Annual Report
YeartoMarch
www.stsplc.co.uk
Rising income and long-term capital growth
The investment objective of Securities Trust of Scotland plc
(the ‘company’) is to achieve rising income and long-term
capital growth through investment in a balanced portfolio
constructed from global equities.
Dividends paid quarterly
The company pays quarterly dividends to provide investors
with a regular income. Dividends are paid in April, July,
October and January.
Focused portfolio managed by Troy Asset
Management
The company appointed Troy Asset Management (‘Troy’ or
the ‘manager’) as manager with effect from 12 November
2020. The manager typically runs a high conviction 30-50
stock equity portfolio that is unconstrained by geography,
sector or market capitalisation. Troy specialises in a
distinctive method of investing that prioritises the
avoidance of permanent capital losses. This is achieved
by investing in high quality companies in a concentrated
portfolio with low turnover.
Discount management
The company introduced a discount control mechanism in
November 2020 which aims toensure, in normal market
conditions, that the shares trade consistently close to their
net asset value. Any issue of shares under the discount
control mechanism would only be undertaken at a premium
to the net asset value at the time of dealing.
Independent board
The company is overseen by an independent board.
Byengaging with and listening to shareholders, the
boardensures that the company continues to offer a
distinctive investment proposition that is relevant to
investors’ needs.
Capital structure
As at 31 March 2022, the company had 99,525,075 ordinary
shares of 1p, each entitled to one vote, in issue and
22,774,073 ordinary shares of 1p were held in treasury.
ABOUT SECURITIES TRUST OF SCOTLAND
Overview
Financial highlights 1
Chairman’s statement 3
Manager’s review 5
Portfolio summary 7
Portfolio holdings 8
Strategic report 10
Board of directors 17
Governance
Report of the directors 19
Corporate governance statement 25
Audit committee report 30
Directors’ remuneration statement 32
Financial review
Independent auditor’s report 35
Statement of comprehensive income 42
Statement of financial position 43
Statement of changes in equity 44
Statement of cash flow 45
Notes to the financial statements 46
AIFMD disclosures (unaudited) 58
Investor information
Alternative performance measures 59
Glossary of terms 61
Ways to invest in the company 63
Notice of annual general meeting 64
Corporate information 68
CONTENTS
Information disclaimer
This report is produced for members of the company with the purpose of providing them with information relating to the company and
its financial results for the period under review. This report contains subjective opinion, analysis and forward looking statements which,
by their very nature involve uncertainty. Events beyond the control of the directors and the company may affect actual future results
which may therefore differ to those indicated within this historical report. Market and currency fluctuations may occur which may in
turn have an impact on the value of the company’s underlying investments in the future. Past performance is no guarantee of future
performance. Investments are not guaranteed and you may not get back the amount you originally invested. Neither the directors nor
the company take responsibility for matters outside of their control.
Our objective is to deliver rising income and long-term capital growth.
Dividend
Dividend per share (pence)
(pence)
0
1
2
3
4
5
6
7
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2022
4.70
4.75
4.80
4.90
5.80
5.95
6.10
6.25
6.41
5.70
5.875
A total annual dividend
of 5.875p, an increase of
3.1% from 2021, when the
dividend was rebased
following the change of
manager.
Long-term capital growth
(%)
Net asset value total return
**
Share price total return
**
100
120
140
160
180
200
220
240
260
280
Mar 22Mar 21Mar 20Mar 19Mar 18Mar 17Mar 16Mar 15Mar 14Mar 13Mar 12
Over the last ten years,
shareholders have enjoyed
a 167.8% increase in
share price (total return)
including an increase of
17.4% over the year to
31March 2022.
The share price return
has been positive in nine
out of the last ten years
even through some of the
most turbulent market
conditions.
Source: Refinitiv Datastream.
**See Alternative Performance Measures on page 59 for definitions.
FINANCIAL HIGHLIGHTS
Total returnsˆ (including reinvested dividends)
Year ended
31 March 2022
%
Year ended
31 March 2021
%
Net asset value per share 16.8 28.5
Lipper Global – Equity Global Income Index 10.8 29.9
Share price 17.4 23.7
Key data
As at
31 March 2022
As at
31 March 2021
Net asset value per share (cum income)ˆ 230.75p 202.68p
Net asset value per share (ex income)ˆ 229.01p 199.98p
Share price 231.00p 202.00p
Premium/(discount)ˆ 0.11% (0.34%)
Net assets £229,657,000 £207,678,000
Income
Year ended
31 March 2022
Year ended
31 March 2021
Revenue return per share 5.82p 6.76p
Dividend per share 5.875p 5.70p
Ongoing chargesˆ
Year ended
31 March 2022
Year ended
31 March 2021
Ongoing charges 0.93% 0.93%
ˆ Alternative performance measures see pages 59 and 60 for further information.
Five-year record
Annual total returns (including dividends reinvested) over 12 month periods to 31 March
2022 2021 2020 2019 2018
Net asset value per share 16.8% 28.5% (8.3%) 11.4% (1.1%)
Share price 17.4% 23.7% 2.7% 9.6% 0.2%
Source: Refinitiv Datastream.
FINANCIAL HIGHLIGHTS
The year to 31 March 2022
proved to be a remarkably
eventful period that commenced
with a sustained recovery
from the economic effects of
the COVID pandemic before
concerns regarding rapidly
rising rates of inflation and the
required policy response across
the G7 began to dominate
financial markets. In February
2022 Russian forces invaded
Ukraine raising geopolitical risk
to levels not seen this century.
Against such an uncertain background it is pleasing to be
able to report positive returns for the year. The net asset
value total return was +16.8% and the share price total
return was +17.4%, as the share price moved from a 0.3%
discount to the net asset value to a slight premium over
the year. The Lipper Global – Equity Global Income Index
produced a total return of +10.8% for the same period.
There currently seems to be no respite in the
challenges being thrown at financial markets.
As mentioned, against a background of already rising
rates of inflation the war in Ukraine has led to a sharp
rise in oil and, in particular, gas prices and shortages are
predicted for many major commodities including several
foodstuffs. With inflation rates now higher than previously
forecast, Central Banks are responding by raising short
term interest rates and reversing the quantitative easing
that was a response to the COVID related lockdowns.
Managing a global portfolio against such a fast evolving
and uncertain background is no easy task and your
board is reassured by the manager’s clear investment
philosophy and the consistent application of that
policy. Portfolio turnover, by industry standards, is low.
Your manager carefully selects companies that have
the profitability and cash flow to generate long term
real rates of return and then backs them to do so.
Securities Trust has been managed by Troy and administered
by Juniper Partners since November 2020. It is pleasing
to report that all aspects of the relationship between
the board and managers are working well. The board are
encouraged by the approach to fund management and
the integration of ESG considerations into the investment
process as well as marketing and promotion of the Trust.
Revenue and dividends
Revenue earned for the year was £7.4 million, 19% lower than
in the prior year. The decline was principally a result of two
factors – no income was received from option writing and
the portfolio constructed by the new managers, appointed
in November 2020, has a lower yield than the portfolio of
the previous manager. The board and managers were fully
aware of these changes and their effects were anticipated.
Somewhat offsetting the lower income was the fact that
costs were lower, reflecting the initial fee arrangement
agreed at the time of Troy’s appointment.
It is the board’s policy to use revenue reserves, when
considered appropriate, to assist in managing the long
term growth of the dividend paid to shareholders. At
31 March 2022, the company has total revenue reserves
available for distribution of £3.1m, which includes £1.3m
of undistributed reserves from the prior financial year.
A fourth quarterly dividend of 1.75 pence per share
has been declared and will be paid on 1July 2022 to
shareholders on the register on 27 May 2022.
The total dividend for the year is therefore 5.875 pence
per share an increase of 3.1% on the dividend of 5.70 pence
per share paid in respect of the previous financial year.
Board changes
Angus Gordon Lennox was appointed as a director
of Securities Trust of Scotland in 2013 and in line with
best governance practice will retire from the board at
the AGM in July 2022. Angus has made a significant
contribution to the board over his tenure, and I
would like to thank him on behalf of the board for his
commitment, wisdom and frequent valuable insight.
Angus has been the Senior Independent Director of
the company since 2018 and Sarah Harvey has agreed
to take on this role upon Angus’s retirement.
The board is pleased to announce that Alexandra
Innes was appointed as a non-executive director on
4April 2022. Alexandra is a Non-Executive Committee
Member at the Bank of England and a member of the
Group Executive Board and the Technology Investment
Board at Knight Frank LLP. Alexandra held a number
of senior positions in the financial sector during her
executive career and she will bring fresh perspective
to the board. We look forward to working with her.
Discount management
Your company has adopted and implements a formal discount
control mechanism. It is the intention that the application of
this policy will, in normal market conditions, see the shares
valued consistently at close to their asset value. Shares will
be bought by the company should they trade at a discount
and if there are sellers in the market. Likewise, shares
will be issued to meet demand should there be buyers.
CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
In the year to 31 March 2022, 3,043,000 shares were
purchased by the company at an average discount of
1.7% and 100,000 shares were issued at a premium
of 1.3%. Since the year end a further 480,000 shares
have been issued at an average premium of 1.1%.
The discount control mechanism is administered by Juniper
Partners ("Juniper") and a close dialogue is maintained
between the board and Juniper to ensure the efficient
implementation of the discount control mechanism.
Gearing
Your company has total debt facilities available of
£25.0 million and at the year end £15.0 million of these
facilities were drawn down. Gearing is a topic regularly
discussed between your board and managers. During
the year average debt drawn down was £14.7 million.
Environmental, social and governance (‘ESG’)
The company aims to conduct itself responsibly, ethically
and fairly and the board seeks to ensure that the manager’s
management of the portfolio takes account of ESG matters
as an integral part of its analysis of companies for investment.
The board believes that companies which exhibit positive
ESG behaviours contribute to increasing value over the long
term and that it is in shareholders’ interests to consider ESG
factors when selecting and retaining investments. The board
encourages and actively oversees Troy’s application of its
ESG policies within the investment process. In addition to
this, during the year the company published an ESG policy
on the AIC website (www.aic.co.uk) and further details of
this policy can be found on pages 10 and 11 of this report.
Annual General Meeting
It is the current intention to hold a “traditional” meeting to
which all shareholders are invited and welcome to attend.
Aer two years of COVID related restrictions your board is
delighted to be able to return to normal and looks forward
to meeting shareholders in person on 4 July 2022.
Keeping in touch
I would encourage shareholders to visit the company’s
website at www.stsplc.co.uk which can be found through the
QR link below. This offers a wealth of further information on
the company including videos, articles and a highly rated
podcast series to understand more about our manager's
investment philosophy. Through the website you can also
subscribe to monthly email updates and the factsheet which
will provide you with portfolio information and performance
data. If you wish to contact the investment manager or
the company secretary with any queries this can also be
done through the website or by email using the email
addresses set out on the inside back cover of this report.
Outlook
The appalling events in Ukraine dominate thoughts and
the humanitarian crisis that the Russian invasion has
created is utterly dreadful. While very mindful of this, the
invasion, subsequent war and rhetoric from the Kremlin
has added heightened geopolitical risk to an already
uncertain global background. The rise in energy and
commodity prices that the war and economic sanctions
produced has caused inflation to accelerate from an
already extended level and will force interest rates to rise
further than had been previously considered. This is a very
different macro background to that which US financial
markets in particular enjoyed in the very recent past.
The recent weakness in the exchange rate of Sterling against
most major currencies, but in particular against the US Dollar,
is notable and is of benefit to your company. The Sterling
value of overseas investments and the dividends they pay
rises. While 30% of the portfolio is invested in UK Equities
the majority of these companies are global businesses and
likewise beneficiaries of a weak pound. While this currency
weakness may prove to be transitory it does highlight some
of the benefits of adopting a Global as opposed to a more
limited country only approach to an equity income mandate.
Your managers are being consistent in their management
of the portfolio which is invested in strong companies
both in terms of their financial performance and
market positioning. Companies with such strengths
should be well placed to cope with the challenges
of rising costs and higher levels of inflation.
The core attributes of your manager’s philosophy
combine preservation of capital and the objective of
delivering above average returns with below average
levels of volatility. These objectives are particularly
appropriate in the current uncertain world.
John Evans
19 May 2022
The company generated a
strong return for shareholders
in the first full year under Troy’s
management. As the world has
continued to recover from the
COVID shock and bolstered by
monetary and fiscal stimulus,
markets made good progress.
This continued for the first
three quarters of the year until
the appalling events in Ukraine
dented optimism, caused equity
markets to sell off and commodity
markets to extend gains.
Our performance for the year as a whole has been
satisfactory and has been achieved despite a number
of events buffeting the world economy and markets.
Inflation has become a major concern for investors
and the authorities which marks a major change
in the investment backdrop – at least for now.
Performance
As noted in the Chairman’s statement, over the 12
months to 31 March 2022 the company delivered a net
asset value (‘NAV’) total return of +16.8% and a share
price total return of +17.4% reflecting a move in the
share price from a small discount to a small premium
relative to the NAV. This compares to the Lipper
Global – Global Equity Income return of +10.8%.
The strongest contributors to the return were derived
from the consumer staples and information technology
sectors. Within information technology the best performing
investments over the period were Paychex and Microso.
Microso continues to benefit from companies using
an increasing range of the soware that the company
offers driving impressive growth and returns. Paychex
is a payroll, human resources and employee benefits
outsourcing soware provider to medium sized businesses
in the US. The shares have performed consistently well
through the year as employment prospects brightened.
ADP, a competitor to Paychex, also performed well.
Each of these companies continue to show resilient
operating performance and consistent dividend growth.
Within consumer staples, Diageo and British American
Tobacco were the key contributors. The resilience and
valuation in the context of strong pricing power for
these companies has been reappraised by investors in
these more inflationary times. Both companies have also
benefitted from people being able to go out and enjoy
themselves. In the case of British American Tobacco,
the shares were given further support following the
reintroduction of a share buy back as debt on the balance
sheet has been reduced to more comfortable levels.
Ironically the areas of less good performance were
also concentrated in consumer staples and information
technology showing the widening gyre of post-COVID
economic fortunes even within sectors. One of the notable
aspects of share price movements during the period under
review has been the extent to which investors have rewarded
companies who they perceive to be able to pass on price
increases compared to those that will struggle to do so.
Thus, while companies such as Diageo and Pepsi have done
well, others such as Unilever and Clorox have lagged.
Unilever has been under a cloud for some time. The most
notable recent development was a failed bid for the split-
off consumer assets from GlaxoSmithKline which was
abandoned following shareholder dissatisfaction with the
deal (a sentiment shared by Troy). Investors have worried
that the business has suffered from sluggish execution,
exposure to slow-growing categories and muddled
communication. We believe these issues are all fixable.
Longer term we consider Unilever to be an attractive asset
for the company which owing to the concerns outlined is
attractively valued. We are maintaining our investment.
Clorox has been disrupted by COVID. Whereas in the UK
we say Dettol in the US they say Clorox. Unsurprisingly
demand for their products was pulled forward during
the pandemic. As this demand has receded the business
has found it difficult to respond. Rising input costs,
notably oil, have also been problematic. We still think
this remains a high quality business long term and expect
short term virus-driven distortions to normalise.
Also, within consumer staples, Reckitt Benckiser was
lacklustre over the period having also been disrupted by
COVID. Further, the company made a poor capital allocation
decision when acquiring the infant formula company, Mead
Johnson, in 2017. The company, under new management,
is in the process of unwinding this decision. We continue
to think this is a sound long term investment owing to the
strength of its brands and dominant market positions.
Western Union was also weak over perennial concerns
relating to its competitive position in an age of digital
disruption. We continue to think these fears are overstated
and encapsulated in an extremely attractive valuation.
The shares trade on a 13% free cash flow yield.
Finally Vonovia was weak over this period. Over shorter
term periods this company tends to be correlated with
interest rates which have been on the rise. Negative bond
yields have been a feature of the German bond market
for some time but have recently turned positive again.
While Vonovia may continue to tread water if yields rise,
the investment case is predicated on the extraordinary
value that German residential property continues to
offer. Over longer periods of time we would expect this
value component to trump the interest rate effect.
