Schroder UK Mid

Cap Fund plc

Report and Accounts

for the year ended 30 September 2023

Introduction

Key highlights

Net revenues after taxation

£7.842 million

(2022: £7.823 million)

Revenue return per share

22.68 pence

(2022: 22.43 pence)

Dividends per share

20.5 pence

(2022: 19.00 pence)

Net asset value (“NAV”)

per share total return*

17.6%

(2022: –30.0%)

Share price total return*

17.4%

(2022: –32.5%)

Benchmark total return

13.6%

(2022: -26.8%)

Key messages

– A high conviction portfolio targeting around 40-50 holdings, with the goal of delivering a return

in excess of the FTSE 250 ex Investment Trusts Index (the “Benchmark”), offering exposure to a

wide spectrum of investment sectors and themes, and both UK and overseas earnings.

– The Manager seeks out resilient companies that are capable of delivering high risk-adjusted

returns with rising cash flows and earnings. They can be disruptors, which challenge the status

quo within the marketplace, or established companies which can grow sustainably as they

reinvent themselves in response to the disruption. Resilience comes from clear strategic

direction, strong finances, and leading sustainability practices.

– The investment process is proven and repeatable, having generated a NAV return* of 12.20%

p.a. versus 10.29% p.a. for the Benchmark since Schroders became the Manager in 2003

1

.

1

Source: Schroders, Morningstar, 1 May 2003 to 30 September 2023. Net asset value total return compared to the benchmark of the FTSE All-Share ex Investment

Trusts ex FTSE 100 TR Index until 2011, and subsequently the FTSE 250 ex Investment Trusts Index. Past performance is not a guide to futur

e performance and may

not be repeated.

Strategic report Governance Financial Other Information

Introduction

Schroder UK Mid Cap Fund plc 1

Share price

544 pence

(2022: 480 pence)

Share price discount to

NAV per share*

12.0%

(2022: 11.4%)

Net Gearing*

6.8%

(2022: 10.8%)

Ongoing charges ratio*

0.97%

(2022: 0.89%)

Strategic Report

Chairman’s Statement 4

Investment Manager’s Review 6

Investment Portfolio 10

Ten Year Financial Record 11

Business Review 12

Governance

Board of Directors 24

Directors’ Report 26

Audit and Risk Committee Report 29

Management Engagement Committee

Report 31

Nomination Committee Report 32

Remuneration Committee Report 34

Statement of Directors’

Responsibilities 37

Financial

Independent Auditor’s Report 40

Income Statement 45

Statement of Changes in Equity 46

Statement of Financial Position 47

Notes to the Accounts 48

Other information

(unaudited)

Annual General Meeting –

Recommendations

60

Notice of Annual General Meeting 61

Explanatory Notes to the Notice

of Meeting 62

Definitions of Terms and

Performance Measures 64

Shareholder Information 66

Warning to Shareholders 67

Information about the Company 68

Some of the financial measures on these pages are classified as Alternative Performance Measures, as defined by the European Securities and Markets

Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other terms used in this report, ar

e given on page 64,

together with supporting calculations where appropriate.

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Schroder UK Mid Cap

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2 Schroder UK Mid Cap Fund plc

Schroder UK Mid Cap Fund plc 3

Strategic Report

Chairman’s Statement 4

Investment Manager’s Review 6

Investment Portfolio 10

Ten Year Financial Record 11

Business Review 12

Strategic Report

4 Schroder UK Mid Cap Fund plc

Chairman’s Statement

Investment and share price

performance

The Company’s net asset value (“NAV”) total

return for the year was 17.6%, outperforming

the Company’s Benchmark (the FTSE 250 ex

Investment Trusts Index), which produced a

total return of 13.6% over the year. The share

price total return was 17.4% due to a very

small widening of the discount of the share

price to NAV. Given the very challenging

equity market and economic environment

over the last twelve months the Board takes

the view that this is a very encouraging level

of outperformance. Combined with the fact

that the NAV of the trust has outperformed

its Benchmark in four of the last five years

this provides good evidence in support of the

quality of the investment process that is used.

Revenue and dividends

In June 2023, the Board was pleased to

announce an increased interim dividend of

5.5 pence per share which represented a

10% increase on the interim dividend paid in

2022. We have declared a final dividend of

15pence per share for the year ended

30September 2023. The proposed final

dividend brings total dividends for the year to

20.5 pence per share, a level which is covered

by current year earnings, and an increase of

7.9% on dividends declared in respect of the

previous financial year. At the current share

price of 538 pence at 7 December, this

represents a dividend yield of 3.7%.

A resolution to approve the payment of the

final dividend for the year ended

30September 2023 will be proposed at the

forthcoming Annual General Meeting (“AGM”).

If the resolution is passed, the dividend will

be paid on 15 March 2024 to shareholders

on the register on 16 February 2024.

Gearing

At the year end, net gearing stood at 6.8%

(2022: 10.8%). The Board takes the view that

utilising some structural gearing over the

medium term is beneficial to shareholders.

The Manager will continue to use this gearing

to take advantage of attractive new

investment opportunities and to participate

in capital raisings by portfolio companies.

Discount management

During the year under review the Company’s

discount to NAV slightly widened from 11.4%

to 12.0% at period end. Over the last

12months discounts across the investment

trust universe have widened, in many cases

significantly, as UK interest rates have risen

and global uncertainties have increased. The

Board continues to monitor the discount level

and proposes that the Company’s share

buy-back authorities be renewed at the

forthcoming AGM to enable future share

buybacks should they be considered

appropriate and in shareholders' interests.

Any shares so purchased will be cancelled or

held in treasury for potential reissue at a

premium to NAV.

Board changes

The Company was pleased to announce the

appointment of Harry Morley as an

independent non-executive director of the

Company, effective from 1 September 2023.

Harry brings extensive experience of the UK

Mid Cap sector to our board as a non-

executive director of JD Wetherspoon plc and

TheWorks.co.uk plc, and having previously

co-founded and served as CFO of Tragus

Holdings Ltd. A resolution to elect Harry as a

director of the Company will be proposed at

the upcoming AGM.

Andrew Page will be retiring as a director of

the Company at the next AGM in accordance

Dear Shareholder

with the Board’s succession policy. Andrew

has served on the Board for nine years, the

majority of which have been as the Chair of

the Audit and Risk Committee. Andrew’s

experienced oversight of financial and

internal controls matters, as well as his

commitment and dedication to the

Company’s success has been invaluable to

the Board during this time, and we wish him

well. He will be succeeded as Chair of the

Audit and Risk Committee by Helen Galbraith,

as Chair of the Remuneration Committee by

Harry Morley, and as Senior Independent

Director by Wendy Colquhoun.

AGM and Results Webinar

Our portfolio managers will be giving

presentations at an investor webinar on

22January 2024 at 2.00p.m. to discuss the

Company’s results (which can be signed up to

via the following link:

https://www.schroders.events/SCP23).

The Company’s AGM will be held at 12.00

noon on Friday, 8 March 2023. We encourage

shareholders to attend in person and, if

unable to do so, to cast their votes by proxy.

The AGM will include a presentation by the

Manager on the prospects for the UK market

and the Company’s investment strategy and

will provide an opportunity for shareholders

to ask questions of the Board and the

Manager. The meeting will be held at the

Manager’s office at 1 London Wall Place,

London EC2Y 5AU. If shareholders are unable

to attend the AGM in person, they can view a

livestream of the Manager’s presentation and

‘Q&A’ by signing up at:

https://schroders.zoom.us/webinar/register/

WN_IWa5BSGZRruLlzK9DGyxbg.

Outlook

It is interesting to contrast the many

negative headlines in the media with the

fact that mid cap UK equities have delivered

strong returns over the year under review.

Overall, economic growth has been better

than expected and the recovery post COVID

has been at least as good as many other

countries. This is not to downplay the

challenges that are being faced by investors

with inflation and interest rates much higher

than the recent past, geopolitical tensions

increasing and uncertainties as to how to

return the economy to more acceptable

rates of growth. However, we are now

seeing inflation falling rapidly, bringing the

prospect of lower interest rates at some

stage in 2024 which should improve the

outlook for economic growth.

Our Manager continues to identify the

relatively low valuations that apply to UK

equities despite the strong medium and

long-term returns that have been delivered.

2022 saw a significant upturn in corporate

and financial buyers of UK companies and

there are signs that this activity is starting

again as the opportunities to acquire good

businesses at attractive valuations continues

to persist. These factors should give

encouragement to actual and prospective

investors in UK mid-cap equities that this

remains a very attractive area of equity

investment.

Notwithstanding the strong total return

during the year under review, both in

absolute and relative terms and the

challenges that always seem to confront

equity investors, our Manager continues to

identify many stock specific opportunities in

UK mid cap companies. Its continued focus

remains on looking for companies which

can deliver high risk-adjusted returns with

rising cash flows and earnings and with

conservatively financed balance sheets. This

should help to continue to deliver

sustainable returns to our shareholders in

the future.

Overall we agree with our Manager’s

conclusion that for those patient investors

willing to look beyond any shorter-term

uncertainties, the UK mid cap market offers

compelling investment opportunities.

Robert Talbut

Chairman

12 December 2023

Schroder UK Mid Cap Fund plc 5

The Company’s NAV

total return for the

year was 17.6%,

outperforming the

Company’s

Benchmark (the

FTSE 250 ex

Investment Trusts

Index)

Strategic report Governance Financial Other InformationIntroduction

6 Schroder UK Mid Cap Fund plc

Investment Manager’s Review

The NAV per share total return in the 12 months to 30th September

2023 was 17.6%. This compares to 13.6% from the FTSE Mid 250 Total

Return Index. The share price total return was 17.4%.

(Source: Schroders/Morningstar, cum income NAV to NAV

return/price return). Performance is net of fees. Cumulative

performance is set out in the table below.

Long-term trend of outperformance

Since

Performance % 1 year 3 years 5 years 10 years launch

Schroder UK Mid

Cap Fund plc NAV

cum income

1

17.6 16.2 9.2 71.6 949.8

FTSE 250 ex.

Investment Trusts

index 13.6 17.2 –0.5 52.6 575.1

Relative

2

+4.0 –1.0 +9.7 +19.0 +374.7

Schroder UK Mid

Cap Fund plc

share price 17.4 28.8 17.2 66.8 1,096.2

Best performing UK equity investment trust in the AIC UK All

Companies sector since launch in 2003, as at 30 September 2023.

The above measures are on a total return basis.

1

This is an alternative performance measure. Definitions of alternative

performance measures, and other terms used in this report, are

given on page 64, together with supporting calculations where

appropriate.

2

Performance of the stock in the index relative to the FTSE 250

(ex.ITs) Index return.

Market background

UK equities rose over the period as the country emerged from a

market crisis precipitated by the Truss/Kwarteng “mini-budget” in

September 2022. The announcement of significant fiscal stimulus,

without the usual checks and balances, prompted a spike in UK

government bond yields, together with a sharp rise in market interest

rates and mortgage rates. This put pressure on the UK pensions and

fixed income market (LDI), prompting an intervention by the Bank of

England. The market recovered as many of the policies announced

were reversed, and the new chancellor Jeremy Hunt used his Autumn

Statement to promise that the country would tighten its belt in the

future.

While last year’s market turmoil in the UK was, to some extent,

self-inflicted, other countries have since seen their government bond

yields rise sharply and experienced their own crises. This has

occurred against the backdrop of persistent global inflationary

pressures, expectations of higher for longer policy interest rates and

concerns around the sustainability of government budgets. Rising

bond yields, for instance, have exposed management issues at US

regional banks and forced the rescue of the investment bank Credit

Suisse by rival UBS, in a deal facilitated by the Swiss authorities. It

would seem as though change is afoot, in terms of the economic

regime we have now entered, compared with the "lowflation" years

following the 2007/08 GFC and, indeed, the three decade period of

moderating inflation and rates starting in the 1990s.

Against this backdrop, equity markets and domestically focused

sectors, in particular, have been sentiment driven and consequently

very volatile. Valuations have fluctuated depending on whether

macro-economic data indicated whether policy rates might be close

to a peak for this cycle, or not. In this regard, the recovery in UK small

and mid-caps over the period lost some momentum following the

initial rebound from the lows of September 2022. More positively,

towards the period end, market interest rates were relatively stable as

the sell-off in UK government bonds moderated (while it accelerated

in other territories, and in particular the US amid political

disagreement over levels of government borrowing) and mortgage

rates fell. This reflected hopes that near-term inflation pressures may

be moderating, and UK base interest rates may have peaked for now,

with the Bank of England’s chief economist Huw Pill, guiding the

market to a “Table Mountain” rather than, previously, a “Matterhorn”

shape for interest rates.

Portfolio performance

Your Investment Managers are pleased, as shareholders ourselves in

Schroder UK Mid Cap Fund plc, to report outperformance of the

benchmark index, via an inflation-beating return of 17.6%, in the

12months ending 30September 2023.

Stocks held – significant positive and negative

contributions versus the benchmark

Weight Relative

Positive Portfolio relative perfor-

contributor weight

1

to index mance

2

Impact

3

(%) (%) (%) (%)

Games Workshop 3.7 +2.4 78.4 +1.5

4Imprint 3.5 +2.9 52.3 +1.3

Dunelm 3.7 +3.2 41.6 +1.1

Cranswick 3.0 +2.3 22.2 +0.5

Computacenter 2.9 +2.2 21.1 +0.5

Weight Relative

Negative Portfolio relative perfor-

contributor weight

1

to index mance

2

Impact

3

(%) (%) (%) (%)

NCC 0.7 +0.5 –65.6 –0.8

Victrex 2.7 +2.1 –26.5 –0.7

Ecora Resources 1.0 +1.0 –38.1 –0.6

Future 1.4 +0.8 –46.1 –0.5

Telecom Plus 2.8 +2.2 –23.8 –0.5

Source: Schroders, Factset, close 30 September 2022 to close 30 September

2023.

1

Weights are averages.

2

Performance of the stock in the index relative to the FTSE 250 (ex. ITs) Index

return.

3

Impact is the contribution to performance relative to the FTSE 250 (ex. ITs)

Index.

Strong stock picks in consumer facing companies Games Workshop

(the company behind the Warhammer franchise), Dunelm (the leader

in UK homeware retail) and Cranswick (food manufacturer

specialising in pork and chicken) underpinned this outperformance.

This is not the first year that Dunelm and Games Workshop have

appeared in the top contributors’ table, and this is a testament to the

strong “operational grip” – as Dunelm management would put it –

exercised at both companies.

Games Workshop performed very well on the back of news it had

struck an agreement in principle with Amazon to develop its

intellectual property into film and TV productions. We have long seen

scope for the company to selectively licence its intellectual property to

grow the fan base and create a truly global franchise. The Amazon

deal has brought this potential to the attention of the wider market.

Schroder UK Mid Cap Fund plc 7

Strategic report Governance Financial Other InformationIntroduction

Dunelm has bounced back, somewhat, from its oversold position at

the end of September 2022, when concern around consumer-focused

stocks was at peak levels. It has continued to trade strongly, driven by

volume, and taking market share in both its core homewares sector

and in furniture. The company is continuing to benefit from people

spending increased time in their homes, partly driven by more

home-working, and also, presumably, because of a desire to save

money, where the price points sit very close to those of IKEA, for

example. The announced 40p special dividend demonstrates the cash

generative nature of the business model.

4Imprint, the promotional products business with over 98% of

revenues coming from North America, continues to enjoy rapid

post-pandemic growth, and appears in our top five contributors table

for the second year in a row. 2022 results revealed 45% revenue

growth and record operating profit. With just 6% market share of an

industry that is transitioning online, 4Imprint’s leading digital and TV

marketing skills position it well for further market share gains.

Similar to what was reported at the time of the interim results, the

most significant detractor to performance was cyber security

business, NCC. In the second half of its financial year 2023, NCC

experienced softening demand for its services, as large US West Coast

technology customers deferred buying decisions. Margins were also

being squeezed from cheaper overseas competition, and although

the resilience of NCC’s profitable escrow business could be expected

to mitigate some of the pressure, on balance, we decided to exit this

small position. We retain exposure to the exciting structural growth

market of cybersecurity via our holdings in defence stocks

QinetiQ

and Chemring, for example.

High performance polymer business

Victrex also underperformed.

The company saw substantial inflation in raw material and energy

costs, which it was only able to pass through at a lag. We continue to

think the business is well-placed, with a 50% capacity share of the

niche, high margin polyetheretherketone (“PEEK”) market, reflected in

high gross margins (of 54%). It has a strong balance sheet and an

attractive valuation, relative to its history and the broader market.

Mining royalties business

Ecora Resources, also detracted from

performance. The returns from its steelmaking coal exposure began

to decline, as expected, and commodity prices weakened. In the last

two years, the business has begun to move away from being a

predominantly steelmaking coal business, using the supernormal

profits from this commodity to successfully pivot towards

commodities that will enable the energy transition. Meanwhile, the

stock trades at a significant discount to its net asset value per share.

Stocks not held – significant positive and negative

contributions versus the benchmark

Weight Relative

Positive Portfolio relative perfor-

contributor weight

1

to index mance

2

Impact

3

(%) (%) (%) (%)

Tui – –1.0 –41.7 +0.8

Spirent Comms – –0.6 –59.1 +0.5

Drax – –1.1 –37.9 +0.5

Pennon – –0.9 –35.0 +0.4

LXI Reit – –0.7 –35.8 +0.3

Weight Relative

Negative Portfolio relative perfor-

contributor weight

1

to index mance

2

Impact

3

(%) (%) (%) (%)

Marks & Spencer – –1.3 109.0 –1.0

Howden Joinery – –1.5 38.7 –0.5

IMI – –1.2 35.6 –0.5

Hikma Pharma – –1.2 41.8 –0.4

Intermediate Capital – –1.3 11.7 –0.4

Source: Schroders, Factset, close 30 September 2022 to close 30 September

2023.

1

Weights are averages.

2

Performance of the stock in the index relative to the FTSE 250 (ex. ITs) Index

return.

3

Impact is the contribution to performance relative to the FTSE 250 (ex. ITs)

Index.

We had a significant positive contribution from our underweight to

the travel and leisure sector, demonstrated most clearly by not owning

travel company TUI. Not owning shares in telecommunications testing

and assurance equipment company Spirent Communications, which

disappointed the market several times during the year, as an expected

bounce back in capital expenditure spend from its telecoms

customers failed to materialise, was also helpful for performance, as

was not owning renewable energy company Drax. The National Audit

Office announced that they would produce a report in response to the

Government’s Biomass Strategy which dented the share price, given

Drax’s reliance on biomass.

Not holding Marks & Spencer (we focussed our attention elsewhere in

the general retail sector, broadly successfully) and Hikma

Pharmaceuticals, both of which were promoted to the FTSE 100,

detracted from our performance. Neither did we hold trade kitchen

supplier company Howden Joinery, which is one of the larger

companies in the benchmark, and which outperformed. We prefer to

hold Grafton Group, whose shares we see as attractively priced. It is

exposed to broadly similar verticals (building materials and home

improvement), and is well diversified, with around half its operations in

the UK and half in other European countries.

Portfolio activity

Our portfolio consists of a combination of attractively priced structural

growth opportunities (unique companies) in market niches (see

Outlook), together with “flex” stocks, which can be in more cyclical

areas, or might be at a strategic crossroads of some sort.

We established a new holding in Babcock International, where we

see growing demand for the company’s defence and nuclear services,

combined with an improved balance sheet, following several

disposals.

We added a holding in Britvic, the international soft drinks business

with brands such as Robinsons, Tango and J2O. The company also acts

as a bottling partner for PepsiCo in Great Britain, signing a 20-year

agreement on carbonated brands in 2020. The soft drinks industry is

attractive, with companies able to pass through price increases ahead

of inflation to customers desiring an affordable treat. Britvic has

successfully managed the recent spike in inflation, delivering

operating margin improvements in financial years 2021 and 2022. We

expect the business to continue to be resilient.

We also added speciality chemicals company Elementis to the

portfolio, following the disposal of its chromium business, which

should improve the company’s balance sheet and sustainability

profile.

We established a new holding in Israeli gas company, Energean, on

the expectation of a near doubling of its gas production by the end of

2024, and a return of value to shareholders of at least $1bn by the

end of 2025. Post period end, heightened geopolitical risk has

8 Schroder UK Mid Cap Fund plc

impacted the shares, causing a steep fall in value, followed by a

subsequent recovery (as at 11 December 2023) to 13.4% below their

value at 30September 2023, and we continue to monitor the

situation. Energean has long-term fixed price contracts with

independent power producers that have over 10 years left to run.

Following the disposals of its cigarette filters and packaging

businesses, Essentra has emerged as a focused business

concentrated on the attractive industrial components space. With a

strengthened balance sheet, the business should be able to make

value enhancing acquisitions to consolidate a fragmented sector,

while continuing to grow organically. It has already made one such

acquisition, even as management continues to buy back shares in line

with its £60m buyback commitment. Although recent trading has

been weak, in line with the broader industrials sector, it is reasonable

to expect the reported numbers to improve as annual comparisons

begin to ease. Management has recently confirmed that this year’s

profit will be within the range of expectations.

We bought shares in specialty chemicals company Johnson Matthey,

which manufactures catalysts for emission controls systems, and

which is also, excitingly, heavily involved in the energy transition,

through its Hydrogen Technologies businesses.

We purchased a stake in Senior, the specialist fluid conveyance and

thermal management engineering company, which, we expect, will

benefit from recovery and structural growth in the commercial

aerospace sector, and continue to win share in the heavy truck

market. An improved balance sheet provides additional comfort.

We bought shares in challenger bank Virgin Money, where we

expect significant improvement in its net interest income in the

medium term. It is in the process of returning a significant amount of

capital (£175m, just under 10% of its market capitalisation at the time

of writing) to shareholders via share buybacks, and we see the shares

as attractively priced.

Our new holding in WH Smith is our main exposure to the Travel

sector. WH Smith’s airport concessions are well placed to benefit from

improving trends in this sub sector. The company has been successful

in winning new locations in US airports, and has a large backlog of

stores won but not opened that will drive growth in the future.

We sold our holdings in specialist mining engineer Weir and

distributor Diploma on their promotion to the FTSE 100, in line with

our stated policy.

