22
5 year total return
(cumulative)
Source: abrdn, Morningstar & Lipper
NAV total return with
debt at fair value
FT SE Al l-Share Index
total return
Analysis of Total Return Performance for the year ended 31 January 2022
%
Gross assets total return
7.6
Total NAV return per share
A
8.1
Total return on FTSE All-Share Index
18.9
Relative performance
(10.8)
A
With debt at fair value.
Analysis of Performance for the year Relative to the FTSE All-Share Index
-11.2
-
9.
6
-
1.
6
0.9
0.1
-0.6
-0.1
0.1
Listed equities
- Stock selection^
- Sector allocation^
Borrowings & cash
Bid Pricing Adjustment
Fees and Expenses
Tax
Technical Differences
%
- Stock selection^
- Stock allocation^
^ Further analysis of performance attributable to listed equities.
24 Dunedin Income Growth Investment Trust PLC
Ten Year Financial Record
Year ended 31 January 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total revenue (£’000) 18,866 20,750 20,994 20,359 21,963 22,317 22,263 20,518 18,346 21,518
Per share (p)
Revenue return 10.77 11.89 11.90 12.11 12.55 12.64 12.68 12.08 10.90 12.87
Dividends paid/proposed 10.75 11.10 11.25 11.40 11.70 12.10 12.45 12.70 12.80 12.90
Revenue reserve
A
7.45 8.22 8.89 9.63 10.51 11.16 11.54 10.94 9.07 9.05
Net asset value
B
251.48 262.34 279.66 237.48 270.34 290.57 266.83 312.22 297.64 309.03
Total return
C
41.30 22.24 27.76 (28.94) 43.83 30.83 (11.95) 58.57 (1.81) 23.78
Shareholders’ funds (£’000) 385,605 403,526 428,702 368,041 415,810 442,384 401,731 469,806 448,293 464,579
A
After payment of third interim and final dividends (see note 16 on page 91 for further details).
B
With debt at fair value.
C
Per Statement of Comprehensive Income.
Comparison of Dividend Growth of DIGIT to Inflation (figures rebased to 100) –
Five years ended 31 January 2022
100
102
104
106
108
110
112
114
31/01/17 31/01/18 31/01/19 31/01/20 31/01/21 31/01/22
Source: abrdn , ONS & Facstet
DIGIT dividend growth
Consumer Price Index
Performance
Continued
Dunedin Income Growth Investment Trust PLC 25
Dividends per Share – Pence
Year to 31 January
10.75
11.10
11.25
11.40
11.70
12.10
12.45
12.70
12.80
12.90
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Dividends per Share
Dividend per share Rate xd date Record date Payment date
Final dividend 2022 3.90p 5 May 2022 6 May 2022 27 May 2022
Third interim dividend 2022 3.00p 3 February 2022 4 February 2022 25 February 2022
Second interim dividend 2022 3.00p 4 November 2021 5 November 2021 26 November 2021
First interim dividend 2022 3.00p 5 August 2021 6 August 2021 27 August 2021
Total dividend 2022 12.90p
Dividend per share Rate xd date Record date Payment date
Fourth interim dividend 2021 3.80p 6 May 2021 7 May 2021 28 May 2021
Third interim dividend 2021 3.00p 4 February 2021 5 February 2021 26 February 2021
Second interim dividend 2021 3.00p 5 November 2020 6 November 2020 27 November 2020
First interim dividend 2021 3.00p 6 August 2020 7 August 2020 28 August 2020
Total dividend 2021 12.80p
26 Dunedin Income Growth Investment Trust PLC
Investment Philosophy and Style
The Investment Manager believes that building a
concentrated portfolio of high quality companies that
meet its sustainable and responsible investment criteria
will deliver both real income growth and attractive total
returns over the long-term.
The application of sustainable and responsible investing
principles enables the Investment Manager to reduce risks
in the portfolio by identifying and excluding companies
whose business models it considers face significant
threats from Environmental, Social and Governance
(“ESG”) factors. It also enables the Investment Manager to
identify positive opportunities for companies to benefit
from the same trends as well as giving the potential for
engagement to improve companies’ performance and
increase shareholder value.
A focus on high quality companies and sustainable and
responsible investing principles is therefore well aligned
with the generation of resilient and growing dividend
income, and a capital return profile that is both robust in
difficult market conditions and able to participate in
upside opportunities, enhancing risk adjusted returns.
Investment Process
The investment process has five stages:
1. Idea Generation
The Investment Manager’s teams of investment
analysts generate investment ideas from their
comprehensive coverage of the UK and European
equity markets. This involves them considering the
merits of over 1,000 listed businesses across the
market cap spectrum.
2. Sustainability
Companies with excessive ESG risks are excluded
through a combination of pre-set screens and
quantitative and fundamental analysis. This removes
around a quarter of the companies monitored from
the Investment Manager’s consideration.
3. Quality
Businesses that don’t meet the analysts’ quality criteria
are then filtered out. Only around 20% of companies
will meet this hurdle and the Investment Manager
particularly emphasises allocation to companies that
are considered to be sustainable leaders.
4. Total Returns
Focus is then placed on those companies that the
analysts identify as having the most attractive total
return potential as well as those that have compelling
income generation characteristics.
5. Portfolio Construction
The Investment Manager then builds a concentrated
portfolio that can deliver the income and total return
requirements while matching the style and risk profile
and meeting the sustainable and responsible
investing principles.
Investment Process
Dunedin Income Growth Investment Trust PLC 27
A Highly Selective Strategy
Emphasis on sustainability, quality, total return and income
The Investment Manager’s Approach to ESG
Introduction
The Investment Manager believes that effective analysis
of, and engagement with, the ESG risks and opportunities
that companies face will enhance investors’ risk
adjusted returns.
While sustainable and responsible investing principles
were formally incorporated into the Company’s
investment objective in 2021, a focus on ESG factors
has been a long standing part of the Investment
Manager’s process, making the transition a relatively
straightforward one.
Those sustainable and responsible investment principles
are integrated into the investment process through a
combination of exclusions, positive allocation and ongoing
corporate engagement. To deliver this, the Investment
Manager utilises binary screens, qualitative analytical
assessment, proprietary quantitative tools and ongoing
corporate access and voting policy.
The Investment Manager draws upon three resources to
assist it with the integration of ESG into the investment
process; the team of approximately 30 equity analysts, on
desk ESG analysts and the central ESG team. Each plays
an important yet distinct role in implementation.
While deploying these resources, the ultimate
responsibility for stock selection and portfolio construction
lies with the Company’s portfolio managers.
28 Dunedin Income Growth Investment Trust PLC
Exclusions
The Investment Manager uses three different forms of exclusions. These are complimentary in form with binary
exclusions providing assurance to shareholders that companies with certain types of business activities will not be
invested in. Additionally, the Investment Manager utilises both the judgement of its investment analysts and its own
proprietary quantitative tools to exclude companies with poorly managed ESG risks.
1. Binary exclusions – these screens focus on areas where the Investment Manager sees long-term risks arising from ESG
factors to companies’ business models and, as a result, it chooses not to invest. These will be subject to ongoing review to
ensure that they are consistent with industry best practice.
2. ESG House Score – this is a proprietary quantitative tool that scores the companies in the investment universe on
operational and governance risks. The Investment Manager excludes the bottom 10% of companies from consideration
for the portfolio.
3. ESG Quality Score – every company under research coverage is judged by the analysts on the quality of its
management of ESG risks. Companies deemed to be below average are excluded from consideration for the portfolio.
Investment Process
Continued
Dunedin Income Growth Investment Trust PLC 29
The number of investible companies is reduced by 23% due to the effect of the three screens.
Carbon Intensity
The Company also commits to having a carbon intensity of less than 80% of the FTSE All-Share Index, which constrains
investment in high carbon emitting companies.
30 Dunedin Income Growth Investment Trust PLC
Weighted Average Carbon Intensity (WACI)
In tonnes of CO2e / million USD revenue
Scope 1 & 2 Scope 1 Scope 2 Scope 3
Portfolio 94.30 79.94 14.36 146.37
Benchmark 147.07 108.07 39.00 167.65
Relative carbon intensity % 64.12 73.97 36.84 87.30
Total Emissions
(In tonnes of CO2e)
Scope 1 & 2 Scope 1 Scope 2 Scope 3
Portfolio 24,823 21,468 3,355 41,708
Benchmark 72,468 57,556 14,912 78,775
Relative carbon intensity % 34.25 37.30 22.50 52.95
Avoided emissions 47,645 36,089 11,557 37,067
Source: Trucost
The Company’s portfolio currently has a Carbon Intensity on Scope 1 and 2 emissions of 64%, and 76% on Scope
1 to 3 emissions.
On a total emissions basis, the portfolio sits at 34% of the benchmark on Scope 1 and 2 emissions and 44% on Scope
1 to 3 emissions.
Positive Allocation
Investment Process
Continued
Dunedin Income Growth Investment Trust PLC 31
Companies that investment analysts score highly on the
quality of their ESG risk management are designated as
sustainable leaders. Those sustainable leaders that have a
high alignment of revenues or investment with the UN
sustainable development goals will additionally be
designated as solutions providers. The majority of the
Company’s portfolio will be invested into sustainable
leaders and the Investment Manager will actively search
for opportunities where it believes these attributes to
be undervalued.
Split of Sustainable Leaders, Solutions Providers
and Improvers
Engagement
Companies that are scored as average in ESG risk
management are designated as improvers. Clearly
defined opportunities for improvement are identified by
the team of investment analysts in conjunction with the
Investment Manager’s on-desk ESG analysts and central
ESG team, and these are closely monitored from initiation
through to completion. The Investment Manager believes
that effective engagement presents a significant
opportunity to add shareholder value over time.
During the year ended 31 January 2022, the Investment
Manager had 72 separate meetings with portfolio
companies where ESG topics were raised, covering 37 of
the 39 holdings. 12 of these were dedicated priority
engagement meetings, addressing areas of material
improvement. By topic, Corporate Governance was the
area most discussed, but there was also significant focus
on Climate and Environment and, increasingly, on
Social Issues
32 Dunedin Income Growth Investment Trust PLC
% of Meetings where Topic Discussed
Engagement Case Studies
SSE – Corporate Governance/Environment
The Investment Manager engaged with the Chairman of SSE, one of Europe’s largest utilities companies and a leader in
offshore wind power, following demands from activist investors to sell its renewables activities. It was important for the
Investment Manager to better understand the logic behind the company’s decision to reject the proposals and instead
continue to pursue an integrated approach, balanced by creating financial headroom to fund its ambitious expansion
plans. From an environmental perspective, the Investment Manager remains very supportive of the company’s “Just
Transition” plans and the corporate strategy adopted aligns with that. Overall, the Investment Manager remains
supportive of the business’ current trajectory, although will continue to provide both support and challenge to
management’s capital allocation choices.
Persimmon – Human Rights & Stakeholders/Corporate Behaviour
Given the significant issues caused by faulty exterior cladding on new build homes, the Investment Manager engaged
with the Persimmon management team to obtain a stronger insight into the risks that this poses for its business on both a
financial and reputational level, and the company’s efforts at remediation. Persimmon’s historic mix of new home
construction, with a heavy weighting towards houses and low rise flats, leaves it with relatively little exposure to troubled
assets. The company has conducted a detailed review of its last 20 years of construction and set aside significant
financial provisions to manage the remediation process. Importantly, there was a recognition that the company needs
to manage the reputational risks as well as its social responsibilities. From an industry perspective, cladding remains a
very significant problem for many homeowners and the Investment Manager has been a vocal advocate as a firm
for housebuilders to be pro-active in tackling this major social issue and to go beyond strict legal obligations in
offering solutions.
Chesnara – Corporate Governance
The Investment Manager has been in discussions with the company over improving the diversity of its board of directors
and moving more in line with industry best practice. The Investment Manager is a strong believer that more diverse
boards make for greater challenge, debate and ultimately better decision making. Following engagement with the
Chairman, the Investment Manager was pleased that the company made two new non-executive director
appointments in early 2022, better balancing the composition of the board and bringing additional insights and skills to
the table that should help support the company’s corporate strategy under the new CEO.
Investment Process
Continued
Dunedin Income Growth Investment Trust PLC 33
Proxy Voting
Voting policy forms an important part of the Investment Manager’s corporate engagement approach. Every proxy is
voted and, where needed, input sought from the investment and ESG analysts in conjunction with the expertise of the
central voting team. Where direct engagement has not proven effective, the Investment Manager is very prepared to
vote against companies.
Metric Value
Number of meetings held 49
Number of meetings with at least one vote against management 13
Percentage of meetings with at least one vote against management 26.5%
Total number of voteable proposals 790
Number of votes against management 18
Votes against management as a percentage of voteable proposals 2.3%
Number of votes against ISS Policy 21
Votes against ISS Policy as a percentage of voteable proposals 2.7%
Number of votes against policy 27
Votes against policy as a percentage of voteable proposals 3.4%
Number of abstentions in any resolution 1
Resolution abstentions as a percentage of voteable proposals 0.1%
The Investment Manager voted against management recommendations in 27% of the general meetings held by
portfolio companies during the year, which it thinks is the most useful metric for measuring the level of its constructive
engagement. The overall number of votes against was 2.3%. It is important to bear in mind that the Investment Manager
typically begins from a position of support for the select group of companies it invests in.
There is an extensive ongoing programme which allows the Investment Manager to actively engage with investee
companies throughout the year beyond the voting season.
34 Dunedin Income Growth Investment Trust PLC
Introduction
After several years of strong relative performance, it is
disappointing to report that, for the year ended 31
January 2022, the Company’s returns lagged the
benchmark FTSE All-Share Index. The net asset value total
return for the year of 8.1% compared to a total return of
18.9% from the benchmark. It was a year where our style
and strategy faced a number of headwinds and several of
our holdings found themselves out of favour with investors.
Our strategy of building a concentrated portfolio and
being willing to be different to both the benchmark and
peers does mean that there can be periods where our
returns may differ markedly from either. Most of the time,
we would expect that difference to express itself in a
positive way but, unfortunately, for the year under review,
that was not the case. Importantly, though, we consider
the portfolio to be in good shape with our focus on higher
quality companies, an emphasis on investments that can
deliver both income and capital growth, as well as the
application of sustainable and responsible investing
principles, positioning us to be able to cope with what may
be difficult market conditions ahead.
It was a year where our style and
strategy faced a number of
headwinds and several of our
holdings found themselves out of
favour with investors.
Total return performance notwithstanding, it was a year
where there were a number of important strategic and
financial developments. The implementation of the
sustainable and responsible investment criteria was
completed, positioning the Company uniquely amongst its
peer group, while maintaining the cadence of dividend
receipts. The portfolio continued to focus on delivering
growth of both capital and income in a differentiated
fashion with active share standing at 81% and more than
half the portfolio invested outside the FTSE 100 Index. As a
result, income generation came in ahead of our
expectations hitting record levels and the discount to net
asset value at which the Company’s shares have traded
for many years moved to a modest premium.
Performance
Despite a challenging year for relative investment
performance, the underlying profit and dividend
generation from the companies we invest in has
continued to be encouraging. This was reflected in the
earnings per share more than recovering to the level
achieved before the pandemic and indeed setting a new
all-time high in the process. Whilst this outcome was
somewhat flattered by the very substantial special
dividend received from Rio Tinto, the underlying income
generation was ahead of our expectations. It is worth
noting that this rebound comes from a portfolio that had
proven to be very resilient in the tough conditions of
2020/21 and therefore inherently offering less ‘rebound’
potential than others that took greater cuts to their
income account. Indeed, the main performance
challenge we faced for our holdings has been a reduction
in the prices that the market is willing to pay for those
businesses, as opposed to any aggregate impact on their
cash flow, earnings and dividend generation capacity.
From a relative return perspective, this was very much a
year of two halves. In the first half of the year we only
slightly trailed what was a strongly rising market. But as the
second half developed, particularly in the final quarter, the
portfolio increasingly lagged the wider index. This was due
to a combination of effects. Firstly, higher commodity
prices saw oil and gas and mining stocks perform very
strongly, areas to which we typically find it hard to gain
direct exposure to given our focus on high quality
businesses and the application of our sustainable
investment criteria. Alongside this, the anticipation of
rising interest rates was received very positively for the
banking sector and in particular large UK and Asian retail
banks with significant deposit funding bases. Once again,
we have chosen to invest away from that area due to our
preference for investments with a higher degree of
visibility and stability and more dependable dividend
distribution track records. Not owning the likes of large
index constituents such as BP, Shell, HSBC, Lloyds,
Barclays, Glencore and Anglo American all proved a
significant relative headwind as those companies
performed very strongly over the year. It is worth noting
that all of these businesses suspended, cancelled or cut
dividends in 2020.
The same effect of rising short term interest rates and
longer term bond yields that supported the
outperformance of the banks also provided a further
headwind to our performance in that it catalysed a
reduction in the valuation of a number of our holdings as
investors shifted capital away from more expensive
companies and allocated towards companies trading on
lower valuations. This “rotation”, as it is termed, was
particularly strong given the improving earnings dynamics
Investment Mana
g
er’s Review
Dunedin Income Growth Investment Trust PLC 35
for those cheaper businesses in areas like commodities
and banking. Companies such as Aveva and Edenred,
which have been tremendous long-term investments for
the Company, all underperformed as investor attention
moved elsewhere, despite solid operational and financial
delivery. We estimate that around three quarters of the
underperformance of the portfolio was driven by these
stylistic and strategy related elements.
Alongside these impacts there were some stock specific
elements where companies, for a variety of reasons,
faced more difficult trading conditions. Ubisoft, the French
computer game developer, reduced its profit guidance
over the year as it faced a series of delays to the launch of
its new releases and a generally less buoyant environment
as economies opened up and demand for its products
faced tougher comparatives. While this has been
disappointing, the elements in the investment case that
we have been backing over the last three years remain
very much intact with a transition to more recurring
revenues at higher margins as the company sells more
digital content and better monetises its game franchises
and back catalogue. The industry backdrop has also
developed favourably, with content becoming ever more
important, followed by a wave of consolidation which we
think underpins the value of its intellectual property.
UK housebuilder Persimmon faced headwinds following
the threat of government intervention over the cost of
remediating defective cladding for apartment blocks. We
still think the company is well positioned to manage this
given a significant focus on house building as opposed to
the construction of flats. From an earnings perspective, we
expect that it can grow volumes steadily at reasonable
margins in a market that remains constrained from a
supply perspective. Remediation should be more than
manageable financially given the company’s very strong
balance sheet and we expect that it will continue to return
excess cash flow to shareholders.