MANAGER’S REVIEW
Portfolio activity
There were very few changes made to the portfolio during
the year. We sold Verizon to fund an investment in Boston
Properties, bought and sold Hargreaves Lansdown (an
unusually short holding period for Troy) and established an
investment in Domino’s Pizza funded by the sale of Fevertree.
Boston Properties is the largest office REIT in the US, with
prime properties in five coastal cities; Boston, New York,
Washington, Los Angeles and San Francisco. Our belief is
that the widely-held view that there will be materially less
need for prime office space post COVID will ultimately
prove to be overstated – despite the reality of a hybrid
working environment. Our view is that knowledge-based
economies benefit from network effects requiring face-
to-face interaction which requires offices. The shares have
performed well this year as the US economy has reopened.
The purchase and subsequent sale of Hargreaves Lansdown
was a nuanced investment decision. We still think the
company has a terrific long term opportunity to be the
UK’s leading digital wealth manager. The problem is that
increased competition is putting pressure on pricing. This
was exemplified by an announcement by rival, AJ Bell, that
they would be launching a commission-free investment
platform named DODL. We initially established a modest
investment in the company with a view to increasing the
scale of the investment should the valuation become more
attractive. As we had become incrementally more negative
and in the context of a still full valuation, we decided to sell.
Domino’s Pizza is the UK’s leading pizza franchise. We have
long felt that this is an excellent business which has been
undermanaged. This has changed as a newly invigorated
board and new CEO have begun to improve operations. This
was manifest during the year as the company announced a
new agreement with franchisees following a long-running
dispute. This should allow Domino’s to grow more quickly
as new stores are opened and promotional spend becomes
more effective. Despite these developments, the company
trades at a discount to similar assets around the world and
makes for a compelling, resilient, long term investment case.
Investment strategy
A torrent of negative news flow has characterised the
recent past, most obviously the horrific events in Ukraine.
To this must be added a spike in inflation, a commodity
price shock and the ongoing agonies of COVID,
especially in China. Not only does this make for a much
less stable backdrop it will also, crucially in our view,
lead to a material change in the investment backdrop.
Years of accommodative policy both monetary and
fiscal, could be prosecuted with abandon so long as
inflation was contained. This is no longer the case.
We have long worried that policymakers have been too
focused on keeping goods and services prices subdued
while allowing asset prices to rise. Not only is this likely
to lead to unpleasant side effects such as inequality and
the misallocation of capital but also leaves valuations
vulnerable should it be necessary to rein in the supportive
policy. That moment appears to have arrived.
Thus, the interest rate on a two year treasury note in the
US has moved from 0.2% in September 2021 to 2.34% at
the end of March 2022 (and has continued to rise since
that date) as investors have anticipated rising short term
interest rates. Interestingly, longer term rates have been
more measured with the US 10 year moving from 1.29%
to (coincidentally but notably) 2.34% over the same
period. As a result, the yield curve has “flattened” and
ultimately inverted. This suggests that the mooted rate
rises may precipitate a slowdown or even recession.
At the same time Central Banks around the world have
indicated that they will cease and reverse quantitative
easing. It is likely this has supported asset prices in
recent years and its withdrawal may do the opposite.
All together this represents a far less emollient policy
backdrop for risk assets and makes recent weakness in equity
and credit markets unsurprising. A normalisation of policy
appears to be leading to a normalisation of valuation which
will be felt most keenly by the most fully priced assets. In this
context, the war in Ukraine is likely to accentuate existing
trends. Unfortunately, it will likely mean we have still more
inflation in the short term, fewer rate rises (as the high oil
price sucks demand from elsewhere in the economy) and a
steeper recession than would otherwise have been the case.
We have constructed the portfolio to be robust to a range
of outcomes by investing in companies which we consider
to be both resilient and high quality. The same competitive
advantages that allow companies to sustain a high return
on capital employed and an attractive margin structure are
also those that allow companies to raise prices to offset
rising costs. Such attributes have benefitted the company
this year and should continue to do so long into the future.
Looking forward, there are a number of companies in which
we would like to invest, should the opportunity present
itself, that are rapidly becoming better value. This will
likely allow us to upgrade the quality and income growth
embedded in the portfolio should prices continue to fall.
Even as we are horrified by the humanitarian disaster
unfolding in Ukraine, we are remaining rational in
our investment approach and are confident the
company will continue to deliver growing free cash
flow funding an attractive and growing income
steam as well as long term capital growth.
James Harries
19 May 2022
MANAGER’S REVIEW
Portfolio distribution as at 31March 2022
By region (excluding cash)
31March 2022
%
31March 2021
%
North America 54.2 52.9
Europe 42.1 44.0
Asia 3.7 3.1
100.0 100.0
By sector (excluding cash)
31March 2022
%
31March 2021
%
Consumer staples 38.7 42.4
Information technology 20.2 18.9
Healthcare 16.9 17.3
Consumer discretionary 6.0 3.3
Real estate 5.8 4.9
Industrials
5.7 5.3
Financials 4.7
5.4
Communication services 2.0 2.5
100.0 100.0
By asset class (including cash and borrowings)
31March 2022
%
31March 2021
%
Equities 106.1 106.6
Cash 0.4 0.4
Borrowings (6.5) (7.0)
100.0 100.0
Largest 10 holdings
31March 2022
Market value
£000
31March 2022
% of total
portfolio
31March 2021
Market value
£000
31March 2021
% of total
portfolio
British American Tobacco 15,683 6.4 14,145 6.4
Paychex 13,724 5.6 10,098 4.6
Philip Morris 12,079 4.9 11,322 5.1
CME Group 11,590 4.7 8,923 4.0
Automatic Data Processing 11,348 4.7 9,164 4.1
Diageo 10,799 4.4 8,625 3.9
PepsiCo 10,740 4.4 9,063 4.1
Reckitt & Benckiser 10,541 4.3 11,508 5.2
Unilever 10,158 4.2 11,722 5.3
Roche 9,330 3.8 7,613 3.4
PORTFOLIO SUMMARY
As at 31March 2022
Sector Country
Market value
£000
% of total
portfolio
North America 132,588 54.2
Paychex Information technology United States 13,724 5.6
Philip Morris Consumer staples United States 12,079 4.9
CME Group Financials United States 11,590 4.7
Automatic Data Processing Information technology United States 11,348 4.7
PepsiCo Consumer staples United States 10,740 4.4
Microso Information technology United States 9,138 3.7
Johnson & Johnson Healthcare United States 8,637 3.5
Medtronic Healthcare United States 8,320 3.4
Cisco Systems Information technology United States 7,208 3.0
Procter & Gamble Consumer staples United States 6,423 2.6
Fastenal Industrials United States 5,699 2.3
Hershey Consumer staples United States 5,345 2.2
McDonald’s Consumer discretionary United States 4,971 2.0
Boston Properties Real estate United States 4,463 1.8
Accenture Information technology United States 4,275 1.8
Western Union Information technology United States 3,336 1.4
Coca-Cola Consumer staples United States 3,069 1.3
Clorox Consumer staples United States 2,223 0.9
PORTFOLIO HOLDINGS
Sector Country
Market value
£000
% of total
portfolio
Europe 103,031 42.1
British American Tobacco Consumer staples United Kingdom 15,683 6.4
Diageo Consumer staples United Kingdom 10,799 4.4
Reckitt & Benckiser Consumer staples United Kingdom 10,541 4.3
Unilever Consumer staples United Kingdom 10,158 4.2
Roche Healthcare Switzerland 9,330 3.8
Novartis Healthcare Switzerland 8,341 3.4
Relx Industrials United Kingdom 8,194 3.4
GlaxoSmithKline Healthcare United Kingdom 6,885 2.8
Vonovia Real estate Germany 5,713 2.3
Nestle Consumer staples Switzerland 5,213 2.1
Intercontinental Hotels Consumer discretionary United Kingdom 5,132 2.1
Domino's Pizza Group Consumer discretionary United Kingdom 4,707 1.9
Imperial Brands Consumer staples United Kingdom 2,335 1.0
Asia 8,942 3.7
Nintendo Communication services Japan 4,784 2.0
Link REIT Real estate Hong Kong 4,158 1.7
Total portfolio 244,561 100.0
Business model
The company, as an investment trust, is a UK closed-end public
limited company which invests in a diversified portfolio of
assets meeting certain tax conditions.
The company has no employees, and the board outsources its
entire operational infrastructure to third party organisations.
In particular, the board appoints and oversees Troy Asset
Management Limited (‘Troy’ or the ‘manager’) as independent
manager to manage the investment portfolio and Juniper
Partners Limited (‘Juniper Partners’) (previously called
PATAC Limited) to provide AIFM, company secretarial and
administrative services and to operate the discount control
mechanism. The board sets the company’s strategy, decides
the appropriate financial policies to manage the assets and
liabilities of the company, ensures compliance with tax,
legal and regulatory requirements and reports regularly to
shareholders on the company’s performance. The directors
do not envisage any change to this model in the foreseeable
future.
For more information on investment trusts please visit
www.theaic.co.uk.
Purpose and values
Purpose
The objective is to achieve rising income and long-term
capitalgrowth which it seeks to deliver for shareholders
through investment in a balanced portfolio constructed
fromglobal equities.
Values
Independence: to act independently in the interests
ofshareholders.
Sustainability: to ensure that the companies in which the
company invests are supportive of good environmental, social
and governance practices and that the manager encourages
continuous improvement in these areas.
Transparency: to report transparently and accurately to
shareholders on the condition, performance and prospects of
the company.
Culture
The board considers that its culture of open debate combined
with strong governance and the benefits of a diverse board is
central to delivering its purpose, values and strategy. The board
monitors and reviews its culture as part of its annual evaluation
process and monitors the culture within the manager, Troy, to
ensure that it is closely aligned with that of the company.
Environmental, social and governance (ESG)
The board and the manager support the 2020 UK Stewardship
Code, issued by the Financial Reporting Council (‘FRC’), which
sets out the principles of executive stewardship by institutional
investors.
Troy is a signatory to the UK Stewardship Code. Signatories
systematically integrate stewardship and investment, including
material environmental, social and governance issues, and
climate change to fulfil their responsibilities. A copy of Troy's
Stewardship Report can be viewed at www.taml.co.uk.
The company considers responsible investment as the
fundamental integration of material ESG factors into
investment analysis, decision making and portfolio
construction, and into stewardship activities, including
voting and engagement. This is essential in improving the
risk and return profile of the portfolio. The company’s long
investment horizon means that social and environmental
materiality and financial materiality are largely indivisible.
As such, the company’s duty to investors necessitates that
analysis of material ESG risks and opportunities is integrated
into the investment process. This is particularly relevant in
relation to climate risk which Troy believe to be both material
andsystemic.
Research process
The manager defines ‘ESG factors’ as non-financial,
environmental, social or governance factors. Troy carries
out an analysis of these ESG factors by considering both
the positive and negative effect such factors may have on an
investment. Within this framework, Troy analyses ‘sustainability
risks’, being risks relating to an ESG event or condition that,
if they occur, could cause an actual or potential material
negative impact on the value of an investment.
Troy also considers the materiality of ESG factors in relation
to their outward impact on the environment and society. Troy
may seek to deliver environmental or social impact where
doing so is aligned with improving the risk and return profile
of the investment, or is not contrary to that objective. Troy
will not seek environmental or social impact at the expense
of returns. In all but rare circumstances, long investment time
horizons create alignment between an investment’s risk and
return objectives and any impact objective.
Troy does not seek to narrowly define or limit the factor
categories but rather appreciates that such analysis must
necessarily take place in the context of the wider assessment
of risk and reward. An outline of some, but by no means all, of
the areas which will be assessed for the impact of ESG factors
is as follows:
• climate change;
• natural resources;
• pollution and waste;
• environmental opportunities;
• human capital;
• product liability;
• stakeholder opposition;
• social opportunities;
• corporate governance; and
• corporate behaviours.
Climate change
In considering ESG matters, the manager is increasingly
focussing on climate-related risks. Climate change is
considered to be one of the most significant and complex
systemic risks facing our society, economy and financial
markets today.
STRATEGIC REPORT
Time horizon: The manager aims to invest in stocks that
can be held for the long term (five years or more). This time
horizon clearly extends into the time frame over which one can
reasonably expect the impact of climate change to be felt. As
such the management of climate risk is implemented within
the investment process.
Transition risk: The manager assesses that the risks associated
with a transition to a lower carbon economy fall well with
Troy’s investment time horizon of more than five years. Whilst
Troy’s investment process favours capital-light investments,
and the company has limited exposure to the most carbon-
intensive sectors, the analysis of transition risk at the individual
stock and portfolio level remains an important part of the
investment rocess.
Physical risk: The risks associated with a warming climate,
including from rising sea levels, extreme weather and wildfire
events, are extremely difficult to model and are risks that
impact almost all companies. The understanding of how
physical climate risk might impact financial markets and asset
prices is in its infancy but Troy continue to develop their
understanding of this and apply it to the analysis of companies.
TCFD: In recognition of the importance of the influence of
climate change on future returns, Troy has committed to
implementing the recommendations of the Task Force for
Climate-Related Financial Disclosures ('TCFD'), although it has
not early adopted reporting.
The company is not early adopting TCFD as there is no such
requirement to do so.
Monitoring of, and engagement with, investee companies
Whilst the manager seeks to invest in companies whose
business strength and corporate governance policies
mean they generally do not require significant shareholder
intervention, the manager does recognise that engagement is
an important aspect of fiduciary duty. Engagement is generally
conducted proactively and as part of an investee company’s
decision-making process; Troy is also willing to engage
reactively where a company has taken a course of action that
conflicts with its standpoint. The impetus to engage may stem
from a breach by the company of generally accepted business
practice norms, Troy’s proxy voting process or integrated ESG
analysis. Any engagement would be expected to meet the
following criteria:
• there is a clear objective in engaging with a company;
• the matter for engagement must be material; and
• the engagement with the company is constructive.
Voting and disclosure of activity
The company considers (proxy) voting an important part of its
stewardship activities and investment process and aims to use
its voting rights to both safeguard the interests of investors
and encourage environmental and social sustainability (where
these objectives are aligned). The manager will seek to instruct
votes, on behalf of investors, on all resolutions for which it has
voting authority.
Troy conducts analysis of each management or shareholder
resolution ahead of voting. Votes are then cast in line with
what is deemed to be in the best long-term interest of
shareholders. Environmental and social sustainability are
considered alongside governance factors in this analysis.
Whenever possible, voting on any resolution is incorporated
as part of the wider engagement with management. Troy’s
preferred course of action would be to have dialogue with any
company ahead of casting a vote against management. Where
appropriate Troy may also seek to engage with a company
following a vote against management.
UN Principles for Responsible Investment
As part of the Investment Manager’s commitment to responsible
investing, Troy became a signatory to the United Nations’
Principles for Responsible Investment in September2016.
Further details of Troy’s ESG related policies and activities can
be found on its website at www.taml.co.uk.
Strategy
Investment policy
The company’s policy is to invest primarily in global equities.
The majority of the company’s portfolio is invested in large
capitalisation companies (market capitalisations over £1 billion).
The resulting diversified portfolio of international quoted
companies is focused, typically containing between 30 and
50 high conviction stocks selected on the basis of detailed
research analysis. The equity portfolio consists of listed shares
and is diversified across a range of holdings.
The manager has unconstrained discretion to select stocks
except that:
• no more than 10% of the company’s gross assets may be
invested in listed investment companies (including UK
listed investment trusts);
• the board must approve in advance all investments
in investment schemes which are sponsored by the
investment manager;
• the sum of all holdings over 5% of the total portfolio must
not exceed 40% of the portfolio;
• no more than 15% of the total portfolio can be invested
in collective investment schemes, of which no holding
can exceed 10% of the value of the collective investment
scheme; and
• warrants cannot exceed 5% of the total portfolio.
The company’s exposure to listed equities is set within a
range of 90% to 120% of shareholders’ funds in normal
circumstances.
The company’s active portfolio management strategy will
inevitably involve separate periods where, at different times,
the company’s portfolio outperforms and underperforms the
market as a whole.