We disposed of our residual holdings in gaming company, 888, and

events, media and marketing company Ascential, following a period of

share price recovery. We also sold our small holding in housebuilder

Crest Nicholson, and our remaining position in cyber security and

escrow business NCC, as described above. With the investment case

having played out, we exited Investec and reinvested some of the

proceeds in Virgin Money, also as described above. We exited our

residual position in Ted Baker, following its acquisition by the US

private company American Brands Group.

We disposed of our holding in oil services company Petrofac following

news of the CEO’s departure. We exited our residual position in PZ

Cussons and reinvested the proceeds into drinks manufacturer and

Irn Bru owner AG Barr, which made an interesting entry into the

growing energy drinks market via its acquisition of energy, sports and

protein drinks manufacturer Boost Drinks. Finally, we sold our position

in speciality chemicals company Synthomer, following a recovery in

the share price, seeing stronger balance sheets elsewhere in the

sector.

Outlook and strategy

The year ended September 2023 yielded a welcome return to the

long-term trend of outperformance for Your Company, with a positive,

inflation-beating total return. We have analysed the stock specific

reasons for this above.

That the UK market, particularly Mid-Caps, has had a difficult time,

driven partly by bad PR (including incorrect GDP data from the ONS,

which had masked the economy’s complete recovery from the COVID

pandemic, corrected only in September), and partly by more stubborn

than expected inflation and a return to interest rates last seen around

the time of the Global Financial Crisis, is unlikely to be a topic of hot

debate. Geopolitical risk has increased since we wrote our mid-year

outlook, but this fact does not seem to have put much of a dent in the

market’s confidence in the “Magnificent Seven”, which have streaked

ahead on a cloud of AI (recall that by the end of the film, only three of

the seven were still alive).

We see opportunity in the fact that UK mid cap aggregate valuations

are now sitting at a discount to where they started in autumn 2022.

Most strikingly, they are on a discount to UK large caps, and the yield

of the dividend payers in the Mid 250 index is now at an aggregate

5.3% for the 12 months ahead, vs 4.6% for the FTSE 100

1

. Inflation is

slowly, but mechanically, easing, and although interest rates are

higher than we might have hoped a year ago, the Bank of England

would appear to be showing a more dovish stance at this point.

Our response, in this environment, is to stick to our strategy of

choosing resilient businesses which can deliver high risk-adjusted

returns with rising cash flows and earnings. We have maintained our

focus on two categories of investment. First, those unique assets with

scarcity value and franchise power that allow management teams to

raise prices without noticeably impacting demand. We can logically

expect to be able to buy more of these types of assets if the current

indiscriminatory selloff continues. The other category (flex) takes in

more cyclical businesses or industries that are undergoing some sort

of change, or that might be at some form of a strategic crossroads.

This could be industry consolidation, management change or supply

retreating out of the market. As a result of this change, we believe

these companies will deliver better returns on capital in the future,

rewarding shareholders. Additionally, portfolio companies tend to be

net cash, or to have low levels of debt. This is important as refinancing

costs have increased sharply, hurting profitability, and increasing risks

for equity holders.

Our cautious approach has meant that, in aggregate, around 80% of

our portfolio holdings are geared at 1.0x net debt: EBITDA or less

2

,

which means that they are far less indebted than the aggregate of the

underlying index. This also means that they are in a position to invest

for growth, organic or acquired, to pay dividends (ordinary or special –

we have had five portfolio companies pay special dividends this year)

and/or to carry out share buybacks, where appropriate. Provided this

activity can be done generating a return which beats the company’s

opportunity cost of capital, shareholders will benefit. This year, fifteen

of our fifty-two portfolio companies have carried out a share buyback

programme and twelve programmes are ongoing at the time of

writing. Companies such as asset manager Man Group ($1bn of

shares bought back over 5 years) are typical of the cash generative

business models which we favour in our portfolios.

And what of M&A? It would seem that the prospect of more settled

credit markets, together with eye catching valuations, has spurred

acquirors into action post a summer lull, particularly in the small cap

arena, with recent bids for property listings company On The Market,

media company Kin & Carta and The Restaurant Group, the owner of

Wagamama. After a protracted negotiation period, media mid cap

Ascential has announced the disposal of two of its three business

divisions, one to private equity and one to a US corporate. It seems

logical to us that, if so many UK Mid Caps continue to be priced below

their intrinsic value, we will see more bid approaches.

We would like to remind readers that we are fishing in an attractive

pond. In terms of the long-term potential of UK equities, we suggest

that investors willing to look beyond the ongoing negative headlines

will find the UK punches above its weight. This can be seen in terms of

multi-baggers relative to the US. (See our recent article “

30-baggers”:

Investment Manager’s Review

continued

1

Source: Peel Hunt

2

Excluding financials and real estate holdings.

Schroder UK Mid Cap Fund plc 9

why the UK has more than its fair share, and our podcast on the topic,

both available on the Company’s web pages), and this is why the

Benchmark has beaten the S&P 500 return over the 25 years to

30September 2023, when measured in local currency. In US dollar

terms, it has very nearly matched the popular US index. The Mid 250

is populated by multiple “unique” companies, with strong growth

prospects, generating cash and delivering attractive returns on

capital.

As stock pickers, we are confident that the collective strength of our

holdings’ balance sheets will continue to provide resilience in a

challenging economic environment. We are sticking to our sell

discipline, avoiding companies whose business models are in danger

of being disrupted while seeking out companies which have the ability

to reinvent themselves, or which might be the next mid cap disruptor.

Ten largest overweight positions

Benchmark

Market Absolute Market Active Market

Description Value % Value % Value % FTSE Industry

4Imprint Group plc 4.20% 0.70% 3.50% Consumer Discretionary

Dunelm Group plc 4.00% 0.60% 3.50% Consumer Discretionary

Computacenter plc 3.80% 0.80% 2.90% Technology

Oxford Instruments plc 3.50% 0.60% 2.90% Industrials

Cranswick plc 3.80% 0.90% 2.90% Consumer Staples

Man Group plc 4.10% 1.30% 2.80% Financials

Inchcape plc 4.10% 1.30% 2.80% Industrials

Spectris plc 4.40% 1.70% 2.70% Industrials

Telecom Plus plc 3.10% 0.50% 2.60% Telecommunications

Games Workshop Group plc 4.00% 1.60% 2.40% Consumer Discretionary

Schroder Investment Management Limited

12 December 2023

Past Performance is not a guide to future performance. The value

of investments and the income from them may go down as well as

up and investors may not get back the amounts originally

invested.

This information is not an offer, solicitation or recommendation to

buy or sell any financial instrument or to adopt any investment

strategy.

Strategic report Governance Financial Other InformationIntroduction

10 Schroder UK Mid Cap Fund plc

Investment Portfolio as at 30 September 2023

Stocks in bold are the 20 largest investments, which by value account for 59.4% (30 September 2022: 61.4%) of total investments. Investment

are all equities.

£’000 %

Industrials

Spectris 9,503 4.1

Oxford Instruments 7,448 3.3

QinetiQ 6,376 2.8

Grafton 5,424 2.4

Redrow 4,651 2.0

Babcock 4,465 2.0

Tyman 4,046 1.8

Redde Northgate 3,887 1.7

Chemring 3,843 1.7

Bodycote International 3,589 1.6

Senior 2,722 1.2

Clarkson 2,708 1.2

Keller 2,704 1.2

Paypoint 2,616 1.1

International Workplace 1,981 0.9

Essentra 1,780 0.8

XP Power 1,770 0.8

James Fisher 507 0.2

Total Industrials 70,020 30.8

Consumer Services

4Imprint 8,925 3.9

Inchcape 8,874 3.9

Dunelm 8,602 3.7

WH Smith 5,779 2.5

Pets At Home 4,015 1.8

Watches of Switzerland 3,257 1.4

Future 2,667 1.2

Total Consumer Services 42,120 18.4

Financials

Man Group 8,713 3.8

Safestore 5,296 2.3

Paragon 4,920 2.2

IG Group 4,919 2.2

Savills 3,979 1.7

Just Group 2,948 1.3

£’000 %

OSB 2,848 1.2

Londonmetric Property 2,683 1.2

Virgin Money 1,991 0.9

Sirius 1,981 0.9

Bridgepoint 1,310 0.6

Total Financials 41,588 18.3

Consumer Goods

Games Workshop 8,659 3.8

Cranswick 8,170 3.6

Vistry 4,104 1.8

A.G. Barr 3,683 1.6

Photo-Me 3,629 1.6

Britvic 1,875 0.8

Total Consumer Goods 30,120 13.2

Basic Materials

Victrex 5,901 2.6

Johnson Matthey 3,175 1.4

Elementis 2,198 1.0

Anglo Pacific 2,044 0.9

Total Basic Materials 13,318 5.9

Technology

Computacenter 8,096 3.5

IP Group 3,214 1.4

Total Technology 11,310 4.9

Healthcare

Spire Healthcare 4,273 1.9

Genus 4,188 1.8

Total Healthcare 8,461 3.7

Telecommunications

Telecom Plus 6,556 2.8

Total Telecommunications 6,556 2.8

Oil & Gas

Energean Oil and Gas 4,458 2.0

Total Oil & Gas 4,458 2.0

Total investments 227,950 100.0

Schroder UK Mid Cap Fund plc 11

Ten Year Financial Record

At 30 September 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Shareholders’ funds (£’000) 161,739 173,327 184,260 192,718 226,577 229,734 226,424 199,524 277,569 187,393 213,823

NAV per share (pence) 447.5 479.6 509.8 533.2 632.0 640.8 633.5 569.0 791.6 541.9 618.3

Share price (pence) 420.0 448.9 462.5 435.4 524.5 538.0 540.0 458.5 730.0 480.0 544.0

Share price discount to

NAV per share* (%) 6.1 6.4 9.3 18.3 17.0 16.0 14.8 19.4 7.8 11.4 12.0

Gearing/(net cash)* (%) 2.0 (4.4) (6.1) 1.5 (0.5) (3.0) 4.3 5.3 7.7 10.8 6.8

For the year ended 30 September 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Net revenue return after

taxation (£’000) 3,096 3,506 3,549 4,455 5,031 6,015 7,325 3,155 5,322 7,823 7,842

Revenue return per share (pence) 8.57 9.70 9.82 12.33 13.96 16.78 20.43 8.92 15.18 22.43 22.68

Dividends per share (pence) 7.70 8.50 9.20 11.25 13.10 16.00 18.50 13.30 14.80 19.00 20.5

Ongoing Charges* (%) 1.01 0.94 0.93 0.95 0.92 0.90 0.90 0.90 0.90 0.89 0.97

Performance

1

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

NAV total return* 100.0 108.9 117.8 125.5 151.9 157.1 160.0 147.7 209.5 146.7 172.5

Share price total return* 100.0 108.8 114.2 109.6 135.5 142.4 148.1 129.6 210.7 142.1 166.8

Benchmark 100.0 105.3 118.7 129.0 147.2 153.4 153.7 130.2 183.4 134.3 152.6

1

Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2013.

*Alternative performance measures.

NAV per share, share price and Benchmark total returns for the 10 years ended

30September 2023.

90

100

110

120

130

140

150

160

170

180

190

200

210

220

230

240

NAV

Share price

Benchmark

30-Se

p-2013

30-Se

p-2014

30-Se

p-2015

30-Se

p-2016

30-Se

p-2017

30-Se

p-2018

30-Se

p-2019

30-Se

p-2020

30-Se

p-2021

30-Se

p-2022

3

0-Se

p-2023

Strategic report Governance Financial Other InformationIntroduction

Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2013.

10 Year NAV, share price and Benchmark total returns

Definitions of terms and Alternative Performance Measures are provided on page 64.

12 Schroder UK Mid Cap Fund plc

Business Review

The Company is a listed investment trust, that has outsourced its

operations to third party service providers.

The Board has appointed the Manager, Schroder Unit Trusts Limited,

to implement the investment strategy and to manage the Company’s

assets in line with the appropriate restrictions placed on it by the

Board, including limits on the type and relative size of holdings which

may be held in the portfolio and on the use of gearing, cash,

derivatives and other financial instruments as appropriate.

The terms of the appointment are described more completely in the

Directors’ Report including delegation to the portfolio managers and

their team. The Manager also promotes the Company using its sales

and marketing teams. The Board and Manager work together to

deliver the Company’s investment objective, as demonstrated in the

diagram above.

Investment objective

The Company’s investment objective is to invest in mid cap equities

with the aim of providing a total return in excess of the FTSE 250 ex

Investment Trusts Index.

Investment policy

The Manager applies a high conviction approach, managing a focused

portfolio of resilient companies that are all capable of delivering

excess risk-adjusted returns with rising cash flows and earnings.

Fundamental research forms the basis of each investment decision

taken by the Manager. The Company will predominantly invest in

companies from the FTSE 250 Index, but may hold up to 20% of its

portfolio in equities and collective investment vehicles outside the

benchmark index. The Company may also invest in other collective

investment vehicles where desirable, for example to provide exposure

to specialist areas within the universe. The Company has the ability to

use gearing for investment purposes up to 25% of total assets.

Status

The Company is domiciled in the UK and is an investment company

within the meaning of section 833 of the Companies Act 2006.

The Company carries on business as an investment trust. Its shares

are listed and admitted to trading on the premium segment of the

main market of the London Stock Exchange. It has been approved by

HM Revenue & Customs as an investment trust in accordance with

section 1158 of the Corporation Tax Act 2010, by way of a one-off

application and it is intended that the Company will continue to

conduct its affairs in a manner which will enable it to retain this status.

The Company is not a “close” company for taxation purposes.

Purpose, values and culture

The Company’s purpose is to create long-term shareholder value, in

line with the investment objective.

The Company’s culture is driven by its values: transparency,

engagement and rigour, with collegiate behaviour and constructive,

robust challenge. The values are all centred on achieving returns for

shareholders in line with the Company’s investment objective. The

Board also promotes the effective management or mitigation of the

risks faced by the Company and, to the extent it does not conflict with

the investment objective, aims for the Company’s operations to be

structured taking into account all its stakeholders and their impact on

the environment and community.

Acting with high standards of integrity and transparency, the Board is

committed to encouraging a culture that is responsive to the views of

shareholders and its wider stakeholders.

As the Company has no employees and acts through its service

providers, its culture is represented by the values and behaviour of the

Board and third parties to which it delegates. The Board aims to

encourage a culture of constructive challenge with the key suppliers

and openness with all stakeholders. The Board is responsible for

embedding the Company’s culture in the Company’s operations. The

Board recognises the Company’s responsibilities with respect to

corporate and social responsibility and engages with its outsourced

service providers to safeguard the Company’s interests. As part of this

ongoing monitoring, the Board receives reporting from its service

providers with respect to their anti-bribery and corruption policies;

Modern Slavery Act 2015 statements; diversity policies; and

greenhouse gas and energy usage reporting. The Company is

required to obtain the prior approval of the Ordinary Shareholders to

any material change to its published investment policy.

Business model

Investor

value

Strategy

Board

Appoint Manager and

other service providers

to achieve objectives

Responsible for

overall strategy and

oversight including

risk management

Activities centred

on the creation of

shareholder value

–

Set objectives, strategy and key

performance indicators (“KPIs”)

–

Oversight

Oversee portfolio

management

Monitor achievement

of KPIs

Oversee the use of gearing

Oversee discount/premium

management and the

provision of liquidity

through share issuance

and repurchase

–

Investment

Manager implements

the investment strategy

by following an

investment process

Supported by strong

research and

risk environment

Regular reporting and

interaction with the Board

–

Promotion

Marketing and sales

capability of the Manager

Support from the corporate

broker with secondary

market intervention to

support discount/

premium management

–

Competitiveness

Board is focused on ensuring:

– that the vehicle remains

attractive to investors

– that the fees and ongoing

charges remain competitive

Schroder UK Mid Cap Fund plc 13

Key performance indicators (“KPIs”)

The investment objective

The Board measures the development and success of the Company’s

business through achievement of the Company’s investment

objective, which is considered to be the most significant key

performance indicator for the Company.

Commentary on performance against the investment objective can be

found in the Chairman’s Statement.

At each meeting, the Board considers a number of performance

indicators to assess the Company’s success in achieving its investment

objective. These are as follows: NAV total return; share price total

return; share price discount/premium to NAV per share and ongoing

charges. These are classed as Alternative Performance Measures

(“APMs”) and their calculations are explained in more detail on

pages64 and 65.

Performance against these indicators is reported on page 11.

NAV and share price total return

At each meeting, the Board reviews the performance of the portfolio

in detail and discusses the views of the portfolio managers with them.

Share price discount/premium to NAV per share

The Board reviews the level of share price discount to NAV at each

Board meeting and buys back shares where appropriate, taking

account of the interests of all shareholders.

Share issuance is also considered, where relevant, and at a premium

to NAV, in order to improve liquidity where this is in shareholders’

interests.

Ongoing charges

The Board reviews the Company’s ongoing charges to ensure that the

total costs incurred by shareholders in the running of the Company

remain competitive when measured against peer group funds. An

analysis of the Company’s costs, including management fees,

directors’ fees and general expenses, is submitted to each Board

meeting. Management and any performance fees payable are

reviewed at least annually.

Revenue and dividends

The Board considers the payment of an interim and final dividend

annually, taking into account revenue generated during the year. The

net revenue return for the year, after finance costs and taxation, was

£7,842,000 (2022: £7,823,000), equivalent to a revenue return per

share of 22.68pence (2022: 22.43pence). The Board was pleased to

announce on 28June 2023 an interim dividend of 5.5pence per

share for the year ending 30September 2023. The directors have

recommended the payment of a final dividend for the year of

15.0pence per share (2022: 14.0pence) payable on 15March 2024.

The dividend will be payable to shareholders on the register on 16

February 2024 and the ex-dividend date will be 15 February 2024.

Risk factors

In addition to the performance indicators set out above, the Board

monitors risk factors relating to investment performance on a

quarterly basis.

Stock selection and portfolio construction

Investment process

In order to meet the investment objective, the Manager applies a high

conviction approach, managing a focused portfolio of high quality

companies that are all capable of delivering excess risk-adjusted

returns with rising cash flows and earnings. These returns can come

from “disruptors”, which change the status quo within the

marketplace, or from established companies which can grow

sustainably by reinventing themselves in response to the disruption.

High conviction: We only invest where we believe there is a very

strong case to do so. We don’t carry any stocks where we are not

convinced that they will make a positive impact on performance. This

is reflected in a high active share.

Resilient: resilience goes hand in hand with sustainability. When we

say resilience, we mean the ability of a business to thrive for many

years into the future. It is a driver of investment returns and an

approach for reducing risk. With that in mind, we seek well-managed

companies, where management has a long-term vision, so that the

business is capable of generating risk adjusted returns in excess of

cost of capital. We are aiming for good quality longer-term returns

rather than risking money on a short-term anomaly.

Strategic report Governance Financial Other InformationIntroduction

The diagram below details the Manager’s investment process.

Investment

Process

Positively and profitably

responding to disruption

Offering their stakeholders

something different, new or

better

Well managed, leading

ESG practices, strong

finances and clear

strategic vision

Exposed to a growing

market and a strong

market position

or potential

High conviction

40-50 stocks

Cha

llenge the

st

a

tus quo

Grow

sustainably

Resilie

nt

Reinven

t

14 Schroder UK Mid Cap Fund plc

Challenging the status quo: Whether it be a service or a product, or

the delivery of this, the company is “doing it a different way”. An

example of this in the portfolio is fund management company Man

Group, which uses quantitative methods to deliver novel investment

ideas.

Growing sustainably: Sustainability in investment has multiple

facets. We seek out companies which are exposed to a structural

growth market and have a strong or potentially strong position in this

market. The company could also be creating a new market (a

“disruptor”). While the Company does not automatically exclude

sectors or particular companies based on specific ESG metrics, ESG

factors are incorporated into the Managers’ investment decision

making process. Another form of sustainability comes from acting

responsibly, ethically and in an environmentally sound way and

Schroders’ proprietary Sustainability tools, SustainEx and Context,

assist us in examining whether companies are targeting the correct

behaviours. Examples in the portfolio which tick both boxes include

Victrex and Oxford Instruments.

Reinvent: Established companies which do not continually reinvent

themselves are exposed to an existential threat in the Manager’s view.

Examples of companies which are avoiding this threat in the portfolio

include Grafton, which has moved away from commodity products

and into high value niche markets, and Inchcape, which is assisting its

suppliers (the original equipment manufacturers), using its technology

and vast store of data, thus helping to modernise the car distribution

industry.

Sustainable growth is key to the investment

strategy

As Manager of the Company, we are stewards of capital, focusing on

the long-term prospects of the assets in which we invest. We analyse

each investment’s ability to create, sustain and protect value to ensure

that it can deliver returns in line with our shareholders’ objectives.

Sustainability is key and that is reflected in our approach to investing.

Sustainable companies can continue for an extended period or

without interruption. They will possess many, if not all, of the following

characteristics:

• Capable of compound growth, often due to exposure to a

structural growth market, or gaining significant share in a static or

declining market

• Possessing a unique or rare business model, relative to the

investment universe

• Led by a proven, strong, management team, or one where we see

potential for this

• With business practices which are transparent, clearly laid out and

explained

• Having accounting practices which are of a high standard

• Generating cash which allows the business to grow

• Underpinned by a strong or strengthening (thanks to cash

conversion) balance sheet

• Management will not destroy value, e.g. by making frequent or

unsuitable acquisitions or over gearing the balance sheet

ESG and sustainability benchmarking

Internal accreditation

• Sustainability is a building block of the investment process and

can be clearly evidenced

• The investment process applied by the portfolio managers of

Schroder UK Mid Cap Fund plc is ESG “integrated”

In 2019 Schroders rolled out an internal ESG accreditation process. As

part of this, the portfolio’s integration process has been reviewed and

approved every year since 2020. This means that sustainability is a

building block of the investment process and can be clearly evidenced.

External benchmarking

The Manager is pleased to report that the Company has been given a

Morningstar Sustainability Rating (“Globe” rating) of 5, out of a

maximum of 5. This means that it is in the top 10% of Morningstar’s

UK Equity Mid/Small Cap global category.