Emerging market credit fund manager Ashmore found
itself under pressure as rising interest rates pressured
bond valuations, emerging markets remained out of
favour and the company’s own internal investment
performance has been difficult. The business is anchored
by a very strong balance sheet, an attractive dividend and
a clear area of strategic expertise, but we do await signs
of underlying operational improvement.
In a period of difficult performance, it is easy to overlook
what were a number of very positive share price
developments within the portfolio, rewarding companies
for very strong operational delivery which will ultimately
translate through into enhanced cash flows and dividends.
Danish pharmaceutical company Novo-Nordisk
performed extremely strongly as it benefitted from
continued strong demand for its GLP1 diabetes products.
The company also made a significant breakthrough in the
treatment of obesity with its drug Wegovy, which for the
first time gives the potential for major weight loss with a
course of injections, avoiding the need for very expensive
and intrusive surgical procedures and holding the hope of
being able to make a real impact on the effects of co-
morbidities such as heart disease and cancer. UK
speciality chemicals business Croda performed well as it
saw very fast uptake for its pharmaceutical products that
form an integral part of the Pfizer Covid vaccine, providing
a vital link in the provision of these critical medicines. The
company also announced a sale of its more
commoditised and lower margin industrial business which
improves the business overall and provides capital for
reinvestment into higher margin and faster growing areas.
French energy giant TotalEnergies also performed well as
it benefited from higher oil and gas prices, particularly
from its leading LNG business, while continuing to grow its
renewables portfolio and execute on cost and capital
efficiency. These three strong share price performances
were also accompanied with the delivery of dividend
growth ahead of our expectations.
From a strategic perspective, it was
pleasing to see a strong overall
contribution to performance from
our overseas holdings. It is also
welcome that we saw strong returns
from companies we deem to be
sustainable solutions providers or
sustainable leaders.
From a strategic perspective, it was pleasing to see a
strong overall contribution to performance from our
overseas holdings. It is also welcome that we saw strong
returns from companies we deem to be sustainable
solutions providers or sustainable leaders. Alongside Novo-
Nordisk and Croda we also saw good outcomes from
companies such as renewables and energy infrastructure
developer and owner SSE, Dutch lithography machine
manufacturer ASML and immunotherapy leader
AstraZeneca. These examples show that positive
allocation to companies with leadership in ESG risk
management and those well aligned with the UN
sustainable development goals can add value to investors
prepared to back them.
36 Dunedin Income Growth Investment Trust PLC
Portfolio Activity
Activity during the year was concentrated on three
discrete objectives. Firstly, positioning the portfolio to meet
the new sustainable and responsible investing criteria,
secondly enhancing the underlying income growth profile,
and thirdly continuing to concentrate the portfolio around
our favoured investments.
Following the approval in June from shareholders for the
Company to adopt its sustainable and responsible
investing criteria, positions in Rio Tinto, BHP Billiton, British
American Tobacco, National Grid and Telecom Plus were
sold. Rio Tinto and Telecom Plus failed on our assessment
of their ESG risk management, BHP due to its thermal coal
assets, British American Tobacco due to its tobacco
exposure and National Grid due to the carbon intensity of
its generation assets in North America. New holdings were
established in Scandinavian bank Nordea, truck and
construction equipment manufacturer Volvo and UK
housebuilder Persimmon. We also substantially increased
our holding in utility and renewables developer SSE and
added to the position in Chesnara, the consolidator of
closed life assurance assets. To help balance the impact
on income generation, we also exited Countryside
Properties, the UK housebuilder which had yet to resume
dividend payments following the impact of the pandemic.
Later on in the financial year, we added additional capital
to industrial software developer Aveva, animal
pharmaceutical and biotech players Dechra
Pharmaceuticals and Genus and the hobbyist platform
Games Workshop on weakness, as investors sold out of
more highly valued stocks. These are all strong businesses
with modest dividend yields today but with attractive long-
term growth prospects ahead of them and contribute to
the Company’s income growth prospects. We have also
been continuing to concentrate the portfolio behind our
very best ideas and, as a result, we made significant
additions to existing holdings in Relx, Diageo and Assura as
we looked to increase the capital invested in companies
with resilience and higher visibility of earnings amidst an
increasingly uncertain backdrop. To fund these
investments, we exited Dutch brewer Heineken, travel and
high street retailer WH Smith, Asian bank Standard
Chartered and medical device manufacturer Smith &
Nephew. These are all good businesses, but we preferred
the prospects of our other existing holdings. One final exit
was that of Jackson Financial
, the very small spin-out
holding we received from Prudential. This saw the number
of companies held in the portfolio contract, to stand at 39
at the year end.
Unilever remains a holding very much in the spotlight,
particularly following its failed acquisition of
GlaxoSmithKline’s consumer health business and
continued middling financial performance. We added
modestly to the position following the weakness in the
share price and the more attractive valuation and it is one
that we will continue to monitor. The holding balances
some strong brands and provides attractive exposure to
emerging markets with a less premium portfolio than
some peers and greater exposure to the lower margin
food segment.
Outlook
We have had a cautious outlook for some time and events
in Ukraine do little to dissuade us from that position. The
environment of high inflation, slowing growth and
tightening monetary policy is likely to prove a challenging
one. At the company level, profitability is being pressured
by supply chain disruptions and higher costs, while
weakening demand may make for a harder environment
to pass on prices. This makes for a complex situation to
navigate with both valuations and earnings potentially
under pressure. We believe that our focus on holding high
quality businesses with robust market positions, good
growth prospects and strong balance sheets along with
leading ESG risk management capabilities is the right one
for these uncertain conditions. Giving us the best
prospects of protecting capital on the downside, allowing
participation in any upside that may develop and
supporting the delivery of a growing dividend over time.
Ben Ritchie, Rebecca Maclean and Samantha Brownlee,
Aberdeen Asset Managers Limited
6 April 2022
Investment Mana
g
er’s Review
Continued
Dunedin Income Growth Investment Trust PLC 37
Aberdeen Asset Managers Limited
The Company’s Investment Manager is Aberdeen Asset
Managers Limited which is a wholly-owned subsidiary of
abrdn plc. The abrdn Group’s assets under management
and administration were £542 billion as at 31 December
2021, managed for a range of clients including 22 UK-
listed closed end investment companies.
The Investment Team Senior Managers
Ben Ritchie
Head of European Equities
Ben Ritchie is Head of European Equities at abrdn. He
originally joined Aberdeen Asset Management in 2002 as
a graduate trainee. Ben has a BA (Hons) in Modern History
and Politics from Pembroke College, University of Oxford,
and is a certified CFA Charterholder.
Samantha Brownlee
Investment Director, UK Equities
Samantha Brownlee is an Investment Director in the UK
Equities Team at abrdn. She joined abrdn in 2008 as a
Graduate Business Analyst and worked with the Pan
European Equities Team until her transfer to the North
American Equities Team in 2014 and then to the UK
Equities Team in December 2020. Samantha received a
Bachelor of Laws and an MA in Archaeology from The
University of Edinburgh. She is a CFA Charterholder.
Rebecca Maclean
Investment Director, UK Equities
Rebecca Maclean is an Investment Director in the UK
Equities team at abrdn. She has worked in the responsible
investment industry since 2010 and joined abrdn in 2013
as a Responsible Investment Analyst. She moved to the UK
Equities team in 2016. Rebecca graduated with a BA in
Experimental Psychology from University of Oxford, holds
a MA in International Relations from King’s College London,
and is a CFA Charterholder.
Information About the Investment Mana
g
er
38 Dunedin Income Growth Investment Trust PLC
Portfolio
13.2% of the Company’s total assets are
invested in the Pharmaceuticals and
Biotechnology sub-sector.
Dunedin Income Growth Investment Trust PLC 39
Activity during the year was
concentrated on three discrete
objectives. Firstly, positioning the
portfolio to meet the new
sustainable and responsible
investing criteria, secondly
enhancing the underlying
income growth profile, and
thirdly continuing to concentrate
the portfolio around our
favoured investments.
40 Dunedin Income Growth Investment Trust PLC
As at 31 January 2022
AstraZeneca
Diageo
AstraZeneca is a pharmaceutical
company that focuses on the research,
development and manufacture of
drugs in a range of therapeutic areas.
Diageo is a global leader in spirits and
liquers with a portfolio of world-
renowned brands.
SSE
Relx
SSE is a multi-national energy firm
involved in the generation, transmission,
distribution and supply of electricity
through regulated networks and its
renewables portfolio.
Relx is a global provider of information
and analytics for professionals and
businesses across a number of
industries including scientific, technical,
medical and law.
Nordea Bank
TotalEnergies
Nordea Bank is a Scandinavian bank
offering banking, asset management
and insurance services across the
Nordic region.
TotalEnergies is an energy company
producing and marketing fuels, natural
gas and electricity globally.
Prudential
Chesnara
Prudential is a life insurance and
savings company with leading market
positions in Asia and the United States.
Chesnara is an owner and manager of
primarily closed books of life assurance
assets in the UK, Sweden and Holland.
Direct Line Insurance
Coca-Cola Hellenic Bottling Company
Direct Line Insurance is a leading
insurance company offering motor,
home and business cover in the
UK market.
Coca-Cola Hellenic Bottling Company
is a bottler of the Coca-Cola brand
operating plants across Europe, Africa
and Asia.
Ten Lar
g
est Investments
Dunedin Income Growth Investment Trust PLC 41
Portfolio
Valuation Total Valuation
2022 assets 2021
Company FTSE All-Share Index Sector £’000 % £’000
AstraZeneca Pharmaceuticals and Biotechnology 27,116 5.3 24,489
Diageo Beverages 26,809 5.3 18,537
SSE Electricity 25,499 5.0 9,754
Relx Media 25,378 5.1 14,960
Nordea Bank Banks 21,375 4.2 –
TotalEnergies Oil, Gas and Coal 21,177 4.2 10,728
Prudential Life Insurance 18,542 3.7 15,475
Chesnara Life Insurance 16,756 3.3 12,513
Direct Line Insurance Non-life Insurance 15,773 3.1 13,612
Coca-Cola Hellenic Bottling Company Beverages 15,772 3.1 11,808
Ten largest investments 214,197 42.3
Weir Group Industrial Engineering 14,717 2.9 13,974
Intermediate Capital Investment Banking and Brokerage
Services
14,438 2.8 12,946
Novo-Nordisk Pharmaceuticals and Biotechnology 14,234 2.8 9,784
Aveva Software and Computer Services 14,123 2.8 16,729
Pets At Home Retailers 13,729 2.7 5,167
GlaxoSmithKline Pharmaceuticals and Biotechnology 13,582 2.7 19,906
Close Brothers Banks 13,127 2.6 9,950
Assura Real Estate Investment Trusts 13,083 2.6 16,815
Sirius Real Estate Real Estate Investment and Services 12,733 2.5 10,201
ASML Technology Hardware and Equipment 11,990 2.4 9,409
Twenty largest investments 349,953 69.1
Persimmon Household Goods and Home
Construction
11,926 2.4 –
Marshalls Construction and Materials 11,612 2.3 9,101
Hannover Re Non-life Insurance 11,358 2.2 8,629
Ashmore Investment Banking and Brokerage
Services
11,262 2.2 14,948
Croda Chemicals 10,764 2.1 9,828
London Stock Exchange Finance and Credit Services 9,816 1.9 8,078
Morgan Sindall Construction and Materials 9,766 1.9 –
M&G Investment Banking and Brokerage
Services
9,683 1.9 6,135
Euromoney Institutional Investor Industrial Support Services 9,257 1.8 9,683
Edenred Industrial Support Services 8,875 1.7 7,924
Thirty largest investments 454,272 89.5
42 Dunedin Income Growth Investment Trust PLC
Valuation Total Valuation
2022 assets 2021
Company FTSE All-Share Index Sector £’000 % £’000
Unilever Personal Care, Drug and Grocery Stores 8,486 1.7 6,826
Volvo Industrial Transportation 7,472 1.5 –
Dechra Pharmaceuticals Pharmaceuticals and Biotechnology 5,518 1.1 5,874
Ubisoft Leisure Goods 5,306 1.0 6,530
Games Workshop Leisure Goods 5,150 1.0 4,107
Genus Pharmaceuticals and Biotechnology 5,082 1.0 5,500
Prosus Software and Computer Services 4,926 1.0 6,806
Moonpig Retailers 4,713 0.9 –
Abcam Pharmaceuticals and Biotechnology 1,498 0.3 4,819
Total investments 502,423 99.0
Net current assets
A
4,921 1.0
Total assets less current liabilities
A
507,344 100.0
A
Excluding bank loan of £13,034,000.
Portfolio Sector Breakdown
0% 5% 10% 15% 20% 25% 30%
Financials
Health Care
Consumer
Discretionary
Basic Materials
Consumer Staples
Technology
Industrials
Utilities
Telecoms
Energy
Real Estate
2022
2021
Portfolio
Continued
Dunedin Income Growth Investment Trust PLC 43
As at 31 Januar
y
2022
FTSE All-Share Portfolio Portfolio
Index weighting weighting weighting
2022 2022 2021
% % %
Energy Oil, Gas and Coal 9.3 4.2 2.2
9.3 4.2 2.2
Basic Materials Chemicals 0.8 2.1 2.0
Industrial Metals & Mining 6.5 - 7.3
Precious Metals & Mining 0.4 – –
7.7 2.1 9.3
Industrials Aerospace & Defence 1.7 – –
Construction and Materials 1.6 4.2 1.9
Electronic & Electrical Equipment 1.0 – –
General Industrials 1.9 – –
Industrial Engineering 0.7 2.9 2.8
Industrial Transportation 1.2 1.5 -
Industrial Support Services 4.6 3.5 3.6
12.7 12.1 8.3
Consumer Discretionary Automobiles & Parts 0.1 – –
Consumer Services 1.2 – –
Household Goods and Home Construction 1.4 2.4 2.6
Leisure Goods 0.1 2.0 2.1
Media 3.2 5.0 3.0
Personal Goods 0.5 – –
Retailers 1.9 3.6 2.2
Travel & Leisure 3.2 – –
11.6 13.0 9.9
Health Care Healthcare Providers 0.1 – –
Medical Equipment and Services 0.5 – 2.2
Pharmaceuticals and Biotechnology 9.3 13.2 14.2
9.9 13.2 16.4
Sector Analysis
44 Dunedin Income Growth Investment Trust PLC
As at 31 Januar
y
2022
FTSE All-Share Portfolio Portfolio
Index weighting weighting weighting
2022 2022 2021
% % %
Consumer Staples Beverages 3.8 8.4 7.1
Food Producers 0.6 – –
Personal Care, Drug and Grocery Stores 7.1 1.7 1.4
Tobacco 3.6 – 2.7
15.1 10.1 11.2
Real Estate Real Estate Investment and Services 0.6 2.5 2.1
Real Estate Investment Trusts 2.7 2.6 3.4
3.3 5.1 5.5
Telecommunications Telecommunications Equipment 0.1 – –
Telecommunications Service Providers 2.2 – 2.2
2.3 – 2.2
Utilities Electricity 0.8 5.0 2.0
Gas, Water & Multi-utilities 2.5 – 3.4
3.3 5.0 5.4
Financials Banks 8.6 6.8 3.3
Finance and Credit Services 1.3 1.9 1.7
Investment Banking and Brokerage Services 2.9 7.0 6.8
Life Insurance 3.0 7.0 5.6
Non-life Insurance 0.9 5.3 4.6
16.7 28.0 22.0
Investment Companies Equity Investment Instruments 6.6 - -
Technology Software & Computer Services 1.4 3.8 4.8
Technology, Hardware & Equipment 0.1 2.4 1.9
1.5 6.2 6.7
Total investments 100.0 99.0 99.1
Net current assets before borrowings
A
1.0 0.9
Total assets less current liabilities
A
100.0 100.0
A
Excluding bank loan of £13,034,000.
Sector Analysis
Continued
Invest
Dunedin Income Growth Investment Trust PLC 45
Sustainable Leader: Croda
Croda is a British speciality chemicals company, known as
a world leader in the supply of active ingredients into the
personal care and life sciences markets. It operates in
niche segments, providing significant value to its
customers which, combined with a culture of continuous
innovation and entrenched client relationships, delivers
attractive financial returns and has enabled a long track
record of strong profit, cash flow and dividend growth. An
example of a recent success has been its excipients,
which are inactive substances that act as the vehicle for a
drug or other active substance and have played a key role
in the deployment of the Pfizer BioNTech Covid-19
vaccine.
Sustainability is integral to the company’s strategy. It has in
place a dedicated senior management team to drive its
programme which, along with innovation, makes up one
of the two key strategic priorities of the business. The
company’s ambition is to be the world’s most sustainable
supplier of innovative ingredients and it has externally
verified 1.5c Science Based Targets for its decarbonisation
roadmap which is to be achieved by 2030. This approach
gives it a critical edge and aligns its sustainability and
commercial agendas, exemplified by its new bio-based
surfactant plant in Atlas Point, Delaware which is the first
of its kind in the United States and allows the substitution of
oil based ingredients with natural alternatives
Investment Case Studies
46 Dunedin Income Growth Investment Trust PLC
Solutions Provider: Novo-Nordisk
Novo-Nordisk is a global healthcare company with a
world leading position in diabetes treatment that is
expanding into obesity care as well as biopharma and
other serious chronic diseases with high unmet needs.
Nearly 500 million people worldwide are estimated to
have diabetes, and eight out of ten live in low-and middle-
income countries, less than half of which are treated. The
high social and human costs have made diabetes a key
government focus and Novo-Nordisk has a critical role to
play in both broadening access to treatment and in
innovating to provide better treatments for the
management of diabetes, as well as tackling root causes
and associated medical conditions.
Control by the Novo Foundation ensures a long term
perspective and the company traces its history right back
to the beginning of the production of insulin in the 1920’s. It
has consistently led in the discovery of innovative new
medicines. Most recently initiating the GLP1 class of
treatments, developing tablet solutions to replace some
injectables and discovering truly ground breaking obesity
treatments in the form of Wegovy. Improving access to
medicine is an explicit part of the corporate strategy and
Novo-Nordisk represents a good example of a company
with a commercial strategy that is clearly aligned with
providing solutions to one the most significant global
health challenges that we face, allowing it to generate
strong profit growth over the long-term while at the same
time building a sustainable business.