STRATEGIC REPORT
With effect from November 2020 the performance of the
company has been measured against the Lipper Global –
Equity Global Income Index which delivered a total return for
the year end 31 March 2022 of 10.8%.
As an investment trust, the company is able to finance part
of its operations through bank borrowings (gearing). The
board monitors such borrowings (gearing) closely and takes a
prudent approach. Gearing levels are discussed by the board
and manager regularly and monitored at every board meeting.
Gearing is limited to 20% of shareholders’ funds.
Risk management
Risk management is largely focused on managing investment
risk in accordance with the investment policy guidelines set
by the board. The board has established risk parameters for
the manager within which the portfolio will be managed. The
board reviews, at each board meeting, the relevant risk metrics
and monitors investment risk on an ongoing basis.
The wider corporate risks relate mainly to the challenges
of managing the company in an increasingly regulated and
competitive market place. These risks are each actively
managed through mitigation measures which the board has
put in place and which are discussed on pages 14 and 15 of
this report.
Marketing
The marketing strategy seeks to:
• increase demand for the company’s shares;
• obtain ratings and buy recommendations from key wealth
managers; and
• grow the profile of the company across the wider market.
This is achieved through active promotion by the manager and
through the company’s website which contains information
relating to performance, outlook and significant developments
as they occur. In addition, the company utilises best practice
marketing tools such as advertising, public relations and
promotional marketing. The manager also meets regularly with
existing and potential institutional shareholders.
Financial
The main financial focus is on the management of shareholder
capital; the use of gearing; and the management of the risks to
assets and liabilities of the company.
The board’s principal goal for the management of shareholder
capital is to achieve rising income and long-term capital growth.
Dividend policy
The company’s dividend policy is to provide shareholders with
a regular income paid quarterly in April, July, October and
January.
Gearing and bank facilities
From time to time the company finances its operations
through bank borrowings. The board monitors such
borrowings (gearing) closely and takes a prudent approach.
The company currently has a multi-currency fixed credit facility
with the Royal Bank of Scotland International, which expires
on 25 September 2023, for £15,001,000 million drawn in three
tranches (£1,500,000, €4,500,000 and US$12,750,000). The
facilities are fully drawn down in sterling, euros and US dollars
with the intention of increasing income and of improving
future investment returns.
The facility also offers a £10 million revolving credit loan which
expires on 30September 2023. This was unutilised at 31March
2022. Further information on the company’s covenants can be
found in note 11 on page 51.
Duty to promote the success of the company
The company is required to provide a statement which
describes how the directors have had regard to the matters
set out in section 172 of the Companies Act 2006 when
performing their duty to promote the success of the
company,including:
• the likely consequence of any decision in the long-term;
• the need to foster the company’s business relationships
with suppliers, customers, and others;
• the impact of the company’s operations on the
community and the environment;
• the desirability of the company maintaining a reputation
for high standards of business conduct; and
• the need to act fairly as between members of the company.
The board is focused on promoting the long-term success of
the company and regularly reviews the company’s long-term
strategic objectives, including consideration of the impact
of the manager’s actions on the marketability and reputation
of the company and the likely impact on the company’s
stakeholders of the company’s principal strategies.
The main stakeholders in the company are its shareholders,
manager, service providers, debt provider, and along with
the wider community in which the company operates. The
manager also engages with the investee companies where
appropriate, particularly on performance and ESG issues.
The board considers its stakeholders at board meetings and
receives feedback on the manager’s interactions with them.
• Shareholders – The board receives regular reports
from the manager on shareholder engagement, with
the manager tasked with maintaining regular and open
dialogue with major shareholders. Directors, primarily
through the chairman, also meet regularly with major
shareholders to understand their views and to help
inform the board’s decision-making process. The
company maintains a website which hosts copies of
the annual and interim reports along with factsheets
and other relevant materials. In normal circumstances
shareholders are invited to attend the AGM at which they
have the opportunity to speak directly with directors.
• Manager – The Manager’s review on pages 5 and 6 details
the key investment decisions taken during the year. The
board works closely with the manager to develop and
monitor its investment strategy and activities, not just to
achieve its investment objective, but also to deliver the
company’s values of independence, sustainability, and
transparency. The board receives presentations from
the manager at every board meeting to help it exercise
effective oversight of the manager and the company’s
strategy. The management engagement committee is
tasked with reviewing the performance of the manager at
least annually.
• Service providers – The board seeks to maintain
constructive relationships with the company’s suppliers,
either directly or through the manager, with regular
communications and meetings. A key relationship is with
Juniper Partners, who provide AIFM, company secretarial
and fund administration services, as well as operating the
discount control mechanism. The company secretary is
tasked with maintaining a constructive relationship with
other third-party suppliers, on behalf of the company. The
management engagement committee conducts an annual
review of the performance, terms and conditions of the
company’s main service providers to ensure they are
performing in line with board expectations and providing
value formoney.
• Debt provider – On behalf of the board, the manager and
Juniper Partners maintain a positive working relationship
with The Royal Bank of Scotland International, the
provider of the company’s loan facilities, and provides
regular updates on business activities and compliance
with its loan covenants.
• Communities and the environment – The board expects
good governance standards to be maintained at the
companies in which the company is invested and
reviews the engagement and voting activities which
are undertaken by the manager. Further details of the
company’s purpose, values and strategy are outlined
on pages 10 and 11. The ESG strategy followed by the
manager is also detailed on pages 10 and 11.
The board is always mindful of its responsibilities to
the stakeholders of the company and this forms part of
every board decision. Specific examples of stakeholder
considerations during the year were:
• Dividends – Following the rebasing of the dividend in the
prior year, the company has continued to pay quarterly
dividends with the dividend for the year increasing by
3.1% from 2021.
• Discount control mechanism – The board continued the
formal discount control mechanism (‘DCM’) to monitor
the discount/premium levels at which the company’s
shares are traded. The DCM operates under a policy
whereby shares can only be issued at a premium and
bought at a discount to net asset value. The board
believes the continued operation of the DCM is very
important for shareholders as it provides liquidity and
reduced discount volatility. Details of shares bought
back/issued can be found in note 12 on page 51.
• Succession planning – In line with the company’s tenure
policy, Angus Gordon Lennox will retire at the AGM
on 4 July 2022 and will not stand for re-election. To
ensure there remains an appropriate level of skills and
experience on the board, Alexandra Innes was appointed
as a director on 4 April 2022. Additionally, Sarah Harvey
will assume the role of senior independent director,
currently undertaken by Angus Gordon Lennox.
• Debt provider – During the year the company negotiated
a renewal of the revolving credit loan facility with Royal
Bank of Scotland International. Further details can be
found in note 11 on page 51.
Principal developments and future prospects
The principal business developments over the course of
the year are set out in the Chairman’s statement on pages 3
and4 and the manager’s review on pages 5 and 6. The future
performance of the company depends upon the success
of the company’s investment strategy in light of economic
factors and equity markets developments. Please refer to
the Chairman’s statement on pages 3 to 4 and the manager’s
review on pages 5 and 6 for an update on future prospects
forthe company.
Principal risks and uncertainties
Risk and mitigation
The company’s business model is longstanding and resilient
to most of the short-term uncertainties that it faces, which the
board believes are effectively mitigated by its internal controls
and the oversight of the manager, as described in the table
below. The principal and emerging risks and uncertainties
are therefore largely longer term and driven by the inherent
uncertainties of investing in global equity markets.
The board believes that it is able to respond to these longer-
term risks and uncertainties with effective mitigation so that
both the potential impact and the likelihood of these seriously
affecting shareholders’ interests are materially reduced.
Operational and management risks along with a review of
potential emerging risks, are regularly monitored at board
meetings and the board’s planned mitigation measures for the
principal and emerging risks are described in the table below.
As part of its annual strategy meeting, the board carries out a
robust assessment of the principal and emerging risks facing
the company, including those that would threaten its business
model, future performance, solvency or liquidity.
STRATEGIC REPORT
The board maintains a risk register and also carries out a risk workshop as part of its annual strategy meeting. The board has
identified the following principal and emerging risks to the company:
Principal risks Mitigation and management
Investment strategy and objectives
– Pursuing an investment strategy to
fulfil the company’s objective which the
market perceives to be unattractive
or inappropriate may lead to reduced
returns for shareholders and, as a result,
the company may become unattractive to
investors, leading to decreased demand for
its shares and a widening discount.
The board formally reviews the company’s objectives and strategies on an
annual basis, or more regularly if appropriate. The board also receives updates
at each board meeting from the manager with regards to the portfolio and its
performance; receives broker updates on the market; and is updated on the
make-up and movements in the shareholder register. In addition, the company
operates a discount control mechanism; the marketing and distribution
activity is actively reviewed; and the board and manager proactively engage
withshareholders.
Investment management – If the longer-term
performance of the investment portfolio
does not deliver income and capital returns
in line with the investment objective and/
or consistently underperforms market
expectations, the company may become
unattractive to investors.
The board manages the risk of investment underperformance by relying on
good manager stock selection skills within a framework of diversification and
other investment restrictions and guidelines.
The board monitors the implementation and results of the investment process
with the manager (who attends all board meetings) and reviews data that
shows statistical measures of the company’s risk profile. Should investment
underperformance be sustained despite the mitigation measures taken by the
manager, the board would assess the cause and be able to take appropriate
action to manage this risk.
Macro-economic and Market risk – The
company’s portfolio is invested in listed
equities and is therefore exposed to events
or developments which can affect the
general level of share prices, including
inflation or deflation, economic recessions
and movement in interest rates and
currencies which could cause losses within
the portfolio and increasing finance and
operational costs of the company.
The board receives regular updates on the company’s portfolio and the
investment environment in which the manager is operating. An explanation of
the different components of market risk and how they are individually managed
is contained in note 16 to the financial statements on pages 53 to 57.
Gearing and leverage risk – The company
may borrow money for investment
purposes. While this has the potential
to enhance investment returns in rising
markets, in falling markets the impact
could be detrimental to performance. If
borrowing facilities are not renewed, the
company may have to sell investments to
repayborrowings.
The company’s gearing is maintained at a conservative and manageable
level. All borrowing facilities require prior approval of the board and actual
borrowing levels are discussed by the board and manager at every meeting.
Details of the company’s current borrowings and unused facilities can be found
in note 11 to the financial statements on page 51. The company’s investments are
in quoted securities that are readily realisable and the board regularly reviews
the liquidity level of the portfolio in order to assess how quickly, if necessary,
the borrowings could be repaid. Further information on leverage can be found
on page 58.
Discount risk – The discount/premium at
which the company’s shares trade relative to
its net asset value can fluctuate. The risk of a
widening discount is that it may undermine
investor confidence in the company.
The company operates a discount control mechanism which aims to ensure, in
normal market conditions, the company’s shares trade, on a consistent basis,
at or very close to net asset value. The board reviews the operation of the
discount control mechanism at each board meeting and maintains a regular
dialogue with Juniper Partners (which manages the policy on behalf of the
Board) in respect of any issues or buybacks under the policy.
Operational risk – The company is
dependent on third parties for the provision
of all services and systems. Any fraud,
control failures, cyber threats, business
continuity issues at, or poor service from,
these third parties could result in financial
loss or reputational damage to the company.
The board carries out an annual evaluation of its service providers and
gives regular feedback to the manager and company secretary through the
management engagement committee. The board receives and reviews control
reports from all service providers where appropriate. Periodically, the board
requests representatives from third party service providers to attend board
meetings to give the board the opportunity to discuss the controls that are in
place directly with the third-party providers.
Principal risks Mitigation and management
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 board considers that, given the regular oversight of this risk carried out
by the company secretary and reviewed by the board, the likelihood of this
risk occurring is minimal. The audit committee regularly reviews the eligibility
conditions and the company’s compliance against each, including the minimum
dividend requirements and shareholder composition for close company status.
The board receives reports from the manager, the AIFM, and the company
secretary to enable it to ensure compliance with all applicable rules.
Climate change risk (emerging risk) – There
is increasing awareness of the challenges
and emerging risks posed by climate
change.
The investment process is focused on ESG issues and, as set out on pages 10
to 11, this includes an assessment of the potential impact of climate change.
Overall the specific potential effects of climate change are difficult, if not
impossible to predict and the board and investment manager continue to
monitor material physical and transition risks and opportunities as part of the
investment process.
Geopolitical risk (emerging risk) – The
impact of geopolitical events could result in
losses to the company.
Geopolitical risks have always been an input into the investment process.
This risk area is now highlighted as a result of the Russian invasion of Ukraine,
with the resultant effects on global trade and volatility in asset prices. Further
information on this risk and its potential impact on the company is set out in the
Chairman’s statement and the Manager’s review. The board seek to mitigate
this risk through maintaining a broadly diversified global equity portfolio with
appropriate asset and geographical exposure. The board and the manager
continue to monitor the ongoing heightened geopolitical risk and are in regular
communication on emerging matters which may impact on the portfolio.
Following the ongoing assessment of the principal and emerging risks facing the company, and its current position, the board
is confident that the company will be able to continue in operation and that the processes of internal control that the company
has adopted and oversight by the manager and the company secretary continues to be effective.
Key performance indicators
The board provides certain key performance indicators
(‘KPIs’) to monitor and assess the performance of the
company. The principal KPIs are:
1. Performance comparison
The NAV total return to 31 March 2022 was 16.8% against
the Lipper Global-Equity Global Income Index total return
of 10.8%, resulting in an overperformance of 6.0% (2021:
underperformance of 1.4%).
2. Growth in net assets
The growth in net assets is measured by the growth in the
cum income NAV per share during the financial year. The
company’s cum income NAV per share rose to 230.75p at
31March 2022, from 202.68p as at 31 March 2021, an increase
of 13.8% (2021: 24.6%).
The Chairman’s statement, on pages 3 and 4, and the
Manager’s review, on pages 5 and 6, provide more
information on performance.
3. Ongoing charges
The board monitors the ongoing charges to ensure it stays
at or below 1.0%. The ongoing charges for the year end
31March 2022 were 0.93% (2021: 0.93%) and therefore the
KPI was achieved.
4. Discount
In November 2020, the board introduced the discount
control mechanism with the aim to ensure, that in normal
market conditions, the company’s shares trade, on a
consistent basis, at or very close to NAV. At 31 March 2022,
the share price was at a premium of 0.11% (31March 2021 –
discount of 0.34%). The average discount for the year was
1.6% (2021: 1.4%).
The successful implementation of this policy sees shares
being purchased and issued by the company on a consistent
basis and the intention is to grow the company in real terms
via share issuances over time.
5. Rising income
The board aims to achieve rising income through investment
in a balanced portfolio constructed from global equities.
The annual dividend for the year ended 31 March 2022 was
5.875p, an increase of 3.1% on the annual dividend for the
year ended 31 March 2021 of 5.70p.
STRATEGIC REPORT
Summary of KPIs
Target Actual Achieved
1. Performance comparison Total return to exceed the Lipper
Global – Equity Global Income Index
6.0%
3
2. Growth in net assets Growth in cum income NAV 13.8%
3
3. Ongoing charges Below 1.0% 0.93%
3
4. Average discount At or very close to NAV 1.6%
3
5. Rising income Dividend per share growth 3.1%
3
Approved by the board
John Evans
19 May 2022
BOARD OF DIRECTORS
John Evans, chairman
John commenced his career at Ivory & Sime in 1979. In 1990, John was one of the founding
partners of Aberforth Partners, a specialist investment management firm that invests in UK
smaller quoted companies largely on behalf of institutional investors. John retired from Aberforth
in 2011 and is Chairman of JP Morgan Mid Cap Investment Trust. He is currently Chairman of
BMO UK High Income Trust but intends to retire as a director and chair at its forthcoming AGM
on 20 July 2022. He was appointed to the board of Securities Trust of Scotland in February 2016
and became chairman in September 2019.