This fund-level rating evaluates how much ESG risk is embedded in a

fund relative to its Morningstar peer group, i.e. the risk of something

going wrong in an ESG context. Under the widely accepted premise

that the world is transitioning to a more sustainable economy,

Morningstar’s view is that a risk-based evaluation is the best available

technique to assess the ESG characteristics of a fund.

Morningstar Sustainability Rating

If we look specifically at carbon intensity, one measure of this, which

we source from MSCI data, indicates that the Company’s carbon

intensity is around half that of the benchmark. For this we use Scope

1+2 Carbon Intensity – which is the average carbon intensity (tonnes

CO2e/$ million of revenues) of portfolio companies, weighted by

position size.

Source: MSCI.

2022: Fund coverage: 92%, Benchmark coverage: 96%

2023: Fund coverage: 98%, Benchmark coverage: 99%

Extensive engagement with portfolio

companies

The Manager believes that, as external research on mid cap

companies is limited in scope and often in quality, this provides an

opportunity to deliver excess returns to shareholders. Detailed

analysis of company reports and accounts, company meetings and

visits, ESG analysis and engagements and the use of industry experts

are all a vital part of the Manager’s research process. It is the

application of experience to these varied inputs, coupled with an

extensive global in-house analytical resource that the Board believes

gives the team the potential to deliver attractive returns.

As part of our process, we meet with company management teams in

advance of investing, as well as meeting with the management of all

portfolio companies at least once a year. In many cases, we meet with

them more often than this, as well as engaging with board members.

In addition, we will attend meetings with most management teams of

companies in this dynamic Benchmark over the course of a year as we

regularly review the investment cases of companies not held in the

portfolio. We believe it is just as important to understand why you

don’t hold something as it is to know why you do.

Fund Benchmark

Carbon intensity

Tonnes of CO2 per $million sales

0

50

100

150

47.0

34.1

114.2

94.4

2022

2023

2022 2023

Business Review

continued

Schroder UK Mid Cap Fund plc 15

Dedicated team of ESG specialists

We have always taken pride in our level of engagement with

companies. Our brand, as well as extensive analytical resource, affords

us the ability to regularly engage with companies on all aspects of

corporate strategy, including specific ESG/sustainability matters.

We are fortunate at Schroders to have access to a dedicated team of

over 50 ESG/sustainability specialists. Their role is to research

ESG/sustainability themes within sectors, provide proprietary analytics

and tools, as well as to analyse and engage with individual companies

on these issues. We engage with the output of this team regularly to

ensure that these factors inform the investment process.

The next table shows the number of shareholder resolutions the

Company has voted on in the last year and over three years.

Year ended 3 years to

Proxy voting 30 September 2023 30 September 2023

Meetings 63 188

Resolutions 1,087 3,144

Voted against management 1.7% 5.2%

Did not vote 0 0

Source: Schroders

Responsible investment

The Company delegates to its Manager the responsibility for taking

ESG issues into account when assessing the selection, retention and

realisation of investments. The Board expects the Manager to engage

with investee companies on social, environmental and business ethics

issues and to promote best practice. The Board expects the Manager

to exercise the Company’s voting rights in consideration of these

issues.

Further detail on engagement and stewardship can be found on

pages 14 and 15.

In addition to the description of the Manager’s integration of ESG into

the investment process and the details in this Business Review, a

description of the Manager’s policy on these matters can be found on

the Schroders website at

www.schroders.com. The Board notes that

Schroders believes that companies with good ESG management often

perform better and deliver superior returns over time. Engaging with

companies to understand how they approach ESG management is an

integral part of the investment process. Schroders has committed to

the UN Global Compact, amongst codes and standards,

andinformation about the application of Schroders’ sustainability

andresponsible investment policies can be found at:

https://www.schroders.com/en/sustainability/corporate- responsibility/.

The Board has received reporting from the Manager on the

application of its policy.

Investment restrictions and spread of

investment risk

Risk in relation to the Company’s investments is spread as a result of

the Manager monitoring the Company’s portfolio with a view to

ensuring that the portfolio retains an appropriate balance to meet the

Company’s investment objective. The key restrictions imposed on the

Manager include:

(a) no more than 15% of the Company’s total net assets, at the date

of acquisition, may be invested in any one single company;

(b) no more than 10% of the value of the Company’s gross assets may

be invested in other listed investment companies unless such

companies have a stated investment policy not to invest more than

15% of their gross assets in other listed investment companies;

(c) no more than 15% of the Company’s gross assets may be invested

in other listed investment companies (including listed investment

trusts);

(d) no more than 15% of the Company’s total net assets may be

invested in open-ended funds; and

(e) no holding may represent 20% or more of the equity capital of any

company. No breaches of these investment restrictions took place

during the financial year.

The investment portfolio on page 10 demonstrates that, as at

30September 2023, the Company held 52 investments spread over a

range of industry sectors. The Board therefore believes that the

objective of spreading investment risk has been achieved and will

continue to be achieved as the Manager moves towards its target

focused portfolio of around 40-50 investments.

The Company’s financial instruments comprise its investment

portfolio, cash balances, including those held in money market funds,

bank borrowings and debtors and creditors that arise directly from its

operations such as sales and purchases awaiting settlement and

accrued income. The financial risk management objectives and

policies arising from its financial instruments and the exposure of the

Company to risk are disclosed in note 20 on pages 54 to 57.

Use of gearing

The Company currently has in place a three year £10 million revolving

credit facility, which expires on 14 February 2025. The Company also

has a £20 million 1-year revolving credit facility expiring on

27February 2024. The Board of directors is in the process of renewing

the revolving credit facility expiring on 27 February 2024, and intends

to do the same with the facility expiring on 14 February 2025, subject

to this being in shareholders' interests at the time of renewal.

In rising markets the gearing amplifies increases in the NAV and in

falling markets any reduction in NAV would be amplified by the

gearing. The Company’s gearing continues to be operated within pre-

agreed limits so that it does not exceed 25% of total assets. The

flexibility to utilise gearing remains an important tool in allowing the

Manager to pursue investment opportunities when appropriate.

Promotion and shareholder relations

The Company promotes its shares to a broad range of investors

including discretionary wealth managers, private investors, financial

advisers and institutions which have the potential to be long-term

supporters of the investment strategy. The Board seeks to achieve this

through its Manager and corporate broker, which promote the shares

of the Company through regular contact with both current and

potential shareholders. These activities consist of investor lunches,

one-on-one meetings, webinars, regional road shows and

attendances at conferences. In addition, the Company’s shares are

supported by the Manager’s wider marketing of investment

companies targeted at all types of investors. This includes maintaining

close relationships with adviser and execution-only platforms,

advertising in the trade press, maintaining relationships with financial

journalists and the provision of digital information on Schroders’

website.

Shareholder relations are given high priority by both the Board and

the Manager. The Board also seeks active engagement with investors

and meetings with the Chairman are offered where appropriate. In

addition to the engagement and meetings held during the year the

Chairs of the Board and committees, as well as the other directors,

attend the AGM and are available to respond to queries and concerns

from shareholders.

Shareholders are also encouraged to sign up to the Manager’s

Investment Trusts update, to receive information on the Company

directly.

https://www.schroders.com/en/uk/private-

investor/fundcentre/funds-in-focus/investment-trusts/schroders-

investmenttrusts/never-miss-an-update

Strategic report Governance Financial Other InformationIntroduction

16 Schroder UK Mid Cap Fund plc

Business Review

continued

Further disclosures

Diversity

The below tables set out the gender and ethnic diversity composition of the Board (as at 30 September 2023 and at the date of this report):

Number of

senior positions

Number of Percentage of on the Board

Board members the Board (SID and Chair)

White British or other White (including minority-white groups) 5 100% 2

Mixed/multiple ethnic groups – – –

Asian/Asian British – – –

Black/African/Caribbean/Black British – – –

Other ethnic group, including Arab – – –

Not specified/prefer not to say – – –

Number of

senior positions

Number of Percentage of on the Board

Board members the Board (SID and Chair)

Men 3 60% 2

Women 2 40% 0

Not specified/prefer not to say – – –

Given that the Company is an investment trust with no executive

Board members, the prescribed columns and references regarding

executive management have not been included in the above table.

As at 30 September 2023, the requirements under Listing Rules

9.8.6R(9) and (11) to disclose compliance with certain targets, have

been met in relation to at least 40% of the Board being female,

although the requirements that a senior position be held by a woman,

and that one individual be from an ethnic group other than a white

ethnic group have not been met. Upon Ms Colquhoun taking on the

role of senior independent director in March 2024, the first of these

requirements will have been met. The Board will have regard to the

second requirement when considering future appointments.

Appointments and succession plans will always be based on merit and

objective criteria and, within this context, the Board seeks to promote

diversity of gender, social and ethnic backgrounds, cognitive and

personal strengths. The Board will encourage any recruitment

agencies it engages to find a range of candidates that meet the

objective criteria agreed for each appointment. Candidates for Board

vacancies are selected based on their skills and experience, which are

matched against the balance of skills and experience of the overall

Board taking into account the criteria for the role being offered.

The Board also considers the diversity and inclusion policies of its key

service providers.

Financial crime policy

The Company continues to be committed to carrying out its business

fairly, honestly and openly. The Company operates a financial crime

policy, covering bribery and corruption, tax evasion, money

laundering, terrorist financing and sanctions, as well as seeking

confirmations that the Company’s service providers’ policies are

operating soundly.

Greenhouse gas emissions and energy usage

As the Company outsources its operations to third parties, it

consumed less than 40,000 kWh during the year and so has no

greenhouse gas emissions, energy consumption or energy efficiency

action to report.

Taskforce for Climate-Related Financial Disclosures

On 30 June 2023, the Company’s AIFM produced a product level

disclosure consistent with the Taskforce on Climate-Related Financial

Disclosures (“TCFD”) for the period 1 January 2022 to 31 December

2022. This can be found here:

https://mybrand.schroders.com/m/3fc5db9ace2e795d/original/TCFD-

Schroder-UK-Mid-Cap-Fund-20221231.pdf

Schroder UK Mid Cap Fund plc 17

Stakeholder engagement, section 172 of the Companies Act 2006

During the year under review, the Board discharged its duty under section 172 of the Companies Act 2006 to promote the success of the

Company for the benefit of its members as a whole, having regard to the interests of all stakeholders. As an externally managed investment

trust, the Company has no employees, operations or premises. The Board has identified its key stakeholders as the Company’s shareholders,

the Manager, other service providers, the Investee companies and the Company’s Lender.

Fulfilling this duty naturally supports the Company in achieving its investment objective and helps to ensure that all decisions ar

e made in a

responsible way, taking sustainability into account. In accordance with the requirements of the Companies (Miscellaneous Reporting)

Regulations 2018, the directors explain below how they have individually and collectively discharged their duties under section 172 of the

Companies Act 2006 over the course of the reporting period and key decisions made during the period and related engagement activities.

Stakeholder Stakeholder considerations, engagement and key decisions

Shareholders The Company welcomes attendance and participation from shareholders at the Annual General Meeting. If

attending, shareholders have the opportunity to meet the directors and ask questions at the AGM. The Board

values the feedback and questions which it receives from shareholders. Shareholder relations are given high priority

by both the Board and the Manager and are detailed further in ‘Promotion and shareholder relations’ on page 15.

In addition to the AGM, shareholders may also contact the Board by writing to the Company Secretary (Company

Secretary, Schroder UK Mid Cap Fund plc, 1 London Wall Place, London EC2Y 5AU), or emailing

amcompanysecretary@schroders.com. Shareholders are also encouraged to register for updates on the Company

on the Company’s website. To sign up please visit https://www.schroders.com/engb/uk/individual/nevermiss-an-

update/.

The annual and half year results presentations, as well as monthly updates are available on the Company’s website,

with results announced via a regulatory news service. Feedback and/or questions received from shareholders

enable the Company to evolve its reporting which, in turn, helps to deliver transparent and understandable

updates.

The Manager communicates with shareholders periodically. All investors are offered the opportunity to meet the

Chairman and other Board members without using the Manager or Company Secretary as a conduit, by writing to

the Company’s registered office. At Board meetings, the directors receive updates on the share trading activity,

share price performance and any shareholders’ feedback, as well as any publications or comments in the press. The

Board also engages external providers, such as its broker, to obtain a more detailed view on specific aspects of

shareholder communications, such as developing more effective ways to communicate with investors.

The Board is responsible for discount and premium management and is cognisant of the prevailing discount to

NAV.

For key decisions, the Board took into account feedback from shareholders either directly or through service

providers, including the Manager.

The Manager The Manager aims to continue to achieve consistent, long-term returns in line with the investment objective and

maintains a close and collaborative working relationship with the Board.

The Board maintains a constructive relationship with the Manager, encouraging open discussion and recognising

that the interests of shareholders and the Portfolio Managers are well aligned. The Board invites the Manager to

attend all Board meetings and receives regular reports on the performance of the investments and the

implementation of the investment strategy, policy and objective. The portfolio activities undertaken by the Manager

and the impact of decisions affecting investment performance are set out in the Managers’ Review on pages 6 to 9.

The Management Engagement Committee reviews the performance of the Manager, its remuneration and the

discharge of its contractual obligations at least annually.

Other service providers The Board maintains regular contact with its key external providers, both through the Board and committee

meetings, as well as outside the regular meeting cycle. Their advice, as well as their needs and views, are routinely

taken into account when considering relevant matters. During the period, the Management Engagement

Committee continued to undertake reviews of the third-party service providers and agreed that their continued

appointment remained in the best interests of the Company and its shareholders. The Committee periodically

reviews the market rates for services received, to ensure that the Company continues to receive high quality service

at a competitive cost.

During the year, directors attended a meeting to assess the internal controls of certain service providers including

the Company’s Depositary and Custodian, HSBC, the Company’s registrar, Equiniti, and Schroder’s Group Internal

Audit. These meetings enable the Board to conduct due diligence on operations and IT risks amongst service

providers; and to receive up to date information about changes in regulation and market practice in the industry.

The Board regularly considers how it meets various regulatory and statutory obligations and follows voluntary and

best-practice guidance, while being mindful of how any decisions which it makes can affect its shareholders and

wider stakeholders, in the short and the long-term. The Board receives reports from the Manager, Corporate Broker

and Company Secretary on recent and proposed changes in regulation and market practice, as well as any likely

reputational threats which, in turn, influence the Board’s decision-making process.

Strategic report Governance Financial Other InformationIntroduction

18 Schroder UK Mid Cap Fund plc

Business Review

continued

Risk

Mitigation and management

Change (post

mitigation and

management)

Strategic

The requirements of investors change or diverge

in such a way as to diverge from the Company’s

investment objectives, resulting in a wide

discount of the share price to underlying NAV per

share.

The appropriateness of the Company’s investment remit is

periodically reviewed and the success of the Company in

meeting its stated objectives is monitored.

The share price relative to NAV per share is monitored and

the use of buy back authorities is considered on a regular

basis.

Marketing and distribution activity is actively reviewed.

The Company engages proactively with investors.

The Company’s cost base could become

uncompetitive, particularly in light of open ended

alternatives.

The ongoing competitiveness of all service provider fees is

subject to periodic benchmarking against their competitors.

Annual consideration of management fee levels is

undertaken.

Investment management

The Manager’s investment strategy, if

inappropriate, may result in the Company

underperforming the market and/or peer group

companies, leading to the Company and its

objectives becoming unattractive to investors.

Review of the Manager’s compliance with its agreed

investment restrictions, investment performance and risk

against investment objectives and strategy; relative

performance; the portfolio’s risk profile; and whether

appropriate strategies are employed to mitigate any

negative impact of substantial changes in markets. The

Manager also reports on the Company’s portfolio, and the

market generally.

Annual review of the ongoing suitability of the Manager,

including resources and key personnel risk.

Financial and market risk

The Company is exposed to the effect of market

fluctuations due to the nature of its business. A

significant fall in equity markets could have an

adverse impact on the market value of the

Company’s underlying investments.

The risk profile of the portfolio is considered and appropriate

strategies to mitigate any negative impact of substantial

changes in markets are discussed with the Manager. See

note 20 of the notes to the accounts.

Principal risks and uncertainties

The Board is responsible for the Company’s system of risk

management and internal control and for reviewing its effectiveness.

The Board has adopted a detailed matrix of principal risks affecting

the Company’s business as an investment trust and has established

associated policies and processes designed to manage and, where

possible, mitigate those risks, which are monitored by the Audit and

Risk Committee on an ongoing basis. This system assists the Board in

determining the nature and extent of the risks it is willing to take in

achieving the Company’s strategic objectives. Both the principal risks

and the monitoring system are also subject to robust review at least

annually.

The Company’s principal risks and uncertainties have not changed

materially since the date of the previous Annual Report and are not

expected to change materially for the current financial year.

Although the Board believes that it has a robust framework of internal

control in place this can provide only reasonable, and not absolute,

assurance against material financial misstatement or loss and is

designed to manage, not eliminate, risk.

Actions taken by the Board and, where appropriate, its committees, to

manage and mitigate the Company's principal risks and uncertainties

are set out in the table below.

Schroder UK Mid Cap Fund plc 19

Risk

Mitigation and management

Change (post

mitigation and

management)

Custody

Safe custody of the Company’s assets may be

compromised through control failures by the

depositary, including cyber hacking.

The depositary reports on the safe custody of the Company’s

assets, including cash and portfolio holdings which are

independently reconciled with the Manager’s records.

The review of audited internal controls reports covering

custodial arrangements is undertaken.

An annual report from the depositary on its activities,

including matters arising from custody operations is

received.

Gearing and leverage

The Company utilises credit facilities. These

arrangements increase the funds available for

investment through borrowing. While this has

the potential to enhance investment returns in

rising markets, in falling markets the impact

could be detrimental to performance.

Gearing is monitored and strict restrictions on borrowings

are imposed: gearing continues to operate within

pre-agreed limits so as not to exceed 25% of total assets.

The Manager is currently in discussion with several providers

to secure new borrowing facilities upon expiry of one of the

Company’s current facilities in February 2024. If a new loan

cannot be arranged with acceptable terms, the Board is

satisfied that this does not represent a significant risk to the

Company since it has sufficient readily realisable assets to

repay the loan.

The Board also reviews the cost of gearing.

Accounting, legal and regulatory

In order to continue to qualify as an investment

trust, the Company must comply with the

requirements of section 1158 of the Corporation

Tax Act 2010.

Breaches of the UK Listing Rules, the Companies

Act or other regulations with which the Company

is required to comply, could lead to a number of

detrimental outcomes.

The confirmation of compliance with relevant laws and

regulations by key service providers is reviewed.

Shareholder documents and announcements, including the

Company’s published annual report are subject to stringent

review processes.

Procedures are established to safeguard against the

disclosure of inside information.

Service provider

The Company has no employees and has

delegated certain functions to a number of

service providers. Failure of controls, including as

a result of cyber hacking, and poor performance

of any service provider, could lead to disruption,

reputational damage or loss.

Service providers are appointed subject to due diligence

processes and with clearly-documented contractual

arrangements detailing service expectations.

Regular reports are provided by key service providers and

the quality of their services is monitored.

Review of annual audited internal controls reports from key

service providers, including confirmation of business

continuity arrangements and IT controls is undertaken.

Cyber

The Company’s service providers are all

exposed to the risk of cyber attacks. Cyber

attacks could lead to loss of personal or

confidential information or disrupt operations.

Service providers report on cyber risk mitigation and

management at least annually, which includes

confirmation of business continuity capability in the event

of a cyber attack.

Strategic report Governance Financial Other InformationIntroduction

20 Schroder UK Mid Cap Fund plc

Business Review

continued

Risk

Mitigation and management

Change (post

mitigation and

management)

Political risk

This includes trade wars, regional tensions and

UK political risks specifically.

The Board continues to monitor relevant political and

geopolitical events to the extent that they apply to the

Company, including the war in Ukraine and conflict in the

Middle East.

The Board is also mindful that changes to public policy in the

UK could impact the Company in the future.

Climate change risk

A failure to understand the pricing of assets

affected by climate change or a lower demand

for impacted assets could lead to poor

investment decisions or more volatile pricing as

asset prices adjust to reflect the increasing

regulation of carbon emissions.

The Manager has developed a range of proprietary tools to

better understand the impacts of climate change on the

portfolio. The investment process applied by the portfolio

managers is ESG “integrated”. The Manager monitors the

emissions of investee companies and can engage with

companies to reduce their emissions or aim to invest in

companies committed to reaching net zero carbon

emissions. The Board receives updates from the Manager at

Board meetings and continues to engage with the Manager

and the Schroders sustainability team to discuss ESG

matters, including climate change. The Board has challenged

the Manager regarding the need to carefully consider and

monitor sustainability and environmental and societal

impacts when assessing investment opportunities, in

addition to the well founded attention to good corporate

governance principles, which have been in place for many

years.

Inflation & Global supply chain risk

Rising supplier costs and availability of supply.

The Board has, in conjunction with the Manager, considered

the risks relating to elevated levels of price inflation,

generally, together with the evolution in the way that supply

chains are operating and the concomitant risks of rising

supplier costs and availability of supply. It is the Board’s view

that the complexion of these risks has changed over the past

year in a way that requires them now to be assessed as

principal risks. The key mitigation to these risks comes from

diligent appraisal and monitoring of investments by the

Manager, including engagement with the management of

investee companies, together with a critical assessment of

investee companies’ ability to pass on rising costs to

customers as a result of their pricing power and strong

market positions alongside their ability to control costs.

Risk assessment and internal controls review by the Board

Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service

providers, and ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee,

including the incidence of significant control failings or weaknesses that have been identified at any time and the extent to which they

have resulted in unforeseen outcomes or contingencies that may have a material impact on the Company’s performance or condition.

No significant control failings or weaknesses were identified from the Audit and Risk Committee’s ongoing risk assessment which has

been in place throughout the financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed

review of the risks facing the Company.

A full analysis of the financial risks facing the Company is set out in note 20 to the accounts on pages 54 to 57.

Schroder UK Mid Cap Fund plc 21

Viability statement

The directors have assessed the viability of the Company over a five

year period, taking into account the Company’s position at

30September and 12 December 2023 and the potential impact of the

principal risks and uncertainties it faces for the review period. The

directors have assessed the Company’s operational resilience and

they are satisfied that the Company’s outsourced service providers will

continue to operate effectively, following the implementation of their

business continuity plans.