Investment Case Studies
Continued
Dunedin Income Growth Investment Trust PLC 47
Sustainable Improver: TotalEnergies
TotalEnergies is a leading energy company listed on the
French stock market. Most oil & gas companies do not
make it through our screening process given their mix of
business is deemed unsustainable. However,
TotalEnergies is a business adapting to the energy
transition and already making enough progress on lower
carbon energy sources and renewables to allow us to
consider the merits of its investment case. Over half the
volume and around 40% of the value of its upstream
production is from natural gas. Alongside this, they have
one of the world’s leading Liquid Natural Gas (“LNG”)
operations, responsible for sourcing and shipping what is
an important transition fuel. Its renewable energy portfolio
is also of a substantial size with over 10 GW/h of electricity
generating assets, primarily from solar power with plans to
more than triple that by 2025. Importantly, the company
also has minimal unconventional production, such as
shale, and has committed to no further investment in
these areas.
An independent group, the Transition Pathway Initiative,
assesses that TotalEnergies’ emissions intensity reduction
target is aligned with a 1.5 degree scenario, putting it in a
very select group of energy companies expecting to meet
that goal. TotalEnergies isn’t perfect, which is why we
deem it an improver, but we see enough evidence that it is
making strong efforts to transition to be able to consider it
as an investment. We are engaging with the company
directly and through industry groups, such as Climate
Action 100+, to encourage it to accelerate its
transformation and enhance its reporting. If the company
can deliver its future plans for a sustainable, lower carbon
energy company, then we see an attractive investment
case. This is a company growing strongly in LNG,
renewable energy generation and in new molecules such
as biofuels, bio gas and green hydrogen, generating both
cash flow for investment and for the payment of a steadily
growing dividend.
48 Dunedin Income Growth Investment Trust PLC
Governance
Dunedin Income Growth Investment Trust PLC 49
The Company is committed to high
standards of corporate governance and
applies the principles identified in the UK
Corporate Governance Code and the
AIC Code of Corporate Governance.
The Directors, all of whom are non-
executive and independent of the
Manager, supervise the management
of the Company and represent the
interests of shareholders
50 Dunedin Income Growth Investment Trust PLC
David Barron
Independent Non-Executive Chairman
Experience:
David Barron was, until November 2019, Chief Executive of
Miton Group PLC and is currently a non-executive director
of Premier Miton Group PLC. He was, until 2013, Head of
Investment Trusts at JPMorgan Asset Management and,
until 2014, a director of The Association of Investment
Companies. He is also a non-executive director of
BlackRock Sustainable American Income Trust plc and
Fidelity Japan Trust PLC.
Length of service:
6 years, appointed a Director on 1 February 2016 and
Chairman on 23 May 2017
Last re-elected to the Board:
10 June 2021
Committee membership:
Management Engagement Committee and Nomination
and Remuneration Committee
Contribution:
The Nomination and Remuneration Committee has
reviewed the contribution of David Barron in light of his
proposed re-election at the AGM and has concluded that
he has continued to Chair the Company expertly,
fostering a collaborative spirit between the Board and
Manager whilst ensuring that meetings remain focused on
the key areas of stakeholder relevance. In addition, he has
continued to provide significant investment trust expertise
to the Board.
Gay Collins
Independent Non-Executive Director
Experience:
Gay Collins has over 35 years of experience in the
financial services sector and has founded and grown
three PR companies, Montfort Communications, Penrose
Financial (which became MHP) and Ludgate
Communications, and has an executive role at Montfort
where she advises financial services companies on
communications. She is also a non-executive director of
the Association of Investment Companies and JPMorgan
Global Growth & Income plc.
Length of service:
Appointed a Director on 1 July 2021
Last re-elected to the Board:
n/a
Committee membership:
Audit Committee, Management Engagement
Committee and Nomination and Remuneration
Committee
Contribution:
The Nomination and Remuneration Committee has
reviewed the contribution of Gay Collins in light of her
proposed election at the AGM and has concluded that she
has significant experience of the financial services sector
and knowledge of the investment trust sector.
Board of Directors
Dunedin Income Growth Investment Trust PLC 51
Jasper Judd
Independent Non-Executive Director and Chairman of the
Audit Committee
Experience:
Jasper Judd worked for Brambles Limited, a listed
Australian multi-national, where he held a number of
senior executive roles including Global Head of Strategy.
He is also a non-executive director of JPMorgan Indian
Investment Trust plc. He is a Chartered Accountant.
Length of service:
6 years, appointed a Director on 1 February 2016
Last re-elected to the Board:
10 June 2021
Committee membership:
Audit Committee (Chairman), Management Engagement
Committee and Nomination and Remuneration
Committee
Contribution:
The Nomination and Remuneration Committee has
reviewed the contribution of Jasper Judd in light of his
proposed re-election at the AGM and has concluded that
he has continued to chair the Audit Committee expertly
through the year and provide financial insight to the Board
and knowledge of the investment trust sector.
Christine Montgomery
Independent Non-Executive Director and Chairman of the
Management Engagement Committee
Experience:
Christine Montgomery has over 30 years of investment
management experience, most recently as Head of
Global Equities at AustralianSuper in Melbourne from 2016
to 2019. She previously held roles as a global equities
portfolio manager at Fidelity Worldwide Investments,
Martin Currie and Edinburgh Partners. She is also a non-
executive director of The Scottish American Investment
Company PLC and True Potential Administraion LLP.
Length of service:
2 years, appointed a Director on 1 February 2020
Last re-elected to the Board:
10 June 2021
Committee membership:
Audit Committee, Management Engagement Committee
(Chairman) and Nomination and Remuneration
Committee
Contribution:
The Nomination and Remuneration Committee has
reviewed the contribution of Christine Montgomery in light
of her proposed re-election at the AGM and has
concluded that she has continued to provide significant
investment insight to the Board and knowledge of the
investment management sector.
52 Dunedin Income Growth Investment Trust PLC
Howard Williams
Senior Independent Non-Executive Director
and Chairman of the Nomination and
Remuneration Committee
Experience:
Howard Williams has over 35 years’ of fund management
experience and was, until October 2017, Chief Investment
Officer and Head of the Global Equity Team at JPMorgan
Asset Management. Prior to joining JPMorgan Asset
Management in 1994, he held a number of senior positions
at Shell Pensions and Kleinwort Benson Asset
Management. He started his career at James Capel & Co.
He is also a non-executive director of Schroders Unit Trust
Limited and Lifesight Limited.
Length of service:
4 years, appointed a Director on 1 April 2018 and Senior
Independent Director on 16 July 2020
Last re-elected to the Board:
10 June 2021
Committee membership:
Audit Committee, Management Engagement Committee
and Nomination and Remuneration Committee
(Chairman)
Contribution:
The Nomination and Remuneration Committee has
reviewed the contribution of Howard Williams 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
Continued
Dunedin Income Growth Investment Trust PLC 53
The Directors present their report and the audited
financial statements for the year ended 31 January 2022.
Results and Dividends
The financial statements for the year ended 31 January
2022 are contained on pages 77 to 100. First, second and
third interim dividends, each of 3.00p per Ordinary share,
were paid on 27 August 2021, 26 November 2021 and 25
February 2022 respectively. The Directors now
recommend a final dividend of 3.90p per Ordinary share
payable on 27 May 2022 to shareholders on the register
on 6 May 2022. The ex-dividend date is 5 May 2022. A
resolution to approve the final dividend will be proposed
at the Annual General Meeting.
Principal Activity and Status
The Company is registered as a public limited company
(registered in Scotland No. SC000881) and is an
investment company within the meaning of Section 833 of
the Companies Act 2006. The Company has been
approved by HM Revenue & Customs as an investment
trust subject to it continuing to meet the relevant eligibility
conditions of Section 1158 of the Corporation Tax Act
2010 and the ongoing requirements of Part 2 Chapter 3
Statutory Instrument 2011/2999 for all financial years
commencing on or after 1 February 2012. The Directors
are of the opinion that the Company has conducted its
affairs for the year ended 31 January 2022 so as to enable
it to comply with the ongoing requirements for investment
trust status.
Individual Savings Accounts
The Company has conducted its affairs in such a way
as to satisfy the requirements as a qualifying security
for Individual Savings Accounts. The Directors intend
that the Company will continue to conduct its affairs
in this manner.
Capital Structure and Voting Rights
The issued Ordinary share capital at 31 January 2022
consisted of 148,164,670 Ordinary shares of 25p and
5,513,265 Ordinary shares held in treasury.
Each Ordinary share holds one voting right and
shareholders are entitled to vote on all resolutions which
are proposed at general meetings of the Company. The
Ordinary shares, excluding treasury shares, carry a right to
receive dividends. On a winding up or other return of
capital, after meeting the liabilities of the Company, the
surplus assets will be paid to Ordinary shareholders in
proportion to their shareholdings.
There are no restrictions on the transfer of Ordinary
shares in the Company other than certain restrictions
which may from time to time be imposed by law.
Management Agreement
The Company has appointed Aberdeen Standard Fund
Managers Limited (“ASFML”), a wholly owned subsidiary of
abrdn plc, as its alternative investment fund manager.
ASFML 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
Aberdeen Asset Managers Limited (“AAML”) by way of a
group delegation agreement in place between ASFML
and AAML. In addition, ASFML has sub-delegated
administrative and secretarial services to Aberdeen Asset
Management PLC and promotional activities to AAML.
Details of the management fees and fees payable for
promotional activities 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.
Substantial Interests
As at 31 January 2022, the following interests in the issued
Ordinary share capital of the Company had been
disclosed in accordance with the requirements of the
FCA’s Disclosure Guidance and Transparency Rules:
Shareholder
Number of
shares held % held
Aberdeen Asset Managers
Limited Retail Plans
A
34,781,676 23.5
A
Non-beneficial interest
There have been no changes notified to the Company
between the year end and the date of approval of
this Report.
Directors
At the end of the year, the Board comprised five non-
executive Directors, each of which is considered by the
Board to be independent of the Company and the
Manager. David Barron is the Chairman and Howard
Williams is the Senior Independent Director.
Directors’ Report
54 Dunedin Income Growth Investment Trust PLC
Elisabeth Scott retired as a Director on 10 June 2021 and
Gay Collins was appointed as an independent non-
executive Director on 1 July 2021.
The Directors attended scheduled Board and Committee
meetings during the year ended 31 January 2022 as
follows (with their eligibility to attend the relevant
meetings in brackets):
Board
Meetings
Audit
Committee
Meetings
Management
Engagement
Committee
Meetings
Nomination
and
Remuneration
Committee
Meetings
David Barron 4 (4) - (-) 1 (1) 1 (1)
Gay Collins
A
2 (2) 1 (1) 1 (1) 1 (1)
Jasper Judd 4 (4) 2 (2) 1 (1) 1 (1)
Christine
Montgomery
4 (4) 2 (2) 1 (1) 1 (1)
Elisabeth Scott
B
2 (2) 1 (1) - (-) - (- )
Howard Williams 4 (4) 2 (2) 1 (1) 1 (1)
A
Appointed on 1 July 2021
B
Retired on 10 June 2021
The Board meets more frequently when business needs
require. Four additional Board meetings and one
additional Nomination and Remuneration Committee
meeting were held during the year, at which all Directors
were present.
Under the terms of the Company’s Articles of Association,
Directors are subject to election at the first Annual General
Meeting after their appointment and are required to retire
and be subject to re-election at least every three years
thereafter. However, the Board has decided that all
Directors will retire annually.
Gay Collins will stand for election at the Annual General
Meeting. Jasper Judd, Howard Williams, Christine
Montgomery and David Barron will retire at the Annual
General Meeting and, being eligible, offer themselves for
re-election.
The Board believes that all the Directors seeking
election/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 50 to 52, 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. The Board therefore
recommends the election/re-election of each of the
Directors at the Annual General Meeting.
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 managed succession
and diversity.
It is the Board’s policy that the Chairman of the Board will
not 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 exceptional 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 of the Board, 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.
Directors’ Report
Continued
Dunedin Income Growth Investment Trust PLC 55
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 and Remuneration 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.
Directors’ and Officers’ Liability Insurance
The Company maintains insurance in respect of Directors’
and Officers’ liabilities in relation to their acts on behalf of
the Company. Each Director is entitled to be indemnified
out of the assets of the Company to the extent permitted
by law against any loss or liability incurred by him or her in
the execution of his or her duties in relation to the affairs of
the Company. These rights are included in the Articles of
Association of the Company.
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.
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.
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 AIC Code
can be found on its website.
56 Dunedin Income Growth Investment Trust PLC
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
63 to 65.
Management Engagement Committee
The Management Engagement Committee consists of all
the Directors. The Committee was chaired by Elisabeth
Scott until her retirement from the Board on 10 June 2021
at which point Christine Montgomery was appointed as
Chairman. The terms and conditions of the Manager’s
appointment, including an evaluation of performance and
fees, are reviewed by the Committee on an annual basis.
The Committee also keeps the resources of the abrdn
Group under review, together with its commitment to the
Company and its investment trust business. In addition, the
Committee conducts an annual review of the
performance, terms and conditions of the Company’s
main third party suppliers.
The Board remains 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 Board is satisfied that the abrdn Group has
the secretarial, administrative and promotional skills
required for the effective operation and administration of
the Company. Accordingly, the Board believes that the
continuing appointment of the Manager on the terms
agreed is in the interests of shareholders as a whole.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee consists of
all the Directors. The Committee is chaired by Howard
Williams who has relevant experience and understanding
of the Company. The Committee reviews the
effectiveness of the Board, succession planning, Board
appointments, appraisals and training, and determines
the Directors’ remuneration policy and level of
remuneration, including for the Chairman. The Committee
also considers the need to appoint an external
remuneration consultant. Further details of the
remuneration policy are provided in the Directors’
Remuneration Report on pages 59 to 62.
During the year, through the work of the Nomination and
Remuneration 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 actions points were for the Board to enhance
detailed oversight of marketing activities, to conduct
additional training of Directors especially in relation to
evolving ESG regulatory and reporting requirements, and
to consider ways of improving the use of time in and
around Board meetings. These matters will be addressed
by the Board during the current financial year.
Following the evaluation process, the Board believes that it
continues to operate in an efficient and effective manner
with each Director making a significant contribution to the
Board. The intention is that the evaluation of the Board will
be externally facilitated every three years, the next such
review to be conducted during the year ending 31
January 2025.
The Committee considers succession planning on at least
an annual basis. Potential new Directors are identified
against the requirements of the Company’s business and
the need to have a balance of skills, experience,
independence, diversity and knowledge of the Company
within the Board.
In respect of the appointment of Gay Collins, who was
appointed as an independent non-executive Director on 1
July 2021, the Board used the services of an external
search consultant, Cornforth Consulting Limited.
Cornforth Consulting Limited does not have any other
connections with the Company or individual Directors.
Going Concern
The Company’s assets consist mainly of equity shares in
companies listed on the London Stock Exchange and in
most circumstances are considered to be realisable within
a short timescale. The Board has set limits for borrowing
and derivative contract positions and regularly reviews
actual exposures, cash flow projections and compliance
with loan covenants. The Board has also performed stress
testing and liquidity analysis.
The Directors believe that the Company has adequate
financial resources to continue in operational existence for
the foreseeable future and for at least twelve months
from the date of this Report. Accordingly, they continue to
adopt the going concern basis of accounting in preparing
the financial statements.
Directors’ Report
Continued
Dunedin Income Growth Investment Trust PLC 57
Accountability and Audit
The respective responsibilities of the Directors and the
Auditor in connection with the financial statements
appear on pages 68, and 73.
Each Director confirms that, so far as he or she is aware,
there is no relevant audit information of which the
Company’s Auditor is unaware, and they have taken all
the steps that they could reasonably be expected to have
taken as Directors in order to make themselves aware of
any relevant audit information and to establish that the
Company’s Auditor is aware of that information.
Independent Auditor
The Company’s Auditor, Deloitte LLP, has indicated its
willingness to remain in office. The Board will propose
resolutions at the Annual General Meeting to re-appoint
Deloitte LLP as Auditor for the ensuing year and to
authorise the Directors to determine its remuneration.
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).
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 Board and Manager meet with major
shareholders on at least an annual basis in order to gauge
their views. In addition, the Company Secretary only acts
on behalf of the Board, not the Manager, and there is no
filtering of communication. At each Board meeting the
Board receives full details of any communication from
shareholders to which the Chairman responds personally
as appropriate.
Directors attend meetings with the Company’s largest
shareholders and meet other shareholders at the Annual
General Meeting and, as explained in the Chairman’s
Statement, the Company will hold an online shareholder
presentation in advance of the Annual General Meeting
this year, which will include an interactive question and
answer session.
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.
Disclosures in Strategic Report
In accordance with Section 414 C (11) of the Companies
Act 2006, the following information otherwise required to
be set out in the Directors’ Report has been included in the
Strategic Report: risk management objectives and policies
and likely future developments in the business.
Annual General Meeting and Online
Shareholder Presentation
The Annual General Meeting will be held at Bow Bells
House, 1 Bread Street, London EC4M 9HH on Tuesday 24
May 2022 at 12 noon. In addition, and as set out in more
detail in the Chairman’s Statement, there will be an online
shareholder presentation on Monday 16 May 2022.
Given the evolving nature of the Covid-19 pandemic,
should circumstances change significantly before the
time of the Annual General Meeting, the Company will
notify shareholders of any changes to the arrangements
by updating the Company’s website and through an RIS
announcement, where appropriate, as early as is possible
before the date of the meeting. Shareholders should note
that if law or Government guidance so requires at the time
of the meeting, the Chairman of the meeting will limit, in his
or her sole discretion, the number of individuals in
attendance at the meeting and may be required to
impose entry restrictions on certain persons wishing to
attend the meeting in order to ensure the safety of those
attending.
The Notice of the Meeting is included on pages 113 to 117.
Resolutions including the following business will be
proposed:
Allotment of Shares
Resolution 11 will be proposed as an ordinary resolution to
confer an authority on the Directors, in substitution for any
existing authority, to allot up to 33.33% of the issued
Ordinary share capital of the Company (excluding
treasury shares) as at the date of the passing of the
resolution (up to a maximum aggregate nominal amount
of £12,354,154 based on the number of Ordinary shares in
issue as at the date of this Report) in accordance with
Section 551 of the Companies Act 2006. The authority
conferred by this resolution will expire at the next Annual
General Meeting of the Company or 31 July 2023,
whichever is earlier (unless previously revoked, varied or
extended by the Company in general meeting).