Mark Little, chairman of the audit committee
Mark has an extensive knowledge of the investment industry, as the former Managing Director of
Barclays Wealth Scotland and Northern Ireland. Mark held this position for eight years until 2013
when he retired. Prior to this, Mark held the position of Global Head of Automotive Research at
Deutsche Bank where he managed and coordinated its global automotive research product. He is
currently a non-executive director of Majedie Investments plc and BlackRock Smaller Companies
Tr ust plc and acts as a consultant to Lindsays LLP. He was appointed to the board of Securities
Trust of Scotland in October 2014.
Angus Gordon Lennox, senior independent director
Angus has an extensive knowledge of the investment industry with 24 years’ experience in the
City, working in a variety of positions including Head of the Investment Companies Department,
both as a Partner of Cazenove, and then as a Managing Director of JPMorgan Cazenove, with
specific responsibility for the investment company department from whom he retired in 2010.
Angus is also the Executive Chairman of two family businesses together with being Chairman of
The Mercantile Investment Trust plc and Chairman of Aberforth Split Level Income Trust plc. He
joined the board of Securities Trust of Scotland in November 2013.
Sarah Harvey, chairman of the marketing and communications committee
Sarah has significant leadership experience growing innovative businesses in multiple markets
with a focus in the last decade on fast growing scale-ups. Sarah was the Chief Operating Officer
of Prodigy Finance (backed by Balderton and Index Ventures providing $1bn of financing for
international students), launched the US fintech Block Inc in Europe, and the event series
Tough Mudder internationally before becoming Chief Operating officer of the overall company.
Her career began in the civil service and following this Sarah worked in strategy roles initially
at the consulting firm Bain & Company before working on a range of international projects
for businesses and not-for-profit organisations. Alongside her non exec role, she focuses on
providing advisory services to digital businesses as well as angel investing. She was appointed to
the board of Securities Trust of Scotland in October 2018.
BOARD OF DIRECTORS
Angus Cockburn, non-executive director
Aer six years as Group Chief Financial Officer of Serco Group plc, Angus stepped down from
the Serco Board in April 2021. Angus is a chartered accountant with considerable experience
gained in a variety of sectors. He has an MBA from the IMD Business School in Switzerland, is an
Honorary Professor at the University of Edinburgh and a member of the Institute of Chartered
Accountants of Scotland. Prior to joining Serco Group plc in 2014 Angus held roles as Chief
Financial Officer and Interim Chief Executive of Aggreko plc, Managing Director of Pringle of
Scotland and held senior finance positions at PepsiCo Inc including Regional Finance Director
for Central Europe. He was also a Non-Executive Director of Howdens Joinery Group plc and
Senior Independent Director of GKN plc. Angus is currently Senior Independent Director and
Chair of the Audit Committee of Ashtead Group plc, a Non-Executive Director of The Edrington
Group Limited and Chairman of James Fisher and Sons Limited. He was appointed to the board
of Securities Trust of Scotland in May 2021.
Alexandra Innes, non-executive director
Alexandra is a Non-Executive Committee Member at the Bank of England, a member of the Group
Executive Board and Technology Investment Board at Knight Frank LLP, and a Non-Executive
Director of ADF PLC. She is a Non-Executive Director of the UCI Cycling World Championships
Ltd, and served on the board of the All England Lawn Tennis Club (Championships) Ltd and the
AELT Ground PLC from 2014 – 2020, where she remains a pension scheme trustee. Alexandra’s
executive career spanned investment banking, global capital markets, and investment management,
most latterly as Managing Director at Barclays PLC, and prior to that as Director of Global
Capital Markets at Bank of America Merrill Lynch. Alexandra holds an M.A. Hons Economics from
Cambridge University, is a Fellow of Chapter Zero, a Green and Sustainable Finance Professional,
Chartered Banking Institute (CCBI GSFP), a Member of the Chartered Institute for Securities &
Investments (MCSI), and holds the CFA Institute Certificate in ESG investing. She was appointed to
the board of Securities Trust of Scotland on 4th April 2022.
REPORT OF THE DIRECTORS
The directors present their report and the audited financial statements of the company for the year
ended 31 March 2022.
Status
The company carries on business as an investment trust
and its shares have a premium listing on the London Stock
Exchange. The company has been approved by the HM
Revenue & Customs as an investment trust in accordance
with section 1158 of the Corporation Tax Act 2010 and the
Investment Trust (Approved Company) (Tax) Regulations
2011. The company will continue to conduct its affairs in a
manner which will enable it to retain this status. The company
is domiciled in the UK and is an investment company within
the meaning of section 833 of the Companies Act 2006. It is
not a close company for taxation purposes.
Revenue and dividends
The net revenue return for the year aer expenses, interest
and taxation was £5,854,000 (2021: £7,045,000), equivalent
to a return of 5.82p per share (2021: 6.76p). Interim dividends
totalling 4.125p have been paid during the year. The directors
recommend a fourth interim dividend of 1.75p per share to
be paid on 1 July 2022 to holders on the register at the close
of business on 27 May 2022, making a total for the year of
5.875p (2021: 5.70p).
Share capital
As at 31 March 2022, the company had 99,525,075 ordinary
shares of 1p (‘ordinary shares’) in issue (2021: 102,468,075) and
22,774,073 ordinary shares held in treasury (2021: 19,831,073).
The company repurchased 3,043,000 shares into treasury at
a cost of £6,431,000 during the year. This represented 3.1%
of the called up issued share capital at the year end and had
a nominal value of £30,430. During the year 100,000 shares
held in treasury were reissued for net proceeds of £199,000.
A special resolution to renew the authority to repurchase
shares will be put to shareholders for approval at the annual
general meeting (‘AGM’). The full text of the resolution is set
out in the notice of meeting.
Directors
The board currently consists of six non-executive directors.
The names and biographies of the current directors are on
page 17 and 18, indicating their range of experience as well
as length of service. All held office throughout the year and
up to the date of this report, except for Alexandra Innes who
was appointed on 4 April 2022.
In line with best practice all directors stand annually for
either election or re-election at the AGM. New directors
automatically offer themselves for election at the AGM
immediately following their appointment.
Having been appointed as a director in 2013 Angus Gordon
Lennox will retire at the conclusion of this year’s AGM and will
not stand for re-election in line with best governance practice.
Alexandra Innes was appointed as a director on 4 April 2022
and will offer herself for election at the 2022 AGM.
The board considers that it has a balance of skills and
experience relevant to the leadership and direction of the
company and that all directors contribute effectively. The role
of the board and its governance arrangements are set out in
the company’s corporate governance statement on pages 25
to 29 which forms part of this report of the directors.
Management arrangements
The investment manager
The company appointed Troy Asset Management Limited
(‘Troy’ or the ‘manager’) on 12 November 2020. The board
closely monitors investment performance and the manager
attends each board meeting to present a detailed update to
the board. The board uses this opportunity to challenge the
manager on any aspect of the portfolio’s management.
AIFM
The company appointed Juniper Partners Limited (‘Juniper
Partners’ or the ‘AIFM’) (previously called PATAC Limited),
as its alternative investment fund manager with effect from
12November 2020. For its services as AIFM, Juniper Partners
receive a fee of 0.015% of the net assets per annum, subject
to a minimum fee of £60,000.
The AIFM has formally delegated the investment
management to Troy as detailed below.
Investment management delegation agreement
As manager, Troy receives an annual management fee of
0.65% of the net assets of the company up to £750 million,
0.55% of net assets between £750 million and £1 billion and
0.50% above £1 billion. However, as a contribution to the
costs of the change of investment manager, Troy agreed to
waive the management fee payable to it for a period of twelve
months from its appointment as manager, as well as making
a significant ongoing annual contribution to the cost of the
company secretarial and administration services provided by
Juniper Partners. The full investment management fee payable
under the investment management delegation agreement has
been payable since 12 November 2021.
Following an initial term of three years, the investment
management delegation agreement shall be terminable by
either party serving six months’ notice. No compensation is
payable to the manager in the event of termination of the
contract over and above payment in respect of the required
minimum notice.
REPORT OF THE DIRECTORS
Continued appointment of the investment manager
The board, through the work of the management engagement
committee, conducts an annual performance appraisal
of the manager against a number of criteria, including
operational performance, investment performance, investment
management fees and other contractual considerations.
Following the review by the management engagement
committee outlined on page 28, the board considers the
continuing appointment of the manager to be in the best
interests of the shareholders at this time.
Company secretarial, accounting and administration
Juniper Partners provides company secretarial, accounting
and administration services to the company. Juniper
Partners receives a fee for these services of £100,000 per
annum plus an amount equal to 0.1%. of the company’s
net assets between £50 million and £100 million, 0.03% of
the company’s net assets between £100 million up to and
including £250 million and 0.02% of the company’s net assets
between £250 million up to and including £1,000 million.
The fixed fee element of the fee is adjusted annually by any
increase in the Consumer Price Index.
Depositary and custodian
JP Morgan Europe Limited is the company’s depositary
and the custodian is JP Morgan Chase Bank N.A. The
depositary’s responsibilities include cash monitoring,
safe keeping of the company’s financial instruments and
monitoring the company’s compliance with investment limits
and leverage requirements. The depositary has delegated
the safe keeping function to the custodian.
Greenhouse gas emissions
As an externally managed investment company with no
employees, the company’s greenhouse gas emissions are
negligible. Streamlined Energy and Carbon Reporting
applies to all large companies. However, as the company has
not consumed more than 40,000 kWh of energy during the
past year, it qualifies as a low energy user and is exempt from
reporting under these regulations.
Shareholder analysis
% of issued
share capital at
31 March 2022
% of issued
share capital at
31 March 2021
Wealth managers 55.0 42.5
D2C Platform 26.8 26.1
Institution 5.1 15.3
IFA Platform 1.1 1.2
Other 12.0 14.9
100.0 100.0
Source: Troy
Substantial interests
During the year to 31 March 2022 the company had received
notification in accordance with the FCA’s Disclosure
Guidance and Transparency Rule 5.1.2R of the following
interests in the voting rights attaching to the company’s
issued share capital:
As at 31March 2022 No. of shares
% issued
share capital
Rathbone Investment
Management 13,412,530 13.4
Smith & Williamson Holdings 5,014,356 5.0
As at 18 May 2022 the company has not been notified of any
changes to the above table.
As at 18 May 2022, the last practicable date prior to the
printing of this report, the company has 99,955,075 ordinary
shares in issue (excluding treasury shares).
Shareholder and voting rights
Each ordinary shareholder is entitled to one vote on a show
of hands and, on a poll, to one vote for every share held. The
ordinary shares carry a right to receive dividends which are
declared from time to time by the company. On a winding-
up, aer meeting the liabilities of the company, any surplus
assets would be paid to ordinary shareholders in proportion
to their shareholdings.
There are no restrictions on the transfer of ordinary shares in
the company other than certain restrictions which may from
time to time be imposed by law (for example, insider trading law)
and there are no special rights attached to any of the ordinary
shares. The company is not aware of any agreements between
shareholders which may result in restrictions on the transfer of
ordinary shares or the voting rights attached to them.
Corporate governance statement
The company’s corporate governance statement is set out on
pages 25 to 29 and forms part of this report of the directors.
Voting policy and the 2020 UK Stewardship
Code
The company has given discretionary voting powers to Troy.
With respect to voting on behalf of clients, Troy’s policy is to:
• vote at all general meetings of companies in which its
clients are invested;
• ensure in all situations that the economic interests of its
clients are paramount; and
• vote consistently on behalf of all clients who are invested
in the particular company.
The directors are aware that Troy gives consideration to
operational performance, corporate social responsibility and
corporate governance issues, among many other factors,
when investment decisions are taken.
The board has noted Troy’s adoption of the 2020 FRC
Stewardship Code, and a copy of the manager's policies and
voting records can be found at www.taml.co.uk.
Disclosure of information to the auditor
As required by section 418 of the Companies Act 2006 each
of the directors of the company at the time when this report
was approved:
• so far as each of the directors is aware, there is no
relevant audit information (as defined in the Companies
Act) of which the company’s auditor is unaware; and
• each of the directors has taken all the steps that they
ought to have taken as a director in order to make
themselves aware of any relevant audit information (as
defined) and to establish that the company’s auditor is
aware of that information.
Listing Rule 9.8.4R
Listing Rule 9.8.4R requires the company to include certain
information in a single identifiable section of the Annual
Report or a cross reference table indicating where the
information is set out. The directors confirm that there are no
disclosures to be made in this regard.
Going concern status
The company’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the chairman’s statement, manager’s
review, strategic report and the report of the directors.
The financial position of the company as at 31 March 2022 is
shown on the statement of financial position on page 43. The
cash flows of the company are set out on page 45. Note 16
on pages 53 to 57 sets out the company’s risk management
policies, including those covering market price risk, liquidity
risk and credit risk.
The company has a one year revolving credit facility for
£10,000,000 which expires in September 2023, which was
undrawn at 31 March 2022. In addition, the company has
a multi-currency fixed facility, which expires in September
2023, in three tranches of £1,500,000, €4,500,000 and
US$12,750,000, all of which were fully drawn down at the
year- end date. No decision has yet been taken in relation to
the renewal of the borrowing facilities. Should they not be
renewed then the company has adequate financial resources
in the form of readily realisable listed securities and as
a result the directors assess that the company is able to
continue in operational existence without the facilities.
In accordance with the 2019 AIC Code of Corporate
Governance, the directors have undertaken a rigorous review
of the company’s ability to continue as a going concern. The
company’s assets consist of a diverse portfolio of listed equity
shares which, in most circumstances, are realisable within a
very short timescale. The directors are mindful of the principal
and emerging risks and uncertainties disclosed on pages 14
and 15. They have reviewed revenue forecasts (adjusted for
various sensitivities) and they believe that the company has
adequate financial resources and a suitably liquid investment
portfolio to continue its operational existence for the
foreseeable future, and at least for the period to 31 March
2024, which is at least 12 months from the date the financial
statements are authorised for issue.
Viability statement
The company’s business model is designed to achieve rising
income and long-term capital growth through investment
in a balanced portfolio constructed from global equities
unconstrained by geography, sector, stock or market
capitalisation. The business model is based on having no
fixed or limited life provided global equity markets continue
to operate normally. The board has assessed its viability over
a five year period as it believes this is an appropriate period
over which it does not expect there to be any significant
change to the principal risks and adequacy of the mitigating
controls in place. The board considers that this reflects the
minimum period which should be considered in the context
of its long-term objective but one which is limited by the
inherent and increasing uncertainties involved in assessment
over a longerperiod.
In making this assessment the directors took comfort
from the results of a series of stress tests that considered
the impact of severe market downturn scenarios on the
company’s financial position. The directors also considered
the following risks to its ongoing viability:
• the principal and emerging risks and uncertainties and
the mitigating actions set out on pages 14 and 15;
• the mitigation measures which key service providers
including the manager have in place to maintain
operational resilience;
• the challenges posed by climate change;
• the ongoing relevance of the company’s investment
objective in the current environment;
• the level of income forecast to be generated by the
company and the liquidity of the company’s portfolio;
• the level of fixed costs and debt relative to its liquid
assets; and
• the expectation is that the current portfolio could be
liquidated to the extent of 98.3% within three trading
days.
Based on this assessment, the board has a reasonable
expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the
next five years.
REPORT OF THE DIRECTORS
Post balance sheet events
Since 31 March 2022, there are no post balance sheet events
which would require the adjustment of or disclosure in the
financial statements.
Performance, outlook and trends likely to affect
future performance
Please refer to the chairman’s statement on pages 3 and4
and the manager’s review on pages 5 and 6 for an update on
the performance of the company over the year and outlook
for 2022, together with information on the trends likely to
affect the future performance of thecompany.
Annual general meeting
The AGM of the company will be held at 12.30pm on Monday
4 July 2022, at The Library of Mistakes, 33A Melville Street
Lane, Edinburgh EH3 7QB.
Shareholders are encouraged to vote by proxy. If shares
are not held directly, for example either through a platform
or a wealth manager, investors are encouraged to arrange
for their nominee to vote on their behalf. Questions to
the AGM may be written on the form of proxy in the space
provided, and a written response will be posted on the
company’s website following the meeting. The Notice of
AGM is included on pages 64 to 67. Resolutions relating to
the following items of business will be proposed:
Remuneration report – ordinary resolution
In accordance with the provisions of the Companies Act
2006 the directors’ remuneration report will be put to
an annual shareholder vote by ordinary resolution. The
vote is advisory in nature and is in respect of the overall
remuneration package which is in place for directors
of the company, and not specific to individual levels
ofremuneration.