A period of five years has been chosen as the Board believes that this

reflects a suitable time horizon for strategic planning, taking into

account the investment policy, liquidity of investments, potential

impact of economic cycles, nature of operating costs, dividends and

availability of funding. This time period also reflects the average hold

period of an investment.

In its assessment of the viability of the Company, the directors have

considered each of the Company’s principal risks and uncertainties

detailed on pages 18 to 20 and in particular the impact of a significant

fall in regional equity markets on the value of the Company’s

investment portfolio. The directors have also considered the

Company’s income and expenditure projections and the fact that the

Company’s investments comprise readily realisable securities which

can be sold to meet funding requirements if necessary.

The directors have also considered a stress test which represents a

severe but plausible scenario along with movement in foreign

exchange rates. This scenario assumes a severe stock market collapse

and/or exchange rate movements at the beginning of the five year

period, resulting in a 50% fall in the value of the Company’s

investments and investment income and no subsequent recovery in

either prices or income in the following five years. It is assumed that

the Company continues to pay an annual dividend in line with current

levels and that the borrowing facility remains available and remains

drawn, subject to the gearing limit.

The Company’s investments comprise highly liquid, large, listed

companies and so its assets are readily realisable securities and could

be sold to meet funding requirements or the repayment of the

gearing facility should the need arise. There is no expectation that the

nature of the investments held within the portfolio will be materially

different in the future.

One of the Company's two loan facilities is due to expire in February

2024 and the Company has entered into negotiations with its bankers.

If acceptable terms are available from the existing bankers, or any

alternative, the Company would expect to continue to access an

equivalent facility. However, should these terms not be forthcoming,

the outstanding borrowing attributable to this facility would be repaid

through the proceeds of equity sales.

The operating costs of the Company are predictable and modest in

comparison with the assets and there are no capital commitments

foreseen which would alter that position. Furthermore, the Company

has no employees and consequently no redundancy or other

employment related liabilities.

The Board reviews the performance of the Company’s service

providers regularly, including the Manager, along with internal

controls reports to provide assurance regarding the effective

operation of internal controls as reported on by their reporting

accountants. The Board also considers the business continuity

arrangements of the Company’s key service providers.

The Board monitors the portfolio risk profile, limits imposed on

gearing, counterparty exposure, liquidity risk and financial controls at

its quarterly meetings.

Although there continue to be regulatory changes which could

increase costs or impact revenue, the directors do not believe that this

would be sufficient to affect its viability.

The Board has assumed that the business model of a closed ended

investment company, as well as the Company’s investment objective,

will continue to be attractive to investors. The directors also

considered the beneficial tax treatment the Company is eligible for as

an investment trust. If changes to these taxation arrangements were

to be made it would affect the viability of the Company to act as an

effective investment vehicle.

Based on the above the directors have concluded that there is a

reasonable expectation that the Company will be able to continue in

operation and meet its liabilities as they fall due over the five year

period of their assessment.

Going concern

The directors have assessed the principal risks, the impact of the

emerging risks and uncertainties and the matters referred to in the

viability statement. Based on the work the directors have performed,

they have not identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast significant

doubt on the Company’s ability to continue as a going concern for a

period of at least 12 months from the date the financial statements

were authorised for issue.

By order of the Board

Schroder Investment Management Limited

Company Secretary

12 December 2023

Strategic report Governance Financial Other InformationIntroduction

22 Schroder UK Mid Cap Fund plc

Go v ernance

Schroder UK Mid Cap Fund plc 23

Governance

Board of Directors 24

Directors’ Report 26

Audit and Risk Committee Report 29

Management Engagement Committee Report 31

Nomination Committee Report 32

Remuneration Committee Report 34

Statement of Directors’ Responsibilities 37

24 Schroder UK Mid Cap Fund plc

Board of Directors

Robert Talbut

Status: Chairman

Length of service: 7 years

Experience: Mr Talbut is Chairman of Shires

Income plc and a director of JPMorgan

American Investment Trust plc and Pacific

Assets Trust plc. He was formerly the chief

investment officer of Royal London Asset

Management and has over 30 years of

experience in the asset management

industry. He has represented the asset

management industry through the

Chairmanship of both the ABI Investment

Committee and the Asset Management

Committee of the Investment Association. He

was also a member of the Financial Conduct

Authority’s Listing Advisory Panel.

Committee membership: Audit and Risk

Committee, Management Engagement

Committee (Chairman), Nomination

Committee (Chairman), Remuneration

Committee.

Current remuneration: £42,000 per

annum

Shares held: 8,176*

Wendy Colquhoun

Status: Director

Length of service: 3 years

Experience: Ms Colquhoun is Chairman of

Henderson Opportunities Trust plc and a

non-executive director of Capital Gearing

Trust plc and Murray International Trust plc.

She was formerly a qualified solicitor and a

senior corporate partner at CMS Cameron

McKenna Nabarro Olswang LLP where she

specialised in financial services. She has

extensive experience of investment trusts

having advised investment trust clients for

over 25 years.

Committee membership: Audit and Risk

Committee, Management Engagement

Committee, Nomination Committee,

Remuneration Committee.

Current remuneration: £28,350 per

annum

Shares held: 2,000*

Helen Galbraith

Status: Director

Length of service: 1 year

Experience: Ms Galbraith is Audit Chair of

CT UK High Income Trust plc and Chair of

Orwell Housing Association. She was

formerly Head of Investor Relations at Aviva

plc, Head of Global Equities at Aviva Investors

and has over 20 years' experience in the

insurance and asset management industry.

She is a Chartered Financial Analyst and a

passionate advocate of financial education

for children having established an online

platform.

Committee membership: Audit and Risk

Committee, Management Engagement

Committee, Nomination Committee,

Remuneration Committee.

Current remuneration: £28,350 per

annum

Shares held: 5,500*

Schroder UK Mid Cap Fund plc 25

Harry Morley

Status: Director

Length of service: 2 months

Experience: Mr Morley was CEO of Armajaro

Asset Management LLP, and was the co-

founder and CFO of Tragus Holdings Ltd,

owner of Café Rouge and Bella Italia

restaurant chains. He also worked in the

shipping industry for P&O. He qualified as a

chartered accountant with Price Waterhouse.

Mr Morley is currently a non-executive

director of JD Wetherspoon plc, and a non-

executive director of TheWorks.co.uk plc.

Committee membership: Audit and Risk

Committee, Management Engagement

Committee, Nomination Committee,

Remuneration Committee.

Current remuneration: £28,350 per

annum

Shares held: 9,000*

Andrew Page

Status: Senior Independent Director

Length of service: 9 years

Experience: Mr Page was, until August 2014,

the chief executive officer of The Restaurant

Group plc (“TRG”), a FTSE 250 company which

operates 460 restaurants throughout the UK.

He has previously served as both Chairman

and senior independent director on several

listed and private equity-backed company

boards. He is senior independent director of

JP Morgan Emerging Markets Investment

Trust plc. Prior to joining TRG in 2001, Mr

Page held a number of senior positions

within the leisure and hospitality sector

including senior vice president with

InterContinental Hotels. Before that he spent

six years working in Kleinwort Benson’s

Corporate Finance department. Mr Page is a

chartered accountant.

Committee membership: Audit and Risk

Committee (Chairman), Management

Engagement Committee, Nomination

Committee, Remuneration Committee

(Chairman).

Current remuneration: £34,125 per

annum

Shares held: 23,128*

* Shareholdings are as at 12 December 2023 and include the holdings of connected persons. Full details of directors’ shareholdings are set out in the Directors’

Remuneration Report on page 36.

Strategic report Governance Financial Other InformationIntroduction

26 Schroder UK Mid Cap Fund plc

Directors’ report

Directors and officers

Chairman

The Chairman is an independent non-executive director who is

responsible for leadership of the Board and ensuring its effectiveness

in all aspects of its role. The Chairman’s other significant

commitments are detailed on page 24. He has no conflicting

relationships.

Senior Independent Director (“SID”)

The SID is responsible for the evaluation of the Chairman, and also

serves as a secondary point of contact for shareholders.

Company Secretary

Schroder Investment Management Limited provides company

secretarial support to the Board and is responsible for assisting the

Chairman with Board meetings and advising the Board with respect

to governance. The Company Secretary also manages the

relationship with some of the Company’s service providers.

Shareholders wishing to lodge questions in advance of the AGM are

invited to do so by writing to the Company Secretary at the address

given on the outside back cover.

Role and operation of the Board

The Board is the Company’s governing body; it sets the Company’s

strategy and is collectively responsible to shareholders for its

long-term success. The Board is responsible for appointing and

subsequently monitoring the activities of the Manager and other

service providers to seek to ensure that the investment objective of

the Company continues to be met. The Board also ensures that the

Manager adheres to the investment restrictions set by the Board and

acts within the parameters set by it in respect of any gearing. The

Strategic Report on pages 4 to 21 sets out further detail of how the

Board reviews the Company’s strategy, risk management and internal

controls, greenhouse gas emissions, and likely future developments

and also includes other information required for the Directors’ Report

and is incorporated by reference. Details of the Company’s financial

risk management objectives and exposure to risk can be found in

note 20 on pages 54 to 57.

A formal schedule of matters specifically reserved for decision by the

Board has been defined and a procedure adopted for directors, in

the furtherance of their duties, to take independent professional

advice at the expense of the Company.

The Chairman ensures that all directors receive relevant

management, regulatory and financial information in a timely manner

and that they are provided, on a regular basis, with key information

on the Company’s policies, regulatory requirements and internal

controls.

The Board meets at least quarterly and receives and considers

reports regularly from the Manager and other key advisers and ad

hoc reports and information are supplied to the Board as required.

Four Board meetings are usually scheduled each year to deal with

matters including: the setting and monitoring of investment strategy,

approval of borrowings and/or cash positions, review of investment

performance, the level of discount/premium of the Company’s shares

to NAV, promotion of the Company, and services provided by third

parties. Additional meetings of the Board are arranged as required.

The Board has approved a policy on directors’ conflicts of interest.

Under this policy, directors are required to disclose all actual and

potential conflicts of interest to the Board as they arise for

consideration and approval. The Board may impose restrictions or

refuse to authorise such conflicts if deemed appropriate. No directors

have any connections with the Manager, shared directorships with

other directors or material interests in any contract which is

significant to the Company’s business.

Committees

In order to assist the Board in fulfilling its governance responsibilities,

it has delegated certain functions to committees. The roles and

responsibilities of these committees, together with details of work

undertaken during the year under review, is outlined over the next

few pages.

The reports of the Audit and Risk, Management Engagement,

Nomination, and Remuneration Committees are incorporated into

and form part of the Directors’ Report. Each committee’s effectiveness

was assessed, and judged to be satisfactory, as part of the Board’s

annual review of the Board and its committees.

Key service providers

The Board has adopted an outsourced business model and has

appointed the following key service providers:

Manager

The Company is an alternative investment fund as defined by the

AIFM Directive and has appointed Schroder Unit Trusts Limited

(“SUTL”) as the Manager in accordance with the terms of an

alternative investment fund manager (“AIFM”) agreement. The AIFM

agreement, which is governed by the laws of England and Wales, can

be terminated by either party on 12 months’ notice or on immediate

notice in the event of certain breaches or the insolvency of either

party. As at the date of this report no such notice had been given by

either party.

SUTL is authorised and regulated by the FCA and provides portfolio

management, risk management, accounting and company secretarial

services to the Company under the AIFM agreement. Part of the fund

accounting and administration activities are currently performed by

HSBC Securities Services (UK) Limited. The Manager also provides

general marketing support for the Company and manages

relationships with key investors, in conjunction with the Chairman,

other Board members or the corporate broker as appropriate. The

Manager has delegated investment management, marketing,

administrative, accounting and company secretarial services to

another wholly owned subsidiary of Schroders plc, Schroder

Investment Management Limited. The Manager has in place

appropriate professional indemnity cover.

The Schroders Group manages £724.3 billion (as at 30 September

2023) on behalf of institutional and retail investors, financial

institutions and high net worth clients from around the world,

invested in a broad range of asset classes across equities, fixed

income, multi-asset and alternatives.

For the financial year ended 30 September 2023, the Manager was

entitled to a management fee at a rate of 0.65% per annum of

chargeable assets up to £250 million and 0.60% of any amounts in

excess of that. Chargeable assets are defined as total assets less

current liabilities other than short-term borrowings, provided that if

there are any short-term borrowings, the value of cash up to the level

of such borrowings is deducted from the calculation of assets.

The management fee payable in respect of the year ended

30September 2023 amounted to £1,504,000 (2022: £1,623,000),

paidquarterly in arrears.

Schroder UK Mid Cap Fund plc 27

The Manager is also entitled to receive a fee for providing

administrative, accounting and company secretarial services to the

Company. For these services, for the year ended 30 September 2023

it received a fee of £162,000 (2022: £144,000), including VAT. The fee

continues to be subject to annual adjustment in line with changes in

the Retail Prices Index.

Details of all amounts payable to the Manager are set out in note 17

on page 54.

The Board has reviewed the performance of the Manager, and fees

paid to it, during the year under review and continues to consider

that it has the appropriate depth and quality of resource to achieve

above-average returns in the longer term. Thus, the Board considers

that the Manager’s appointment under the terms of the AIFM

agreement is in the best interests of shareholders as a whole.

Safekeeping and cashflow monitoring agent

HSBC Bank plc (“HSBC Bank”), which is authorised by the Prudential

Regulation Authority and regulated by the FCA and the Prudential

Regulation Authority, has been appointed to carry out certain duties

of a safekeeping and cashflow monitoring agent specified in the AIFM

Directive for the Company, including:

– safekeeping of the assets of the Company which are entrusted to

it;

– cash monitoring; and

– oversight of the Company and the Manager to the extent

described in the AIFM Directive.

HSBC Bank is liable to the Company for losses suffered by it as a

result of any negligence, wilful default, fraud or fraudulent

misrepresentation on its part.

The Company, the Manager and HSBC Bank may terminate the

safekeeping and cashflow monitoring agent services agreement

pursuant to which HSBC Bank provides these services at any time by

giving 90 days’ notice in writing. HSBC Bank may only be removed

from office when a new safekeeping and cashflow monitoring agent

is appointed by the Company.

Registrar

Equiniti Limited is the Company’s registrar. Equiniti’s services to the

Company include share register maintenance (including the issuance,

transfer and cancellation of shares as necessary), acting as agent for

the payment of any dividends, management of company meetings

(including the registering of proxy votes and scrutineer services as

necessary), handling shareholder queries and correspondence and

processing corporate actions.

Corporate Governance Statement

The Financial Conduct Authority requires all UK listed companies to

disclose how they have applied the principles and complied with the

provisions of the UK Corporate Governance Code 2018 (the “UK

Code”) issued by the Financial Reporting Council (“FRC”).

The Board of the Company has considered the principles and

provisions of the AIC Code of Corporate Governance (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 Board considers that reporting against the principles and

provisions of the AIC Code, which has been endorsed by the Financial

Reporting Council, provides more relevant information to

shareholders.

The AIC Code is available on the AIC website (

www.theaic.co.uk). It

includes an explanation of how the AIC Code adopts the principles

and provisions set out in the UK Code to make them relevant for

investment companies.

The Board confirms that the Company has complied with the AIC

Code, in so far as it applies to the Company’s business, throughout

the year under review. As all of the Company's day-to-day

management and administrative functions are outsourced to third

parties, it has no executive directors, employees or internal

operations and therefore has not reported in respect of the following

UK Code Provisions:

– the role of the executive directors and senior management;

– the need for an internal audit function; and

– executive directors’ remuneration.

Share capital and substantial share interests

As at the date of this report, the Company had 36,143,690 ordinary

shares of 25p in issue. 1,562,500 shares were held in treasury.

Accordingly, the total number of voting rights in the Company at the

date of this report is 34,581,190. Details of changes to the Company’s

share capital during the year under review are given in note 14 to the

accounts on page 52. All shares in issue rank equally with respect to

voting, dividends and any distribution on winding up.

There are no restrictions concerning the transfer of securities in the

Company; no special rights with regard to control attached to

securities; no restrictions on voting rights; no agreements between

holders of securities regarding their transfer known to the Company;

and no agreements to which the Company is a party which might

change or fall away on a change of control or trigger any

compensatory payments for directors following a successful takeover

bid.

Strategic report Governance Financial Other InformationIntroduction

28 Schroder UK Mid Cap Fund plc

Directors’ report

continued

The Company is aware that certain changes to the interests held in

the Company of 3% or more of the voting rights attaching to the

Company’s issued share capital have taken place since the last

notification made by investors to the Company. As a result, the

following table is based on what the Board believes to be the most

practicable up to date details of interests of 3percent or more in the

share capital of the Company, using the shareholder analysis

prepared by Richard Davies Investor Relations Limited, which is

reviewed at every Board meeting.

% at

30 September

Shares 2023

Hargreaves Lansdown, stockbrokers 4,069,034 11.7

Interactive Investor 3,131,858 9.1

Evelyn Partners (Retail) 2,848,763 8.2

Charles Stanley 2,712,255 7.9

Redmayne Bentley, stockbrokers 1,928,056 5.5

Rathbones 1,399,749 4.1

AJ Bell, stockbrokers 1,350,464 4.0

Allspring Global Investments 1,258,579 3.9

Saba Capital Management 1,227,837 3.6

There have been no notified changes to the above holdings since the

year end.

Provision of information to the auditors

The directors at the date of approval of this report confirm that, so far

as each of them is aware, there is no relevant audit information of

which the Company’s auditors are unaware; and each director has

taken all the steps that he or she ought to have taken as a director in

order to make himself or herself aware of any relevant audit

information and to establish that the Company’s auditors are aware

of that information.

Directors’ attendance at meetings

The number of scheduled meetings of the Board and its committees

held during the financial year and the attendance of individual

directors is shown below. Whenever possible all directors attend the

AGM.

Nomination

Audit and Management

and Risk Remuneration Engagement

Board Committee Committee Committee

Robert Talbut 4/4 2/2 1/1 1/1

Andrew Page 4/4 2/2 1/1 1/1

Wendy Colquhoun 4/4 2/2 1/1 1/1

Helen Galbraith 4/4 2/2 1/1 1/1

Harry Morley 1/1

1

0/0 1/1 1/1

1

Mr Morley joined the Board on 1 September 2023.

In addition to the above meetings, the Board met twice on an ad-hoc

basis during the year, once to approve the Company’s annual report

for the year ended 30 September 2022 and once to approve the

Company’s half year report for the period ended 31 March 2023.

Directors’ and officers’ liability insurance and indemnities

Directors’ and officers’ liability insurance cover was in place for the

directors throughout the year. The Company’s articles of association

provide, subject to the provisions of UK legislation, an indemnity for

directors in respect of costs which they may incur relating to the

defence of any proceedings brought against them arising out of their

positions as directors, in which they are acquitted or judgment is

given in their favour by the court. This is a qualifying third party

indemnity and was in place throughout the year under review for

each director and to the date of this report.

By order of the Board

Robert Talbut

Chairman

12 December 2023

Schroder UK Mid Cap Fund plc 29

Strategic report Governance Financial Other InformationIntroduction

Audit and Risk Committee report

The responsibilities and work carried out by the audit and risk committee during the year under review are set out in the following report. The

duties and responsibilities of the committee, which include monitoring the integrity of the Company’s financial reporting and internal controls,

are set out in further detail below, and may be found in the terms of reference which are set out on the Company’s web pages,

www.schroders.co.uk/midcap.

All directors are members of the committee. Andrew Page is the Chairman of committee. The Chair of the Board is a member of the

Committee, and was independent on appointment. The Board has satisfied itself that at least one of the committee’s members has r

ecent and

relevant financial experience and that the committee as a whole has competence relevant to the sector in which the company operates.

The below table sets out how the committee discharged its duties during the year. The committee met twice during the year. An evaluation of

the committee’s effectiveness and review of its terms of reference was completed during the year.

The committee identified one potentially significant financial reporting risk, which is unchanged from the prior year, being the valuation and

existence of investments, as well as several other financial reporting risks. Each of the matters considered during the committee

's review are

outlined below.

Approach

The committee’s key roles and responsibilities are set out below.

Risks and internal controls Financial reports and valuation Audit

Principal risks

To establish a process for identifying,

assessing, managing and monitoring

emerging and principal risks of the

Company.

Financial statements

To monitor the integrity of the financial

statements of the Company and any

formal announcements relating to the

Company’s financial performance and

valuation. To review the half year report.

Audit results

To discuss any matters arising from the

audit and recommendations made by

the auditor.

Emerging risks and uncertainties

To ensure a robust assessment of the

Company’s emerging and principal risks

and procedures are in place to identify

emerging risks, and an explanation of

how these are being managed or

mitigated.

Going concern

To review the position and make

recommendations to the Board in

relation to whether it considers it

appropriate to adopt the going concern

basis of accounting in preparing its

annual and half-yearly financial

statements.

Auditor appointment, independence

and performance

To make recommendations to the Board,

in relation to the appointment, re-

appointment, effectiveness and removal

of the external auditor, to review their

independence, and to approve their

remuneration and terms of engagement.

Reviewing the audit plan and

engagement letter.

Application during the year

Risks and internal controls

Financial reports and valuation Audit

Service provider controls

Reviewing the operational controls

maintained by the Manager, depositary

and registrar.

Recognition of investment income

Considered dividends received against

forecast and the allocation of special

dividends to income or capital.

Effectiveness of the independent

audit process and auditor

performance

Evaluated the effectiveness of the

independent audit firm and process

prior to making a recommendation that

it should be re-appointed at the

forthcoming AGM. Evaluated the

auditor’s performance against agreed

criteria including: qualification;

knowledge, expertise and resources;

independence policies; effectiveness of

audit planning; adherence to auditing

standards; and overall competence was

considered, alongside feedback from the

Manager on the audit process.

Professional scepticism of the auditor

was questioned and the committee was

satisfied with the auditor’s replies.