The Directors consider that the authority proposed to be
granted by resolution 11 is necessary to retain flexibility,
although they do not at the present time have any
intention of exercising such authority.
58 Dunedin Income Growth Investment Trust PLC
Limited Disapplication of Pre-emption Provisions
Resolution 12 will be proposed as a special resolution and
seeks to give the Directors power to allot Ordinary shares
and to sell Ordinary shares held in treasury (see below) (i)
by way of a rights issue (subject to certain exclusions); (ii)
by way of an open offer or other offer of securities (not
being a rights issue) in favour of existing shareholders in
proportion to their shareholdings (subject to certain
exclusions); and (iii) to persons other than existing
shareholders for cash up to a maximum aggregate
nominal amount representing 5% of the Company’s
issued Ordinary share capital as at the date of the passing
of the resolution (up to an aggregate nominal amount of
£1,853,308 based on the number of Ordinary shares in
issue as at the date of this Report), without first being
required to offer such shares to existing shareholders pro
rata to their existing shareholding.
This power will expire at the conclusion of the next Annual
General Meeting of the Company or 31 July 2023,
whichever is earlier (unless previously revoked, varied or
extended by the Company in general meeting).
The Company may buy back and hold shares in treasury
and then sell them at a later date for cash rather than
cancelling them. Such sales are required to be on a pre-
emptive, pro rata basis to existing shareholders unless
shareholders agree by special resolution to disapply such
pre-emption rights. Accordingly, in addition to giving the
Directors power to allot unissued Ordinary share capital
on a non pre-emptive basis, resolution 12 will also give the
Directors power to sell Ordinary shares held in treasury on
a non pre-emptive basis, subject always in both cases to
the limitations noted above. Pursuant to this power,
Ordinary shares would only be issued for cash, and
treasury shares would only be sold for cash, at a premium
to the net asset value per share (calculated after the
deduction of prior charges at market value). Treasury
shares are explained in more detail under the heading
“Market Purchase of the Company’s own Ordinary
Shares” below.
Market Purchase of the Company’s own Ordinary Shares
Resolution 13 will be proposed as a special resolution to
authorise the Company to make market purchases of its
own Ordinary shares. The Company may do either of the
following things in respect of its own Ordinary shares
which it buys back and does not immediately cancel but,
instead, holds in treasury:
· sell such shares (or any of them) for cash (or its
equivalent); or
· ultimately cancel the shares (or any of them).
Treasury shares may be re-sold quickly and cost
effectively. The Directors therefore intend to continue to
take advantage of this flexibility as they deem
appropriate. Treasury shares also enhance the Directors’
ability to manage the Company’s capital base.
No dividends will be paid on treasury shares and no voting
rights attach to them.
The maximum aggregate number of Ordinary shares
which may be purchased pursuant to the authority is
14.99% of the issued Ordinary share capital of the
Company as at the date of the passing of the resolution
(approximately 22.2 million Ordinary shares). The
minimum price which may be paid for an Ordinary share
is 25p (exclusive of expenses). The maximum price
(exclusive of expenses) which may be paid for the shares
is the higher of a) 5% above the average of the middle
market quotations of the Ordinary shares (as derived
from the Daily Official List of the London Stock Exchange)
for the shares for the five business days immediately
preceding the date of purchase; and b) the higher of the
price of the last independent trade and the highest
current independent bid on the main market for the
Ordinary shares.
This authority, if conferred, will expire at the conclusion of
the next Annual General Meeting of the Company or 31
July 2023, whichever is earlier (unless previously revoked,
varied or extended by the Company in general meeting),
and will be exercised only if it would result in an increase in
net asset value per Ordinary share for the remaining
shareholders and if it is in the best interests of
shareholders as a whole.
Recommendation
The Directors consider that the resolutions to be proposed
at the Annual General Meeting are in the best interests of
the Company and its shareholders and recommend that
shareholders vote in favour of the resolutions as they
intend to do in respect of their own beneficial
shareholdings, amounting to 46,966 Ordinary shares,
representing 0.3% of the issued share capital.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
1 George Street
Edinburgh EH2 2LL
6 April 2022
Directors’ Report
Continued
Dunedin Income Growth Investment Trust PLC 59
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 16 July 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 Auditor to audit
certain of the disclosures provided in the Directors’
Remuneration Report. Where disclosures have been
audited, they are indicated as such. The Auditor’s report is
included on pages 69 to 76.
The Director’s Remuneration Policy and level of Directors’
remuneration are determined by the Nomination and
Remuneration Committee, which is chaired by Howard
Williams and comprises all of the Directors.
Remuneration Policy
The Directors’ Remuneration Policy takes into
consideration the principles of the UK Corporate
Governance Code 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 although any comments received
from shareholders are considered.
Directors’ fees are set within the limits of the Company’s
Articles of Association which limit the aggregate fees
payable to the Board of Directors per annum. The current
limit is £200,000 per annum and may only be increased by
shareholder resolution.
The Board’s policy is that the remuneration of non-
executive Directors should be sufficient to attract
Directors of the quality required to run the Company
successfully. The remuneration should also reflect the
nature of the Directors’ duties, responsibilities, the value of
their time spent and be fair and comparable to that of
other investment trusts that are similar in size, and have
similar capital structures and similar investment objectives.
The levels of fees at the year end are set out in the table
below. Fees are reviewed annually and were most
recently changed with effect from 1 February 2021.
31 January
2022
£
31 January
2021
£
Chairman 38,000 37,000
Chairman of Audit Committee 29,500 28,500
Director 24,750 24,000
An additional fee of £2,000 per annum is payable to the
Senior Independent Director.
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.
· Under the terms of the Company’s Articles of
Association, Directors are subject to election at the first
Annual General Meeting after their appointment and
are required to retire and be subject to re-election at
least every three years thereafter. However, the Board
has decided that all Directors will retire annually.
· 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.
· The Company indemnifies its Directors for all costs,
charges, losses, expenses and liabilities which may be
incurred in the discharge of duties as a Director of
the Company.
Directors’ Remuneration Report
60 Dunedin Income Growth Investment Trust PLC
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.
· Compensation will not be due upon leaving office.
· 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 and Remuneration
Committee on an annual basis and it is the Committee’s
intention that this Remuneration Policy will apply for the
three year period ending 31 January 2023.
Statement of Voting at General Meeting
At the Annual General Meeting held on 16 July 2020,
shareholders approved the Directors’ Remuneration
Policy. 97.4% of proxy votes were in favour of the
resolution, 1.7% were against and 0.9% abstained.
Implementation Report
Review of Directors’ Fees
The Nomination and Remuneration 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 Committee concluded that, with effect from 1
February 2022, fees should be increased to £40,000 for the
Chairman, £31,500 for the Audit Committee Chairman
and £26,500 for the other Directors. It was also agreed that
an additional fee of £2,000 per annum should continue to
be payable to the Senior Independent Director. There are
no further fees to disclose as the Company has no
employees, chief executive or executive directors.
Company Performance
The graph below shows the share price and NAV total
return (assuming all dividends are reinvested) to Ordinary
shareholders compared to the total return from the FTSE
All-Share Index for the ten year period to 31 January 2022
(rebased to 100 at 31 January 2012). This Index was
chosen for comparison purposes as it is the Company’s
benchmark used for investment performance
measurement purposes.
100
120
140
160
180
200
220
240
12 13 14 15 16 17 18 19 20 21 22
Share price total return
NAV total return with debt at market value
FTSE All-Share total return
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.
Directors’ Remuneration Report
Continued
Dunedin Income Growth Investment Trust PLC 61
Audited Information
Fees Payable
The Directors who served during the year received the
following emoluments in the form of fees.
Director 2022
£
2021
£
David Barron 38,000 37,000
Catherine Claydon
A
- 11,952
Gay Collins
B
14,438 -
Jasper Judd 29,500 28,500
Christine Montgomery 24,750 24,000
Elisabeth Scott
C
8,937 24,000
Howard Williams
D
26,750 24,755
Total 142,375 150,207
A
Retired on 16 July 2020
B
Appointed on 1 July 2021
C
Retired on 10 June 2021
D
Appointed Senior Independent Director on 16 July 2020
The above amounts exclude any employers’ national
insurance contributions. 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.
Annual Percentage Change in Directors’ Remuneration
The table below sets out the annual percentage change in
Directors’ fees for the past two years.
Year ended 31
January 2022
Year ended 31
January 2021
Director % %
David Barron 2.7 5.7
Gay Collins
A
n/a n/a
Jasper Judd 3.5 5.6
Christine Montgomery 3.1 n/a
Howard Williams
B
8.1 7.6
A
Appointed on 1 July 2021
B
Appointed Senior Independent Director on 16 July 2020
Directors’ Interests in the Company
The Directors are not required to have a shareholding in
the Company. The Directors (including their connected
persons) at 31 January 2022 and 31 January 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.
31 January
2022
31 January
2021
Ordinary
shares
Ordinary
shares
David Barron 21,977 21,977
Gay Collins
A
3,032 -
Jasper Judd 5,000 5,000
Christine Montgomery 5,000 5,000
Elisabeth Scott
B
4,800 4,800
Howard Williams 11,843 11,391
A
Appointed on 1 July 2021
B
At date of retirement on 10 June 2021
Since the year end Howard Williams has acquired an
additional 114 Ordinary shares through a dividend re-
investment plan. There have been no other 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.
Statement of Voting at General Meeting
At the Company’s last Annual General Meeting, held on 10
June 2021, shareholders approved the Directors’
Remuneration Report (excluding the Directors’
Remuneration Policy) in respect of the year ended 31
January 2021. 97.2% of proxy votes were in favour of the
resolution, 1.4% were against and 1.4% abstained.
A resolution to receive and adopt the Directors’
Remuneration Report (excluding the Directors’
Remuneration Policy) in respect of the year ended
31 January 2022 will be proposed at the Annual
General Meeting.
62 Dunedin Income Growth Investment Trust PLC
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 31 January 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
David Barron
Chairman
6 April 2022
Directors’ Remuneration Report
Continued
Dunedin Income Growth Investment Trust PLC 63
The Audit Committee presents its Report for the year
ended 31 January 2022.
Committee Composition
Throughout the year the Audit Committee consisted of all
the Directors except for the Chairman of the Board, David
Barron. The Committee is chaired by Jasper Judd who is a
Chartered Accountant and has recent and relevant
financial experience. The Board is satisfied that the
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 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 (including review of non-
financial risks) on which the Company is reliant (the
Directors’ statement on the Company’s internal controls
and risk management is set out below);
· to consider whether there is a need for the Company to
have its own internal audit function;
· to monitor the integrity of the half-yearly and annual
financial statements of the Company by reviewing, and
challenging where necessary, the actions and
judgements of the Manager;
· to review, and report to the Board on, the significant
financial reporting issues and judgements made in
connection with the preparation of the Company’s
financial statements, half-yearly financial reports,
announcements and related formal statements;
· to review the content of the Annual Report and advise
the Board on whether, taken as a whole, it is fair,
balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy;
· to meet with the Auditor to review the proposed audit
programme of work and the findings of the Auditor. The
Committee shall also use this as an opportunity to
assess the effectiveness of the audit process;
· to develop and implement policy on the engagement of
the Auditor to supply non-audit services. Non-audit fees
paid to the Auditor during the year under review
amounted to £8,000 (2021: £8,000), representing the
review of the Half-Yearly Financial Report. All non-audit
services must be approved in advance by the Audit
Committee and will be reviewed in the light of statutory
requirements and the need to maintain the Auditor’s
independence;
· to 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 in relation to the
appointment of the Auditor and to approve the
remuneration and terms of engagement of the Auditor;
and
· to monitor and review the Auditor’s independence,
objectivity, effectiveness, resources and qualification.
Activities During the Year
The Audit Committee met twice during the year when,
amongst other things, it considered the Annual Report and
the Half-Yearly Financial Report in detail. Representatives
of the abrdn Group’s internal audit, risk and compliance
departments reported to the 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.
Internal Controls and Risk Management
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 31 January 2022 and up to the date of approval of
the Annual Report, is regularly reviewed by the Board 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 in place and a process for
reviewing its effectiveness. Any system of internal control
is designed to manage rather than eliminate the risk of
failure to achieve business objectives and can only provide
reasonable and not absolute assurance against material
misstatement or loss.
The design, implementation and maintenance of controls
and procedures to safeguard the assets of the Company
and to manage its affairs properly extends to operational
and compliance controls and risk management. The
Board, through the Audit Committee, has prepared its
own risk register which lists potential risks as set out in the
Strategic Report on pages 14 to 16. The Board considers
the potential cause and possible effect of these risks as
well as reviewing the controls in place to mitigate them.
Audit Committee’s Report
64 Dunedin Income Growth Investment Trust PLC
Clear lines of accountability have been established
between the Board and the Manager. The Board 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
Board has had regard to the activities of the abrdn Group,
including its internal audit and compliance functions, and
the Auditor.
The Board 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 Board has also reviewed the
effectiveness of the abrdn Group’s system of internal
control including its annual internal controls report
prepared in accordance with the International Auditing
and Assurance Standards Board’s International Standard
on Assurances Engagements (“ISAE”) 3402, “Assurance
Reports on Controls at a Service Organization”.
Risks are identified and documented through a risk
management framework by each function within the
abrdn Group’s activities. Risk is considered in the context
of the FRC’s guidance on internal controls and includes
financial, regulatory, market, operational and reputational
risk. This helps the internal audit risk assessment model
identify those functions for review. Any weaknesses
identified are reported to the Board and timetables are
agreed for implementing improvements to systems. The
implementation of any remedial action required is
monitored and feedback provided to the Board.
The key components designed to provide effective
internal control are outlined below:
· written agreements are in place which specifically
define the roles and responsibilities of the Manager and
other third party service providers;
· the Board and Manager have agreed clearly defined
investment criteria, specified levels of authority and
exposure limits. Reports on these issues, including
performance statistics and investment valuations, are
regularly submitted to the Board;
· the Manager prepares forecasts and management
accounts which allow the Board to assess the
Company’s activities and review its performance; the
emphasis is on obtaining the relevant degree of
assurance and not merely reporting by exception;
· as a matter of course the abrdn Group’s compliance
department continually reviews the Company’s
operations; and
· at its meeting in March 2022, the Audit Committee
carried out an annual assessment of internal controls for
the year ended 31 January 2022 by considering
documentation from the abrdn Group, including the
internal audit and compliance functions and taking
account of events since 31 January 2022.
The Board has considered the need for an internal audit
function. However, the Company has no employees and
the day-to-day management of the Company’s assets
has been delegated to the abrdn Group which has its own
compliance and internal control systems. The Board has
therefore decided to place reliance on those systems and
internal audit procedures and has concluded that it is not
necessary for the Company to have its own internal audit
function.
Financial Statements and Significant Issues
During its review of the Company’s financial statements
for the year ended 31 January 2022, the Audit Committee
considered the following significant issues, in particular
those communicated by the Auditor during its planning
and reporting of the year-end audit:
Valuation and Existence of Investments
How the issue was addressed
- The Company’s
investments have been valued in accordance with the
accounting policies, as disclosed in note 2 (c) to the
financial statements. All investments are in quoted
securities in active markets, are considered to be liquid
and have been categorised as Level 1 within the FRS102
fair value hierarchy. The portfolio holdings and their pricing
is reviewed and verified by the Manager on a regular basis
and management accounts, including a full portfolio
listing, are prepared for each Board meeting. The
Company uses the services of an independent Depositary
(The Bank of New York Mellon (International) Limited) to
hold the assets of the Company. The Depositary checks
the consistency of its records with those of the Manager
on a monthly basis and reports to the Board on an
annual basis.
Recognition of Investment Income
How the issue was addressed
- The recognition of
investment income is undertaken in accordance with the
stated accounting policies. In addition, the Directors
review the Company’s income, revenue forecasts and
dividend comparisons at each Board meeting.
Audit Committee’s Report
Continued
Dunedin Income Growth Investment Trust PLC 65
Maintenance of Investment Trust Status
How the issue was addressed
- The Company has been
approved as an investment trust under Sections 1158 and
1159 of the Corporation Tax Act 2010. Ongoing
compliance with the eligibility criteria is monitored on a
regular basis by the Manager and reported at each
Board meeting.
Review of the Auditor
The Audit Committee has reviewed the effectiveness of
the Auditor, Deloitte LLP (“Deloitte”), including:
· Independence - the Auditor discusses with the Audit
Committee, at least annually, the steps it takes to ensure
its independence and objectivity and makes the
Committee aware of any potential issues, explaining all
relevant safeguards.
· Quality of audit work - including the ability to resolve
issues in a timely manner (identified issues are
satisfactorily and promptly resolved), its
communications/presentation of outputs (the
explanation of the audit plan, any deviations from it and
the subsequent audit findings are comprehensive and
comprehensible), and working relationship with
management (the Auditor has a constructive working
relationship with the Manager).
· Quality of people and service - including continuity and
succession plans (the audit team is made up of
sufficient, suitably experienced staff with provision
made for knowledge of the investment trust sector and
retention on rotation of the audit partner).
In reviewing the Auditor, the Committee also took
into account the FRC’s Audit Quality Inspection Report
for Deloitte.
Tenure of the Auditor
Deloitte was initially appointed as the Company’s Auditor
at the Annual General Meeting on 23 May 2017. In
accordance with present professional guidelines the audit
partner is rotated after no more than five years and the
year ended 31 January 2022 is the fifth year for which the
present audit partner, Andrew Partridge, has served. A
new audit partner has been introduced to the Audit
Committee and Deloitte has confirmed that there will be
continuity in the audit team.
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 that Deloitte is
independent and therefore supports the
recommendation to the Board that the re-appointment of
Deloitte be put to shareholders for approval at the Annual
General Meeting.
Jasper Judd
Chairman of the Audit Committee
6 April 2022
66 Dunedin Income Growth Investment Trust PLC
Financial
Statements
8.4% of the Company’s total assets are invested
in the Beverages sub-sector.