Dividend policy – ordinary resolution
As a result of the timing of the payment of the company’s
quarterly dividends in January, April, July and October,
the company’s shareholders are unable to approve a final
dividend each year. As an alternative the board will put the
company’s dividend policy to shareholders for approval on an
annual basis.
Resolution 3, which is an ordinary resolution, relates to the
approval of the company’s dividend policy which is as follows:
Dividends on the ordinary shares are payable quarterly in
January, April, July and October. The payment of dividends
in accordance with this dividend policy is subject always
to market conditions and the company’s financial position
andoutlook.
Election and re-election of directors – ordinary
resolutions
Biographical detail of the directors can be found on pages
17 and 18 of the annual report and accounts. In accordance
with the principles of good governance set out in the UK
Corporate Governance Code all directors who will continue
following the AGM will seek re-election. In proposing the
election and re-election of the directors, the chairman has
confirmed that, following the most recent board evaluation,
each director continues to make an effective and valuable
contribution to the board and demonstrates commitment to
their role.
Allotment of shares – ordinary resolution
Section 551 of the Companies Act 2006 provides that the
directors may not allot new shares without shareholder
approval. Resolution 11 seeks to renew the directors’
authority to allot shares up to a maximum aggregate nominal
amount of £333,347 (being an amount equal to one third of
the issued share capital of the company (excluding treasury
shares) as at 18 May 2022, being the last practicable date
before the date of this document). The board intends to
exercise this power only once the number of shares held by
the company in treasury is not sufficient to support share
issuance by the company. As at 18 May 2022, being the last
practicable date prior to the publication of this document,
the company held 22,294,073 ordinary shares in treasury,
representing approximately 22.3% of the company’s issued
share capital (excluding treasury shares).
The authority will expire on 30 September 2023 or, if
earlier, at the AGM of the company to be held in 2023,
unless previously cancelled or varied by the company in
generalmeeting.
Disapplication of statutory pre-emption rights – special
resolution
Resolution 12 proposes as a special resolution to continue
the directors’ authority under sections 570 and 573 of the
Companies Act 2006 to allot shares for cash in certain
circumstances otherwise than pro rata to all the shareholders
up to an aggregate nominal amount of £244,598
(representing 20% of the company’s issued share capital as
at 18May 2022, the latest practicable date before publication
of the accounts). Any issue of shares would be made in
accordance with the company’s articles of association. The
directors issue new ordinary shares or re-issue shares from
treasury only when they believe it is advantageous to the
company’s shareholders to do so and for the purposes of
operating the company’s discount control mechanism. Any
such issue of shares would only be undertaken at a premium
to the NAV at the time of dealing. In no circumstances would
such issue of new ordinary shares or re-issue of shares from
treasury result in a dilution of the net asset value per share.
For the purposes of this resolution, allotment of shares
includes the sale of treasury shares. As at 18 May 2022, being
the last practicable date prior to the publication of this
document, the company held 22,294,073 ordinary shares in
treasury, representing approximately 22.3% of the company’s
issued share capital (excluding treasury shares).
Purchase of own shares – special resolution
Each year the directors seek authority from shareholders
to purchase the company’s own shares. The directors
recommend that shareholders renew this authority by
passing resolution 13.
Any shares purchased pursuant to this authority may be
automatically cancelled or held in treasury pursuant to the
Companies (Acquisition of own shares) (Treasury shares)
Regulations 2003. Resolution 13 specifies the maximum
number of shares that may be acquired being 14.99% of
the issued share capital as at 18 May 2022, being the last
practicable date prior to the publication of this document,
and the maximum and minimum prices at which they may
bebought and, if passed, would lapse at the company’s
AGMin 2023.
The main effect of any share buybacks (whether for
cancellation or to be held in treasury) will be to enhance
the net asset value of the remaining ordinary shares, as the
shares will only be acquired at a cost that is less than their
net asset value.
Purchases can provide liquidity for shareholders wishing to
sell their ordinary shares and may have a beneficial effect on
the discount to their net asset value at which the ordinary
shares currently trade. The purpose of holding some shares
in treasury is to allow the company to re-issue those shares
quickly and cost-effectively, thus providing the company
with greater flexibility in the management of its capital base.
Whilst in treasury no dividends are payable on or voting
rights attached to the shares.
Purchase by the company of its own shares will be funded
either by using available cash resources, by selling
investments in the portfolio or through borrowings.
During the year ended 31 March 2022, the company
bought back 3,043,000 ordinary shares to be held
in treasury. As at 31 March 2022, the company holds
22,774,073 shares in treasury representing 22.9% of the
issued share capital of the company. As at 18 May 2022
being the last practicable date before publication of
the accounts, the company holds 22,294,073 shares in
the treasury representing 22.3% of the issued share
capital of the company (excluding treasury shares).
Notice period for general meetings – special resolution
The company’s articles of association enable the company
to call general meetings (other than an AGM) on 14 clear
days’ notice. In order for this to be effective, shareholders
must also approve annually the calling of meetings other
than AGMs on 14 days’ notice. Resolution 14 will be proposed
at the AGM to seek such approval. The approval will be
effective until the company’s next AGM, when it is intended
that a similar resolution will be proposed.
The company meets the requirements for electronic voting
under the Companies Act 2006, offering facilities for all
shareholders to vote by electronic means. The board believes
it is in the best interests of shareholders for the shorter
notice period to be available to the company, although it
is intended that this flexibility will be used only for early
renewals of the board’s authority to issue new shares or
re-issue shares from treasury and only where merited in the
interests of shareholders as a whole.
Recommendation
The directors believe all the resolutions proposed are in the
best interests of the company and the shareholders as a
whole and recommend all shareholders to vote in favour of
all the resolutions.
The results of the votes on the resolutions at the AGM will
be published on the company’s website www.stsplc.co.uk.
Statement of directors’ responsibilities
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have elected to prepare the financial statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards and applicable law), including Financial Reporting
Standard102 ‘The Financial Reporting Standard applicable in
the UK and Republic of Ireland’ (“FRS102”). Under company
law the directors must not approve the accounts 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 in accordance with
Section 10 of FRS102, and then apply them consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
REPORT OF THE DIRECTORS
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with
specific requirements in FRS102 is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the company financial
position and financial performance;
• state whether applicable UK Accounting Standards,
including FRS102, have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping 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 also
responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Under applicable law and regulations, the directors are
also responsible for preparing a strategic report, directors’
report, directors’ remuneration report and corporate
governance statement that comply with that law and
thoseregulations.
The financial statements are published on the company's
website, www.stsplc.co.uk, which is maintained by the
manager. The maintenance and integrity of the website
is, so far as it relates to the company, the responsibility of
themanager.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice, including FRS 102 ‘The Financial Reporting
Standard applicable in the UK and Republic of Ireland’,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the company;
• the annual report, including 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 and emerging risks and
uncertainties that it faces; and
• the annual report and financial statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
company’s performance, business model and strategy.
This responsibility statement was approved by the board of
directors on 19 May 2022 and is signed on its behalf by:
John Evans
19 May 2022
CORPORATE GOVERNANCE STATEMENT
Corporate governance
Corporate governance is the process by which the board seeks
to look aer shareholders’ interests and protect and enhance
shareholder value. Shareholders hold the directors responsible
for the stewardship of the company, delegating authority and
responsibility to the directors to manage the company on their
behalf and holding them accountable for its performance.
The board is ultimately responsible for framing and executing
the company’s strategy and for closely monitoring risks. It
aims to run the company in a manner which is responsible
and consistent with our belief in honesty, transparency
and accountability. In our view, good governance means
managing our business well and engaging effectively
with investors. The board consider the practice of good
governance to be an integral part of the way it manages the
company and is committed to maintaining high standards of
financial reporting, transparency and business integrity.
This report, which is part of the report of the directors,
explains how the board addresses its responsibility, authority
and accountability.
Compliance with the AIC Code
The board of the company has considered the Principles and
Provisions of the 2019 AIC Code of Corporate Governance
(‘AIC Code’). The AIC Code addresses the principles and
provisions set out in the 2018 UK Corporate Governance Code
(the ‘UK Code’), as well as setting out additional provisions on
issues that are of specific relevance to investment companies.
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 than if it had adopted the UK Code. The AIC
Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
Role of the board
Investment companies have a board of directors whose
duty it is to govern the company to secure the best possible
return for shareholders within the framework set out in the
company’s articles of association – in other words, to look
aer the interests of shareholders. Your board met five
times during the year on a formal basis and on an ad-hoc
basis when required, to consider the company’s strategy and
monitor the company’s performance (see table below). The
directors are directly answerable to shareholders.
An investment trust board provides a very specific and
proactive form of direct oversight of the investment of the
shareholders’ funds.
Your board takes this responsibility extremely seriously and
serves shareholders by ensuring that the interests of the
manager are aligned as closely as possible with those of
shareholders.
The board consists of a chairman and five non-executive
directors, all of whom are considered under the AIC Code to
be independent of the manager and free of any relationship
which could materially interfere with the exercise of their
independent judgement on issues of strategy, performance,
resources and standards of conduct. Biographies for all of
the directors are on pages17 and 18, which demonstrate a
breadth of investment knowledge, business and financial
skills which enable them to provide effective strategic
leadership and proper governance of the company.
The number of routine board and committee meetings attended
by each director during the year compared to the total number
of meetings that each director was eligible to attend is detailed
in the table on page 26. The board meets formally at least five
times a year, and more frequently where business needs require.
In addition, the board maintains regular contact with the
manager and company secretary.
The primary focus at regular board meetings is a review of
investment performance and associated matters including
asset allocation, promotion and investor relations, peer group
information and industry issues. To enable the board to function
effectively and allow directors to discharge their responsibilities,
full and timely access is given to all relevant information. In the
case of board meetings, this consists of a comprehensive set of
papers, including the portfolio manager’s review, performance
reports and discussion documents regarding specific matters.
Directors have made further enquiries where necessary.
The board sets the company’s values and objectives and
ensures that its obligations to its shareholders are met. It has
formally adopted a schedule of matters which are required to
be brought to it for decision, thus ensuring that it maintains
full and effective control over appropriate strategic, financial,
operational and compliance issues. The board undertakes an
annual review of culture, policies and practices to ensure that
they are aligned with the company’s values and objectives.
The role of the chairman and senior independent director
The chairman is responsible for providing effective
leadership to the board, by setting the tone of the company,
demonstrating objective judgement and promoting a culture
of openness and debate. The chairman facilitates effective
contribution, and encourages active engagement, by each
director. The chairman also ensures that directors receive
accurate, timely and clear information to assist them with
effective decision-making. The chairman leads the evaluation
of the board and individual directors, and acts upon the
results of the evaluation process by recognising strengths
and addressing any weaknesses. The chairman also engages
with major shareholders and ensures that all directors
understand shareholder views.
CORPORATE GOVERNANCE STATEMENT
The senior independent director acts as a sounding board for
the chairman and acts as an intermediary for other directors,
when necessary. Working closely with the nomination and
remuneration committee, the senior independent director
takes responsibility for the annual appraisal of the chairman’s
performance and is available to shareholders to discuss any
concerns they may have. As noted in the Chairman’s statement,
Sarah Harvey will assume the role of senior independent
director on Angus Gordon Lennox’s retirement at the AGM.
Committee structure
Terms of reference for each of the committees are available
via the company secretary. Directors who are not members
of committee’s may attend at the invitation of the committee
chairman. The board also regularly reviews the performance
of the manager. The management engagement committee
meets to review the continuing appointment of the manager
and reviews the terms of the investment management
agreement, to ensure that it remains competitive and in
the best interest of shareholders along with reviewing the
continuing appointment of other key service providers. The
audit committee also reviews the controls reports from key
service providers as part of its internal controls monitoring.
Directors’ meetings
The following table shows the number of formal board and
board committee meetings held during the year and the
number attended by each director or committee member. In
addition to the formal board meetings, there were several
additional meetings of the board and a strategy meeting held
during the financial year.
Formal
board
meetings
(5 meetings)
Management
engagement
committee
(1 meeting)
Audit
committee
(3 meetings)
Nomination and
remuneration
committee
(1 meeting)
Marketing and
communications
committee
(2 meetings)
John Evans 5/5 1/1 N /A 1/1 2/2
Angus Cockburn 5/5 1/1 3/3 1/1 2/2
Angus Gordon Lennox 5/5 1/1 3/3 1/1 2/2
Sarah Harvey
5/5
1/1 3/3
1/1
2/2
Mark Little 5/5 1/1 3/3 1/1 2/2
Notes:
1. John Evans, as Chairman, does not sit on the audit committee but attended each of the meetings.
2. Alexandra Innes was appointed on 4 April 2022.
Directors’ independence and succession planning
The board consists of six non-executive directors, each of
whom is considered independent. Directors are initially
appointed until the following annual general meeting when,
under the company’s articles of association, it is required that
they be elected by shareholders. The board has decided that
all directors will stand for annual re-election in line with best
practice under the AIC Code.
The board does not believe that length of service in itself
necessarily disqualifies a director from seeking re-election
but, when making a recommendation, the board will take
into account the ongoing requirements of the AIC Code,
including the need to refresh the board and its committees.
As reported in the chairman’s statement, Angus Gordon
Lennox has indicated his intention to retire from the board
following the conclusion of the AGM of the company
on 4July 2022 and will not be standing for re-election.
Alexandra Innes, who was appointed on 4April 2022, will
stand for election at the AGM.
In accordance with the AIC Code, all directors are considered
to be independent of the manager. They are free of any
relationship which could materially interfere with the exercise
of their independent judgement on issues of strategy,
performance, resources and standards of conduct and
demonstrate a breadth of investment knowledge, business
and financial skills which enable them to provide effective
strategic leadership and proper governance of the company.
The board plans for its own succession with the assistance of
the nomination and remuneration committee. This process
involves the identification of the need for a new appointment,
and the preparation of a brief including a description of the role
and specification of the capabilities required.
The nomination and remuneration committee may seek
assistance in identifying suitable candidates by appointing
an external recruitment firm. During the year the company
engaged Cornforth Consulting as its external recruitment firm
as part of the recruitment of Alexandra Innes. Cornforth does
not have any other connections with the company. It would
typically consider candidates from a wide range of backgrounds,
having consideration for the diversity of the board as a whole,
including but not limited togender.
Tenure
The board has adopted a tenure policy for all directors,
including the chairman, which states that the board believes
that it is an advantage to have the continuous contribution of
directors over a period of time during which they are able to
develop awareness and insight of the company and thereby
be able to make a valuable contribution to the board as a
whole. The board believes that it is appropriate for a director
to serve for up to nine years following their initial election at
their first AGM, and it is expected that directors will stand
down from the board aer that time. However, a flexible
approach to tenure has been adopted and that period
may be extended for a limited time to facilitate effective
succession planning whilst still ensuring regular refreshment
and diversity on the board.
Board diversity
The nomination and remuneration committee considers
diversity, including the balance of skills, knowledge, gender,
social and ethnic backgrounds, cognitive and personal
strengths and experience, amongst other factors when
reviewing the composition of the board. However, it does
not consider that it is appropriate to establish targets or
quotas in this regard. The board comprises six non-executive
directors of whom two are female thereby constituting 33%
female representation. With Angus Gordon Lennox due to
retire at the next AGM, the board will revert to five directors,
with 40% female representation.
Induction and training
The company secretary provides all directors with induction
training on appointment, tailored to the needs of individual
appointees. The induction programme includes one-to-one
meetings with representatives of the manager and the company
secretary. Regular briefings are provided on changes in
regulatory requirements that affect the company and directors.
Directors are encouraged to attend industry and other seminars
covering issues and developments relevant to investment trusts.
Board meetings regularly include agenda items on recent
developments in governance and investment trust issues.