Ongoing risk review

Half year

report

Audit

planning

Annual

report

Post-audit

review

Audit

30 Schroder UK Mid Cap Fund plc

Audit and Risk Committee report

continued

Andrew Page

Audit and Risk Committee Chairman

12 December 2023

Application during the year

Risks and internal controls Financial reports and valuation Audit

Internal controls and risk management

Consideration of several key aspects of

internal control and risk management

operating within the Manager, depositary

and registrar, including assurance reports

and presentations on these controls.

It is considered that the Company does not

require an internal audit function,

principally because the Company delegates

its day-to-day operations to third parties,

which are monitored by the Committee and

provide control reports on their operations

annually.

Calculation of the investment

management fee and performance fee

Consideration of methodology used to

calculate the fees, matched against the

criteria set out in the AIFM agreement.

Auditor independence

The committee last undertook an audit

tender process in 2017 when KPMG LLP was

appointed as auditor in respect of the

financial year ended 30 September 2017. The

Company is required to tender the external

audit no later than for year ending 30

September 2027. In accordance with

professional and regulatory standards, the

senior statutory auditor responsible for the

audit is rotated at least every five years in

order to protect independence and

objectivity and to provide fresh challenge to

the business. This is the fourth year that the

senior statutory auditor, Gary Fensom, has

conducted the audit of the Company’s

financial statements.

There are no contractual obligations

restricting the choice of independent auditor.

Compliance with the investment trust

qualifying rules in S1158 of the

Corporation Tax Act 2010

Consideration of the Manager’s report

confirming compliance.

Overall accuracy of the annual report

and accounts

Consideration of the draft annual report

and accounts and the letter from the

Manager in support of the letter of

representation to the auditor.

Audit results

Met with and reviewed a comprehensive

report from the auditor which detailed the

results of the audit, compliance with

regulatory requirements, safeguards that

have been established, and on their own

internal quality control procedures.

Principal risks

Reviewing the principal risks faced by the

Company and the system of internal

control.

Valuation and existence of holdings

Quarterly review of portfolio holdings and

assurance reports.

Meetings with the auditor

Met the auditors without representatives of

the Manager present. Representatives of

the auditors attended the committee

meeting at which the draft annual report

and accounts was considered.

Fair, balanced and understandable

Reviewed the annual report and accounts

to ensure that it was fair, balanced and

understandable.

Provision of non-audit services by the

auditor

The committee has reviewed the FRC’s

Guidance on Audit Committees and has

formulated a policy on the provision of non-

audit services by the Company’s auditor.

The committee has determined that the

Company’s appointed auditor will not be

considered for the provision of certain non-

audit services, such as accounting and

preparation of the financial statements,

internal audit and custody. The auditor may,

if required, provide other permissible non-

audit services which will be judged on a case-

by-case basis.

The auditor did not provide any non-audit

services to the Company during the year.

Going concern and viability

Reviewing the impact of risks on going

concern and longer-term viability.

Consent to continue as auditor

KPMG LLP indicated to the committee their

willingness to continue to act as auditor.

Recommendations made to, and approved by, the Board:

As a result of the work performed, the committee has concluded that the annual report for the year ended 30 September 2023, taken

as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s

position, performance, business model and strategy, and has reported on these findings to the Board. The Board’s conclusions in this

respect are set out in the Statement of Directors’ Responsibilities on page 37.

Having reviewed the performance of the auditors as described above, the committee considered it appropriate to recommend the

firm’s re-appointment. Resolutions to re-appoint KPMG LLP as auditors to the Company, and to authorise the directors to determine

their remuneration will be proposed at the AGM.

Schroder UK Mid Cap Fund plc 31

Strategic report Governance Financial Other InformationIntroduction

Management Engagement Committee report

The committee undertook a detailed review of the Manager’s

performance and agreed that it has the appropriate depth and

quality of resource to deliver superior returns over the longer

term.

The committee reviewed the management fee structure and

agreed that no changes would be proposed.

The committee also reviewed the terms of the AIFM agreement

and agreed they remained fit for purpose.

The committee reviewed the other services provided by the

Manager and agreed that they were satisfactory.

The annual review of each of the other service providers

determined that their performance was satisfactory.

Oversight of other service providers

The committee reviews the performance and pricing

competitiveness of the following service providers on at least an

annual basis:

• Depositary and custodian

• Corporate broker

• Registrar

• Lender

The committee also receives a report from the Company Secretary

on ancillary service providers, and considers any

recommendations.

Oversight of the Manager

The committee:

• reviews the Manager’s performance, over the short- and long-

term, against the Benchmark, peer group and the market.

• considers the reporting it has received from the Manager

throughout the year, and the reporting from the Manager to

the shareholders.

• assesses management fees on an absolute and relative basis,

receiving input from the Company’s broker, including peer

group and industry figures, as well as the structure of the fees.

• reviews the appropriateness of the Manager’s contract,

including terms such as notice period.

• assesses whether the Company receives appropriate

administrative, accounting, company secretarial and marketing

support from the Manager.

Application during the year

The management engagement committee is responsible for (1) the monitoring and oversight of the Manager’s performance and fees, and

confirming the Manager’s ongoing suitability, and (2) reviewing and assessing the Company’s other service providers, including reviewing their

fees. All directors are members of the committee. Robert Talbut is the Chairman of the committee. Its terms of reference are available on the

Company’s web pages, www.schroders.co.uk/ukmidcap.

Approach

The committee’s key roles and responsibilities are set out below

Recommendations made to, and approved by, the Board:

• That the ongoing appointment of the Manager on the terms of the AIFM agreement was in the best interests of shareholders as

a whole.

• That the Company’s service providers’ performance remained satisfactory.

32 Schroder UK Mid Cap Fund plc

Nomination Committee report

Selection and induction

•

Committee prepares a job specification

for each role, which is shared with an

independent recruitment firm. For the

Chairman and the Chairs of committees,

the committee considers current Board

members too.

• Job specification outlines the knowledge,

professional skills, personal qualities and

experience requirements.

• Potential candidates assessed against

the Company’s diversity policy.

• Committee discusses the long list,

invites a number of candidates for

interview and makes a recommendation

to the Board.

• Committee reviews the induction and

training of new directors. On

appointment, directors receive a full,

formal and tailored induction. Directors

are also regularly provided with key

information on the Company’s policies,

regulatory and statutory requirements

and internal controls. Changes affecting

directors’ responsibilities are advised to

the Board as they arise. Directors also

regularly participate in relevant training

and industry seminars.

• The terms of directors’ letters of

appointment are available for inspection

at the Company’s registered office

address during normal business hours

and during the AGM at the location of

such meeting.

Board evaluation

•

Committee assesses each director

annually and considers whether an

external evaluation should take place.

• Evaluation focuses on whether each

director continues to demonstrate

commitment to their role and provides

a valuable contribution to the Board

during the year, taking into account

time commitment, independence,

conflicts and training needs.

• Following the evaluation, the

committee provides a recommendation

to shareholders with respect to the

annual re-election of directors at the

AGM.

• All directors retire at the AGM and their

election, or re-election, as appropriate

is subject to shareholder approval.

Succession

•

Having considered diversity and the

need for regular refreshment the

Board’s policy is that directors’ tenure,

including the Chairman of the Board, will

be for no longer than nine years, except

in exceptional circumstances, and that

each director will be subject to annual

re-election at the AGM.

• Committee reviews the Board’s current

and future needs at least annually.

Should any need be identified the

committee will initiate the selection

process.

• Committee oversees the handover

process for retiring directors.

The nomination committee is responsible for (1) the recruitment, selection and induction of directors, (2) their assessment during their tenure,

and (3) the Board’s succession. All directors are members of the committee. Robert Talbut is the Chairman of the committee. Its terms of

reference are available on the Company’s web pages, www.schroders.co.uk/ukmidcap.

Selection and ongoing assessment of directors

For application see page

33

Selection

Annual

review of

succession

policy

Annual

evaluation

Application

of succession

policy

Induction

Approach

The committee’s key roles and responsibilities are set out below

Schroder UK Mid Cap Fund plc 33

Strategic report Governance Financial Other InformationIntroduction

Succession

• The committee reviewed the Board

tenure policy and agreed it was still fit

for purpose.

• Andrew Page informed the Board that

he intended to retire as a director of

the Company at the upcoming AGM,

due to be held in March 2024.

• Harry Morley was appointed as a

director of the company in September

2023 and will be subject to election at

the upcoming AGM in accordance with

the Company’s Articles of Association.

Board evaluation and directors’ fees

• The Board and committee evaluation process

was undertaken in September 2023 using a

comprehensive questionnaire which was

completed by all directors.

• The evaluation of the Chairman was led by the

senior independent director, who held a

subsequent meeting with the Chairman to

discuss the results.

• The committee also reviewed each director’s

time commitment and independence by

reviewing a complete list of appointments,

including pro bono not for profit roles, to

ensure that each director remained free from

conflict and had sufficient time available to

discharge each of their duties effectively. All

directors were considered to be independent

in character and judgement.

• The committee considered each director’s

contributions, and noted that in addition to

extensive experience as professionals and

non-executive directors, each director had

valuable skills and experience, as detailed in

their biographies on pages 24 and 25, which

was supported by the completion of a detailed

skills matrix by each director.

• Based on its assessment, the committee

provided individual recommendations for

each director’s election, or re-election, as

appropriate.

Selection and induction

• The committee commenced its search

process for a new director and

engaged Trust Associates, an external

search firm with no other connection

to the Board or individual directors.

Recommendations made to, and approved by, the Board:

• That all directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the

Board, contribute towards the Company’s long-term success, and remain free from conflicts with the Company and its directors, so

should all be recommended for election or re-election* by shareholders at the AGM.

Application during the year

* Mr Page will retire as a director at the forthcoming annual general meeting.

34 Schroder UK Mid Cap Fund plc

Remuneration Committee report

Introduction

The following remuneration policy is currently in force and is subject

to a binding vote every three years. The next vote will take place at

the AGM to be held in 2026 and the current policy provisions will

apply until that date. The below directors’ annual report on

remuneration is subject to an annual advisory vote. An ordinary

resolution to approve this report will be put to shareholders at the

forthcoming AGM.

At the AGM held on 21 February 2023 when the policy was last voted

on by shareholders, 97.06% of the votes cast (including votes cast at

the Chairman’s discretion) in respect of approval of the directors’

remuneration policy were in favour, while 2.94% were against. 9,568

votes were withheld.

At the AGM held on 21 February 2023, 99.67% of the votes cast

(including votes cast at the Chairman’s discretion) in respect of

approval of the directors’ remuneration report for the year ended

30September 2022 were in favour, while 0.33% were against. 9,568

votes were withheld.

Directors’ remuneration policy

The determination of the directors’ fees is a matter dealt with by the

Remuneration Committee and the Board.

It is the Remuneration Committee’s policy to determine the level of

directors’ remuneration having regard to amounts payable to non-

executive directors in the industry generally, the role that individual

directors fulfil in respect of Board and committee responsibilities, and

time committed to the Company’s affairs, taking into account the

aggregate limit of fees set out in the Company’s articles of

incorporation (currently £200,000). Any increase in the level set out

therein requires approval by the Board and the Company’s

shareholders.

The Chairman of the Board and the Chair of the Audit and Risk

Committee each receives fees at a higher rate than the other

directors to reflect their additional responsibilities. The fees payable

to directors are not performance related. They are set at a level to

recruit and retain individuals of sufficient calibre, with the level of

knowledge, experience and expertise necessary to promote the

success of the Company in reaching its short and long-term strategic

objectives.

The Board and its committees exclusively comprise non- executive

directors. No director past or present has an entitlement to a pension

from the Company, and the Company has not, and does not intend

to, operate a share scheme for directors or to award any share

options or long-term performance incentives to any director. No

director has a service contract with the Company, although directors

have a letter of appointment. Directors do not receive exit payments

and are not provided with any compensation for loss of office. No

other payments are made to directors other than the reimbursement

of reasonable out-of-pocket expenses incurred in attending to the

Company’s business.

Implementation of policy

The Board did not seek the views of shareholders in setting this

remuneration policy. Any comments on the remuneration policy

received from shareholders would be considered on a case-by-case

basis.

As the Company does not have any employees, no employee pay and

employment conditions were taken into account when setting this

remuneration policy and no employees were consulted in its

construction.

Directors’ fees are reviewed annually and take into account research

from third parties on the fee levels of directors of peer group

companies, as well as industry norms and factors affecting the time

commitment expected of the directors. New directors are subject to

the provisions set out in this remuneration policy.

Directors’ annual report on remuneration

This report sets out how the remuneration policy was implemented

during the year ended 30 September 2023.

Consideration of matters relating to directors’

remuneration

Directors’ remuneration was last reviewed by the remuneration

committee in September 2023. Although no external advice was

sought in considering the levels of directors’ fees, information on fees

paid to directors of other investment trusts managed by Schroders

and peer group companies was provided by the Manager and

corporate broker and was taken into consideration.

Following this review, the remuneration committee recommended

that with effect from 1 October 2023, the Chairman's annual fee be

increased to £42,000, the chairman of the audit and risk committee's

annual fee be increased to £34,125 and the annual fee for non-

executive directors be increased to £28,350. Directors’ fees were last

increased with effect from 1 October 2022.

The terms of Directors’ letters of appointment are available for

inspection at the Company’s registered office address during normal

business hours and during the AGM at the location of such meeting.

The remuneration committee is responsible for making recommendations to the Board on the remuneration of the directors. All directors are

members of the committee, which is considered appropriate by the directors given that all members are independent non-executive directors

and Andrew Page is the chairman. Its terms of reference are available on the Company’s web pages, www.schroders.co.uk/ukmidcap.

Recommendations made to, and approved by, the Board:

• That directors’ fees per annum be increased to the following levels effective from 1 October 2023: Chairman £42,000, Audit and

Risk. Chair: £34,125 and other directors: £28,350.

Schroder UK Mid Cap Fund plc 35

Expenditure by the Company on

remuneration and distributions to

shareholders

The table below compares the remuneration payable to directors to

distributions paid to shareholders during the year under review and

the prior financial year. In considering these figures, shareholders

should take into account the Company’s investment objective.

Fees paid to directors (audited)

The following amounts were paid by the Company to directors for their services in respect of the year ended 30 September 2023 and the

preceding financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The performance of the Company

over the financial year is presented on page 2, under the heading “Key highlights”.

Change in annual fees

Taxable payable years ended

Fees benefits

1

Total 30 September

2023 2022 2023 2022 2023 2022 2023 2022 2021

Director £ £ £ £ £ £ % % %

Robert Talbut (Chairman) 40,000 38,500 302 395 40,302 38,895 3.6 18.6 29.0

Wendy Colquhoun 27,000 26,000 1,759 774 28,759 26,774 7.4 7.1 33.3

Clare Dobie

2

– 24,917 – – – 24,917 N/a N/a (0.6)

Helen Galbraith 27,000 12,543 – – 27,000 12,543 115.3 N/a N/a

Andrew Page 32,500 31,250 – – 32,500 31,250 4.0 4.2 (0.3)

Harry Morley

3

2,250

– 161 – 2,411 – N/a N/a N/a

Total 128,750 133,210 2,222 1,169 130,972 134,379

1

Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and NI contributions.

2

Retired from the Board on 15 September 2022.

3

Appointed as a director on 1 September 2023.

Strategic report Governance Financial Other InformationIntroduction

Year ended Year ended

30 September 30September

2023 2022 Change

£’000 £’000 %

Remuneration payable

to directors 131 134 (2.2)

Distributions paid to

shareholders

Dividends 6,743 5,586

Share buybacks – 2,675

Total distributions paid to

shareholders 6,743 8,261 (18.4)

36 Schroder UK Mid Cap Fund plc

Remuneration Committee report

continued

10 Year share price and Benchmark total returns

1

Source: Morningstar/Thomson Reuters. Rebased to 100 at 30 September 2013. Definitions of terms and Alternative Performance Measures

are given on page 64.

Directors’ share interests (audited)

The Company’s articles of association do not require directors to own

shares in the Company. The interests of directors, including those of

connected persons, at the beginning and end of the financial year

under review are set out below.

30 30

September September

2023 2022

Wendy Colquhoun 2,000 2,000

Helen Galbraith 5,500 5,500

Harry Morley 9,000 N/A

Andrew Page 23,128 23,128

Robert Talbut 8,176 8,176

There have been no changes since the year end.

Andrew Page

Chairman of the Remuneration Committee

12 December 2023

Share price

Benchmark

30-Se

p-2021

30-Se

p-2020

30-Se

p-2019

30-Sep-2018

30-Se

p-2017

30-Se

p-2016

30-Se

p-2015

30-Se

p-2014

30-Se

p-2013

30-Se

p-2022

30-Se

p

-2023

50

100

150

200

250

Schroder UK Mid Cap Fund plc 37

The directors are responsible for preparing the Annual Report and

financial statements in accordance with applicable law and

regulations.

Company law requires the directors to prepare financial statements

for each financial year. Under that law they have elected to prepare

the financial statements in accordance with UK accounting standards

and applicable law (UK Generally Accepted Accounting Practice),

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 judgements and estimates that are reasonable and

prudent;

– state whether applicable UK accounting standards have been

followed, subject to any material departures disclosed and

explained in the financial statements;

– assess the Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern; and

– use the going concern basis of accounting unless they either

intend to liquidate the Company or to cease operations or have

no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Company’s

transactions and disclose with reasonable accuracy at any time the

financial position of the Company and enable them to ensure that the

financial statements comply with the Companies Act 2006. They are

responsible for such internal control as they determine is necessary

to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error, and have

general responsibility for taking such steps as are reasonably open to

them to safeguard the assets of the Company and to prevent and

detect fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the

corporate and financial information included on the company’s

website. Legislation in the UK governing the preparation and

dissemination of financial statements may differ from legislation in

other jurisdictions.

Directors’ Statement

Each of the directors, whose names and functions are listed on

pages24 and 25, confirms that, to the best of their knowledge:

– the financial statements, prepared in accordance with the

applicable set of accounting standards, give a true and fair view

of the assets, liabilities, financial position and profit or loss of the

Company; and

– the Strategic Report includes a fair review of the development

and performance of the business and the position of the

Company, together with a description of the principal risks and

uncertainties that it faces.

We consider the annual report and accounts, taken as a whole, is fair,

balanced and understandable and provides the information

necessary for shareholders to assess the Company’s position and

performance, business model and strategy.

On behalf of the Board

Robert Talbut

Chairman

12 December 2023

Statement of Directors’ Responsibilities in respect of the Annual Report and Accounts

Strategic report Governance Financial Other InformationIntroduction

38 Schroder UK Mid Cap Fund plc

Schroder UK Mid Cap Fund plc 39

Financial

Independent Auditors’ Report 40

Income Statement 45

Statement of Changes in Equity 46

Statement of Financial Position 47

Notes to the Accounts 48

40 Schroder UK Mid Cap Fund plc

Independent Auditor’s Report

1 Our opinion is unmodified

We have audited the financial statements of Schroder UK Mid Cap Fund plc (“the Company”) for the year ended 30 September 2023 which

comprise the Income Statement, Statement of Changes in Equity, Statement of Financial Position, and the related notes, including the

accounting policies in note 1.

In our opinion the financial statements:

– give a true and fair view of the state of the Company’s affairs as at 30 September 2023 and of its return for the year then ended;

– have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable

in the UK and Republic of Ireland; and

– have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are

described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is

consistent with our report to the Audit and Risk Committee.

We were first appointed as auditor by the directors on 21 June 2017. The period of total uninterrupted engagement is for the seven financial

years ended 30 September 2023. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in

accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services

prohibited by that standard were provided.

2 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and

include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had

the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We

summarise below the key audit matter (unchanged from 2022), in arriving at our audit opinion above, together with our key audit procedures

to address this matter and, as required for public interest entities, our results from those procedures. This matter was addressed, and our

results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole,

and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter.

The risk Our response

Carrying amount of

quoted investments

£228.0m; (2022: £207.3m)

Refer to page 29 (Audit and

Risk Committee Report),

page48 (accounting policy)

and page 51 (financial

disclosures).

Low risk, high value

The Company’s portfolio of quoted investments

makes up 96.7% (2022: 97.4%) of the Company’s

total assets (by value – the residual comprising of

debtors and cash and cash equivalents) and is one

of the key drivers of results. We do not consider

these investments to be at a high risk of significant

misstatement, or to be subject to a significant level

of judgement because they comprise liquid,

quoted investments. However, due to their

materiality in the context of the financial

statements as a whole, they are considered to be

one of the areas which had the greatest effect on

our overall audit strategy and allocation of

resources in planning and completing our audit.

We performed the detailed tests below rather than

seeking to rely on any of the Company’s controls,

because the nature of the balance is such that we

would expect to obtain audit evidence primarily

through the detailed procedures described below.

Our procedures included:

– Tests of detail: Agreeing the valuation of

100% of the quoted investments in the

portfolio to externally quoted prices; and

– Enquiry of Depositary: Agreeing 100% of

quoted investment holdings in the portfolio to

independently received third party

confirmations from the investment depository.

Our results: We found the carrying amount of

quoted investments to be acceptable (2022:

acceptable).

Schroder UK Mid Cap Fund plc 41

Strategic report Governance Financial Other InformationIntroduction

3 Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at £2.35m (2022: £2.13m), determined with reference to a benchmark of total assets,

of which it represents 1% (2022: 1%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold,

performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account

balances add up to a material amount across the financial statements as a whole.

Performance materiality was set at 75% (2022: 75%) of materiality for the financial statements as a whole, which equates to £1.76m (2022:

£1.59m). We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an

elevated level of risk.

In addition, we applied materiality of £392k (2022: £390k) and performance materiality of £294k (2022: £292k) to income (as disclosed in Note

3), for which we believe misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be e

xpected

to influence the Company’s members’ assessment of the financial performance of the Company.

We agreed to report to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding £117k (2022: £106k),

or £19k in relation to income (2022: £39k) in addition to other identified misstatements that warranted reporting on qualitative gr

ounds.

Our audit of the Company was undertaken to the materiality level specified above and was performed by a single audit team.

The scope of the audit work performed was fully substantive as we did not rely upon the Company’s internal control over financial r

eporting.

4 Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease

its operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that

there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from

the date of approval of the financial statements (“the going concern period”).