Dunedin Income Growth Investment Trust PLC 67
The Company’s net asset value
(“NAV”) increased by 8.1% on a total
return basis, underperforming the
FTSE All-Share Index which produced
a total return of 18.9%. The share
price total return for the year of
12.5% exceeded the NAV total
return, reflecting a move from a
discount to NAV to a small premium
at the end of the year.
68 Dunedin Income Growth Investment 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 the Directors have elected
to prepare the financial statements in accordance with UK
Accounting Standards, including FRS 102 ‘The Financial
Reporting Standard Applicable in the UK and Republic
of Ireland’.
Under Company law the Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for
that period.
In preparing these financial statements, the Directors are
required to:
· select suitable accounting policies and then apply
them consistently;
· make judgments and estimates that are reasonable
and prudent;
· state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
· prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They
have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of
the Company and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Statement of Corporate Governance that comply with
that law and those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website, but not for 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.
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; and
· the Annual Report taken as a whole, is fair, balanced and
understandable and it provides the information
necessary to assess the Company’s position and
performance, business model and strategy; and
· the Strategic Report and Directors’ Report include a fair
review of the development and performance of the
business and the position of the Company, together with
a description of the principal risks and uncertainties that
the Company faces.
On behalf of the Board
David Barron
Chairman
6 April 2022
Statement of Directors’ Responsibilities
Dunedin Income Growth Investment Trust PLC 69
1. Opinion
In our opinion the financial statements of Dunedin Income Growth Investment Trust PLC (the “Company”):
· give a true and fair view of the state of the Company’s affairs as at 31 January 2022 and of its profit for the year
then ended;
· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including
Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and
the Statement of Recommended Practice issued by the Association of Investment Companies in April 2021 ‘Financial
Statements of Investment Trust Companies and Venture Capital Trusts’; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
· the Statement of Comprehensive Income;
· the Statement of Financial Position;
· the Statement of Changes in Equity;
· the Statement of Cash Flows; and
· the related notes 1 to 22.
The financial reporting framework that has been applied in their preparation is applicable law, United Kingdom
Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK
and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice) and the Statement of
Recommended Practice issued by the Association of Investment Companies (“SORP”) in April 2021 ‘Financial Statements
of Investment Trust Companies and Venture Capital Trusts’.
2. Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting Council’s (the “FRC’s”) Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the Company for the year are disclosed in note 5 to the financial
statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to
the Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of Our Audit Approach
Key audit matters The key audit matter that we identified in the current period was valuation and ownership of
investments.
Materiality The materiality that we used in the current year was £4.6 million (2021: £4.4 million) which
was determined on the basis of 1% of net assets.
Scoping Audit work to respond to the risks of material misstatement was performed directly by the
audit engagement team.
Significant changes in our approach There were no significant changes in our approach in the current year.
Independent Auditor’s Report to Dunedin
Income Growth Investment Trust PLC
70 Dunedin Income Growth Investment Trust PLC
4. Conclusions Relating to Going Concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of
accounting included:
· assessing liquidity and the ability of the Manager to trade in the investment portfolio in order to cover operational
expenditure as it falls due;
· assessing whether the Company has complied with the covenant tests for its borrowing facilities to assess the
continued availability of the borrowing facilities;
· assessing the appropriateness of the going concern disclosures included within the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Company has applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
5. Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
5.1 Valuation and Ownership of Investments
Key audit matter description As an investment entity, the Company holds investments valued at fair value of £502.4 million as at
31 January 2022 (2021: £487.4 million) which has increased by 3% from the prior year-end. These
represent the most quantitatively significant financial statement line on the Statement of Financial
Position, hence alteration of investment quantity and/or prices is deemed more susceptible to
manipulation by fraud.
The activities of the Company’s operations are outsourced to the administrator, BNP Paribas, and
investments are held by the Depositary, The Bank of New York Mellon (International) Limited.
Refer to note 2 (c) to the financial statements for the accounting policy on investments and details of
the investments are disclosed in note 10 to the financial statements.
Independent Auditor’s Report to Dunedin
Income Growth Investment Trust PLC
Continued
Dunedin Income Growth Investment Trust PLC 71
How the scope of our audit
responded to the key audit
matter
We performed the following procedures to address the valuation and ownership of the
investment portfolio:
· obtained an understanding of relevant controls at the administrator, BNP Paribas, over the
ownership and valuation of quoted investments and tested elevant controls;
· agreed 100% of the Company’s investment portfolio at the year end to confirmations received
directly from the Depositary, BNY Mellon; and
· agreed 100% of the bid prices of quoted investments on the investment listing at year end to
closing bid prices published by an independent pricing source.
In addition, we performed the following procedures:
· tested the accuracy of a sample of purchases and sales of investments; and
· assessed the completeness and appropriateness of disclosures in relation to fair value
measurements and liquidity risk.
Key observations Based on the work performed, we concluded that the valuation and ownership of investments
was appropriate.
6. Our Application of Materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality £4.6 million (2021: £4.4 million)
Basis for determining materiality 1% (2021: 1%) of net assets
Rationale for the benchmark applied Net assets has been chosen as it is considered the most relevant benchmark for
investors and is a key driver of shareholder value
Net Assets
£464.6m
Materiality £4.6m
Audit Committee
reporting
threshold £0.2m
Net
Assets
72 Dunedin Income Growth Investment Trust PLC
6.2 Performance Materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
Performance materiality was set at 70% of materiality for the 2022 audit (2021: 70%). In determining performance
materiality, we considered the following factors:
· our risk assessment, including our assessment of the Company’s overall control environment; and
· our experience from previous audits has indicated a low number of corrected and uncorrected misstatements
identified in prior periods.
6.3 Error Reporting Threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of
£0.2 million (2021: £0.2 million), as well as differences below that threshold that, in our view, warranted reporting on
qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation
of the financial statements.
7. An Overview of the Scope of our Audit
7.1 Scoping
Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control and
assessing the risks of material misstatement through quantitative and qualitative factors relating to each account
balance, class of transactions and disclosure. Audit work to respond to the risks of material misstatement was
performed directly by the audit engagement team.
7.2 Our Consideration of the Control Environment
The administrator of the Company, BNP Paribas, provides day to day administration of the Company and is also
responsible for the Company’s general administrative functions, including the calculation and publication of the net
asset value and maintenance of the Company’s accounting and statutory records.
As part of our risk assessment, we assessed the control environment in place at the administrator, to the extent relevant
to our audit. As part of this, we relied upon the controls report of the administrator and adopted a controls reliance
approach with respect to valuation and ownership of investments.
7.3 Our Consideration of Climate-Related Risks
In planning our audit, we have considered the potential impact of climate change on the Company’s business and its
financial statements. The Company continues to develop its assessment of the potential impacts of environmental,
social and governance (“ESG”) related risks as outlined on page 17. As a part of our audit, we held discussions to
understand the process of identifying climate-related risks, the determination of mitigating actions and the impact on
the Company’s financial statements. We performed our own qualitative risk assessment of the potential impact of
climate change on the Company’s account balances and classes of transactions.
Independent Auditor’s Report to Dunedin
Income Growth Investment Trust PLC
Continued
Dunedin Income Growth Investment Trust PLC 73
8. Other Information
The other information comprises the information included in the Annual Report, other than the financial statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a
going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
10. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the Audit was Considered Capable of Detecting Irregularities,
Including Fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
74 Dunedin Income Growth Investment Trust PLC
11.1 Identifying and Assessing Potential Risks Related to Irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, we considered the following:
· the nature of the industry and sector, control environment and business performance including the design of the
Company’s remuneration policies, key drivers for remuneration, bonus levels and performance targets;
· results of our enquiries of management and the Audit Committee about their own identification and assessment of the
risks of irregularities;
· any matters we identified having obtained and reviewed the Company’s documentation of its policies and procedures
relating to:
· identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of
non-compliance;
· detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
alleged fraud;
· the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
· the matters discussed among the audit engagement team regarding how and where fraud might occur in the
financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the following area: valuation and ownership of investments. In
common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and regulatory framework that the Company operates in, focusing on
provisions of those laws and regulations that had a direct effect on the determination of material amounts and
disclosures in the financial statements. The key laws and regulations we considered in this context included the UK
Companies Act, the Listing Rules and UK tax legislation, given the Company’s qualification as an investment trust.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material
penalty. This included the requirements of the United Kingdom’s Financial Conduct Authority (“FCA”).
11.2 Audit Response to Risks Identified
As a result of performing the above, we identified valuation and ownership of investments as a key audit matter related
to the potential risk of fraud. The key audit matters section of our report explains the matters in more detail and also
describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
· reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
· enquiring of management and the Audit Committee concerning actual and potential litigation and claims;
· performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
· reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with HMRC; and
· in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
Independent Auditor’s Report to Dunedin
Income Growth Investment Trust PLC
Continued
Dunedin Income Growth Investment Trust PLC 75
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit.
Report on Other Legal and Regulatory Requirements
12. Opinions on Other Matters Prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
· the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit,
we have not identified any material misstatements in the Strategic Report or the Directors’ Report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained
during the audit: the Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 56;
· the Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and
why the period is appropriate page 18;
· the Directors' statement on fair, balanced and understandable page 68;
· the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks page 14;
· the section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems pages 63 to 64; and
· the section describing the work of the Audit Committee pages 63 to 65.
14. Matters on Which we are Required to Report by Exception
14.1 Adequacy of Explanations Received and Accounting Records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
· we have not received all the information and explanations we require for our audit; or
· 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 are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
76 Dunedin Income Growth Investment Trust PLC
14.2 Directors’ Remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’
remuneration have not been made or the part of the Directors’ Remuneration Report to be audited is not in agreement
with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other Matters Which we Are Required to Address
15.1 Auditor Tenure
Following the recommendation of the Audit Committee, we were appointed by shareholders at the Annual General
Meeting on 23 May 2017 to audit the financial statements for the period ending 31 January 2018 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the
firm is five years, covering the years ending 31 January 2018 to 31 January 2022.
15.2 Consistency of the Audit Report with the Additional Report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in
accordance with ISAs (UK).
16. Use of Our Report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as
a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Partridge (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Edinburgh, United Kingdom
6 April 2022
Independent Auditor’s Report to Dunedin
Income Growth Investment Trust PLC
Continued
Dunedin Income Growth Investment Trust PLC 77
Year ended 31 January 2022 Year ended 31 January 2021
Revenue Capital Total Revenue Capital Total
Notes
£’000 £’000 £’000 £’000 £’000 £’000
Gains/(losses) on investments 10
- 17,551 17,551 - (16,360) (16,360)
Currency profit/(loss)
- 525 525 - (676) (676)
Income 3
21,518 - 21,518 18,346 - 18,346
Investment management fee 4
(727) (1,091) (1,818) (663) (994) (1,657)
Administrative expenses 5
(882) - (882) (986) - (986)
Net return before finance costs and taxation
19,909 16,985 36,894 16,697 (18,030) (1,333)
Finance costs 6
(569) (824) (1,393) (540) (800) (1,340)
Return before taxation
19,340 16,161 35,501 16,157 (18,830) (2,673)
Taxation 7
(267) - (267) - - -
Return after taxation
19,073 16,161 35,234 16,157 (18,830) (2,673)
Return per Ordinary share (pence) 9
12.87 10.91 23.78 10.90 (12.71) (1.81)
The column of this statement headed “Total” represents the profit and loss account of the Company.
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 Dunedin Income Growth Investment Trust PLC
As at As at
31 January 2022 31 January 2021
Notes £’000 £’000
Non-current assets
Investments at fair value through profit or loss 10 502,423 487,430
Current assets
Debtors 11 2,672 1,053
Cash and cash equivalents 2,855 4,002
5,527 5,055
Creditors: amounts falling due within one year
Bank loan 12 (13,034) (13,802)
Other creditors 12 (606) (666)
(13,640) (14,468)
Net current liabilities (8,113) (9,413)
Total assets less current liabilities 494,310 478,017
Creditors: amounts falling due after more than one year 13 (29,731) (29,724)
Net assets 464,579 448,293
Capital and reserves
Called-up share capital 14 38,419 38,419
Share premium account 4,619 4,619
Capital redemption reserve 1,606 1,606
Capital reserve 396,303 380,142
Revenue reserve 16 23,632 23,507
Equity shareholders’ funds 464,579 448,293
Net asset value per Ordinary share (pence) 17 313.56 302.56
The financial statements were approved and authorised for issue by the Board of Directors on 6 April 2022 and were signed on its
behalf by:
David Barron
Director
The accompanying notes are an integral part of the financial statements.
Statement of Financial Position
Dunedin Income Growth Investment Trust PLC 79
For the year ended 31 January 2022
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Balance at 31 January 2021 38,419 4,619 1,606 380,142 23,507 448,293
Return after taxation - - - 16,161 19,073 35,234
Dividends paid 8 - - - - (18,948) (18,948)
Balance at 31 January 2022 38,419 4,619 1,606 396,303 23,632 464,579
For the year ended 31 January 2021
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Balance at 31 January 2020 38,419 4,619 1,606 399,028 26,134 469,806
Return after taxation - - - (18,830) 16,157 (2,673)
Dividends paid 8 - - - - (18,784) (18,784)
Buyback of Ordinary shares for treasury - - - (56) - (56)
Balance at 31 January 2021 38,419 4,619 1,606 380,142 23,507 448,293
The Revenue reserve and the part of the Capital reserve represented by realised capital gains represent the amount of the
Company’s reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.
Statement of Chan
g
es in Equity
80 Dunedin Income Growth Investment Trust PLC
Year ended Year ended
31 January 2022 31 January 2021
Notes £’000 £’000
Operating activities
Net return before finance costs and taxation 36,894 (1,333)
Adjustment for:
(Gains)/losses on investments (17,551) 16,360
Currency (gains)/losses (525) 676
(Increase)/decrease in accrued dividend income (223) 318
Stock dividends included in dividend income (1,333) (1,325)
Decrease in other debtors excluding tax 5 18
(Decrease)/increase in other creditors (66) 227
Net tax (paid)/received (811) 599
Net cash flow from operating activities 16,390 15,540
Investing activities
Purchases of investments (142,812) (114,507)
Sales of investments 145,846 107,274
Net cash from/(used in) investing activities 3,034 (7,233)
Financing activities
Interest paid (1,380) (1,332)
Dividends paid 8 (18,948) (18,784)
Buyback of Ordinary shares for treasury – (56)
Loan repayment (13,323) (1,274)
Loan drawdowns 13,323 3,501
Net cash used in financing activities (20,328) (17,945)
Decrease in cash and cash equivalents (904) (9,638)
Analysis of changes in cash and cash equivalents during the year
Opening balance 4,002 13,754
Effect of exchange rate fluctuations on cash held (243) (114)
Decrease in cash as above (904) (9,638)
Closing balance 2,855 4,002
The accompanying notes are an integral part of the financial statements. A reconciliation of the changes in net debt can be found in
note 18 on page 93.
Statement of Cash Flows
Dunedin Income Growth Investment Trust PLC 81
1. Principal activity
The Company is a closed-end investment company, registered in Scotland No. SC000881, with its Ordinary shares being
listed on the London Stock Exchange.
2. Accounting policies
(a) Basis of preparation and going concern. The financial statements have been prepared in accordance with Financial
Reporting Standard 102 and with the AIC (“Association of Investment Companies”) Statement of Recommended
Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued in April 2021. The
financial statements are prepared in sterling which is the functional currency of the Company and rounded to the
nearest £’000. They have also been prepared on the assumption that approval as an investment trust will continue to
be granted.
The Company’s assets consist substantially of equity shares in companies listed on recognised stock exchanges and in
most circumstances are realisable within a short timescale. The Board has set limits for borrowing and regularly
reviews actual exposures, cash flow projections and compliance with banking covenants. The Board has also
performed stress testing and liquidity analysis. The Company has a £40 million multi-currency revolving loan facility
which expires in July 2023 and the Board has considered the ability of the Company to refinance it. Having taken these
factors into account as well as the impact of Covid-19 and having assessed the principal risks and other matters set
out in the Viability Statement on page 18, the Directors believe that, after making enquiries, the Company has
adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its
financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report.
Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.
Further detail is included in the Directors’ Report (unaudited) on page 56.
Critical accounting judgements and key sources of estimation uncertainty. The preparation of financial statements
requires the use of certain significant accounting judgements, estimates and assumptions which requires
management to exercise its judgement in the process of applying the accounting policies and are continually
evaluated. The Board considers that there are no accounting judgements, estimates and assumptions which would
significantly impact the financial statements.
(b) Revenue, expenses and interest payable. 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 according to the circumstances. Foreign income is
converted at the exchange rate applicable at the time of receipt. Interest receivable on short term deposits and
expenses are accounted for on an accruals basis. Income from underwriting commission is recognised as earned.
Interest payable is calculated on an effective yield basis. Stock lending income is recognised on an accruals basis.
Underwriting commission is taken to revenue, unless any shares underwritten are required to be taken up, in which
case the proportionate commission received is deducted from the cost of the investment.
Expenses are charged to capital 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, including the
amortisation of expenses, are allocated between revenue and capital in line with the Board’s expectation of returns
from the Company’s investments over the long-term of 40% to revenue and 60% to capital.
Notes to the Financial Statements
For the year ended 31 January 2022
82 Dunedin Income Growth Investment Trust PLC
(c) Investments. Investments have been designated upon initial recognition as fair value through profit or loss. Investments
are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require
delivery within the timeframe established by the market concerned, and are measured initially at fair value.
Subsequent to initial recognition, investments are recognised at fair value through profit or loss. 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 FTSE All-Share and
the most liquid AIM constituents. Gains or 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.
(d) Dividends payable. Final dividends payable to equity shareholders are recognised in the financial statements when
they have been approved by Shareholders and become a liability of the Company. Interim dividends are recognised in
the financial statements in the period in which they are paid.
(e) 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.
Share premium account. The balance classified as share premium includes the premium above the nominal value from
the proceeds on issue of any equity share capital comprising Ordinary shares of 25p.
Capital redemption reserve. The capital redemption reserve is used to record the amount equivalent to the nominal
value of any of the Company’s own shares purchased and cancelled in order to maintain the Company’s capital.
Capital reserve. Gains or losses on the disposal of investments and changes in the 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. Certain other items including gains or
losses on foreign currency and special dividends are also allocated to this reserve as appropriate. The part of this
reserve represented by realised capital gains is available for distribution by way of dividend.
The costs of share buybacks to be held in treasury are also deducted from this reserve.
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 by
way of dividend.