Directors’ indemnity
The company provides a deed of indemnity to each director
to the extent permitted by United Kingdom law whereby
the company is able to indemnify such a director against
any defence costs incurred in proceedings brought by the
company against a director in which the director successfully
defends. The company also has in place a Director and
Officer Liability Insurance Policy that is renewed annually.
Performance evaluation
A formal, annual, appraisal system has been agreed for the
evaluation of the board, its committees and the individual
directors, including the chairman. Board and committee
evaluation questionnaires are drawn up by the company
secretary and completed by each director. The responses are
collated and discussed. The chairman leads the evaluation
of the board, committee and individual directors, including
consideration of the time commitment, skills and experience
of the directors, while the senior independent director leads
the evaluation of the chairman’s performance. The board
has given consideration to appointing an external board
evaluator, however, it does not believe it is necessary at this
time. The results of the evaluation process were presented
to and considered by the board. There were no significant
actions arising from the evaluation process and it was agreed
that the current composition of the board and its committees
reflected a suitable mix of skills and experience. It concluded
that the board as a whole, the individual directors and its
committees were functioning effectively. As a result of
the board’s evaluation process the chairman confirms that
all directors continue to be effective and their election/
re-election isrecommended.
The board also regularly reviews the performance of the
manager. The management engagement committee meets
to review the continuing appointment of the manager
and reviews the terms of the investment management
agreement, to ensure that it remains competitive and in
the best interest of shareholders along with the continuing
appointment of other key service providers.
Company secretary
The board has direct access to company secretarial
advice and services of Juniper Partners which, through its
nominated representatives, is responsible for ensuring that
board and committee procedures are followed, and that
applicable regulations are complied with.
Conflicts of interest
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. The board
regularly monitors the interests of each director and a register
of directors’ interests, including potential conflicts of interest,
is maintained by the company. Directors who have potential
conflicts of interest will not take part in any discussions which
relate to that particular conflict. The board considers that
the framework has worked effectively throughout the year
underreview.
CORPORATE GOVERNANCE STATEMENT
Anti-bribery
The board has a zero tolerance policy towards bribery and
ensures that its service providers and associated persons
have adequate anti-bribery policies and procedures in place
which are high level, proportionate and risk based.
In relation to the corporate offence of failing to prevent tax
evasion, it is the company’s policy to conduct all business in
an honest and ethical manner. The company takes a zero-
tolerance approach to facilitation of tax evasion whether
under UK law or under the law of any foreign country and is
committed to acting professionally, fairly and with integrity in
all its business dealings and relationships.
Modern slavery statement
The Modern Slavery Act 2015 requires certain companies
to prepare a slavery and human trafficking statement. As
the company has no employees and does not supply goods
and services, it does not fall within the scope of the Modern
Slavery Act and therefore no slavery or human trafficking
statement is included in the annual report.
Relations with shareholders
The company places great importance on communication
with shareholders. It aims to provide shareholders with a full
understanding of the company’s activities and performance
and reports formally to shareholders twice a year by way of
the annual report and the half-yearly report. The net asset
value of the company’s shares is available daily through the
London Stock Exchange and the company’s monthly updates
are available on the website. In addition, the chairman meets
major shareholders annually or as necessary without the
manager present.
The board monitors the shareholder profile of the company
at every board meeting. All shareholders have the
opportunity, and, in normal circumstances, may attend the
company’s AGM at which the directors and representatives
of the manager are available to meet shareholders and
answer questions. The manager also presents a review of
the company’s performance and invites questions from
shareholders.
The manager’s business development team also maintains
regular contact with the company’s shareholders and reports
regularly to the board. Shareholders can also contact the
directors throughout the year, through the company secretary.
Board committees
Management engagement committee
The committee, chaired by John Evans and comprising of all
directors, met once during the year and its responsibilities
include:
• reviewing the continuing appointment of the manager;
• reviewing the performance of the manager in terms of
investment performance, marketing and administration
services provided;
• reviewing the terms of the investment management
agreement, to ensure that it remains competitive and in
the best interests of shareholders; and
• reviewing the performance of other service providers to
the company including the company secretary, depositary,
registrar and broker.
With effect from 1 April 2022 Angus Cockburn will chair this
committee.
Nomination and remuneration committee
The committee, chaired by Angus Gordon Lennox and
comprising of all directors, met once during the year and its
responsibilities include:
• assessing the skills, knowledge, experience and diversity
required on the board and the extent to which each are
represented;
• establishing processes for the review of the performance
of the board committees and the board as a whole;
• establishing processes for the identification of suitable
candidates for appointment to the board;
• overseeing succession planning for the board;
• reviewing the performance of each director during the
period in which they have been a member of the board
and considering the recommendation to shareholders to
approve their re-appointment; and
• to consider the directors’ remuneration policy and
approve any changes to directors’ remuneration arising
as a result of such policy.
It is proposed that Alexandra Innes will assume the role of
chair on Angus Gordon Lennox’s retirement.
Marketing and communications committee
The committee, chaired by Sarah Harvey and comprising
of all directors, met twice during the year and its
responsibilitiesinclude:
• considering the marketing strategy for the company and
associated Key Performance Indicators;
• reviewing the company’s communications with its
shareholders; and
• understanding the shareholder register and agreeing the
distribution strategy with the manager.
Audit committee
The committee, chaired by Mark Little, comprises all the
directors save for John Evans, the company’s chairman,
who in line with best practice does not formally sit on the
committee but attends each of the meetings. The committee
met three times during the year. Further information may be
found in the audit committee’s report on pages30 and 31.
Internal control
The AIC Code and the FCA's Disclosure Guidance and
Transparency Rules require directors, at least annually, to
review the effectiveness of the company’s system of internal
control and include a description of the main features
relating to the financial reporting process.
Investment management and all administrative services
are provided to the company by Troy and Juniper Partners,
respectively, the company’s system of internal control
mainly comprises monitoring the services provided by them,
including the operating controls established by them, to
ensure that they meet the company’s business objectives.
The company does not have an internal audit function of its
own, but relies on the risk and compliance department of
both firms. This arrangement is kept under review. Juniper
Partners also carries out a review of the custodial activities
carried out by J.P. Morgan ChaseBank N.A.
The board, either directly or through its committees, reviews
the effectiveness of the company’s system of internal control
by monitoring the operation of the key controls of main
service providers and:
• reviews an internal control report as provided to the
board annually by the manager. This report details
significant risks, regulatory issues, error management and
complaint handling;
• reviews the terms of the management agreement;
• reviews reports on the internal controls and the
operations of the manager and of the custodian; and
• reviews the risk profile of the company and considers
investment risk at every board meeting.
There is an ongoing process for identifying, evaluating
and managing the significant risks faced by the company
including the principal and emerging risks as outlined
on pages14 and 15. This process accords with the FRC’s
‘Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting’.
During the course of its review of internal controls, the
board has not identified or been advised of any failings or
weaknesses which it has determined to be significant, and is
satisfied with the arrangements.
Internal control and risk management systems in relation
to the financial reporting process
The directors are responsible for the company’s system of
internal control, designed to safeguard the company’s assets,
maintain proper accounting records and ensure that financial
information used within the business, or published, is reliable.
Juniper Partners, in its capacity as administrator, has in place
stringent controls that monitor the following activities within
the financial reporting process:
• investment and related cash transactions are completely
and accurately recorded and settled in a timely manner;
• corporate actions are identified and generated respectively,
and then processed and recorded accurately and in a timely
manner;
• investment income is accurately recorded in the proper
period;
• investments are valued using current prices obtained
from independent external pricing sources;
• cash and securities positions are completely and accurately
recorded and reconciled to third party data; and
• investment management fees are accurately calculated
and recorded.
The system of internal control can only be designed to
manage rather than eliminate the risk of failure to achieve
business objectives and therefore can provide only
reasonable, but not absolute, assurance against fraud,
material mis-statement or loss.
By the means of the procedures set out above, the board
confirms that it has reviewed the effectiveness of the company’s
systems of internal control for the year ended 31March 2022,
and to the date of approval of this annual report.
John Evans
Chairman
19 May 2022
AUDIT COMMITTEE REPORT
Audit committee report
I am pleased to present the committee’s report to
shareholders for the year ended 31 March 2022. This report
describes the range of work undertaken by the committee.
The audit committee is chaired by Mark Little and comprises
all of the directors with the exception of John Evans, chairman
of the company. The company chairman attended each of the
meetings by invitation from the committee. The board reviews
the relevant skills and experience of the audit committee as
part of the annual board review and believes that the members
of the committee have the appropriate skills and experience.
Biographies of the members of the committee are on pages17
and 18.
Role and responsibilities
The committee has continued to support the board in fulfilling
its oversight responsibilities, reviewing the financial reporting
process, the systems of internal control and management
of risk, the audit process and the company’s process for
monitoring compliance with laws and regulations.
The audit committee’s responsibilities include:
• monitoring and reviewing the integrity of financial
statements and ensuring in particular that, taken as a
whole, they are fair, balanced and understandable;
• review of the internal financial controls;
• making recommendations to the board in relation to the
appointment, evaluation and dismissal of the external
auditors, their remuneration, terms of their engagement
and reviewing their independence and objectivity,
effectiveness, and overall effectiveness of the audit
process;
• reviewing the external auditor’s audit plan and year end
report;
• developing and implementing policy on the engagement
of the external auditors to supply non-audit services;
• reporting to the board, identifying any matter in respect
of which it considers that action or improvement is
needed and making recommendations as to the steps to
be taken; and
• assessing the need for an internal audit function.
Activities during the year
The committee met three times during the year where it
reviewed the company’s risk register, internal controls and
risk and compliance reports from third party service providers
and considered the half yearly and annual financial reports
to shareholders. The audit committee also considered and
approved the external auditors’ plan and scope for the audit of
the financial statements for the year ended 31 March 2022.
The audit committee takes account of the most significant
issues and risks, both operational and financial, that are likely
to impact the company’s financial statements.
The following significant areas were considered by the audit committee in relation to the financial statements:
Matter Action
Accuracy of portfolio
valuation and
ownership of
investments
Controls are in place to ensure that valuations are appropriate and existence is verified through
custodian reconciliations.
All listed investments are valued at bid prices provided by third party service providers in
accordance with the price source agreement in place. The AIFM carries out testing of the prices and
reports regularly to the board.
The appointed custodian is responsible for the custody and controlling of all assets of the company
entrusted for safekeeping. The audit committee reviews a summary of the SOC 1 report from
JPMorgan Chase Bank N.A. on key controls over the assets of the company and any significant
issues are reported to the audit committee.
The AIFM regularly reconciles the portfolio holdings to confirmations from the company’s custodian.
The manager has procedures in place to ensure that investments can only be made to the extent that
the appropriate contractual and legal arrangements are in place to protect the company’sassets.
Strength of processes
and internal controls
at outsourced
providers
The committee together with the board have established clear lines of responsibility between the
manager, custodian, company secretary and receive appropriate reports from each of them regarding
the operation of their internal controls and reviews.
The directors, having carried out due diligence at the time of appointment and subsequently, are
satisfied with the third party service providers, their business resilience and continuity arrangements.
Matter Action
Mis-statement of
revenue returns
The board reviews income forecasts (including special dividends) and receives explanations from the
manager for any variations or significant movements from previous forecasts. The board, together
with the manager, has reviewed the impact that significant external events that could give rise to
market volatility, including COVID-19 and the Russian invasion of Ukraine, may have on the portfolio
and income forecasts.
The allocation of expenses is reviewed by the audit committee annually taking into account the
long-term split of returns from the portfolio, both historic and projected and the objectives of
thecompany.
The management fee is calculated in accordance with the contractual terms in the investment
management agreement and is reviewed in detail by the company secretary and is also subject to
analytical review by the board.
Auditors’ report
At the conclusion of the audit, Ernst & Young LLP (‘EY’) did not
highlight any issues to the audit committee which would cause
it to qualify its audit report, nor did it highlight any fundamental
internal control weaknesses. Their audit report is included on
pages 35 to 41.
Conclusions in respect of the annual report
The production and audit of the company’s annual report is a
comprehensive process which requires input from a number of
different contributors. One of the key governance requirements
of the company’s annual report is that it is fair, balanced and
understandable. The board requested that the audit committee
confirm whether it considered that the annual report, when
taken as a whole, fulfils this requirement.
As part of its review of the annual report, the committee
notedthat:
• comprehensive reviews had been undertaken at different
levels in the production process of the annual report
by the company secretary, manager, auditor and the
committee to ensure consistency and overall balance; and
• the controls that are in place at the company secretary
and other third-party service providers ensure the
completeness and accuracy of the company’s financial
records and the security of the company’s assets.
Effectiveness of the external audit process
The committee also evaluated the effectiveness of the external
audit process. This evaluation involved an assessment of the
effectiveness of the auditor’s performance against criteria
including qualification, expertise and resources, independence
and effectiveness of the audit process. Having reviewed the
performance of the external auditor as described above,
the committee is satisfied with the external audit process
undertaken by EY in relation to this annual report and its
financial statements.
Auditor’s independence
The company has in place a policy governing the provision of
non-audit services by the external auditor, so as to safeguard its
independence and objectivity. This is achieved by prohibiting
non-audit work where independence may be compromised or
conflicts arise. Any non-audit work requires specific approval of
the audit committee in each case. The audit fee was £40,000
plus VAT for the year ended 31 March 2022 (2021: £34,000 plus
VAT). There were no non audit fees for the year ended 31 March
2022 (2021: nil). Following its review, the committee is satisfied
that the company’s auditor, EY, remainsindependent.
Auditor rotation
A competitive tender for the audit of the company was held
in January 2018, following which EY was appointed as the
company’s auditor with effect from the conclusion of the
2018 AGM. In accordance with the FRC ethical standard, the
company’s audit engagement partner will rotate every five
years. Sue Dawe has been the audit engagement partner
since the appointment of EY and therefore her last year as
audit engagement partner will be the year ending 31 March
2023. There is currently no intention to put the audit out
to tender. A resolution to re-appoint EY as the company’s
auditor will be proposed at the AGM.
Having completed its review of the annual report and
financial statements, the committee recommended to the
board that the annual report and financial statements when
taken as a whole, are fair, balanced and understandable.
Mark Little
Chairman of the audit committee
19 May 2022
DIRECTORS’ REMUNERATION STATEMENT
Nomination and remuneration committee
The committee has responsibility for setting the
remuneration policy for all directors, taking into account
factors such as time commitment and responsibilities of
the role, with the objective to attract and retain directors
of the quality required to run the company successfully,
without paying more than is necessary. The committee
is also responsible for reviewing and setting directors’
remunerationlevels.
Remuneration statement
The board has prepared this report in accordance with the
requirements of the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations
2013. An ordinary resolution to approve this report will be
put to the members at the AGM.
Company law requires the company’s auditor to audit certain
disclosures provided in this report. Where disclosures have
been audited, they are indicated as such. The auditor’s
opinion is included in their report on pages35 to 41.
Directors’ remuneration policy
The board’s policy is that the remuneration of non-executive
directors should reflect the experience of the board as a
whole, be fair and comparable to that of other investment
trusts that are similar in size, have a similar capital structure
(ordinary shares and borrowings) and have similar investment
objectives (principally global growth and income). It is
intended that this policy will continue for the year ending
31March 2023 and subsequent periods. The fees for the non-
executive directors are determined within the limits set out
in the company’s articles of association.
Directors are entitled to be reimbursed for any reasonable
expenses properly incurred by them in connection with the
performance of their duties. The company pays any UK tax
and National Insurance due on the reimbursed expenses.
Directors are not eligible for bonuses, pension benefits,
share options, long-term incentive schemes or other benefits.
Directors do not have a service contract but are provided
with letters of appointment. All directors are appointed
for an initial term covering the period from the date of
appointment until the first AGM at which they are required
to stand for election in accordance with the company’s
articles of association. Thereaer the directors have chosen
to be re-elected annually. There is no notice period and
no provision for compensation upon early termination of
appointment. The directors’ remuneration policy will be put
to shareholders at least once every three years and was
last approved by shareholders at the AGM in 2020. It will
therefore be put again to shareholders at the AGM in 2023.