We used our knowledge of the Company, its industry, and the general economic environment to identify the inherent risks to its business

model and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the going concern

period. The risks that we considered most likely to adversely affect the Company’s available financial resources and its ability to oper

ate over

this period were:

– The impact of a significant reduction in the valuation of investments and the implications for the Company’s debt covenants;

– The liquidity of the investment portfolio and its ability to meet the liabilities of the Company as and when they fall due; and

– The operational resilience of key service organisations.

We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by assessing the

degree of downside assumption that, individually and collectively, could result in a liquidity issue, taking into account the Company

’s current

and projected cash and liquid investment position.

We considered whether the going concern disclosure in Note 1 to the financial statements gives a full and accurate description of the

directors’ assessment of going concern, including the identified risks and related sensitivities.

Our conclusions based on this work:

– we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appr

opriate;

– we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions

that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the going concern

period;

– we have nothing material to add or draw attention to in relation to the directors’ statement in Note 1 to the financial statements on the

use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Company’s use of

that basis for the going concern period, and we found the going concern disclosure in Note 1 to be acceptable; and

– the related statement under the Listing Rules set out on page 21 is materially consistent with the financial statements and our audit

knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with

judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in

operation.

5 Fraud and breaches of laws and regulations – ability to detect

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or

pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

– Enquiring of directors as to the Company’s high-level policies and procedures to prevent and detect fraud, as well as whether the

y have

knowledge of any actual, suspected or alleged fraud;

– Assessing the segregation of duties in place between the directors, the administrator and the Company’s Manager; and

– Reading Board and Audit and Risk Committee minutes.

42 Schroder UK Mid Cap Fund plc

Independent Auditor’s Report

continued

As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular to the risk that

management may be in a position to make inappropriate accounting entries. We evaluated the design and implementation of the relevant

controls over journal entries and other adjustments and made inquiries of the Administrator about inappropriate or unusual activity relating to

the processing of journal entries and other adjustments. Based on these procedures, we selected journal entries for testing, which included

material post-closing journal entries.

On this audit we do not believe there is fraud risk related to revenue recognition because the revenue is non-judgemental and str

aightforward,

with limited opportunity for manipulation. We did not identify any significant unusual transactions or additional fraud risks.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our

general commercial and sector experience and through discussion with the directors, the Manager and the administrator (as required by

auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. As the

Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures

for complying with regulatory requirements.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation

(including related companies legislation), distributable profits legislation, and its qualification as an Investment Trust under UK taxation

legislation, any breach of which could lead to the Company losing various deductions and exemptions from UK corporation tax, and we

assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

We assessed the legality of the distributions made by the Company in the period based on comparing the dividends paid to the distributable

reserves prior to each distribution.

Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect

on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following

areas as those most likely to have such an effect: money laundering, data protection, bribery and corruption legislation and certain aspects of

company legislation recognising the financial and regulated nature of the Company’s activities and its legal form. Auditing standar

ds limit the

required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and the administrator and

inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident

from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the

financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the

further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less

likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. W

e are

not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

6 We have nothing to report on the other information in the Annual Report

The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on

the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly

stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the

information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we

have not identified material misstatements in the other information.

Strategic report and directors’ report

Based solely on our work on the other information:

– we have not identified material misstatements in the strategic report and the directors’ report;

– in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

– in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies

Act 2006.

Schroder UK Mid Cap Fund plc 43

Strategic report Governance Financial Other InformationIntroduction

Disclosures of emerging and principal risks and longer-term viability

We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in respect of

emerging and principal risks and the viability statement, and the financial statements and our audit knowledge.

Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in r

elation

to:

– the directors’ confirmation within the viability statement on page 21 that they have carried out a robust assessment of the emerging and

principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity;

– the principal risk and uncertainties disclosures describing these risks and how emerging risks are identified, and explaining ho

w they are

being managed and mitigated; and

– the directors’ explanation in the viability statement of how they have assessed the prospects of the Company, over what period the

y have

done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation

that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment,

including any related disclosures drawing attention to any necessary qualifications or assumptions.

We are also required to review the viability statement, set out on page 21 under the Listing Rules. Based on the above procedures, we have

concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we

cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that

were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Company

’s

longer-term viability.

Corporate governance disclosures

We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate governance

disclosures and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements and our audit

knowledge:

– the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and

understandable, and provides the information necessary for shareholders to assess the Company’s position and performance, business

model and strategy;

– the section of the annual report describing the work of the audit and risk committee, including the significant issues that the audit and

risk committee considered in relation to the financial statements, and how these issues were addressed; and

– the section of the annual report that describes the review of the effectiveness of the Company’s risk management and internal contr

ol

systems.

We are required to review the part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK

Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in this respect.

7 We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:

– adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited b

y

us; or

– the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting

records and returns; or

– certain disclosures of directors’ remuneration specified by law are not made; or

– we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

8 Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 37, the directors are responsible for: the preparation of the financial statements

including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company’s ability to continue as a

going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either

intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

44 Schroder UK Mid Cap Fund plc

Independent Auditor’s Report

continued

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not

guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can

arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at

www.frc.org.uk/auditorsresponsibilities.

9 The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our

audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an

auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other

than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Gary Fensom (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

Saltire Court

20 Castle Terrace

Edinburgh

EH1 2EG

12 December 2023

Schroder UK Mid Cap Fund plc 45

2023 2022

Revenue Capital Total Revenue Capital Total

Note £’000 £’000 £’000 £’000 £’000 £’000

Gains/(losses) on investments held at fair value

through profit or loss 2 – 26,716 26,716 – (88,419) (88,419)

Income from investments 3 9,024 298 9,322 8,958 88 9,046

Other interest receivable and similar income 3 140 – 140 10 – 10

Gross return/(loss) 9,164 27,014 36,178 8,968 (88,331) (79,363)

Investment management fee 4 (451) (1,053) (1,504) (487) (1,136) (1,623)

Administrative expenses 5 (601) – (601) (542) – (542)

Net return/(loss) before finance costs and taxation 8,112 25,961 34,073 7,939 (89,467) (81,528)

Finance costs 6 (270) (630) (900) (116) (271) (387)

Net return/(loss) before taxation 7,842 25,331 33,173 7,823 (89,738) (81,915)

Taxation 7 – – – – – –

Net return/(loss) after taxation 7,842 25,331 33,173 7,823 (89,738) (81,915)

Return/(loss) per share 9 22.68p 73.25p 95.93p 22.43p (257.32)p (234.89)p

The “Total” column of this statement is the profit and loss account of the Company. The “Revenue” and “Capital” columns represent

supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items

of other comprehensive income, and therefore the net return/(loss) after taxation is also the total comprehensive income/(loss) for the year

.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the

year.

The notes on pages 48 to 57 form an integral part of these accounts.

Income Statement

for the year ended 30 September 2023

Strategic report Governance Financial Other InformationIntroduction

46 Schroder UK Mid Cap Fund plc

Statement of Changes in Equity

for the year ended 30 September 2023

Called-up Capital Share

share Share redemption Merger purchase Capital Revenue

capital premium reserve reserve reserve reserves reserve Total

Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 30 September 2021 9,036 13,971 220 2,184 9,908 235,367 6,883 277,569

Repurchase of the Company’s

own shares into treasury – – – – (2,675) – – (2,675)

Net (loss)/return after taxation – – – – – (89,738) 7,823 (81,915)

Dividends paid in the year 8 – – – – – – (5,586) (5,586)

At 30 September 2022 9,036 13,971 220 2,184 7,233 145,629 9,120 187,393

Net return after taxation – – – – – 25,331 7,842 33,173

Dividends paid in the year 8 – – – – – – (6,743) (6,743)

At 30 September 2023 9,036 13,971 220 2,184 7,233 170,960 10,219 213,823

The notes on pages 48 to 57 form an integral part of these accounts.

Schroder UK Mid Cap Fund plc 47

2023 2022

Note £’000 £’000

Fixed assets

Investments held at fair value through profit or loss 10 227,950 207,289

Current assets

Debtors 11 2,515 853

Cash and cash equivalents 12 5,372 4,786

7,887 5,639

Current liabilities

Creditors: amounts falling due within one year 13 (22,014) (25,535)

Net current liabilities (14,127) (19,896)

Total assets less current liabilities 213,823 187,393

Net assets 213,823 187,393

Capital and reserves

Called-up share capital 14 9,036 9,036

Share premium 15 13,971 13,971

Capital redemption reserve 15 220 220

Merger reserve 15 2,184 2,184

Share purchase reserve 15 7,233 7,233

Capital reserves 15 170,960 145,629

Revenue reserve 15 10,219 9,120

Total equity shareholders’ funds 213,823 187,393

Net asset value per share 16 618.32p 541.89p

These accounts were approved and authorised for issue by the Board of directors on 12 December 2023 and signed on its behalf by:

Robert Talbut

Chairman

The notes on pages 48 to 57 form an integral part of these accounts.

Registered in Scotland as a public company limited by shares

Company registration number: SC082551

Statement of Financial Position

at 30 September 2023

Strategic report Governance Financial Other InformationIntroduction

48 Schroder UK Mid Cap Fund plc

Notes to the accounts

for the year ended 30 September 2023

1. Accounting Policies

(a) Basis of accounting

Schroder UK Mid Cap Fund plc (“the Company”) is registered in Scotland as a public company limited by shares. The Company’s registered

office is 9 Haymarket Square, Edinburgh, Scotland EH3 8FY.

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice (“UK GAAP”),

in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable in the UK and Republic of

Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital T

rusts”

(the “SORP”) issued by the Association of Investment Companies in July 2022. All of the Company’s operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of

investments held at fair value through profit or loss. The directors believe that the Company has adequate resources to continue oper

ating for

at least 12 months from the date of approval of these accounts. In forming this opinion, the directors have taken into consideration: stress

testing prepared by the Manager which modelled a 50% decline in valuation of investments and investment income and demonstrated the

Company’s ability to comply with the covenants of its borrowing agreements and pay its operating expenses; the controls and monitoring

processes in place; the Company’s level of debt and other payables; the low level of operating expenses, comprising largely variable costs

which would reduce pro-rata in the event of a market downturn; and that the Company’s assets comprise cash and readily realisable securities

quoted in active markets. In forming this opinion, the directors have also considered the loans currently in place which expire on 27February

2024 and 14 February 2025. Further details of directors’ considerations regarding this are given in the Chairman’s Statement, Portfolio

Managers’ Review, Going Concern Statement, Viability Statement and under the Principal and Emerging risks and uncertainties heading on

page 18.

The Company has not presented a statement of cash flows, as it is not required for an investment fund whose investments are highly liquid,

carried at market value and which presents a statement of changes in equity.

The accounts are presented in sterling and amounts have been rounded to the nearest thousand.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 September 2022.

Other than the directors’ assessment of going concern, no significant judgements, estimates or assumptions have been required in the

preparation of the accounts for the current or preceding financial year.

(b) Valuation of investments

The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth.

This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment

objective and information is provided internally on that basis to the Company’s Board of directors. Accordingly, upon initial recognition the

investments are designated by the Company as “held at fair value through profit or loss”. They are included initially at fair value which is taken

to be their cost, excluding expenses incidental to purchase which are written off to capital at the time of acquisition. Subsequently the

investments are valued at fair value, which are quoted bid prices.

Any investments that are unlisted or not actively traded would be valued using a variety of techniques to determine their fair value; any such

valuations would be reviewed by both the AIFM’s fair value pricing committee and by the directors.

All purchases and sales are accounted for on a trade date basis.

(c) Accounting for reserves

Gains and losses on sales of investments and the management fee or finance costs allocated to capital, are included in the Income Statement

and dealt with in capital reserves. Increases and decreases in the valuation of investments held at the year end, are included in the Income

Statement and in capital reserves within “Investment holding gains and losses”.

(d) Income

Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital in

nature, in which case it is included in capital.

Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash

dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend is r

ecognised

in capital.

(e) Expenses

All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income Statement with the

following exceptions:

– The management fee is allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and

capital return from the Company’s investment portfolio.

– Expenses incidental to the purchase and sale of investments are written off to capital at the time of the transaction.

These expenses are commonly referred to as transaction costs and comprise brokerage commission and stamp duty.

Details of transaction costs are given in note 10 on page 51.

(f) Finance costs

Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis

using the effective interest method and in accordance with FRS 102.

Finance costs are allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and capital return

from the Company’s investment portfolio.

Schroder UK Mid Cap Fund plc 49

1. Accounting Policies continued

(g) Financial instruments

Cash at bank and in hand may comprise cash, cash equivalents, and demand deposits which are readily convertible to a known amount of

cash and are subject to insignificant risk of changes in value.

Cash equivalents are short-term maturity of three months or less, highly liquid investments that are readily convertible to known amounts of

cash. The Company’s investment in HSBC's Sterling Liquidity Fund of £4,438,000 (2022: Nil) is managed as part of the Company's cash and

cash equivalents as defined under FRS 102 7.2.

Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with debtors

reduced by appropriate allowances for estimated irrecoverable amounts.

Bank loans and overdrafts are initially measured at fair value and subsequently at amortised cost. They are recorded at the proceeds r

eceived

net of direct issue costs.

(h) Taxation

Taxation comprises amounts expected to be received or paid.

Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date.

Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is

probable that taxable profits will be available against which those timing differences can be utilised.

Tax relief is allocated to expenses charged to the capital column of the Income Statement on the “marginal basis”. On this basis, if taxable

income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to the capital column.

Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to r

everse,

based on tax rates that have been enacted or substantively enacted at the accounting date and is measured on an undiscounted basis.

(i) Value added tax (“VAT”)

Expenses are disclosed inclusive of the related irrecoverable VAT.

(j) Dividends payable

In accordance with FRS 102, the final dividend is included in the accounts in the year in which it is approved by shareholders.

(k) Repurchases of shares into treasury and subsequent reissues

The cost of repurchasing shares into treasury, including the related stamp duty and transaction costs is dealt with in the Statement of Changes

in Equity and charged to “Share purchase reserve”. Share repurchase transactions are accounted for on a trade date basis.

The sales proceeds of treasury shares reissued are treated as a realised profit up to the amount of the purchase price of those shar

es and is

transferred to capital reserves. The excess of the sales proceeds over the purchase price is transferred to “share premium”.

2. (Losses)/gains on investments held at fair value through profit or loss

2023 2022

£’000 £’000

(Losses)/Gains on sales of investments based on historic cost (1,032) 17,274

Amounts recognised in investment holding gains and losses in the previous year in

respect of investments sold in the year 9,922 (12,932)

Gains on sales of investments based on the carrying value at the previous balance sheet date 8,890 4,342

Net movement in investment holding gains and losses 17,826 (92,761)

Gains/(losses) on investments held at fair value through profit or loss 26,716 (88,419)

3. Income

2023 2022

£’000 £’000

Revenue:

Income from investments:

UK dividends 8,606 8,533

UK property income distributions 418 388

Stock dividends – 37

9,024 8,958

Other interest receivable and similar income:

Deposit interest 140 10

9,164 8,968

Capital:

Special dividends allocated to capital 298 88

Strategic report Governance Financial Other InformationIntroduction

50 Schroder UK Mid Cap Fund plc

Notes to the accounts

continued

4. Investment management fee

2023 2022

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Management fee 451 1,053 1,504 487 1,136 1,623

The bases for calculating the investment management fee and performance fee are set out in the Directors’ Report on page 26 and details of

all amounts payable to the Manager are given in note 17 on page 54.

5. Administrative expenses

2023 2022

£’000 £’000

Other administrative expenses 238 213

Secretarial fee 162 144

Directors’ fees 129 134

Auditor’s remuneration for audit services

1

72 51

601 542

1

Includes £12,000 (2022: £9,000) irrecoverable VAT.

6. Finance costs

2023 2022

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Interest on bank loans and overdrafts 270 630 900 116 271 387

7. Taxation

(a) Analysis of charge in the year:

2023 2022

£’000 £’000

Taxation for the year – –

(b) Factors affecting tax charge for the year

The tax assessed for the year is lower (2022: Higher) than the Company’s applicable rate of corporation tax in for the year of 22% (2022: 19%).

The factors affecting the current tax charge for the year are as follows:

2023 2022

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Net return/(loss) on ordinary activities before taxation 7,842 25,331 33,173 7,823 (89,738) (81,915)

Net return/(loss) on ordinary activities before taxation

multiplied by the Company’s applicable rate of

corporation tax for the year of 22% (2021: 19%) 1,725 5,573 7,298 1,486 (17,050) (15,564)

Effects of:

Capital returns on investments – (5,877) (5,877) – 16,800 16,800

Income not chargeable to corporation tax (1,893) (66) (1,959) (1,628) (17) (1,645)

Unrelieved expenses 168 370 538 142 267 409

Taxation for the year – – – – – –

(c) Deferred taxation

At 30 September 2023, the Company had surplus management expenses of £35,832,000 (2022: £34,176,000) and a non-trade loan

relationship deficit of £4,041,000 (2022: £3,250,000). A deferred tax asset has not been recognised in respect of these losses because the

investment portfolio of the Company is not expected to generate taxable income in future periods in excess of the deductible expenses of

those future periods and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing tax

losses. Accordingly, the deferred tax asset of £9,968,000 (2022: £9,357,000) has not been recognised as at 30 September 2023. The

unrecognised deferred tax asset has been calculated based on the corporation tax rate in effect from 1 April 2023 of 25%, as enacted by the

Finance Act 2021.

Given the Company’s intention to meet the conditions required to retain its status as an Investment Trust Company, no provision has been

made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

Schroder UK Mid Cap Fund plc 51

8. Dividends

(a) Dividends paid and declared

2023 2022

£’000 £’000

2022 final dividend of 14.0p (2021: 11.0p) paid out of revenue profits 4,841 3,857

Interim dividend of 5.5p (2022: 5.0) paid out of revenue profits 1,902 1,729

Total dividends paid in the year 6,743 5,586

2023 2022

£’000 £’000

2023 final dividend declared of 15.0p (2022: 14.0p) to be paid out of revenue profits 5,187 4,841

(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (“Section 1158”)

The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year as shown below. The

revenue available for distribution by way of dividend for the year is £7,842,000 (2022: £7,823,000).

2023 2022

£’000 £’000

Interim dividend of 5.5p (2022: 5.0p) 1,902 1,729

Final dividend of 15.0p (2022: 14.0p) 5,187 4,841

7,089 6,570

9. Return/(loss) per share

2023 2022

£’000 £’000

Revenue return 7,842 7,823

Capital return/(loss) 25,331 (89,738)

Total return/(loss) 33,173 (81,915)

Weighted average number of shares in issue during the year 34,581,190 34,874,738

Revenue return per share 22.68p 22.43p

Capital return/(loss) per share 73.25p (257.32)p

Total return/(loss) per share 95.93p (234.89)p

10. Investments held at fair value through profit or loss

2023 2022

£’000 £’000

Opening book cost 223,047 210,126

Opening investment holding (losses)/gains (15,758) 89,935

Opening fair value 207,289 300,061

Analysis of transactions made during the year

Purchases at cost 57,741 50,360

Sales proceeds (63,796) (54,713)

Gains/(losses) on investments held at fair value 26,716 (88,419)

Closing fair value 227,950 207,289

Closing book cost 215,960 223,047

Closing investment holding gains/(losses) 11,990 (15,758)

Closing fair value 227,950 207,289

Sales proceeds amounting to £63,796,000 (2022: £54,713,000) were receivable from disposals of investments in the year. The book cost of

these investments when they were purchased was £64,828,000 (2022: £37,439,000). These investments have been revalued over time and

until they were sold any unrealised gains and losses were included in the fair value of the investments.

All investments are listed on a recognised stock exchange.

Strategic report Governance Financial Other InformationIntroduction

52 Schroder UK Mid Cap Fund plc

Notes to the accounts

continued

10. Investments held at fair value through profit or loss continued

The following transaction costs, comprising stamp duty and brokerage commission were incurred during the year:

2023 2022

£’000 £’000

On acquisitions 305 226

On disposals 31 28

336 254

11. Debtors

2023 2022

£’000 £’000

Securities sold awaiting settlement 1,688 45

Dividends and interest receivable 813 793

Other debtors 14 15

2,515 853

12. Cash and cash equivalents

2023 2022

£’000 £’000

Cash at bank 934 4,786

Money market funds 4,438 –

5,372 4,786

As at 30 September 2023, the Company held HSBC Sterling Liquidity fund with a market value of £4,438,000 (30 September 2022: Nil), which is

managed as part of the Company's cash and cash equivalents as defined under FRS 102:7.2.

13. Creditors: amounts falling due within one year

2023 2022

£’000 £’000

Bank loan 20,000 25,000

Securities purchased awaiting settlement 1,465 –

Other creditors and accruals 549 535

22,014 25,535

The bank loans comprise a £10 million one-year term loan from Bank of Nova Scotia, London Branch expiring on 27 February 2024, carrying

an interest rate based on the Sterling Overnight Interest Average plus a margin and a £10m three-year revolving credit facility agreement with

Bank of Nova Scotia, London Branch expiring on 14 February 2025. These loans replaced the three-year term loan from Scotiabank Europe plc,

which expired in February 2022 and a one year revolving credit facility agreement with Scotiabank Europe plc which expired on 28 February

2022.

The directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.

14. Called-up share capital

2023 2022

£’000 £’000

Allotted, called-up and fully paid:

Ordinary shares of 25p each:

Opening balance of 34,581,190 (2022: 35,066,190) shares, excluding shares held in treasury 8,645 8,766

Repurchase of Nil (2022: 485,000) shares into treasury – (121)

Subtotal of 34,581,190 (2022: same) shares 8,645 8,645

1,562,500 (2022: same) shares held in treasury 391 391

Closing balance

1

9,036 9,036

1

Represents 36,143,690 (2022: same) shares of 25p each, including 1,562,500 (2022: same) shares held in treasury.