(f) Taxation. The charge for taxation is based on the profit for the year and takes into account taxation deferred because
of timing differences between the treatment of certain items for taxation and accounting purposes.
Owing to the Company’s status as an investment trust, 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.
(g) Foreign currency. Monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign
currencies are converted into sterling at the rate of exchange ruling at the reporting date. Transactions during the
year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Gains or losses
arising from a change in exchange rates subsequent to the date of a transaction are included as a currency gain or
loss in revenue or capital in the Statement of Comprehensive Income, depending on whether the gain or loss is of a
revenue or capital nature. The Company receives a proportion of its investment income in foreign currency. These
amounts are translated at the rate ruling on the date of receipt.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 83
(h) Traded options. The Company may enter into certain derivative contracts (e.g. options). Option contracts are
accounted for as separate derivative contracts and are therefore shown in other assets or other liabilities at their fair
value. The initial fair value is based on the initial premium, which is recognised upfront. The premium received and fair
value changes in the open position which occur due to the movement in underlying securities are recognised in the
revenue column, losses realised on the exercise of the contracts are recorded in the capital column of the Statement
of Comprehensive Income.
In addition, the Company may enter into derivative contracts to manage market risk and gains or losses arising on
such contracts are recorded in the capital column of the Statement of Comprehensive Income.
(i) Borrowings. Borrowings are measured initially at the fair value of the consideration received, net of any issue expenses,
and subsequently at amortised cost using the effective interest method. The finance costs of such borrowings are
accounted for on an accruals basis using the effective interest rate method and are charged 40% to revenue and 60%
to capital in the Statement of Comprehensive Income to reflect the Company’s investment policy and prospective
income and capital growth.
3. Income
2022 2021
£’000 £’000
Income from investments
UK dividend income 14,463 13,411
Overseas dividends 3,895 1,840
Stock dividends 1,333 1,325
19,691 16,576
Other income
Income on derivatives 1,826 1,748
Deposit interest - 1
Interest received on withholding tax refunds 1 21
1,827 1,770
Total income 21,518 18,346
During the year, the Company earned premiums totalling £1,826,000 (2021 - £1,748,000) in exchange for entering into
derivative transactions. The Company had no open positions in derivative contracts at 31 January 2022 (2021 - no open
positions). Losses realised on the exercise of derivative transactions are disclosed in note 10.
84 Dunedin Income Growth Investment Trust PLC
4. Management fee
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 727 1,091 1,818 663 994 1,657
The Company has an agreement with Aberdeen Standard Fund Managers Limited (“ASFML”) for the provision of investment
management, risk management, accounting, administrative and secretarial services. The management fee is calculated
and charged, on a monthly basis, at 0.45% per annum on the first £225 million, 0.35% per annum on the next £200 million and
0.25% per annum on amounts over £425 million of the net assets of the Company, with debt at par and excluding commonly
managed funds. The balance due at the year end was £154,000 (2021 – £291,000). The management fee is allocated 40% to
revenue and 60% to capital. There were no commonly managed funds held in the portfolio during the year to 31 January
2022 (2021 – none).
The management agreement may be terminated by either party on six months’ written notice.
5. Administrative expenses
2022 2021
£’000 £’000
Directors’ fees 142 150
Auditor’s remuneration (excluding VAT):
– fees payable to the Company’s Auditor for the audit of the
Company’s annual accounts
27 24
– fees payable to the Company’s Auditor for other services:
- interim review 8 8
Promotional activities 243 361
Registrar’s fees 51 51
Share plan fees 90 129
Printing and postage 48 50
Other expenses 273 213
882 986
Expenses of £243,000 (2021 - £361,000) were paid to ASFML in respect of the promotion of the Company. The balance
outstanding at the year end was £24,000 (2021 - £20,000). All amounts are inclusive of VAT.
All of the expenses above, with the exception of Auditor’s remuneration, include VAT where applicable. The VAT charged on
the Auditor’s remuneration is disclosed within other expenses.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 85
6. Finance costs
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Bank loan 68 102 170 51 78 129
Loan Notes - repayable after more than five
years
479 718 1,197 479 718 1,197
Amortised Loan Notes issue expenses 3 4 7 2 4 6
Bank overdraft 19 - 19 8 - 8
569 824 1,393 540 800 1,340
Finance costs (excluding bank overdraft interest) are allocated 40% to revenue and 60% to capital.
7. Taxation
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
(a) Analysis of charge for the year
Overseas tax suffered 961 - 961 248 - 248
Overseas tax reclaimable (694) - (694) (107) - (107)
Overseas tax refunded - - - (141) - (141)
Total tax charge for the year 267 - 267 - - -
(b) Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2021 - 19%). The tax assessed for the
year is lower than the rate of corporation tax. The differences are explained below:
86 Dunedin Income Growth Investment Trust PLC
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Return before taxation 19,340 16,161 35,501 16,157 (18,830) (2,673)
Corporation tax at 19% (2021 - 19%) 3,675 3,071 6,746 3,070 (3,577) (507)
Effects of: -
Non-taxable UK dividend income (2,748) - (2,748) (2,548) - (2,548)
Non-taxable stock dividends (254) - (254) (217) - (217)
Capital (gains)/losses on investments not
taxable
- (3,335) (3,335) - 3,108 3,108
Expenses not deductible for tax purposes 1 - 1 - - -
Currency (gains)/losses not taxable - (99) (99) - 128 128
Overseas taxes 267 - 267 141 - 141
Overseas taxes refunded - - - (141) - (141)
Non-taxable overseas dividends (687) - (687) (314) - (314)
Excess management expenses 13 363 376 9 341 350
Total tax charge 267 - 267 - - -
(c) Factors that may affect future tax charges. At the year end, the Company has, for taxation purposes only, accumulated
unrelieved management expenses and loan relationship deficits of £132,362,000 (2021 - £130,381,000). A deferred tax
asset in respect of this has not been recognised and these unrelieved expenses will only be utilised if the Company has
profits chargeable to corporation tax in the future.
On 3 March 2021 the UK government announced an intention to increase the UK corporation tax rate to 25% with
effect from 1 April 2023. If enacted this will impact the value of UK deferred tax balances, and the tax charged on UK
profits generated in 2023 and thereafter. The impact of these proposed changes has yet to be assessed.
8. Ordinary dividends on equity shares
2022 2021
£’000 £’000
Amounts recognised as distributions paid during the year:
Third interim dividend for 2021 - 3.00p (2020 - 3.00p) 4,445 4,446
Fourth interim dividend for 2021 - 3.80p (2020 - final - 3.70p) 5,630 5,483
First interim dividend for 2022 - 3.00p (2021 - 3.00p) 4,445 4,446
Second interim dividend for 2022 - 3.00p (2021 - 3.00p) 4,445 4,445
Return of unclaimed dividends (17) (36)
18,948 18,784
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 87
A third interim dividend of 3.00p per Ordinary share was declared on 2 December 2021, payable on 25 February 2022 to
shareholders on the register on 4 February 2022 and has not been included as a liability in these financial statements. The
final dividend of 3.90p per Ordinary share was approved by the Board on 6 April 2022, payable on 27 May 2022 to
shareholders on the register on 6 May 2022 and has not been included as a liability in the financial statements.
The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis upon which
the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The net revenue available for
distribution by way of dividend for the year is £19,073,000 (2021 - £16,157,000).
2022 2021
£’000 £’000
First interim dividend for 2022 - 3.00p (2021 - 3.00p) 4,445 4,446
Second interim dividend for 2022 - 3.00p (2021 - 3.00p) 4,445 4,445
Third interim dividend for 2022 - 3.00p (2021 - 3.00p) 4,445 4,445
Final dividend for 2022 – 3.90p (2021 – fourth interim dividend of 3.80p) 5,782 5,630
19,117 18,966
The final dividend is based on the latest share capital of 148,264,670 Ordinary shares excluding those held in treasury.
9. Return per Ordinary share
2022 2021
£’000 p £’000 p
Revenue return 19,073 12.87 16,157 10.90
Capital return 16,161 10.91 (18,830) (12.71)
Total return 35,234 23.78 (2,673) (1.81)
Weighted average number of Ordinary shares in issue 148,164,670 148,179,575
88 Dunedin Income Growth Investment Trust PLC
10. Investments at fair value through profit or loss
2022 2021
£’000 £’000
Opening book cost 410,222 380,538
Investment holdings gains 77,208 111,577
Opening fair value 487,430 492,115
Analysis of transactions made during the year
Purchases 144,145 115,832
Sales - proceeds (146,703) (104,157)
Gains/(losses) on investments 17,551 (16,360)
Closing fair value 502,423 487,430
Closing book cost 428,488 410,222
Closing investment holdings gains 73,935 77,208
Closing fair value 502,423 487,430
The Company received £146,703,000 (2021 - £104,157,000) from investments sold in the year. The book cost of these
investments when they were purchased were £125,879,000 (2021 - £86,148,000). These investments have been revalued
over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The realised gains figure above includes losses realised on the exercise of traded options of £971,000 (2021 - £936,000).
Premiums received of £1,826,000 (2021 - £1,748,000) are included within income per note 3.
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 gains/(losses) on investments in
the Statement of Comprehensive Income. The total costs were as follows:
2022 2021
£’000 £’000
Purchases 592 436
Sales 79 62
671 498
The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company’s Key
Information Document are calculated on a different basis and in line with the PRIIPs regulations.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 89
11. Debtors: amounts falling due within one year
2022 2021
£’000 £’000
Net dividends and interest receivable 781 558
Tax recoverable 1,017 473
Amounts due from brokers 857 -
Other loans and receivables 17 22
2,672 1,053
12. Creditors: amounts falling due within one year
2022 2021
(a) Bank loan £’000 £’000
EUR 15,600,000 - 15 February 2021 - 13,802
EUR 15,600,000 - 11 February 2022 13,034 -
13,034 13,802
The Company’s multi–currency revolving credit facility with Scotiabank for £15,000,000 expired on 13 July 2021. The
company entered into a new £30,000,000 multi–currency revolving credit facility with The Bank of Nova Scotia, London
Branch committed until 13 July 2023. Under the terms of the facility, subject to the lender’s credit approval, the
Company has the option to increase the level of the facility from £30,000,000 to £40,000,000 at any time, should further
investment opportunities be identified. As at 31 January 2022 €15,600,000 had been drawn down at a rate of 1.0%
(2021 – €15,600,000 at a rate of 0.9%), which matured on 11 February 2022. At the date this Report was approved
€15,600,000 had been drawn down at a rate of 1.0%, maturing on 11 April 2022. The terms of the loan facility contain
covenants that the adjusted asset coverage is not be less than 4.00 to 1.00 and that the minimum net assets of the
Company are £200 million.
2022 2021
(b) Other creditors £’000 £’000
Loan Notes and bank loan interest 189 183
Sundry creditors 417 483
606 666
90 Dunedin Income Growth Investment Trust PLC
13. Creditors: amounts falling due after more than one year
2022 2021
£’000 £’000
3.99% Loan Notes 2045 30,000 30,000
Unamortised Loan Note issue expenses (269) (276)
29,731 29,724
The 3.99% Loan Notes were issued in December 2015 and are due to be redeemed at par on 8 December 2045. Interest is
payable in half-yearly instalments in June and December. The Loan Notes are secured by a floating charge over the whole
of the assets of the Company. The Company has complied with the Loan Note Trust Deed covenant that total net
borrowings (ie. after the deduction of cash balances) should not exceed 33% of the Company’s net asset value and that the
Company’s net asset value should not be less than £200 million.
The fair value of the Loan Notes as at 31 January 2022 was £36,441,000 (2021 - £37,017,000), the value being calculated per
the disclosure in note 19. The effect on the net asset value of deducting the Loan Notes at fair value rather than at par is
disclosed in note 17.
14. Called-up share capital
2022 2021
£’000 £’000
Allotted, called up and fully paid:
148,164,670 (2021 - 148,164,670) Ordinary shares of 25p each - equity 37,041 37,041
Treasury shares:
5,513,265 (2021 - 5,513,265) Ordinary shares of 25p each - equity 1,378 1,378
38,419 38,419
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.
During the year the Company repurchased no Ordinary shares (2021 - 22,449 shares repurchased at a cost of £56,000
including expenses). All of these shares were placed in treasury.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 91
15. Analysis of changes in financing during the year
2022 2021
Equity Equity
share capital share capital
(including Loan (including Loan
premium) Notes premium) Notes
£’000 £’000 £’000 £’000
Opening balance at 31 January 2021 43,038 29,724 43,038 29,718
Movement in unamortised Loan Notes issue expenses - 7 - 6
Closing balance at 31 January 2022 43,038 29,731 43,038 29,724
16. Revenue reserve per share
The following information is presented supplemental to the financial statements to show the Companies Act position at the
year end.
2022 2021
Revenue reserve (£’000) 23,632 23,507
Number of Ordinary shares in issue at year end 148,164,670 148,164,670
Revenue reserve per Ordinary share 15.95p 15.87p
Less: - third interim dividend (3.00)p (3.00)p
– final dividend (3.90)p –
- fourth interim dividend – (3.80)p
Revenue reserve per Ordinary share 9.05p 9.07p
92 Dunedin Income Growth Investment Trust PLC
17. Net asset value per share
Equity shareholders’ funds have been calculated in accordance with the provisions of FRS 102. The analysis of
equity shareholders’ funds on the face of the Statement of Financial Position does not reflect the rights under
the Articles of Association of the Ordinary shareholders on a return of assets. These rights are reflected in the
net asset value and the net asset value per share attributable to Ordinary shareholders at the year end,
adjusted to reflect the deduction of the Loan Notes at par. A reconciliation between the two sets of figures
is as follows:
2022 2021
Net assets attributable (£’000) 464,579 448,293
Number of Ordinary shares in issue at year end
A
148,164,670 148,164,670
Net asset value per Ordinary share 313.56p 302.56p
A
Excluding shares held in treasury.
Adjusted net assets 2022 2021
Net assets attributable (£’000) as above 464,579 448,293
Unamortised Loan Note issue expenses (note 13) (269) (276)
Adjusted net assets attributable (£’000) 464,310 448,017
Number of Ordinary shares in issue at year end
A
148,164,670 148,164,670
Adjusted net asset value per Ordinary share 313.37p 302.38p
A
Excluding shares held in treasury.
Net assets - debt at fair value £’000 £’000
Net assets attributable 464,579 448,293
Amortised cost Loan Notes 29,731 29,724
Market value Loan Notes (36,441) (37,017)
Net assets attributable 457,869 441,000
Number of Ordinary shares in issue at the period end
A
148,164,670 148,164,670
Net asset value per Ordinary share (debt at fair value) 309.03p 297.64p
A
Excluding shares held in treasury.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 93
18. Analysis of changes in net debt
At Currency Non-cash At
31 January 2021 differences Cash flows movements 31 January 2022
£’000 £’000 £’000 £’000 £’000
Cash and cash equivalents 4,002 (243) (904) - 2,855
Debt due within one year (13,802) 768 - - (13,034)
Debt due after more than one year (29,724) - - (7) (29,731)
(39,524) 525 (904) (7) (39,910)
At Currency Non-cash At
31 January 2020 differences Cash flows movements 31 January 2021
£’000 £’000 £’000 £’000 £’000
Cash and cash equivalents 13,754 (114) (9,638) - 4,002
Debt due within one year (11,013) (562) (2,227) - (13,802)
Debt due after more than one year (29,718) - - (6) (29,724)
(26,977) (676) (11,865) (6) (39,524)
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. Financial instruments and risk management
The Company’s investment activities expose it to various types of financial risk associated with the financial instruments and
markets in which it invests. The Company’s financial instruments 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
in the form of option contracts for the purpose of generating income and futures/options for hedging market exposures.
During the year, the Company entered into certain options contracts for the purpose of generating income. Positions closed
during the year realised a loss of £971,000 (2021 - £936,000). As disclosed in note 3, the premium received and fair value
changes in respect of options written in the year was £1,826,000 (2021 - £1,748,000). The largest position in derivative
contracts held during the year at any given time was £558,000 (2021 - £931,000). The Company had no open positions in
derivative contracts at 31 January 2022 (2021 - none).
The Board relies on Aberdeen Standard Fund Managers Limited (“ASFML” or the “Manager”) for the provision of risk
management activities under the terms of its management agreement with ASFML (further details of which are included
under note 4). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the
Manager. The types of risk and the Manager’s approach to the management of each type of risk, are summarised below.
Such approach has been applied throughout the year and has not changed since the previous accounting period. The
numerical disclosures exclude short-term debtors and creditors on the grounds that they are not considered to be material.
94 Dunedin Income Growth Investment Trust PLC
The Company’s Manager has an independent Investment Risk department for reviewing the investment risk parameters of
all core equity, fixed income and alternative asset classes on a regular basis. The department reports to the Manager’s
Performance Review Committee which is chaired by the Manager’s Chief Investment Officer. The department’s
responsibility is to review and monitor ex-ante (predicted) portfolio risk and style characteristics using best practice, industry
standard multi-factor models.
Risk management framework. The directors of ASFML collectively assume responsibility for ASFML’s obligations under the
AIFMD including reviewing investment performance and monitoring the Company’s risk profile during the year.
ASFML is a fully integrated member of the abrdn Group (the “Group”) which provides a variety of services and support to
ASFML in the conduct of its business activities, including in the oversight of the risk management framework for the
Company. ASFML has delegated the day to day administration of the investment policy to Aberdeen Asset Managers
Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the
limits set out in its pre-investment disclosures to investors (details of which can be found on the Company’s website). ASFML
has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and
operational risk for the Company.
The Manager conducts its risk oversight function through the operation of the Group’s risk management processes and
systems which are embedded within the Group’s operations. The Group’s Risk Division supports management in the
identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance,
Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group’s Head of Risk, who reports to
the Chief Executive Officers of the Group. The Risk Division achieves its objective through embedding the Risk Management
Framework throughout the organisation using the Group’s operational risk management system (“SHIELD”).
The Group’s Internal Audit Department is independent of the Risk Division and reports directly to the Group’s Chief Executive
Officers and to the Audit Committee of the Group’s Board of Directors. The Internal Audit Department is responsible for
providing an independent assessment of the Group’s control environment.
The Group’s corporate governance structure is supported by several committees to assist the board of directors of abrdn, its
subsidiaries and the Company to fulfil their roles and responsibilities. The Group’s Risk Division is represented on all
committees, with the exception of those committees that deal with investment recommendations. The specific goals and
guidelines on the functioning of those committees are described on the committees’ terms of reference.