Annual report on remuneration
The nomination and remuneration committee considered
the directors’ fees in the context of the benchmark data
from its peer group. To reflect the increasing regulatory and
compliance requirements on the board, with effect from
1April 2022, it was agreed that directors’ fees would increase
to £26,500 per annum (2021/2022: £25,500), the chairman
of the audit committee’s fee would increase to £31,500 per
annum (2021/2022: £30,500) and the chairman’s fee would
increase to £40,500 (2021/2022: £39,000).
Directors’ shareholdings (audited)
The directors in office at 31 March 2022 and the number
of shares in the company over which they held an interest
(including those of connected persons) are listed below.
As at 31March 2022 2021
John Evans 50,000 50,000
Angus Cockburn 100,000 —
Angus Gordon Lennox 150,000 150,000
Sarah Harvey 503 503
Mark Little 16,213 16,213
As at 18 May 2022 there have been no changes to the above
table.
Approval
An ordinary resolution for the approval of the directors’
annual report on remuneration will be put to shareholders
at the upcoming AGM. At the previous AGM held on 2July
2021, the shareholders voted in favour of the directors’
remuneration report for the year ended 31March 2021.
Of the proxy votes received, 99.59% of votes were cast in
favour of the directors’ remuneration report (132,894 proxy
votes were cast against the report and 10,667 proxy votes
were withheld).
At the AGM on 24 September 2020, 99.27% of the proxy
votes were cast in favour if the directors’ remuneration policy
(212,764 proxy votes were cast against the policy and 7,018
proxy votes were withheld).
Total return (% change over 10 years)
0
100
150
20
0
50
250
300
Share price
NAV
Lipper*
2020 2021 20222012 2013 2014 2015 2016 2017 2018 2019
Source: Troy Asset Management Limited.
* The Lipper Global – Equity Global Income Index is used as a proxy for the market.
Directors’ emoluments for the year (audited)
2021/2022
£
2020/2021
£
John Evans (chairman of the board) 39,000 38,500
Mark Little (chairman of the audit committee) 30,500 30,000
Angus Cockburn (appointed on 1 May 2021) 23,458 —
Angus Gordon Lennox 25,500 25,000
Sarah Harvey 25,500 25,000
143,958 118,500
Annual percentage change in remuneration of directors
The table below is a new disclosure requirement under The Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019 and sets out the annual percentage change in each director’s remuneration received
in the financial year ended 31 March 2022 compared to the financial year ended 31 March 2021. The percentage change
reflects changes in role and less than full year appointment.
Director
2022
Total fees
% change
2021
Total fees
% change
John Evans
1
1.3% 21.1%
Mark Little 1.7% 1.7%
Angus Cockburn
2
n/a n/a
Angus Gordon Lennox 2.0% 2.0%
Sarah Harvey 2.0% 2.0%
1 John Evans assumed the role of chairman on 17 September 2019.
2 Angus Cockburn appointed on 1 May 2021.
Relative importance of spend on directors’ remuneration
To enable shareholders to assess the relative importance of spend on remuneration, the directors’ total remuneration has
been shown in a table below compared with the company’s dividend distributions.
2021/2022
£000’s
2020/2021
£000’s
Change
£000’s
Directors’ total remuneration 144 119 25
Dividends paid and payable 5,867 5,886 (19)
On behalf of the board
Angus Gordon Lennox
Chairman of the nomination and remuneration committee
19 May 2022
DIRECTORS’ REMUNERATION STATEMENT
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report to the members of
Securities Trust of Scotland plc
Opinion
We have audited the financial statements of Securities Trust
of Scotland plc for the year ended 31 March 2022 which
comprise the statement of comprehensive income, the
statement of financial position, the statement of changes
in equity, the statement of cash flow and the related notes
1 to 20, including a summary of significant accounting
policies. The financial reporting framework that has been
applied in their preparation is applicable law and United
Kingdom Accounting Standards including FRS 102 “The
Financial Reporting Standard applicable in the UK and
Republic of Ireland” (United Kingdom Generally Accepted
AccountingPractice).
In our opinion, the financial statements:
• give a true and fair view of the company’s affairs as at
31March 2022 and of its profit for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; 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 under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We are independent of the company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard as applied to public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the company and we remain
independent of company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the company’s
ability to continue to adopt the going concern basis of
accounting included:
• We confirmed our understanding of the company’s
going concern assessment process and discussed with
the directors and the company secretary those factors
they considered important in their assessment. We
considered whether the factors taken account of in the
directors’ assessment addressed those matters which we
considered important.
• We inspected the Directors’ assessment of going
concern, including the revenue forecast, for the period to
31 March 2024 which is at least twelve months from the
date the financial statements were authorised for issue.
In preparing the revenue forecast, the Company has
concluded that it is able to continue to meet its ongoing
costs as they fall due.
• We reviewed the factors and assumptions, including the
impact of the COVID-19 pandemic and other significant
events that could give rise to market volatility, as
applied to the revenue forecast. We also reviewed the
company’s assessment of the portfolio’s liquidity under
stressed market conditions and determined the impact
of sensitivities on net asset value from the reverse stress
testing performed. We considered the appropriateness
of the methods used to be able to make an assessment
for the company.
• In relation to the company’s borrowing arrangements,
we assessed the risk of breaching the debt covenants
as a result of a reduction in the value of the company’s
portfolio. We calculated the company’s compliance with
debt covenants and performed reverse stress testing in
order to identify what factors would lead to the company
breaching the financial covenants.
INDEPENDENT AUDITOR’S REPORT
• We considered the mitigating factors included in the
revenue forecasts and covenant calculations that are
within the control of the company. We reviewed the
company’s assessment of the liquidity of investments
held and evaluated the company’s ability to sell
those investments in order to cover working capital
requirements should revenue decline significantly.
• We reviewed the company’s going concern disclosures
included in the annual report in order to assess that the
disclosures were consistent with the financial statements
and our understanding of the Company and in conformity
with the reporting standards.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue as
a going concern for a period to 31 March 2024, which is at
least twelve months from when the financial statements are
authorised for issue.
In relation to the company’s reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report. However, because not all future
events or conditions can be predicted, this statement is
not a guarantee as to the company’s ability to continue as a
goingconcern.
Overview of our audit approach
Key audit matters • Risk of incomplete or inaccurate revenue recognition, including the
classification of special dividends as revenue or capital items in the statement
of comprehensive income
• Risk of incorrect valuation or ownership of the investment portfolio
Materiality
• Overall materiality of £2.30m which represents 1% of shareholders’ funds
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for the company. This enables us to form an opinion on the financial statements. We take into account size, risk profile,
the organisation of the company and effectiveness of controls, including controls and changes in the business environment
when assessing the level of work to be performed.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The company has
determined that the impact of climate change could affect the company’s investments and the overall investment process. This
is explained on page 15 in the principal and emerging risks section, which form part of the “Other information,” rather than the
audited financial statements. Our procedures on these disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear
to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the company’s disclosures in the financial
statements as set out in note 1a and conclusion that there was no further impact of climate change to be taken into account as
the investments are valued based on market pricing as required by FRS 102. We also challenged the directors’ considerations
of climate change in their assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Incomplete or inaccurate revenue
recognition, including the
classification of special dividends
as revenue or capital items in the
statement of comprehensive income
(as described on page 31 in the Audit
Committee’s Report and as per the
accounting policy set out on page 46).
The total revenue for the year
to 31 March 2022 was £7.38m
(2021: £9.11m), consisting primarily
of dividend income from listed
equityinvestments.
The investment income receivable by
the company during the year directly
affects the company’s revenue return.
There is a risk of incomplete or
inaccurate recognition of revenue
through the failure to recognise
proper income entitlements
or to apply an appropriate
accountingtreatment.
In addition to the above, the
directors may be required to exercise
judgment in determining whether
income receivable in the form of
special dividends should be classified
as ‘revenue’ or ‘capital’ in the
statement of comprehensive income.
The income received during the
year consisted primarily of dividend
income from listed investments.
We have performed the following procedures:
We obtained an understanding of the processes
and controls surrounding revenue recognition by
performing walkthrough procedures.
For all dividends received and accrued, we
recalculated the dividend income by multiplying
the investment holdings at the ex-dividend date,
traced from the accounting records, by the dividend
per share, which was agreed to an independent
data vendor. Where applicable, we translated any
dividends received in a foreign currency into the
reporting currency of the company using exchange
rates sourced from an independent data vendor. For
a sample of dividends received and accrued we also
agreed amounts to bank statements.
For all dividends accrued, we also reviewed the
investee company announcements to assess whether
the dividend obligations arose prior to 31 March 2022.
To test completeness of recorded income, we verified
that expected dividends for each investee company
held during the year had been recorded as income
with reference to investee company announcements
obtained from an independent data vendor.
For all investments held during the year, we reviewed
the type of dividends paid with reference to an
external data vendor to identify those which were
special. We confirmed two special dividends were
received; one of which was above our testing
threshold. We assessed the appropriateness of
management’s classification as revenue for the special
dividend above our testing threshold by reviewing the
underlying rationale of the distribution.
The results of our
procedures identified no
material misstatement
in relation to incomplete
or inaccurate revenue
recognition, including
incorrect classification
of special dividends as
revenue or capital items
in the statement of
comprehensive income.
INDEPENDENT AUDITOR’S REPORT
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Incorrect valuation or ownership
of the investment portfolio (as
described on page 30 in the audit
committee’s report and as per the
accounting policy set out on page46).
The valuation of the investment
portfolio at 31 March 2022 was
£244.56m (2021: £221.77m).
The company’s investment portfolio
consists of listed equity investments
which are held at fair value in line with
the company’s accounting policy.
The incorrect valuation of the
investment portfolio, including
incorrect application of exchange
rates, could have a significant
impact on the financial statements.
In addition, there is a risk of
misappropriation of assets and
unsecured ownership of the
investment portfolio.
We performed the following procedures:
We obtained an understanding of the processes
and controls surrounding investment title and
pricing of listed investments by performing
walkthroughprocedures.
For all investments in the portfolio, we compared
the market prices and exchange rates applied to an
independent pricing vendor and recalculated the
investment valuations as at the year-end.
We confirmed with the Administrator that there were
no investments with stale prices as at the year-end
and therefore no stale pricing report produced.
We compared the company’s investment holdings at
31 March 2022 to independent confirmations received
directly from the company’s custodian anddepositary.
The results of our
procedures identified no
material misstatement
in relation to the risk
of incorrect valuation
or ownership of the
investment portfolio.
There have been no changes to the areas of audit focus
raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users
of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the company to be £2.30m
million (2021: £2.08m million), which is 1% (2021: 1%) of
shareholders’ funds. We believe that shareholders’ funds
provides us with a materiality aligned to the key measure of
the company’s performance
Performance materiality
The application of materiality at the individual account
or balance level. It is set at an amount to reduce to
an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements
exceedsmateriality.
On the basis of our risk assessments, together with our
assessment of the company’s overall control environment,
our judgement was that performance materiality was 75%
(2021: 75%) of our planning materiality, namely £1.72m
(2021:£1.56m).
Given the importance of the distinction between revenue
and capital for investment trusts, we have also applied
a separate testing threshold for the revenue column of
the statement of comprehensive income of £0.32m (2021:
£0.38m), being 5% of the net revenue return on ordinary
activities before taxation.
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the audit committee that we would report
to them all uncorrected audit differences in excess of £0.11m
(2021: £0.10m), which is set at 5% of planning materiality, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming
our opinion.
Other information
The other information comprises the information included
in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that
there is a material misstatement of the other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the directors’ remuneration report
to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the strategic report and directors’ reports have
been prepared in accordance with applicable legal
requirements;
Matters on which we are required to report
byexception
In the light of the knowledge and understanding of the
company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
• the financial statements and the part of the directors’
remuneration report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation
to going concern, longer-term viability and that part
of the corporate governance statement relating to the
company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review by the
ListingRules.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the financial statements or our knowledge obtained during
the audit:
• directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 21;
• directors’ explanation as to its assessment of the
company’s prospects, the period this assessment covers
and why the period is appropriate set out on page 21;
• director’s statement on whether it has a reasonable
expectation that the group will be able to continue in
operation and meets its liabilities set out on page 21;
• directors’ statement on fair, balanced and understandable
set out on page 24;
• board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
pages 14 and 15;
INDEPENDENT AUDITOR’S REPORT
• The section of the annual report that describes the
review of effectiveness of risk management and internal
control systems set out on page 29; and
• The section describing the work of the audit committee
set out on page 30.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 24, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate
the company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financialstatements.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect
irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The
extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged with
governance of the company and management.
• We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
company and determined that the most significant are
FRS 102, the Companies Act 2006, the Listing Rules,
UK Corporate Governance Code, the Association
of Investment Companies’ Code and Statement of
Recommended Practice, Section 1158 of the Corporation
Tax Act 2010 and The Companies (Miscellaneous
Reporting) Regulations 2018.
• We understood how the company is complying with those
frameworks through discussions with the audit committee
and company secretary and review of Board minutes and
the company’s documented policies andprocedures.
• We assessed the susceptibility of the company’s financial
statements to material misstatement, including how
fraud might occur by considering the key risks impacting
the financial statements. We identified a fraud risk
with respect to the incomplete or inaccurate revenue
recognition through incorrect the classification of special
dividends as revenue or capital items. Further discussion
of our approach is set out in the section on key audit
matters above.
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws
and regulations. Our procedures involved review of the
company secretary’s reporting to the directors with
respect to the application of the documented policies
and procedures and review of the financial statements
to ensure compliance with the reporting requirements of
the company.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit committee,
we were appointed by the company at the annual general
meeting on 19 September 2018 to audit the financial
statements of the company for the year ending 31 March
2019 and subsequent financial periods.
• The period of total uninterrupted engagements
includingprevious renewals and reappointments is
4years, covering the years ending 31 March 2019 to
31March 2022.
• The audit opinion is consistent with the additional report
to the audit committee.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
Susan J Dawe
(Senior statutory auditor)
for and on behalf of Ernst & Young LLP
Statutory Auditor
Edinburgh
19 May 2022
Year to 31March 2022 Year to 31March 2021
Note
Revenue
£000
Capital
£000
Tot a l
£000
Revenue
£000
Capital
£000
Tot a l
£000
Net gains on investments 8 — 29,232 29,232 — 40,826 40,826
Net currency (losses)/gains 3 (445) (442) (12) 1,031 1,019
Income 2 7,378 — 7,378 9,109 — 9,109
Investment management fee (222) (413) (635) (285) (529) (814)
Other expenses 3 (516) — (516) (995) — (995)
Net return before finance costs and
taxation 6,643 28,374 35,017 7,817 41,328 49,145
Finance costs 4 (157) (291) (448) (161) (299) (460)
Net return on ordinary activities before
taxation 6,486 28,083 34,569 7,656 41,029 48,685
Taxation on ordinary activities 6 (632) — (632) (611) — (611)
Net return attributable to ordinary
redeemable shareholders 5,854 28,083 33,937 7,045 41,029 48,074
Net return per ordinary redeemable
share 7 5.82p 27.92p 33.74p 6.76p 39.39p 46.15p
The total columns of this statement are the profit and loss accounts of the company.
The revenue and capital items are presented in accordance with the Association of Investment Companies (AIC) Statement of Recommended
Practice (SORP 2021).
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 pages46 to 57 form part of these financial statements.
STATEMENT OF COMPREHENSIVE INCOME
As at 31March 2022 As at 31March 2021
Note £000 £000 £000 £000
Fixed assets
Investments held at fair value through profit or loss 8 244,561 221,771
Current assets
Trade and other receivables 9 1,089 1,206
Cash and cash equivalents 865 825
1,954 2,031
Current liabilities
Trade payables – amounts falling due within one year 10 (489) (129)
Dividend payable 5 (1,368) (1,410)
Total current liabilities (1,857) (1,539)
Net current assets 97 492
Total assets less current liabilities 244,658 222,263
Trade payables – amounts falling due aer more than
one year 11 (15,001) (14,585)
Total net assets 229,657 207,678
Capital and reserves
Called up share capital 12 1,223 1,223
Capital redemption reserve 78 78
Share premium account 30,762 30,725
Special distributable reserve* 71,925 78,194
Capital reserve* 12 122,611 94,528
Revenue reserve* 3,058 2,930
Total shareholders’ funds 229,657 207,678
Net asset value per ordinary share 13 230.75p 202.68p
*These reserves are distributable.