Schroder UK Mid Cap Fund plc 53

15. Reserves

Year ended 30 September 2023

Capital reserves

Gains and Investment

Capital Share losses on holding

Share redemption Merger purchase sales of gains and Revenue

premium

1

reserve

1

reserve

1

reserve

2

investments

2

losses

3

reserve

4

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Opening balance 13,971 220 2,184 7,233 161,387 (15,758) 9,120

Gains on sales of investments based on the

carrying value at the previous balance sheet date – – – – 8,890 – –

Net movement in investment holding gains and losses – – – – – 17,826 –

Transfer on disposal of investments – – – – (9,922) 9,922 –

Management fee allocated to capital – – – – (1,053) – –

Special dividend allocated to capital – – – – 298 – –

Finance costs allocated to capital – – – – (630) – –

Dividends paid – – – – – – (6,743)

Retained revenue for the year – – – – – – 7,842

Closing balance 13,971 220 2,184 7,233 158,970 11,990 10,219

Year ended 30 September 2022

Capital reserves

Gains and Investment

Capital Share losses on holding

Share redemption Merger purchase sales of gains and Revenue

premium

1

reserve

1

reserve

1

reserve

2

investments

2

losses

3

reserve

4

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Opening balance 13,971 220 2,184 9,908 145,432 89,935 6,883

Gains on sales of investments based on the

carrying value at the previous balance sheet date – – – – 4,342 – –

Net movement in investment holding gains and losses – – – – – (92,761) –

Transfer on disposal of investments – – – – 12,932 (12,932) –

Management fee allocated to capital – – – – (1,136) – –

Special dividend allocated to capital – – – – 88 – –

Finance costs allocated to capital – – – – (271) – –

Repurchase of shares into treasury – – – (2,675) – – –

Dividends paid – – – – – – (5,586)

Retained revenue for the year – – – – – – 7,823

Closing balance 13,971 220 2,184 7,233 161,387 (15,758) 9,120

1

These reserves are not distributable. The “Merger reserve” represents the premium over the nominal value of shares issued following a

merger in 1989.

2

These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends.

The “Share purchase reserve” is for the purpose of financing share buy-backs and was created following the cancellation of the “Warrant

reserve” in 2003.

3

This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised.

An analysis has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the

Company’s own shares) and those that are unrealised.

4

The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.

16. Net asset value per share

2023 2022

Net assets attributable to the Ordinary shareholders (£’000) 213,823 187,393

Shares in issue at the year end, excluding shares held in treasury 34,581,190 34,581,190

Net asset value per share 618.32p 541.89p

Strategic report Governance Financial Other InformationIntroduction

54 Schroder UK Mid Cap Fund plc

Notes to the accounts

continued

17. Transactions with the Manager

Under the terms of the AlFM Agreement, the Manager is entitled to receive a management fee and a company secretarial fee. Details of the

basis of these calculations are given in the Directors’ Report on page 26. Any investments in funds managed or advised by the Manager or any

of its associated companies, are excluded from the assets used for the purpose of the management fee calculation and therefore incur no fee.

The management fee payable in respect of the year ended 30 September 2023 amounted to £1,504,000. (2022: £1,623,000) of which £374,000

(2022: £340,000) was outstanding at the year end. The secretarial fee payable for the year amounted to £162,000 (2022: £144,000) including

VAT, of which £41,000 (2022: £36,000) was outstanding at the year end.

No director of the Company served as a director of any member of the Schroder Group, at any time during the year.

18. Related party transactions

Details of the remuneration payable to directors are given in the Remuneration Report on page 35 and details of directors’ shareholdings are

given in the Remuneration Report on page 36. Details of transactions with the Manager are given in note 17 above. There have been no other

transactions with related parties during the year (2022: nil).

19. Disclosures regarding financial instruments measured at fair value

The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio.

FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels belo

w. A fair value

measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 – valued using unadjusted quoted prices in an active market for identical assets.

Level 2 – valued using inputs other than quoted prices included within Level 1, that are observable (ie developed using market data).

Level 3 – valued using inputs that are unobservable (ie for which market data is unavailable).

Details of the Company’s valuation policy are given in note 1(b) on page 48.

At 30 September 2023, the Company’s investments were all categorised in Level 1 (2022: same).

20. Financial instruments’ exposure to risk and risk management policies

The Company’s investment objective is to invest in mid cap equities with the aim of providing a total return in excess of the FTSE 250

(ex-Investment Companies) Index. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in a

reduction in the Company’s net assets or a reduction in the profits available for dividends.

These financial risks include market risk (comprising interest rate risk and other price risk), liquidity risk and credit risk. The dir

ectors’ policy for

managing these risks is set out below. The Board coordinates the Company’s risk management policy. The Company has no significant

exposure to foreign exchange risk.

The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not

changed from those applying in the comparative year.

The Company’s classes of financial instruments are as follows:

– investments in shares which are held in accordance with the Company’s investment objective;

– short-term debtors, creditors and cash and cash equivalents arising directly from its operations; and

– sterling revolving credit facilities with Scotiabank, the purpose of which are to assist with financing the Company’s operations.

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This

market risk comprises two elements: interest rate risk and other price risk. Information to enable an evaluation of the nature and extent of

these two elements of market risk is given in parts (i) and (ii) of this note, together with sensitivity analyses where appropriate. The Board

reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative

year. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk

on the whole of the investment portfolio on an ongoing basis.

(i) Interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on any variable rate borrowings

when interest rates are re-set. The Company’s one-year term loan carries a fixed rate of interest and does not give rise to any interest rate risk.

Management of interest rate risk

Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Board’s policy is to permit gearing up to 25%,

where gearing is defined as borrowings used for investment purposes less cash and cash equivalents, expressed as a percentage of net

assets.

Schroder UK Mid Cap Fund plc 55

20. Financial instruments’ exposure to risk and risk management policies continued

Interest rate exposure

The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is

shown below:

2023 2022

£’000 £’000

Exposure to floating interest rates:

Cash and cash equivalents 5,372 4,786

Total exposure 5,372 4,786

Cash balances earn interest at a floating rate based on the Sterling Overnight Index Average.

The Company’s 364 day, £20 million revolving credit facility with Scotiabank Europe plc expires on 27 February 2024. The Company also has a

£10 million three year facility with Scotiabank Europe plc, which expires on 14 February 2025. The facilities are unsecured but subject to

covenants and restrictions which are customary for a facility of this nature. Interest is payable at a rate of Sterling Overnight Inter

est Average

(2022 LIBOR), or its replacement reference rate, as quoted in the market for the loan period, plus a margin, plus Mandatory Costs, which are

the lender’s costs of complying with certain regulatory requirements of the Bank of England. At 30 September 2023, the Company had drawn

down £20 million in February 2024.

The above year end amounts are not representative of the exposure to interest rates during the year due to fluctuations in the le

vel of cash

and cash equivalents balances. The maximum and minimum exposure during the year was as follows:

2023 2022

£’000 £’000

Minimum interest rate exposure during the year – net debt (9,957) (13,365)

Maximum interest rate exposure during the year – net debt (20,796) (22,681)

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2022: 1.0%) increase or decrease

in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a

reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary

financial instruments held at the accounting date with all other variables held constant.

2023 2022

1.0% increase 1.0% decrease 1.0% increase 1.0% decrease

in rate in rate in rate in rate

£’000 £’000 £’000 £’000

Income statement – return after taxation

Revenue return 54 (54) 48 (48)

Capital return – – – –

Total return after taxation 54 (54) 48 (48)

Net assets 54 (54) 48 (48)

In the opinion of the directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes

due to fluctuations in the level of cash balances and drawings on the credit facility.

(ii) Other price risk

Other price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of investments.

Management of market price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular

industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the

Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile.

Market price risk exposure

The Company’s total exposure to changes in market prices at 30 September comprises the following:

2023 2022

£’000 £’000

Investments held at fair value through profit or loss 227,950 207,289

The above data is broadly representative of the exposure to market price risk during the year.

Strategic report Governance Financial Other InformationIntroduction

56 Schroder UK Mid Cap Fund plc

Notes to the accounts

continued

20. Financial instruments’ exposure to risk and risk management policies continued

Concentration of exposure to market price risk

An analysis of the Company’s investments is given on page 10. The Company’s investments are all listed in the United Kingdom. Accordingly

there is a concentration of exposure to this country. However it should be noted that an investment may not be entirely exposed to the

economic conditions in its country of listing.

Market price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 20% (2022:

20%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on observation of

current market conditions. The sensitivity analysis is based on the Company’s exposure through its investments and includes the impact on the

management fee, but assumes that all other variables are held constant.

2023 2022

20% increase 20% decrease 20% increase 20% decrease

in fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Income statement – return after taxation

Revenue return (89) 89 (81) 81

Capital return 45,382 (45,382) 41,269 (41,269)

Total return after taxation and net assets 45,293 (45,293) 41,188 (41,188)

Percentage change in net asset value 21.2 (21.2) 22.0 (22.0)

(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by

delivering cash or another financial asset.

Management of the risk

Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding

requirements if necessary.

Liquidity risk exposure

Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:

2023 2022

Within one Within one

year Total year Total

£’000 £’000 £’000 £’000

Creditors: amounts falling due within one year

Securities purchased awaiting settlement 1,465 1,465 – –

Other creditors and accruals 542 542 502 502

Other payables: drawings on the revolving credit facility

(including interest) 20,530 20,530 25,160 25,160

22,537 22,537 25,662 25,662

(c) Credit risk

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss

to the Company.

Management of credit risk

This risk is not significant and is managed as follows:

Portfolio dealing

The Company invests in markets that operate a “Delivery Versus Payment” settlement process which mitigates the risk of losing the principal of

a trade during settlement. The Manager continuously monitors dealing activity to ensure best execution, which involves measuring various

indicators including the quality of trade settlement and incidence of failed trades. Counterparties must be pre-approved by the Manager’s

credit committee.

Schroder UK Mid Cap Fund plc 57

20. Financial instruments’ exposure to risk and risk management policies continued

Exposure to the Custodian

The custodian of the Company’s assets is HSBC Bank plc which has Long-Term Credit Ratings of AA- with Fitch and Aa3 with Moody’s. The

Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the custodian were to

become insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash

balances are all deposited with the custodian as banker and held on the custodian’s balance sheet. Accordingly, in accordance with usual

banking practice, the Company will rank as a general creditor to the custodian in respect of cash balances.

Credit risk exposure

The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current and

comparative year end.

2023 2022

Balance Maximum Balance Maximum

sheet exposure sheet exposure

£’000 £’000 £’000 £’000

Current assets

Debtors – securities sold awaiting settlement, dividends and

interest receivable and other debtors 2,515 2,501 853 838

Cash and cash equivalents 5,372 5,372 4,786 4,786

7,887 7,873 5,639 5,624

No debtors are past their due date and none have been written down or deemed to be impaired.

(d) Fair values of financial assets and financial liabilities

All financial assets and liabilities are either carried in the Statement of Financial Position at fair value or the amount is a reasonable

approximation of fair value.

21. Capital management policies and procedures

The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.

The Company’s debt and capital structure comprises the following:

2023 2022

£’000 £’000

Debt

Bank loan 20,000 25,000

Equity

Called-up share capital 9,036 9,036

Reserves 204,787 178,357

213,823 187,393

Total debt and equity 233,823 212,393

The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the capital r

eturn to its

equity shareholders through an appropriate level of gearing.

The Board’s policy is to permit gearing up to 25% where gearing is defined as borrowings used for investment purposes less cash and cash

equivalents, expressed as a percentage of net assets. If the figure so calculated were to be negative, this would be shown as a “net cash”

position.

2023 2022

£’000 £’000

Borrowings used for investment purposes, less cash and cash equivalents 14,628 20,214

Net assets 213,823 187,393

Gearing 6.8% 10.8%

The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This

review includes:

– the planned level of gearing, which takes into account the Manager’s views on the market;

– the need to buy back the Company’s own shares for cancellation or to hold in treasury, which takes into account the share price discount;

– the opportunities for issues of new shares; and

– the amount of dividends to be paid, in excess of that which is required to be distributed.

Strategic report Governance Financial Other InformationIntroduction

58 Schroder UK Mid Cap Fund plc

Schroder UK Mid Cap Fund plc 59

Other

Information

(unaudited)

Other Information (unaudited)

Annual General Meeting – Recommendations 60

Notice of Annual General Meeting 61

Explanatory Notes to the Notice of Meeting 62

Definitions of Terms and Performance

Measures 64

Shareholder Information 66

Warning to Shareholders 67

Information about the Company 68

60 Schroder UK Mid Cap Fund plc

Annual General Meeting – Recommendations

The Annual General Meeting (“AGM”) of the Company will be held on

Friday, 8 March 2024 at 12.00 noon. The formal Notice of Meeting is

set out on page 61.

The following information is important and requires your immediate

attention. If you are in any doubt about the action you should take,

you should consult an independent financial adviser, authorised

under the Financial Services and Markets Act 2000. If you have sold

or transferred all of your ordinary shares in the Company, please

forward this document with its accompanying form of proxy at once

to the purchaser or transferee, or to the stockbroker, bank or other

agent through whom the sale or transfer was effected for onward

transmission to the purchaser or transferee.

Attendance at the meeting

The meeting will be held at the Manager’s office at 1London Wall

Place, London EC2Y 5AU.

It will also be available to watch online and the details are setout

below. Shareholders watching online will be able to submit questions

in writing during the meeting. Shareholders will also be able to watch

the Manager’s presentation. To sign up to watch the meeting and

presentation, please click on this link

https://schroders.zoom.us/webinar/register/WN_IWa5BSGZRruLlzK9D

Gyxbg. After registering, you will receive a confirmation email

containing information about how to join.

Ordinary business

Resolutions 1 to 9 are all proposed as ordinary

resolutions

Resolution 1 is a required resolution. Resolution 2 invites

shareholders to approve the final dividend. Resolutions 3 concerns

the Directors’ Remuneration Report, on pages 34 to 36. Resolutions 4

to 7 invite shareholders to elect or re-elect each of the directors who

have put themselves forward for re-election for another year,

following the recommendations of the Nomination Committee, set

out on page 33 (their biographies are set out on pages 24 and 25).

Resolutions 8 and 9 concern the re-appointment and remuneration

of the Company’s auditor, discussed in the Audit and Risk Committee

Report on pages 29 and 30.

Special business

Resolution 10: Directors’ authority to allot shares

(ordinary resolution) and resolution 11 – power to

disapply pre-emption rights (special resolution)

The directors are seeking authority to allot a limited number of

unissued ordinary shares for cash without first offering them to

existing shareholders in accordance with statutory preemption

procedures.

Appropriate resolutions will be proposed at the forthcoming AGM

and are set out in full in the Notice of AGM. An ordinary resolution will

be proposed to authorise the directors to allot shares up to a

maximum aggregate nominal amount of £864,529.75 (being 10% of

the issued share capital (excluding any shares held in treasury) as at

the date of the Notice of the AGM). A special resolution will also be

proposed to give the directors authority to allot securities for cash on

a non preemptive basis up to a maximum aggregate nominal amount

of £864,529.75 (being 10% of the Company’s issued share capital

(excluding any shares held in treasury) as at the date of the Notice of

the AGM). This authority includes shares that the Company sells or

transfers that have been held in treasury. The Board has established

guidelines for treasury shares and will only reissue shares held in

treasury at a price equal to or greater than the Company’s NAV

(inclusive of current year income) plus any applicable costs.

The directors do not intend to allot shares pursuant to these

authorities other than to take advantage of opportunities in the

market as they arise and only if they believe it to be advantageous to

the Company’s existing shareholders to do so and when it would not

result in any dilution of NAV per share.

If approved, both of these authorities will expire at the conclusion of

the AGM in 2025 unless renewed, varied or revoked earlier.

Resolution 12: Authority to make market purchases of

the Company’s own shares (special resolution)

At the AGM held on 21 February 2023, the Company was granted

authority to make market purchases of up to 5,417,939 ordinary

shares of 25p each for cancellation or holding in treasury. No shares

have been bought back into treasury under this authority and the

Company therefore has remaining authority to purchase up to

5,417,939 ordinary shares. This authority will expire at the

forthcoming AGM.

The directors believe it is in the best interests of the Company and its

shareholders to have a general authority for the Company to buy

back its ordinary shares in the market as they keep under review the

share price discount to net asset value and the purchase of ordinary

shares. Aspecial resolution will be proposed at the forthcoming AGM

to give the Company authority to make market purchases of up to

14.99% of the ordinary shares in issue as at the date of the Notice of

the AGM. The directors will exercise this authority only if the directors

consider that any purchase would be for the benefit of the Company

and its shareholders, taking into account relevant factors and

circumstances at the time. Any shares so purchased would be

cancelled or held in treasury for potential reissue. If renewed, the

authority to be given at the 2024 AGM will lapse at the conclusion of

the AGM in 2025 unless renewed, varied or revoked earlier.

Resolution 13: Notice period for general meetings

(special resolution)

Resolution 13 set out in the Notice of AGM is a special resolution and

will, if passed, allow the Company to hold general meetings (other

than annual general meetings) on a minimum notice period of

14clear days, rather than 21 clear days as required by the Companies

Act 2006. The approval will be effective until the Company’s next AGM

to be held in 2024. The Directors will only call general meetings on

14clear days’ notice when they consider it to be in the best interests

of the Company’s shareholders and will only do so if the Company

offers facilities for all shareholders to vote by electronic means and

when the matter needs to be dealt with expediently.

Recommendations

The Board considers that the resolutions relating to the above items

of business are in the best interests of shareholders as a whole.

Accordingly, the Board unanimously recommends to shareholders

that they vote in favour of the resolutions to be proposed at the

forthcoming AGM, as they intend to do in respect of their own

beneficial holdings.

Schroder UK Mid Cap Fund plc 61

Strategic report Governance Financial Other InformationIntroduction

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of Schroder

UK Mid Cap Fund plc will be held at 1 London Wall Place, London

EC2Y 5AU on Friday, 8 March 2024 at 12.00 noon to consider the

following resolutions of which resolutions 1 to 10 will be proposed as

ordinary resolutions and resolutions 11 to 13 will be proposed as

special resolutions:

1. To receive the Report of the Directors and the audited accounts

for the year ended 30 September 2023.

2. To approve a final dividend of 15.00 pence per share for the

financial year ended 30 September 2023.

3. To approve the Directors’ Remuneration Report for the year

ended 30 September 2023.

4. To elect Harry Morley as a director of the Company.

5. To re-elect Wendy Colquhoun as a director of the Company.

6. To re-elect Helen Galbraith as a director of the Company.

7. To re-elect Robert Talbut as a director of the Company.

8. To re-appoint KPMG LLP as auditor to the Company.

9. To authorise the directors to determine the remuneration of

KPMG LLP as auditor to the Company.

10. To consider, and if thought fit, pass the following resolution as an

ordinary resolution:

“THAT the directors be generally and unconditionally authorised

pursuant to section 551 of the Companies Act 2006 (the “Act”) to

exercise all the powers of the Company to allot relevant

securities (within the meaning of section 551 of the Act) up to an

aggregate nominal amount of £864,529.75 (being 10% of the

issued ordinary share capital at the date of this Notice, excluding

shares held in treasury) for a period expiring (unless previously

renewed, varied or revoked by the Company in general meeting)

at the conclusion of the next Annual General Meeting of the

Company, but that the Company may make an offer or

agreement which would or might require relevant securities to

be allotted after expiry of this authority and the Board may allot

relevant securities in pursuance of that offer or agreement.”

11. To consider and, if thought fit, to pass the following resolution as

a special resolution:

“THAT, subject to the passing of resolution 10 set out above, the

directors be and are hereby empowered, pursuant to Section

571 of the Act, to allot equity securities (including any shares

held in treasury) (as defined in section 560(1) of the Act)

pursuant to the authority given in accordance with section 551

of the Act by the said resolution 10 and/or where such allotment

constitutes an allotment of equity securities by virtue of section

560(2) of the Act as if Section 561(1) of the Act did not apply to

any such allotment, provided that this power shall be limited to

the allotment of equity securities up to an aggregate nominal

amount of £864,529.75 (representing 10% of the aggregate

nominal amount of the share capital in issue at the date of this

Notice, excluding shares held in treasury); and provided that this

power shall expire at the conclusion of the next Annual General

Meeting of the Company but so that this power shall enable the

Company to make offers or agreements before such expiry

which would or might require equity securities to be allotted

after such expiry.”

12. To consider and, if thought fit, to pass the following resolution as

a special resolution:

“THAT the Company be and is hereby generally and

unconditionally authorised in accordance with Section 701 of the

Act to make market purchases (within the meaning of Section

693 of the Act) of ordinary shares of 25p each in the capital of

the Company (“Shares”) at whatever discount the prevailing

market price represents to the prevailing net asset value per

Share provided that:

(a) the maximum number of Shares which may be purchased is

5,183,720 representing 14.99% of the Company’s issued

ordinary share capital as at the date of this Notice,

excluding shares held in treasury;

(b) the maximum price (exclusive of expenses) which may be

paid for a Share shall not exceed the higher of;

i) 105% of the average of the middle market quotations

for the Shares as taken from the London Stock

Exchange Daily Official List for the five business days

preceding the date of purchase; and

ii) the higher of the last independent bid and the highest

current independent bid on the London Stock

Exchange;

(c) the minimum price (exclusive of expenses) which may be

paid for a Share shall be 25p, being the nominal value per

Share;

(d) this authority hereby conferred shall expire at the

conclusion of the next Annual General Meeting of the

Company in 2025 (unless previously renewed, varied or

revoked by the Company prior to such date);

(e) the Company may make a contract to purchase Shares

under the authority hereby conferred which will or may be

executed wholly or partly after the expiration of such

authority and may make a purchase of Shares pursuant to

any such contract; and

(f) any Shares so purchased will be cancelled or held in

treasury for potential reissue. ”

13. To consider and, if thought fit, to pass the following resolution as

a special resolution:

“THAT, a general meeting, other than an Annual General

Meeting, may be called on not less than 14 clear days’ notice.”

By order of the Board

Schroder Investment Management Limited Registered office:

Company Secretary 9 Haymarket Square

Edinburgh

12 December 2023 Scotland EH3 8FY

Registered number: SC082551

62 Schroder UK Mid Cap Fund plc

Explanatory Notes to the Notice of Meeting

1. Ordinary shareholders are entitled to attend and vote at the

meeting and to appoint one or more proxies, who need not be a

shareholder, as their proxy to exercise all or any of their rights to

attend, speak and vote on their behalf at the meeting.