Risk Management. The main risks the Company faces from its financial instruments are (i) market risk (comprising interest
rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.
The Board regularly reviews and agrees policies for managing each of these risks. The Group’s policies for managing these
risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term
debtors and creditors, other than for currency disclosures.
(i) Market risk. Market risk comprises three elements - interest rate risk, currency risk and price risk.
(a) Interest rate risk. Interest rate movements may affect:
- the fair value of the investments in fixed interest rate securities;
- the level of income receivable on cash deposits; and
- interest payable on the Company’s variable rate borrowings.
Management of the risk. The possible effects on fair value and cash flows that could arise as a result of changes in
interest rates are taken into account when making investment and borrowing decisions.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 95
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these
on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. Details of borrowings at 31
January 2022 are shown in notes 12 and 13.
Interest risk profile. The interest rate risk profile of the portfolio of financial assets and liabilities at the Statement of
Financial Position date was as follows:
Weighted
average Weighted
period for average
which interest Fixed Floating
rate is fixed rate rate rate
At 31 January 2022 Years % £’000 £’000
Assets
Sterling – – – 2,855
Total assets – – – 2,855
Liabilities
Bank loans 0.08 1.00 (13,034) –
Loan Notes 23.87 3.99 (29,731) –
Total liabilities – – (42,765) –
Weighted
average Weighted
period for average
which interest Fixed Floating
rate is fixed rate rate rate
At 31 January 2021 Years % £’000 £’000
Assets
Sterling – – – 4,002
Total assets – – – 4,002
Weighted
average Weighted
period for average
which interest Fixed Floating
rate is fixed rate rate rate
Years % £’000 £’000
Liabilities
Bank loans 0.08 0.90 (13,802) –
Loan Notes 24.87 3.99 (29,724) –
Total liabilities – – (43,526) –
96 Dunedin Income Growth Investment Trust PLC
The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The
weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the
loans. The maturity dates of the Company’s borrowings are shown in notes 12 and 13 to the financial statements.
The floating rate assets consist of cash deposits all earning interest at prevailing market rates.
The Company’s equity portfolio and short-term debtors and creditors (excluding bank loans) have been excluded
from the above tables. All financial liabilities are measured at amortised cost.
Interest rate sensitivity. Movements in interest rates would not significantly affect net assets attributable to the
Company’s shareholders and total profit.
(b) Foreign currency risk. A proportion of the Company’s investment portfolio is invested in overseas securities whose
values are subject to fluctuation due to changes in exchange rates. In addition, the impact of changes in foreign
exchange rates upon the profits of investee companies can result, indirectly, in changes in their valuations.
Consequently the Statement of Financial Position can be affected by movements in exchange rates.
Management of the risk. It is not the Company’s policy to hedge this risk on a continuing basis but the Company may,
from time to time, match specific overseas investment with foreign currency borrowings. A proportion of the
Company’s borrowings, as detailed in note 12, is in foreign currency as at 31 January 2022. The revenue account is
subject to currency fluctuations arising on dividends received in foreign currencies and, indirectly, due to the impact of
foreign exchange rates upon the profits of investee companies. The Company does not hedge this currency risk.
Foreign currency risk exposure by currency of denomination:
31 January 2022 31 January 2021
Net Total Net Total
monetary currency monetary currency
Investments assets exposure Investments assets exposure
£’000 £’000 £’000 £’000 £’000 £’000
Euro 63,632 (12,098) 51,534 64,452 (13,662) 50,790
Swiss Francs 216 216 11,808 221 12,029
Danish Krone 14,234 94 14,328 9,783 100 9,883
Norwegian Krone - 13 13 - 13 13
Swedish Krona 28,847 - 28,847 - - -
Sterling 395,710 (26,069) 369,641 401,387 (25,809) 375,578
Total 502,423 (37,844) 464,579 487,430 (39,137) 448,293
The asset allocation between specific markets can vary from time to time based on the Manager’s opinion of the
attractiveness of the individual stocks in these markets.
Foreign currency sensitivity. There is no sensitivity analysis included as the Board believes the amount exposed to
foreign currency denominated monetary assets to be immaterial. Where the Company’s equity investments (which
are non-monetary items) are priced in a foreign currency, they have been included within the other price risk sensitivity
analysis so as to show the overall level of exposure.
(c) Price risk. Price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may
affect the value of the quoted investments and traded options.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 97
Management of the risk. It is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to
reduce the risk arising from factors specific to a particular company or sector. Both the allocation of assets and the
stock selection process, as detailed on page 26 to 33, 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 listed on various stock exchanges in the UK and Europe.
Price risk sensitivity. If market prices at the Statement of Financial Position date had been 10% higher while all other
variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 January 2022
would have increased by £50,242,000 (2021 - increase of £48,743,000) and equity reserves would have increased by
the same amount. Had market prices been 10% lower the converse would apply.
(ii) Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities as they fall due in line with the maturity profile analysed below.
More
Within Within Within Within Within than
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
At 31 January 2022 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Bank loans 13,034 - - - - - 13,034
Loan Notes - - - - - 30,000 30,000
Interest cash flows on bank loans
and loan notes
1,207 1,197 1,197 1,197 1,197 22,743 28,738
Cash flows on other creditors 417 - - - - - 417
14,658 1,197 1,197 1,197 1,197 52,743 72,189
More
Within Within Within Within Within than
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
At 31 January 2021 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Bank loans 13,802 - - - - - 13,802
Loan Notes - - - - - 30,000 30,000
Interest cash flows on bank loans
and loan notes
1,197 1,197 1,197 1,197 1,197 23,940 29,925
Cash flows on other creditors 483 - - - - - 483
15,482 1,197 1,197 1,197 1,197 53,940 74,210
Management of the risk. The Board imposes borrowing limits to ensure gearing levels are appropriate to market
conditions and reviews these on a regular basis. Borrowings comprise Loan Notes and a revolving facility. The Loan
Notes provide secure long-term funding while short term flexibility is achieved through the borrowing facility. It is the
Board’s policy to maintain a gearing level, measured on the most stringent basis of calculation after netting off cash
equivalents, of less than 30% at all times. Details of borrowings at 31 January 2022 are shown in notes 12 and 13.
98 Dunedin Income Growth Investment Trust PLC
Liquidity risk is not considered to be significant as the Company’s assets comprise mainly cash and listed securities,
which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan
and overdraft facilities, details of which can be found in note 12. Under the terms of the loan facility, the Manager
provides the lender with loan covenant reports on a monthly basis, to provide the lender with assurance that the terms
of the facility are not being breached. The Manager will also review the credit rating of a lender on a regular basis.
Details of the Board’s policy on gearing are shown in the interest rate risk section of this note.
Liquidity risk exposure. At 31 January 2022 and 31 January 2021 the amortised cost of the Company’s Loan Notes was
£29,731,000 and £29,724,000 respectively. At 31 January 2022 and 31 January 2021 the Company’s bank loans
amounted to £13,034,000 and £13,802,000 respectively. The facility is committed until 13 July 2023.
(iii) Credit risk. This is failure of the counterparty to a transaction to discharge its obligations under that transaction that
could result in the Company suffering a loss.
Management of the risk. Investment transactions are carried out with a large number of brokers, whose credit standing
is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker;
– the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of
failed trade reports on a daily 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. The Group’s Compliance
department carries out periodic reviews of the custodian’s operations and reports its finding to the abrdn Group’s Risk
Management Committee. This review will also include checks on the maintenance and security of investments held;
- cash is held only with reputable banks whose credit ratings are monitored on a regular basis.
There are internal exposure limits to cash balances placed with counterparties. The credit worthiness of counterparties
is also reviewed on a regular basis.
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 31 January was as follows:
2022 2021
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
£’000 £’000 £’000 £’000
Non-current assets
Investments at fair value through profit or loss 502,423 - 487,430 -
Current assets
Cash and short term deposits 2,855 2,855 4,002 4,002
505,278 2,855 491,432 4,002
None of the Company’s financial assets is past due or impaired.
Notes to the Financial Statements
Continued
Dunedin Income Growth Investment Trust PLC 99
Fair values of financial assets and financial liabilities. The fair value of borrowings has been calculated at £49,475,000 as
at 31 January 2022 (2021 - £50,819,000) compared to an accounts value in the financial statements of £42,765,000
(2021 - £43,526,000) (notes 12 and 13). The fair value of each loan is determined by aggregating the expected future
cash flows for that loan discounted at a rate comprising the borrower’s margin plus an average of market rates
applicable to loans of a similar period of time and currency. All other assets and liabilities of the Company are included
in the Statement of Financial Position at fair value.
20. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy has the following 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.
The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value
hierarchy at the reporting date as follows:
Level 1 Level 2 Level 3 Total
As at 31 January 2022 Note £’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Quoted equities a) 502,423 - - 502,423
Total 502,423 - - 502,423
Level 1 Level 2 Level 3 Total
As at 31 January 2021 £’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Quoted equities a) 487,430 - - 487,430
Total 487,430 - - 487,430
a) Quoted equities. The fair value of the Company’s investments in quoted equities has been determined by reference to
their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on
recognised stock exchanges.
100 Dunedin Income Growth Investment Trust PLC
21. Capital management policies and procedures
The Company’s capital management objectives are:
- to ensure that the Company will be able to continue as a going concern; and
- to maximise the return to its equity shareholders through an appropriate balance of equity capital and debt.
The capital of the Company consists of equity, comprising issued capital, reserves and retained earnings.
The Board monitors and reviews the broad structure of the Company’s capital. This review includes the nature and planned
level of gearing, which takes account of the Manager’s views on future expected returns and the extent to which revenue in
excess of that which is required to be distributed should be retained. The Company is not subject to any externally imposed
capital requirements.
22. Related party transactions and transactions with the Manager
Directors’ fees and interests. Fees payable during the year to the Directors and their interest in shares of the Company are
disclosed within the Directors’ Remuneration Report on page 61.
Transactions with the Manager. The Company has an agreement with the abrdn Group for the provision of management,
secretarial, accounting and administration services and also for the provision of promotional activities. Details of transactions
during the year and balances outstanding at the year end are disclosed in notes 4 and 5.
Continued
Notes to the Financial Statements
Dunedin Income Growth Investment Trust PLC 101
Corporate Information
Investors can buy and sell shares in
the Company directly through a
stockbroker or, 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.
102 Dunedin Income Growth Investment Trust PLC
Alternative Investment Fund Managers
Directive (“AIFMD”) and Pre-Investment
Disclosure Document (“PIDD”)
The Company has appointed Aberdeen Standard Fund
Managers Limited as its alternative investment fund
manager and The Bank of New York Mellon (International)
Limited as its depositary under the AIFMD.
The AIFMD requires Aberdeen Standard 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:
dunedinincomegrowth.co.uk. The periodic disclosures
required to be made by the AIFM under the AIFMD are set
out on page 109.
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
Dunedin Income Growth Investment Trust PLC 103
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 entry 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 entry 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.
Keeping You Informed
Further information about the Company may be found on
its dedicated website: dunedinincomegrowth.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
104 Dunedin Income Growth Investment Trust PLC
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 Investment
Trusts’ 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 growth of income and capital from a portfolio
invested mainly in companies listed or quoted in the United
Kingdom, 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.
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 page 101 and pages 102 to 104 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.
Investor Information
Continued
Dunedin Income Growth Investment Trust PLC 105
abrdn Group or abrdn
The abrdn plc group of companies. abrdn is the brand of
abrdn plc.
AIC
The Association of Investment Companies.
AIFMD
The Alternative Investment Fund Managers Directive. The
AIFMD is European legislation which created a European-
wide framework for regulating managers of ‘alternative
investment funds’ (“AIFs”). It is designed to regulate any
fund which is not a UCITS fund and which is managed
and/or marketed in the EU. The Company has been
designated as an AIF.
Benchmark
This is a measure against which an Investment Trust’s
performance is compared. The Company’s benchmark is
the FTSE All-Share Index. The index averages the
performance of a defined selection of listed companies
over specific time periods.
Call Option
An option contract which gives the buyer the right, but not
the obligation, to purchase a specified amount of an asset
at the strike price by a future specified date.
Closed-End Fund
A collective investment scheme which has a fixed number
of shares which are not redeemable from the fund itself.
Unlike open-ended funds, new shares/units are not
created by managers to meet demand from investors;
instead, shares are purchased (or sold) only in the market.
Closed-end funds are normally listed on a recognised
stock exchange, such as the London Stock Exchange, and
shares can be bought and sold on that exchange.
Discount
The amount by which the market price per share of an
Investment Trust is lower than the Net Asset Value per
share. The discount is normally expressed as a
percentage of the Net Asset Value per share.
Dividend Cover
Revenue return per share divided by the dividend per
share, expressed as a ratio.
Dividend Yield
The annual dividend expressed as a percentage of the
share price.
FCA
Financial Conduct Authority.
Gearing
Net gearing is calculated by dividing total borrowings less
cash and cash equivalents by shareholders’ funds,
expressed as a percentage.
Investment Manager or AAML
Aberdeen Asset Managers Limited is a wholly owned
subsidiary of abrdn plc and acts as the Company’s
investment manager. It is authorised and regulated
by the FCA.
Investment Trust
A type of Closed-End Fund which invests in other
securities, allowing shareholders to share the risks, and
returns, of collective investment.
Key Information Document or KID
The Packaged Retail and Insurance-based Investment
Products (“PRIIPS”) Regulation 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 returns cannot be guaranteed.
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.
Glossary of Terms
106 Dunedin Income Growth Investment Trust PLC
Manager, AIFM or ASFML
Aberdeen Standard Fund Managers Limited is a wholly
owned subsidiary of abrdn plc and acts as the Company’s
Alternative Investment Fund Manager. It is authorised and
regulated by the FCA.
Net Asset Value or NAV
The value of total assets less liabilities. Liabilities for this
purpose include current and long-term liabilities. The Net
Asset Value divided by the number of shares in issue
produces the Net Asset Value per Ordinary share.
NAV with debt at fair value
The Net Asset Value with debt valued divided by the
number of shares in issue where the Company’s
borrowings are valued using the discounted cash
flow basis.
Ongoing Charges
Ratio of 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.
Total Assets
Total assets less current liabilities (before deducting Prior
Charge as defined above), as per the Statement of
Financial Position.
Total Return
Total Return involves reinvesting the net dividend in the
month that the share price goes ex-dividend. The NAV
Total Return involves investing the same net dividend in the
NAV of the Company on the date to which that dividend
was earned.
Continued
Glossary of Terms
Dunedin Income Growth Investment Trust PLC 107
The provenance of Dunedin Income Growth Investment
Trust PLC goes back to 1873 and to the origins of the
investment trust industry in Scotland. In 1873, a 28 year old
Robert Fleming (sometimes dubbed the “father of the
investment trust industry”), persuaded a group of
Dundee’s wealthiest investors to back his idea of forming
“the first Association in Scotland for investments in
American railroad bonds, carefully selected and widely
distributed, and where investments would not exceed
one-tenth of the capital in any one security”. Fleming, who
was later founder of the merchant bank that bore this
name, showed extraordinary commercial acumen at a
very young age. He was born in modest circumstances in
Dundee and was first apprenticed as office boy at 13, then
rose to become, at 21, book-keeper with the exporting
arm of Dundee’s largest textile merchant, Edward
Baxter & Son.
In 1870, the elderly Mr Baxter sent Robert Fleming to the
United States to represent him on business. Fleming
returned enthused about the investment opportunities
offered by the States, despite the country still suffering
from the aftermath of the American Civil War. The
“association” proved to be an attractive means for
investors to pool their resources, spread risk and put their
investments under full-time management. The new fund,
then known as The Scottish American Investment Trust,
was launched on 1 February 1873. The Scottish American
Investment Trust was partly modelled on the Foreign &
Colonial Government Trust that was launched in 1868.
Unlike Foreign & Colonial, which purchased overseas
government stocks, the new trust would invest in “The
Bonds of States, cities, railroads and other corporations in
the US, but chiefly in the mortgage bonds of railroads”.
John Guild, one of the chairmen, reported “while in this
country you could not lend money on first-class railway
debentures at over 4% or 4.5%, in America you could get
7% with the best security of this description”. Coupled with
the fact that railway infrastructure development in the UK
had by then become relatively mature, it was for this
reason that the United States was an attractive
destination for Scottish funds.
The original prospectus described the intended issue of
£150,000 in certificates of £100 each, paying interest of 6%
per annum. Such was the level of demand that the original
prospectus was withdrawn and a new one was printed
with a capital issue of £300,000. The trust started out with
30 stocks, each comprising no more than 10% of the
portfolio. Confusingly, a similar sounding investment trust
company, launched in Edinburgh, The Scottish American
Investment Company was formed in April 1873, just a few
months after Fleming’s launch in February 1873. In
Dundee, two almost identical issues were made in the
following two years, described as the “Second Issue” and
“Third Issue”. The three issues became three separate
trust companies, under the Joint Stock Companies Act, in
1879 – the First, Second and Third Scottish American Trust
Companies Ltd, but merged into a single trust company in
1969 as The First Scottish American Trust Company Ltd.
In 1984, The First Scottish American Trust Company Ltd
became part of the Dunedin Fund Managers’ stable of
trusts and was subsequently renamed in 1990 as Dunedin
Income Growth Investment Trust. Dunedin Fund
Managers merged with Edinburgh Fund Managers in
1996, which was then acquired by Aberdeen Asset
Management in 2003. Aberdeen Asset Management
merged with Standard Life in 2017 to form what is now the
abrdn Group.
The book entitled “The History of Dunedin Income
Growth Investment Trust PLC” is available on the
Company’s website.
Your Company’s History
108 Dunedin Income Growth Investment Trust PLC
Issued Share Capital at 31 January 2022
148,164,670 Ordinary shares of 25p (153,677,935 including treasury shares)
Treasury Shares at 31 January 2022
5,513,265 Ordinary shares
Name Change
April 1990 Company name changed from “The First Scottish American Trust PLC” to Dunedin Income
Growth Investment Trust PLC
Share Capital History
April 1997 Capitalisation issue of four Ordinary shares of 25p issued for each existing Ordinary share
April 1999 Reduction of share capital by way of repayment of £840,000 of 3 ½% Preference stock
Year ended 31 January 2004 50,000 Ordinary shares purchased for cancellation
Year ended 31 January 2005 1,950,000 Ordinary shares purchased for cancellation
Year ended 31 January 2006 450,000 Ordinary shares purchased for cancellation and 450,000 Ordinary shares
purchased to hold in treasury
Year ended 31 January 2007 3,231,101 Ordinary shares purchased to hold in treasury
Year ended 31 January 2008 2,237,440 Ordinary shares purchased to hold in treasury, 1,972,800 treasury shares cancelled
Year ended 31 January 2009 1,026,007 Ordinary shares purchased to hold in treasury, 2,000,000 treasury shares cancelled
Year ended 31 January 2010 No shares purchased, cancelled or issued
Year ended 31 January 2011 No shares purchased, cancelled or issued
Year ended 31 January 2012 No shares purchased, cancelled or issued
Year ended 31 January 2013 No shares purchased, cancelled or issued
Year ended 31 January 2014 300,000 shares sold from treasury
Year ended 31 January 2015 No shares purchased, cancelled or issued
Year ended 31 January 2016 No shares purchased, cancelled or issued
Year ended 31 January 2017 493,500 Ordinary shares purchased to hold in treasury
Year ended 31 January 2018 833,000 Ordinary shares purchased to hold in treasury
Year ended 31 January 2019 1,387,018 Ordinary shares purchased to hold in treasury
Year ended 31 January 2020 105,550 Ordinary shares purchased to hold in treasury
Year ended 31 January 2021 22,449 Ordinary shares purchased to hold in treasury
Year ended 31 January 2022 No shares purchased, cancelled or issued
Your Company’s Share Capital History
Dunedin Income Growth Investment Trust PLC 109
Aberdeen Standard 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 June 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 19 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 ASFML; 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 2.50:1 2.00:1
Actual level at 31 January 2022 1.17:1 1.18:1
There have been no breaches of the maximum level during the period and no changes to the maximum level of
leverage employed by the Company. There have been no changes to the circumstances in which the Company may
be required to post assets as collateral and no guarantees granted under the leveraging arrangement. Changes to the
information contained either within this Annual Report or the PIDD in relation to any special arrangements in place, the
maximum level of leverage which ASFML may employ on behalf of the Company, the right of use of collateral or any
guarantee granted under any leveraging arrangement, or any change to the position in relation to any discharge of
liability by the Depositary will be notified via a regulatory news service without undue delay in accordance with
the AIFMD.
The information on this page has been approved for the purposes of Section 21 of the Financial Services and Markets Act
2000 (as amended by the Financial Services Act 2012) by Aberdeen Standard Fund Managers Limited which is
authorised and regulated by the Financial Conduct Authority in the United Kingdom.
AIFMD Disclosures
(
Unaudited
)
110 Dunedin Income Growth Investment Trust PLC
Alternative Performance Measures
Alternative performance measures 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.
Dividend cover
Dividend cover measures the revenue return per share divided by total dividends per share, expressed as a ratio.
2022 2021
Revenue return per share a 12.87p 10.90p
Dividends per share b 12.90p 12.80p
Dividend cover a/b 1.0 0.85
Net gearing
Net gearing measures total borrowings less cash and cash equivalents divided by shareholders’ funds, expressed as a percentage.
Under AIC reporting guidance cash and cash equivalents includes net amounts due to and from brokers at the period end as well as
cash and short term deposits.
2022 2021
Borrowings (£’000) a 42,765 43,526
Cash (£’000) b 2,855 4,002
Amounts due to brokers (£’000) c – –
Amounts due from brokers (£’000) d 857 –
Shareholders’ funds (£’000) e 464,579 448,293
Net gearing (a-b+c-d)/e 8.41% 8.82%
Premium/(discount) to net asset value per share with debt at fair value
The premium/(discount) is the amount by which the share price is higher/(lower) than the net asset value per share with debt at fair
value, expressed as a percentage of the net asset value with debt at fair value.
2022 2021
Share price (p) a 310.00p 287.00p
NAV per Ordinary share (p) b 309.03p 297.64p
Discount (a-b)/b 0.31% (3.57%)
Dunedin Income Growth Investment Trust PLC 111
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment
management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair
value throughout the year.
2022 2021
Investment management fees (£’000) 1,818 1,657
Administrative expenses (£’000) 882 986
Less: non-recurring charges (£’000) (57) (11)
Ongoing charges (£’000) 2,643 2,632
Average net assets (£’000) 472,893 414,454
Ongoing charges ratio (excluding look-through costs) 0.56% 0.64%
Look-through costs
A
0.03% 0.03%
Ongoing charges ratio (including look-through costs) 0.59% 0.67%
A
Professional services comprising new Director recruitment costs and legal fees considered unlikely to recur.
B
Calculated in accordance with AIC guidance issued in October 2020 to include the Company’s share of costs of holdings in investment companies on a look-through basis.
The ongoing charges ratio provided in the Company’s Key Information Document is calculated in line with the PRIIPs regulations which
amongst other things, includes the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms,
taking into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against
open-ended and closed-ended competitors, and the Reference Index, respectively.
Share
Year ended 31 January 2022 NAV Price
Opening at 1 February 2021 a 297.6p 287.0p
Closing at 31 January 2022 b 309.0p 310.0p
Price movements c=(b/a)-1 3.8% 8.0%
Dividend reinvestment
A
d 4.3% 4.5%
Total return c+d +8.1% +12.5%
Share
Year ended 31 January 2021 NAV Price
Opening at 1 February 2020 a 312.2p 301.0p
Closing at 31 January 2020 b 297.6p 287.0p
Price movements c=(b/a)-1 (4.7)% (4.7)%
Dividend reinvestment
A
d 4.4% 4.8%
Total return c+d (0.3)% +0.1%
A
NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total
return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
112 Dunedin Income Growth Investment Trust PLC
General
The Annual General Meeting will be held at Bow Bells
House, 1 Bread Street, London EC4M 9HH on Tuesday 24
May 2022 at 12 noon.
The Company will also be hosting an online shareholder
presentation, which will be held at 10.00am on Monday
16 May 2022. Full details on how to register for the online
event can be found at:
www.workcast.com/register?cpak=7925691640699593
Dunedin Income Growth Investment Trust PLC 113
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Dunedin Income Growth Investment Trust PLC
(the “Company”) will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Tuesday 24 May 2022 at 12 noon,
for the following purposes:
Ordinary Business
To consider and, if thought fit, pass the following as ordinary resolutions:
1. To receive the reports of the Directors and Auditor and the financial statements for the year ended 31 January 2022.
2. To receive and adopt the Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy) for the
year ended 31 January 2022.
3. To approve a final dividend of 3.90p per Ordinary share.
4. To re-elect Mr Jasper Judd as a Director of the Company.
5. To re-elect Mr Howard Williams as a Director of the Company.
6. To re-elect Mr David Barron as a Director of the Company.
7. To re-elect Ms Christine Montgomery as a Director of the Company.
8. To elect Ms Gay Collins as a Director of the Company.
9. To re-appoint Deloitte LLP as Auditor of the Company.
10. To authorise the Directors to determine the remuneration of the Auditor for the year to 31 January 2023.
11. That, in substitution for any existing authority under Section 551 of the Companies Act 2006 (the “Act”), but without
prejudice to the exercise of any such authority prior to the passing of this resolution, the Directors be and are hereby
generally and unconditionally authorised, pursuant to and in accordance with Section 551 of 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 (such shares and rights together being “relevant securities”) up to an aggregate
nominal amount of £12,354,154 or, if less, the number representing 33.33% of the issued Ordinary share capital of
the Company (excluding treasury shares) as at the date of the passing of this resolution provided that such
authorisation expires (unless previously renewed, varied or revoked by the Company in general meeting) at the
conclusion of the next Annual General Meeting of the Company or on 31 July 2023 (whichever is earlier) save that
the Company may, at any time prior to the expiry of such authority, make offers or agreements which would or
might require such relevant securities to be allotted after such expiry and the Directors may make such offers or
agreements as if such expiry had not occurred.
To consider and, if thought fit, pass the following as special resolutions:
12. That, subject to the passing of resolution number 11 set out above and in substitution for any existing power under
Sections 570 and 573 of the Companies Act 2006 (the “Act”) but without prejudice to the exercise of any such
authority prior to the passing of this resolution, the Directors be and are hereby generally empowered, pursuant to
Sections 570 and 573 of the Act, to allot equity securities (as defined in Section 560 of the Act) pursuant to the
authority conferred on them by resolution number 11 or by way of a sale of treasury shares (within the meaning of
Section 560(3) of the Act), in each case for cash and as if Section 561(1) of the Act did not apply to any such
allotment or sale provided that this power shall be limited to:
i. the allotment of equity securities or sale of treasury shares (otherwise than pursuant to sub-paragraph (ii)
below) up to an aggregate nominal value of £1,853,308 or, if less, the number representing 5% of the issued
Ordinary share capital of the Company (excluding treasury shares) as at the date of the passing of this
resolution, at a price representing a premium to the net asset value per share at allotment or sale, as
determined by the Directors; and
Notice of Annual General Meetin
g
114 Dunedin Income Growth Investment Trust PLC
ii. the allotment of equity securities by way of rights issue, open offer or other pre-emptive offer in favour of all
holders of Ordinary shares where the equity securities respectively attributable to the interests of all such
holders are either proportionate (as nearly as may be) to the respective number of Ordinary shares held by
them on a record date fixed by the Directors (subject to such exclusions, limitations, restrictions or other
arrangements as the Directors consider necessary or appropriate to deal with treasury shares, fractional
entitlements, record dates, legal, regulatory or practical problems in or under the laws of, or requirements of,
any regulatory body or any stock exchange in any territory or otherwise howsoever);
and shall expire (unless previously renewed, varied or revoked by the Company in general meeting) at the conclusion of
the next Annual General Meeting of the Company or on 31 July 2023 (whichever is earlier), save that the Company may,
at any time prior to the expiry of such authority, make offers or agreements before such expiry which would or might
require equity securities to be allotted after such expiry and the Directors may make such offers or agreements as if
such expiry had not occurred.
13. That, in substitution for any existing authority under Section 701 of the Companies Act 2006 (the “Act”), but without
prejudice to the exercise of any such authority prior to the passing of this resolution, the Company be and is hereby
generally and unconditionally authorised, for the purposes of Section 701 of the Act, to make one or more market
purchases (within the meaning of Section 693(4) of the Act) of fully paid Ordinary shares of 25p each in the capital
of the Company (“Ordinary shares”) on such terms as the Directors of the Company think fit and to cancel or hold in
treasury such shares provided that:
i. the maximum aggregate number of Ordinary shares hereby authorised to be purchased shall be 22,224,874
Ordinary shares 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;
ii. the minimum price which may be paid for an Ordinary share shall be 25p (exclusive of expenses);
iii. the maximum price (exclusive of expenses) which may be paid for an Ordinary share shall be the higher of:
a. 5% above the average of the middle market quotations of the Ordinary shares (as derived from the Daily
Official List of the London Stock Exchange) for the five business days immediately preceding the date of
purchase; and
b. the higher of the price of the last independent trade in Ordinary shares and the highest current
independent bid for Ordinary shares on the London Stock Exchange; and
iv. unless previously varied, revoked or renewed, the authority hereby conferred shall expire at the conclusion of
the next Annual General Meeting of the Company or on 31 July 2023 (whichever is the earlier) save that the
Company may at any time prior to such expiry, enter into a contract or arrangement to purchase Ordinary
shares under this authority which will or might be completed or executed wholly or partly after the expiration of
this authority and may make a purchase of shares pursuant to any such contract or arrangement.
By order of the Board Registered Office:
Aberdeen Asset Management PLC 1 George Street
Company Secretary Edinburgh EH2 2LL
6 April 2022
Notice of Annual General Meetin
g
Continued
Dunedin Income Growth Investment Trust PLC 115
Notes
i. A member entitled to attend and vote at the meeting may appoint a proxy or proxies to exercise all or any of his/her
rights to attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company.
A member may appoint more than one proxy provided each proxy is appointed to exercise rights attached to
different shares. A member may not appoint more than one proxy to exercise the rights attached to any one share.
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 your instructions directly to them. 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 have one, or if you require additional forms or would like to appoint more than one proxy, please
contact the Company's Registrars, Equiniti Limited on 0371 384 2441 (charges for calling this number are
determined by the caller’s service provider. Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday, excluding bank
holidays in England and Wales), tel international +44 (0)121 415 7047. In the case of joint holders, where more than
one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will
be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's
Register of Members in respect of the joint holding (the first-named being the most senior). A member present in
person or by proxy shall have one vote on a show of hands and on a poll every member present in person or by
proxy shall have one vote for every Ordinary share of which he/she is the holder.
ii. A form of proxy is enclosed. To be valid, any proxy form or other instrument of proxy and any power of attorney or
other authority, if any, under which they are signed or a notarially certified copy of that power of attorney or
authority should be sent to the Company’s Registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA so as to arrive not less than 48 hours (excluding non-working days) before the time fixed for
the meeting.
iii. The return of a completed proxy form or other such instrument of proxy will not prevent a member attending the
Annual General Meeting and voting in person if he/she wishes to do so.
iv. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service
may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual
and by logging on to the website euroclear.com. 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.
v. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland
Limited’s specifications, and must contain the information required for such instruction, as described in the CREST
Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by
the Company’s Registrar (ID RA19) no later than 48 hours (excluding non-working days) before the time of the
meeting or any adjournment. 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 Application Host) from which the Company’s Registrar is able to
retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should be communicated to the appointee through other means.
vi. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that
Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message.
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 system providers are referred, in particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
vii. 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.
116 Dunedin Income Growth Investment Trust PLC
viii. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a
process which has been agreed by the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12 noon on 20 May 2022 in order to be
considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully as you will be bound by them and they
will govern the electronic appointment of your proxy.
ix. The “vote withheld” option on the proxy form is provided to enable a member to abstain on any particular resolution.
It should be noted that an abstention is not a vote in law and will not be counted in the calculation of the proportion
of votes “for” or “against” a particular resolution.
x. The right to vote at the meeting is determined by reference to the Company’s register of members as at 6.30 p.m.
on 20 May 2022 or, if the meeting is adjourned, at 6.30 p.m. on the day two days (excluding non-working days) prior
to the adjourned meeting. Changes to entries on that register after that time shall be disregarded in determining
the rights of any member to attend and vote at the meeting.
xi. As at 6 April 2022 (being the latest practicable date prior to the publication of this document) the Company’s issued
share capital comprised 148,264,670 Ordinary shares of 25p each and 5,413,265 treasury shares. Each Ordinary
share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting
rights in the Company as at 6 April 2022 was 148,264,670.
xii. Any person 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/her proxy will need to ensure that both he/she and his/her proxy complies with their
respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules.
xiii. 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) to (iii) above do not
apply to a Nominated Person. The rights described in those notes can only be exercised by registered members of
the Company.
xiv. Biographical details of the Directors standing for election and re-election are set out on pages 50 to 52 of this report.
xv. Members who have general queries about the Annual General Meeting should contact the Company Secretary in
writing. Members are advised that 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) 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.
xvi. Members should note that, 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 the audit of the Company’s accounts (including the Auditor’s report and the conduct of
the audit) that are to be laid before the meeting or 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 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. Where
the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must
forward the statement to the Company’s Auditor no later than the time when it makes the statement available on
the website. The business which may be dealt with at the meeting includes any statement that the Company has
been required under Section 527 of the Companies Act 2006 to publish on a website.
xvii. No Director has a service contract with the Company. Copies of the Directors’ letters of appointment are available
for inspection on any day (except Saturdays, Sundays and public holidays in England and Wales) from the date of
this notice until the date of the meeting during usual business hours at the Company’s registered office and for 15
minutes prior to, and at, the meeting.
Continued
Notice of Annual General Meetin
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Dunedin Income Growth Investment Trust PLC 117
xviii. Information regarding the Annual General Meeting is available from the Company’s website,
www.dunedinincomegrowth.co.uk.
xix. Pursuant to Section 319A of the Companies Act 2006, any shareholder has the right to put questions at the meeting
relating to business being dealt with at the meeting.
xx. Given the evolving nature of the Covid-19 pandemic, should circumstances change significantly before the time of
the Annual General Meeting, the Company will notify shareholders of any changes to the arrangements by updating
the Company’s website and through an RNS announcement, where appropriate, as early as is possible before the
date of the meeting. Shareholders should note that if law or Government guidance so requires at the time of the
meeting, the Chairman of the meeting will limit, in his/her sole discretion, the number of individuals in attendance at
the meeting and may be required to impose entry restrictions on certain persons wishing to attend the meeting in
order to ensure the safety of those attending.
118 Dunedin Income Growth Investment Trust PLC
Dunedin Income Growth Investment Trust PLC 119
120 Dunedin Income Growth Investment Trust PLC
Dunedin Income Growth Investment Trust PLC 121
Directors
David Barron (Chairman)
Gay Collins
Jasper Judd
Christine Montgomery
Howard Williams
Registered Office & Company Secretary
Aberdeen Asset Management PLC
1 George Street
Edinburgh EH2 2LL
Email: CEF.CoSec@abrdn.com
Alternative Investment Fund Manager
Aberdeen Standard Fund Managers Limited
Bow Bells House
1 Bread Street
London EC4M 9HH
Investment Manager
Aberdeen Asset Managers Limited
1 George Street
Edinburgh EH2 2LL
abrdn Customer Services Department,
Investment Plan for Children, Investment
Trust 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
SC000881 (Scotland)
Website
dunedinincomegrowth.co.uk
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder help can be found at shareview.co.uk.
Alternatively, you can contact the Shareholder Helpline:
0371 384 2441*
(*Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday
excluding public holidays in England and Wales. Charges
for calling telephone numbers starting with ‘03’ are
determined by the caller’s service provider.)
Overseas helpline number: +44 (0)121 415 7047
Depositary
The Bank of New York Mellon (International) Limited
1 Canada Square
London E14 5AL
Stockbroker
JPMorgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Auditor
Deloitte LLP
Saltire Court
20 Castle Terrace
Edinburgh EH1 2DB
United States Internal Revenue Service
FATCA Registration Number (“GIIN”)
CJ1DH9.99999.SL.826
Legal Entity Identifier (“LEI”)
549300PPXLZPR5JTL763
Contact Addresses
For more information visit dunedinincomegrowth.co.uk
abrdn.com