A proxy form is attached. If you wish to appoint a person other

than the Chairman as your proxy, please insert the name of your

chosen proxy holder in the space provided at the top of the

form. If the proxy is being appointed in relation to less than your

full voting entitlement, please enter in the box next to the proxy

holder’s name the number of shares in relation to which they are

authorised to act as your proxy. If left blank your proxy will be

deemed to be authorised in respect of your full voting

entitlement (or if this proxy form has been issued in respect of a

designated account for a shareholder, the full voting entitlement

for that designated account).

Additional proxy forms can be obtained by contacting the

Company’s Registrars, Equiniti Limited, on 0800 032 0641 or

+44(0) 121 415 0207 for overseas callers, or you may photocopy

the attached proxy form. Please indicate in the box next to the

proxy holder’s name the number of shares in relation to which

they are authorised to act as your proxy. Please also indicate by

ticking the box provided if the proxy instruction is one of multiple

instructions being given. Completion and return of a form of

proxy will not preclude a member from attending the Annual

General Meeting and voting in person.

On a vote by show of hands, every ordinary shareholder who is

present in person has one vote and every duly appointed proxy

who is present has one vote. On a poll vote, every ordinary

shareholder who is present in person or by way of a proxy has

one vote for every share of which he/she is a holder.

The “Vote Withheld” option on the proxy form is provided to

enable you to abstain on any particular resolution.

However it should be noted that a “Vote Withheld” is not a vote

in law and will not be counted in the calculation of the

proportion of the votes “For” and “Against” a resolution.

A proxy form must be signed and dated by the shareholder or

his or her attorney duly authorised in writing. In the case of joint

holdings, any one holder may sign this form. The vote of the

senior joint holder who tenders a vote, whether in person or by

proxy, will be accepted to the exclusion of the votes of the other

joint holder and for this purpose seniority will be determined by

the order in which the names appear on the Register of

Members in respect of the joint holding. To be valid, proxy

form(s) must be completed and returned to the Company’s

Registrars, Equiniti Limited, Aspect House, Spencer Road,

Lancing, West Sussex BN99 6DA, in the enclosed envelope

together with any power of attorney or other authority under

which it is signed or a copy of such authority certified notarially,

to arrive no later than 48 hours before the time fixed for the

meeting, or an adjourned meeting, excluding non-working days.

Shareholders may also appoint a proxy to vote on the

resolutions being put to the meeting electronically at

www.sharevote.co.uk. Shareholders who are not registered to

vote electronically, will need to enter the Voting ID, Task ID &

Shareholder Reference Number set out in their personalised

proxy form. Alternatively, shareholders who have already

registered with Equiniti’s Shareview service can appoint a proxy

by logging onto their portfolio at

www.shareview.co.uk and

clicking on the link to vote. The on-screen instructions give

details on how to complete the appointment process. Please

note that to be valid, your proxy instructions must be received by

Equiniti no later than 12.00 noon on 6 March 2024. If you have

any difficulties with online voting, you should contact the

shareholder helpline on 0800 032 0641 (or +44(0) 121 415 0207

for overseas callers).

If an ordinary shareholder submits more than one valid proxy

appointment, the appointment received last before the latest

time for receipt of proxies will take precedence.

Shareholders may not use any electronic address provided either

in this Notice of Annual General Meeting or any related

documents to communicate with the Company for any purposes

other than expressly stated.

Representatives of shareholders that are corporations will have

to produce evidence of their proper appointment when

attending the Annual General Meeting.

2. Any person to whom this notice is sent who is a person

nominated under section 146 of the Companies Act 2006 to

enjoy information rights (a “Nominated Person”) may, under an

agreement between him or her and the shareholder by whom

he or she was nominated, have a right to be appointed (or to

have someone else appointed) as a proxy for the Annual General

Meeting. Ifa Nominated Person has no such proxy appointment

right or does not wish to exercise it, he or she may, under any

such agreement, have a right to give instructions to the

shareholder as to the exercise of voting rights.

The statement of the rights of ordinary shareholders in relation

to the appointment of proxies in note 1 above does not apply to

Nominated Persons. The rights described in that note can only

be exercised by ordinary shareholders of the Company.

3. Pursuant to Regulation 41 of the Uncertificated Securities

Regulations 2001, the Company has specified that only those

shareholders registered in the Register of members of the

Company at 6.30 p.m. on 6 March 2024, or 6.30 p.m. two days

prior to the date of an adjourned meeting, excluding non-

working days, shall be entitled to attend and vote at the meeting

in respect of the number of shares registered in their name at

that time. Changes to the Register of Members after 6.30p.m.

on 6 March 2024 shall be disregarded in determining the right

of any person to attend and vote at the meeting.

4. CREST members who wish to appoint a proxy or proxies through

the CREST electronic proxy appointment service may do so by

using the procedures described in the CREST manual. The CREST

manual can be viewed at

www.euroclear.com. A CREST message

appointing a proxy (a “CREST proxy instruction”) regardless of

whether it constitutes the appointment of a proxy or an

amendment to the instruction previously given to a previously

appointed proxy must, in order to be valid, be transmitted so as

to be received by the issuer’s agent (IDRA19) by the latest time

for receipt of proxy appointments.

5. Copies of the terms of appointment of the non-executive

directors and a statement of all transactions of each director and

of his family interests in the shares of the Company, will be

available for inspection by any member of the Company at the

registered office of the Company during normal business hours

on any weekday (English public holidays excepted) and at the

Annual General Meeting by any attendee, for at least 15 minutes

prior to, and during, the Annual General Meeting. None of the

directors has a contract of service with the Company.

6. The biographies of the directors offering themselves for election

or re-election are set out on pages 24 and 25 of the Company’s

annual report and accounts for the year ended 30September

2023.

Schroder UK Mid Cap Fund plc 63

7. As at 12 December 2023, 36,143,690 ordinary shares of 25p

each were in issue and 1,562,500 shares were held in treasury.

Therefore the total number of voting rights of the Company as at

12 December 2023 was 34,581,190.

8. A copy of this Notice of Meeting, which includes details of

shareholder voting rights, together with any other information

as required under Section 311A of the Companies Act 2006, is

available from the website dedicated to the Company:

www.schroders.co.uk/ukmidcap.

9. Pursuant to Section 319A of the Companies Act 2006, the

Company must cause to be answered at the Annual General

Meeting any question relating to the business being dealt with at

the AGM which is put by a member attending the meeting,

except in certain circumstances, including if it is undesirable in

the interests of the Company or the good order of the meeting

that the question be answered or if to do so would involve the

disclosure of confidential information.

10. Members satisfying the thresholds in section 527 of the

Companies Act 2006 can require the Company to publish a

statement on its website setting out any matter relating to:

(a) the audit of the Company’s Accounts (including the auditor’s

report and the conduct of the audit) that are to be laid before

the Meeting; or (b) any circumstance connected with an auditor

of the Company ceasing to hold office since the last AGM, that

the members propose to raise at the Meeting. The Company

cannot require the members requesting the publication to pay

its expenses. Any statement placed on the website must also be

sent to the Company’s auditors no later than the time it makes

its statement available on the website. The business which may

be dealt with at the meeting includes any statement that the

Company has been required to publish on its website.

11. Members satisfying the thresholds in section 338 of the

Companies Act 2006 may require the Company to give, to

members of the Company entitled to receive notice of the

Annual General Meeting, notice of a resolution which those

members intend to move (and which may properly be moved) at

the Annual General Meeting. A resolution may properly be

moved at the Annual General Meeting unless (i) it would, if

passed, be ineffective (whether by reason of any inconsistency

with any enactment or the Company’s constitution or otherwise);

(ii) it is defamatory of any person; or (iii) it is frivolous or

vexatious. A request made pursuant to this right may be in hard

copy or electronic form, must identify the resolution of which

notice is to be given, must be authenticated by the person(s)

making it and must be received by the Company not later than

six weeks before the date of the Annual General Meeting.

12. Members satisfying the thresholds in section 338A of the

Companies Act 2006 may request the Company to include in the

business to be dealt with at the Annual General Meeting any

matter (other than a proposed resolution) which may properly

be included in the business at the Annual General Meeting. A

matter may properly be included in the business at the Annual

General Meeting unless (i) it is defamatory of any person or (ii) it

is frivolous or vexatious. A request made pursuant to this right

may be in hard copy or electronic form, must identify the matter

to be included in the business, must be accompanied by a

statement setting out the grounds for the request, must be

authenticated by the person(s) making it and must be received

by the Company not later than six weeks before the date of the

Annual General Meeting.

1

3. The Company’s privacy policy is available on its website.

Shareholders can contact Equiniti for details of how Equiniti

processes their personal information as part of the AGM.

Strategic report Governance Financial Other InformationIntroduction

64 Schroder UK Mid Cap Fund plc

Definitions of Terms and Performance Measures

The terms and performance measures below are those

commonly used by investment companies to assess values,

investment performance and operating costs. Numerical

calculations are given where relevant. Some of the financial

measures below are classified Alternative Performance

Measures (“APMs”) as defined by the European Securities and

Markets Authority. Under this definition, APMs include a

financial measure of historical financial performance or

financial position, other than a financial measure defined or

specified in the applicable financial reporting framework.

APMs have been marked with an asterisk.

Net asset value (”NAV”) per share

The NAV per share of 618.32p (2022: 541.89p) represents the net

assets attributable to equity shareholders of £213,823,000 (2022:

£187,393,000) divided by the number of shares in issue, excluding

any shares held in treasury, of 34,581,190 (2022: 34,581,190). The

NAV calculation shows performance, after any management fees or

other expenses have been deducted.

The change in the NAV amounted to 14.10% (2022: -30%) over the

year. However this performance measure excludes the positive impact

of dividends paid out by the Company during the year. When these

dividends are factored into the calculation, the resulting performance

measure is termed the “total return”. Total return calculations and

definitions are given below. The methodology demonstrated below

can also be used to reconcile the 3-, 5- and 10-year total return

performance information shown in the annual report.

Total return*

Total return is the combined effect of any dividends paid, together

with the rise or fall in the NAV per share or share price. Total return

statistics enable the investor to make performance comparisons

between investment companies with different dividend policies. Any

dividends received by a shareholder are assumed to have been

reinvested in either the assets of the Company at its NAV per share at

the time the shares were quoted ex-dividend (to calculate the NAV

per share total return) or in additional shares of the Company (to

calculate the share price total return).

The NAV total return for the year ended 30 September 2023 is

calculated as follows:

NAV at 30/9/22 541.89p

NAV at 30/9/23 618.32p

NAV on Cumulative

Dividend XD date XD date Factor factor

14.0p 12/1/2023 652.14p 1.0215 1.0215

5.5p 13/7/2023 610.45p 1.0090 1.0307

NAV total return, being the closing NAV,

multiplied by the cumulative factor, expressed

as a percentage change in the opening NAV 17.6%

The NAV total return for the year ended 30 September 2022 is

calculated as follows:

NAV at 30/9/21 791.56p

NAV at 30/9/22 541.89p

Nav on Cumulative

Dividend XD date XD date Factor factor

9.5p 13/1/2022 764.79p 1.0144 1.0144

3.8p 14/7/2022 612.27p 1.0082 1.0227

NAV total return, being the closing NAV,

multiplied by the cumulative factor, expressed

as a percentage change in the opening NAV -30.0%

The share price total return for the year ended 30 September 2023 is

calculated as follows:

Share price at 30/9/22 480.00p

Share price at 30/9/23 544.00p

Share price Cumulative

Dividend XD date on XD date Factor factor

14.0p 12/1/2023 560.00p 1.0250 1.0250

5.5p 13/7/2023 524.00p 1.0104 1.0357

Share price total return, being the closing

share price, multiplied by the cumulative

factor, expressed as a percentage change

in the opening share price 17.4%

The share price total return for the year ended 30 September 2022 is

calculated as follows:

Share price at 30/9/21 730.00p

Share price at 30/9/22 480.00p

Share price Cumulative

Dividend XD date on XD date Factor factor

11.0p 13/1/2022 686.00p 1.0160 1.0160

9.5p 14/7/2022 510.00p 1.0098 1.0260

Share price total return, being the closing

share price, multiplied by the cumulative

factor, expressed as a percentage change

in the opening share price -32.5%

Annualised total return*

The annualised total return is the compound annual rate of return

which equates to the total return as calculated above, for a period of

more than one year.

Benchmark

A measure against which the performance of an investment company

is compared, or against which it sets its objective. The Company’s

benchmark is the FTSE 250 (ex-Investment Companies) Index.

Schroder UK Mid Cap Fund plc 65

Strategic report Governance Financial Other InformationIntroduction

Discount/premium*

The amount by which the share price of an investment trust is lower

(discount) or higher (premium) than the NAV per share. If shares are

trading at a discount, investors would be paying less than the value

attributable to the shares by reference to the underlying assets. A

premium or discount is generally the consequence of supply and

demand for the shares on the stock market. The discount or premium

is expressed as a percentage of the NAV per share. The discount at

the year end amounted to 12.0% (2022: discount of 11.4%), as the

closing share price at 544.00p (2022: 480.00p) was 12.0% (2022:

11.4%) lower than the closing NAV of 618.32p (2022: 541.89p).

Gearing*

The gearing percentage reflects the amount of borrowings (i.e. bank

loans or overdrafts) which the Company has drawn down and

invested in the market. This figure is indicative of the extra amount by

which shareholders’ funds would move if the Company’s investments

were to rise or fall. This represents borrowings used for investment

purposes, less cash, expressed as a percentage of net assets. If the

figure so calculated is negative, this is shown as a “Net cash” position.

The gearing figure at the year end is calculated as follows:

2023 2022

£’000 £’000

Borrowings used for investment

purposes, less cash 14,628 20,214

Net assets 213,823 187,393

Gearing 6.8% 10.8%

Ongoing Charges*

Ongoing Charges is calculated in accordance with the AIC’s

recommended methodology and represents the management fee

and all other operating expenses excluding finance costs and

transaction costs amounting to £2,105,000 (2022:£2,165,000),

expressed as a percentage of the average daily net asset values

during the year of £217,010,000 (2022:£243,523,000).

Leverage*

For the purpose of the Alternative Investment Fund Managers (AIFM)

Regulations, leverage is any method which increases the Company’s

exposure, including the borrowing of cash and the use of derivatives.

It is expressed as the ratio of the Company’s exposure to its net asset

value and is required to be calculated both on a “Gross” and a

“Commitment” method. Under the Gross method, exposure

represents the sum of the absolute values of all positions, so as to

give an indication of overall exposure. Under the Commitment

method, exposure is calculated in a similar way, but after netting off

hedges which satisfy certain strict criteria.

66 Schroder UK Mid Cap Fund plc

Shareholder Information

Webpages and share price information

The Company has dedicated webpages, which may be found at

www.schroders.co.uk/ukmidcap. The webpages are the Company’s

primary method of electronic communication with shareholders.

They contain details of the Company’s share price and copies of the

annual report and accounts and other documents published by the

Company as well as information on the directors, terms of reference

of committees and other governance arrangements. In addition, the

webpages contain links to announcements made by the Company to

the market and Schroders’ website. There is also a section entitled

“How to Invest”.

The Company releases its NAV per share on both a cum and

ex‑income basis to the market on a daily basis.

Share price information may also be found in the Financial Times and

on the Company’s webpages.

The Manager publishes monthly and quarterly updates on the

Company and other Schroders investment trusts, which may be

found under the “Literature” section on the Company’s webpages.

Association of Investment Companies

The Company is a member of the Association of Investment

Companies. Further information on the Association can be found on

its website, www.theaic.co.uk.

Individual Savings Account (“ISA”) status

The Company’s shares are eligible for stocks and shares ISAs.

Non-Mainstream Pooled Investments status

The Company currently conducts its affairs so that its shares can

berecommended by independent financial advisers to ordinary retail

investors in accordance with the FCA’s rules in relation to

non-mainstream investment products and intends to continue to do

so for the foreseeable future. The Company’s shares are excluded

from the FCA’s restrictions which apply to non-mainstream

investment products because they are shares in an investment trust.

Financial calendar

Annual General Meeting March

Final dividend paid March

Half year results announced May/June

Interim dividend paid June

Financial year end 30 September

Annual results announced December

Alternative Investment Fund Managers

Regulations (“UK AIFMD”) disclosures

The UK AIFMD, as transposed into the FCA Handbook in the UK,

requires that certain pre-investment information be made available

to investors in Alternative Investment Funds (such as the Company)

and also that certain regular and periodic disclosures are made. This

information and these disclosures may be found either below,

elsewhere in this annual report, or in the Company’s UK AIFMD

information disclosure document published on the Company’s

webpages.

Leverage

The Company’s leverage policy and details of its leverage ratio

calculation and exposure limits as required by the AIFMD are

published on the Company’s webpages and within this report. The

Company is also required to periodically publish its actual leverage

exposures. As at 30 September 2023 these were:

Leverage Maximum Actual

exposure ratio ratio

Gross Method 2.00 1.19

Commitment

Method 2.00 1.09

Illiquid assets

As at the date of this report, none of the Company’s assets are

subject to special arrangements arising from their illiquid nature.

Remuneration disclosures

Quantitative remuneration disclosures to be made in this annual

report in accordance with FCA Handbook rule FUND3.3.5 may be

found in the Company"s AIFMD information disclosure document

published on the Company’s webpages.

Publication of Key Information Document

(“KID”) by the AIFM

Pursuant to the Packaged Retail and Insurance Based Investment

Products Regulation, the Manager, as the Company’s AIFM, is

required to publish a short KID on the Company. KIDs are designed

to provide certain prescribed information to retail investors, including

details of potential returns under different performance scenarios

and a risk/reward indicator. The Company’s KID is available on its

webpages.

How to invest

There are a number of ways to easily invest in the Company. The

Manager has set these out at www.schroders.com/invest-in-a-trust/.

Schroder UK Mid Cap Fund plc 67

Warning to shareholders

Companies are aware that their shareholders have received

unsolicited telephone calls or correspondence concerning

investment matters. These are typically from overseas-based

‘brokers’who target UK shareholders, offering to sell them what

often turn out to be worthless or high risk shares or investments.

These operations are commonly known as ‘boiler rooms’. These

‘brokers’ can be very persistent and extremely persuasive.

Shareholders are advised to be wary of any unsolicited advice, offers

to buy shares at a discount or offers of free company reports.

If you receive any unsolicited investment advice:

– Make sure you get the correct name of the person and

organisation

– Check that they are properly authorised by the FCA before

getting involved by visiting

register.fca.org.uk

– Report the matter to the FCA by calling 0800 111 6768 or

visiting fca.org.uk/consumers/report-scam-unauthorised-firm

– Do not deal with any firm that you are unsure about

If you deal with an unauthorised firm, you will not be eligible to

receive payment under the Financial Services Compensation Scheme.

The FCA provides a list of unauthorised firms of which it is aware,

which can be accessed at

fca.org.uk/consumers/unauthorised-

firmsindividualslist.

More detailed information on this or similar activity can be found on

the FCA website at

fca.org.uk/consumers/protect-yourself-scams.

Dividends

Paying dividends into a bank or building society account helps

reduce the risk of fraud and will provide you with quicker access to

your funds than payment by cheque. Applications for an electronic

mandate can be made by contacting the Registrar, Equiniti. This is

the most secure and efficient method of payment and ensures that

you receive any dividends promptly.

If you do not have a UK bank or building society account, please

contact Equiniti for details of their overseas payment service.

Further information can be found at

www.shareview.co.uk, including

how to register with Shareview Portfolio and manage your

shareholding online.

Strategic report Governance Financial Other InformationIntroduction

68 Schroder UK Mid Cap Fund plc

Notes

Directors

Robert Talbut (Chairman)

Andrew Page

Harry Morley

Helen Galbraith

Wendy Colquhoun

Advisers

Alternative investment fund manager

(the “Manager”)

Schroder Unit Trusts Limited

1 London Wall Place

London EC2Y 5AU

Investment Manager and Company Secretary

Schroder Investment Management Limited

1 London Wall Place

London EC2Y 5AU

Telephone: 020 7658 3136

Email: amcompanysecretary@schroders.com

Shareholder enquiries

General enquiries about the Company should be addressed to the

Company Secretary at the address set out above.

Registered office

9 Haymarket Square

Edinburgh

Scotland EH3 8FY

Depositary and custodian

HSBC Bank plc

8 Canada Square

London E14 5HQ

Lending bank

Scotiabank Europe plc

201 Bishopsgate

6th Floor

London EC2M 3NS

Corporate broker

Panmure Gordon & Co

1 New Change

London EC4M 9AF

Independent auditor

KPMG LLP

Saltire Court

20 Castle Terrace

Edinburgh

EH1 2EG

Registrar

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex BN99 6DA

Shareholder Helpline: 0800 032 0641*

Website: www.shareview.co.uk

*Calls to this number are free of charge from UK landlines.

Communications with shareholders are mailed to the address held on

the register. Any notifications and enquiries relating to shareholdings,

including a change of address or other amendment should be

directed to Equiniti Limited at the address above.

Dealing Codes

ISIN: GB0006108418

SEDOL: 0610841

Ticker: SCP

Global intermediary identification number (GIIN)

9GN3DU.99999.SL.826

Legal entity identifier (LEI)

549300SOEWCYZTK2SP87

Privacy notice

The Company’s privacy notice is available on its webpages

Information about the Company

70 Schroder UK Mid Cap Fund plc

Schroder Investment Management Limited

1 London Wall Place, London EC2Y 5AU, United Kingdom

T +44 (0) 20 7658 6000

Important information: This document is intended to be for information purposes only

and it is not intended as promotional material in any respect. The material is not

intended as an offer or solicitation for the purchase or sale of any financial instrument.

The material is not intended to provide, and should not be relied on for, accounting,

legal or tax advice, or investment recommendations. Information herein is believed to

be reliable but Schroders does not warrant its completeness or accuracy. No

responsibility can be accepted for errors of fact or opinion. Reliance should not be

placed on the views and information in the document when taking individual

investment and/or strategic decisions. Past performance is not a reliable

indicator of future results, prices of shares and the income from them may

fall as well as rise and investors may not get back the amount originally

invested. Schroders has expressed its own views in this document and these

may change. Issued by Schroder Investment Management Limited, 1 London

Wall Place, London EC2Y 5AU, which is authorised and regulated by the

Financial Conduct Authority. For your security, communications may be

taped or monitored.

schroders.com

@schroders