The company is registered in Scotland no.SC283272.
The notes on pages46 to 57 form part of these financial statements.
The financial statements were approved by the board and signed on its behalf by
John Evans
Chairman
19 May 2022
STATEMENT OF FINANCIAL POSITION
For the year ended
31March 2022 Note
Called up
share
capital
£000
Capital
redemption
reserve
£000
Share
premium
account
£000
Special
distributable
reserve*
£000
Capital
reserve*
£000
Revenue
reserve*
£000
Tot a l
£000
As at 1 April 2021 1,223 78 30,725 78,194 94,528 2,930 207,678
Net return
attributable to
shareholders** 7 — — — — 28,083 5,854 33,937
Shares issued
from treasury 12 — — 37 162 — — 199
Shares bought back
into treasury 12 — — — (6,431) — — (6,431)
Dividends paid 5 — — — — — (5,726) (5,726)
As at 31March 2022 1,223 78 30,762 71,925 122,611 3,058 229,657
For the year ended
31March 2021 Note
Called up
share
capital
£000
Capital
redemption
reserve
£000
Share
premium
account
£000
Special
distributable
reserve*
£000
Capital
reserve*
£000
Revenue
reserve*
£000
Tot a l
£000
As at 1 April 2020 1,223 78 30,401 82,943 53,499 2,321 170,465
Net return
attributable to
shareholders** 7 — — — — 41,029 7,045 48,074
Shares issued
from treasury 12 — — 324 943 — — 1,267
Shares bought back
into treasury 12 — — — (5,692) — — (5,692)
Dividends paid 5 — — — — — (6,436) (6,436)
As at 31March 2021 1,223 78 30,725 78,194 94,528 2,930 207,678
* These reserves are distributable.
** The company does not have any other income or expenses that are not included in the ‘Net return attributable to ordinary redeemable
shareholders’ as disclosed in the Statement of Comprehensive Income on page42, and therefore this is also the ‘Total comprehensive income’ for
theyear.
The notes on pages46 to 57 form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
Note
Year ended 31March 2022 Year ended 31March 2021
£000 £000 £000 £000
Cash flows from operating activities
Net return on ordinary activities before taxation 34,569 48,685
Adjustments for:
Gains on investments 8 (29,232) (40,826)
Finance costs 4 448 460
Exchange movement on bank borrowings 14 416 (1,180)
Purchases of investments* 8 (17,528) (248,428)
Sales of investments* 8 23,970 257,152
Dividend income 2 (7,378) (8,288)
Other income 2 — (3)
Premium income – written options 2 — (818)
Dividend income received 7,252 7,959
Other income received — 3
Premium income received – written options — 818
Decrease in receivables 17 2,608
Increase/(decrease) in payables 358 (302)
Overseas withholding tax deducted (406) (853)
(22,083) (31,698)
Net cash flows from operating activities 12,486 16,987
Cash flows from financing activities
Repurchase of ordinary share capital (6,431) (5,692)
Issue of ordinary share capital 199 1,433
Equity dividends paid from revenue (5,768) (6,544)
Repayment of the Sterling loan facility — (10,000)
Interest paid on borrowings (446) (460)
Net cash flows from financing activities (12,446) (21,263)
Net increase/(decrease) in cash and cash equivalents 40 (4,276)
Cash and cash equivalents at the start of the year 825 5,101
Cash and cash equivalents at the end of the year 865 825
*Receipts from the sale of, and payments to acquire, investment securities have been classified as components of cash flows from operating activities
because they form part of the fund’s dealing operations.
The notes on pages46 to 57 form part of these financial statements.
STATEMENT OF CASH FLOW
NOTES TO THE FINANCIAL STATEMENTS
Note 1: Accounting policies
(a) Securities Trust of Scotland plc (“the company”) is a public
company limited by shares, is incorporated and domiciled in
Scotland, and carries on business as an investment trust.
The accounts are prepared in accordance with the
Companies Act 2006, United Kingdom Generally
Accepted Accounting Practice (Accounting Standards
“UK GAAP”) including Financial Reporting Standard
(FRS) 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland” and the Statement
of Recommended Practice “Financial Statements of
Investment Trust Companies and Venture Capital Trusts”
(the “SORP”) issued by the Association of Investment
Companies in April 2021. 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. In preparing these financial statements the
directors have considered the impact of climate change
on the value of the listed investments that the company
holds. As the portfolio consists of listed equities, which
are valued using quoted bid prices for investments in an
active market, then fair value reflects market participants
view of climate change risk.
The company’s assets consist of a diverse portfolio of
listed equity shares which, in most circumstances, are
realisable within a very short timescale. The directors
have reviewed revenue forecasts and they believe
that the company has adequate financial resources to
continue its operational existence for the foreseeable
future, and for the period to 31 March 2024, which is at
least 12 months from the date the financial statements are
authorised for issue.
The principal accounting policies are set out below.
These policies have been applied consistently throughout
the current and prior year.
Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that are believed
to be reasonable under the circumstances. There are no
critical accounting estimates or judgements.
Functional currency – the company is required to
determine a functional currency, being the currency
in which the company predominately operates. The
board has determined that sterling is the company’s
functional currency, which is also the currency in which
these financial statements are prepared. This is also the
currency in which all expenses and dividends are paid in.
(b) Income from equity investments is recognised on the
date on which the investments are quoted ex-dividend,
or where no ex-dividend date is quoted, when the
company’s right to receive payment is established. UK
dividends received are accounted for at the amount
receivable and are not grossed up for any tax credit.
Anyspecial dividends are looked at individually to
ascertain the reason behind the payment. This will
determine whether they are treated as revenue or
capital. Other income includes any taxes deducted at
source. Gains and losses arising from the translation
of income denominated in foreign currencies are
recognised in the revenue reserve. Scrip dividends are
treated as unfranked investment income; any excess in
value of shares received over the amount of the cash
dividend is recognised in capital reserve.
(c) Interest receivable and payable and management
expenses are accounted for on an accruals basis.
(d) The management fee and finance costs are allocated 65%
to capital and 35% to revenue in accordance with the
board’s expected long-term split of returns in the form of
capital gains and income, respectively. All other expenses
are wholly allocated to revenue.
(e) Gains and losses on the realisation of investments
and changes in the fair value of investments which are
readily convertible to cash, without accepting adverse
terms, together with exchange adjustments to overseas
currencies are taken to capital reserve.
(f) Acquisitions in foreign currencies are recorded in the
functional currency of the company at the prevailing
exchange rate on the date of the transaction and
retranslated at the rates of exchange ruling on the date
of the statement of financial position. Investments are
recognised initially as at the trade date of a transaction.
Subsequent to this, the disposal of an investment is
accounted for the trade date of a transaction.
(g) Revenue received and interest paid in foreign
currencies are translated at the rates of exchange on
the transaction date. Any exchange differences between
the recognition and settlement both for revenue
transactions are recognised as revenue in the statement
of comprehensive income.
(h) The company’s investments are classified as ‘financial
assets at fair value through profit or loss’ and are valued
at fair value. For listed investments this is deemed to be
bid market prices. Gains and losses arising from changes
in fair value are included in the capital return for the year.
(i) All other financial assets and liabilities are recognised in
the financial statements at amortised cost.
(j) The cost of share buybacks include the amount of
consideration paid, including directly attributable costs
and are deducted from the special distributable reserve
until the shares are cancelled. Proceeds received from
the reissue of shares held in treasury are treated in
accordance with Section 731 of the Companies Act 2006.
Proceeds equivalent to the original cost, calculated by
applying a weighted average price, are credited to the
Special Distributable Reserve to replenish the profits
available for distribution; proceeds in excess of the
original cost are credited to the Share Premium account.
(k) Nature of distributable reserve accounts
Capital reserve
Gains and losses on realisations of fixed asset
investments, and transactions costs, together with
appropriate exchange differences, are dealt with in this
reserve.
Increases and decreases in the valuation of fixed asset
investments (which are non-distributable) are also
dealt with in this reserve along with payment of capital
dividend. Also taken to this reserve are 65% of the
management fees as detailed in note (d).
Revenue reserve
Net revenue profits and losses of the company are
recorded within this reserve, together with the dividend
payment made by the company. The remaining 35% of
the management fees are taken to this reserve.
Special distributable reserve
Records transactions of which are capital in nature –
shares bought back into treasury and the related stamp
duty incurred. Also taken to this reserve are proceeds
received, based on weighted average purchase price, on
shares issued from treasury.
(l) Dividends payable – under FRS 102 dividends should not
be accrued in the financial statements unless they have
been approved by shareholders before the statement of
financial position date. Dividends to equity shareholders
are recognised in the statement of changes in equity
when the shareholder’s right to receive the payment is
established. In the case of the fourth interim dividend this
would be the ex-dividend date of 26 May 2022.
(m) During the year ending 31 March 2017 the company
commenced the writing of options, continuing through
to the year ending 31 March 2021 until the appointment
of Troy on 12 November 2020. These derivatives were
held at fair value based on the bid/offer prices of the
options written to which the company is exposed. The
value of the option was subsequently marked-to-market
to reflect the fair value of the option based on traded
prices. The primary purpose behind the writing of options
was to receive the premium. Any premium received was
amortised to revenue over the period to expiry. When
an option was closed out or exercised, the gain or loss
is accounted for as a capital gain or loss. There were no
options held at 31 March 2022 or 31 March 2021.
Note 2: Revenue
Year to 31March 2022
£000
Year to 31March 2021
£000
From listed investments
UK – equities 2,889 1,711
Overseas – equities 4,489 6,577
7,378 8,288
Other revenue
Premium – written options — 818
Other Income — 3
7,378 9,109
During the year ended 31March 2022, the company received no special dividends treated as capital (2021: £nil).
NOTES TO THE FINANCIAL STATEMENTS
Note 3: Other expenses
Year to 31March 2022
£000
Year to 31March 2021
£000
Bank charges and custody fees 10 21
Depositary fees 30 41
Directors’ fees 144 119
Employers’ national insurance contributions 10 12
Legal fees 13 15
Printing and postage 39 33
Registrar’s fees 53 61
Secretarial fee 15 93
Irrecoverable VAT 24 (10)
Expenses in relation to change of manager
(including professional advisers) — 446
Other 130 123
Tot a l 468 954
Auditors’ remuneration*:
– audit services 48 41
516 995
* The audit fees are payable to Ernst & Young LLP. There were no non-audit services for the year ended 31March 2022 (2021: nil).
Note 4: Finance costs Year to 31March 2022 Year to 31March 2021
Revenue
£000
Capital
£000
Tot a l
£000
Revenue
£000
Capital
£000
Tot a l
£000
Interest on bank loans and overdras 157 291 448 161 299 460
Note 5: Dividends
Year to 31March 2022
£000
Year to 31March 2021
£000
Year ended 31March 2020 – fourth interim dividend of 2.06p — 2,158
Year ended 31March 2021 – first interim dividend of 1.375p — 1,430
Year ended 31March 2021 – second interim dividend of 1.375p — 1,438
Year ended 31March 2021 – third interim dividend of 1.375p — 1,410
Year ended 31March 2021 – fourth interim dividend of 1.575p 1,608 —
Year ended 31March 2022 – first interim dividend of 1.375p 1,376 —
Year ended 31March 2022 – second interim dividend of 1.375p 1, 374 —
Year ended 31March 2022 – third interim dividend of 1.375p 1,368 —
5,726 6,436
Set out below are the total dividends in respect of the period, which forms the basis on which the requirements of sections
1158-1159 of the Corporation Tax Act 2010 are considered.
Year to 31March 2022
£000
Year to 31March 2021
£000
First interim dividend of 1.375p for the year ended 31March 2022 (2021: 1.375p) 1,376 1,430
Second interim dividend of 1.375p for the year ended 31March 2022 (2021: 1.375p) 1,374 1,438
Third interim dividend of 1.375p for the year ended 31March 2022 (2021: 1.375p) 1,368 1,410
Proposed fourth interim dividend of 1.75p for the year ended 31March 2022
(2021: 1.575p) 1,750 1,608
5,868 5,886
The revenue reserves as at 31March 2022 are £3,058,000, of this £1,750,000 will be used to fund the fourth interim dividend.
The amount reflected above for the cost of the proposed fourth interim dividend for 2022 is based on 100,005,075 ordinary
shares, being the number of ordinary shares in issue excluding those held in treasury at the date of this report. The articles of
association of the company permit dividends to be paid out of capital.
Note 6: Taxation on ordinary activities
Year to 31March 2022
£000
Year to 31March 2021
£000
Irrecoverable overseas withholding tax 632 611
The corporation tax rate was 19.00% (2021: 19.00%). The tax charge for the year differs from the charge resulting from applying
the standard rate of corporation tax in the UK for an investment trust company. The differences are explained below:
Year to 31March 2022
£000
Year to 31March 2021
£000
Net return before taxation 34,569 48,685
Corporation tax at rate of 19% (2021: 19%) 6,568 9,250
Effects of:
Gains on investments (not taxable) (5,554) (7,757)
Non taxable dividend income (1,347) (1,575)
Irrecoverable overseas withholding tax 632 611
Currency losses/(gains) (not taxable) 84 (194)
Increase in excess management and loan expenses 249 276
Total tax charge 632 611
As at 31March 2022, the company had unutilised management expenses of £19,579,000 (2021: £18,268,000) carried forward.
Due to the company’s status as an investment trust and the intention to continue to meet the conditions required to obtain
approval in the foreseeable future, the company has not provided deferred tax on capital gains and losses arising on the
revaluation or disposal of investments.
Note 7: Return per share
Year to 31 March
2022
Year to 31 March
2021
Revenue return (£000) 5,854 7,045
Capital return (£000) 28,083 41,029
Total (£000) 33,937 48,074
Weighted average number of ordinary shares in issue 100,591,911 104,176,945
Revenue return per ordinary redeemable share 5.82p 6.76p
Capital return per ordinary redeemable share 27.92p 39.39p
Total return per ordinary redeemable share 33.74p 46.15p
NOTES TO THE FINANCIAL STATEMENTS
Note 8: Investments at fair value through profit or loss
As at 31March 2022
£000
As at 31March 2021
£000
Opening book cost 215,911 182,216
Opening investment holding gains 5,860 7,453
Opening market value 221,771 189,669
Acquisitions at cost 17,528 248,428
Disposals proceeds received (23,970) (257,152)
Gains on investments 29,232 40,826
Market value of investments held 244,561 221,771
Closing book cost 209,480 215,911
Closing investment holding gains 35,081 5,860
Closing market value 244,561 221,771
The company received £23,970,000 (2021: £257,152,000) from investments sold in the year. The average book cost of these
investments when they were purchased was £23,959,000 (2021: £214,733,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the fair value of investments.
The transaction costs in acquiring investments during the year were £47,000 (2021: £434,000). For disposals, transaction costs
were £9,000 (2021: £164,000).
Note 9: Trade and other receivables
As at 31March 2022
£000
As at 31March 2021
£000
Dividends receivable 854 728
Tax recoverable 207 433
Prepayments and other debtors 28 45
1,089 1,206
None of the company’s trade receivables are past due or impaired.
Note 10: Trade payables – amounts falling due
within one year
As at 31March 2022
£000
As at 31March 2021
£000
Interest accrued 15 13
Other trade payables 474 116
489 129
Note 11: Trade payables – amounts falling due
aer more than one year
As at 31March 2022
£000
As at 31March 2021
£000
Bank term loans 15,001 14,585
On 12 October 2021, the company renewed the multi-currency revolving credit facility with The Royal Bank of Scotland
International Limited (the ‘lender’). The facilities comprise £1,500,000 (Facility A), €4,500,000 (Facility B), and $12,750,000
(Facility C) term loans and £10,000,000 (Facility D) multi-currency revolving credit facility. A £15,000 arrangement fee was paid
on entering into the agreement.
The term loans carry an annual fixed rate interest of 2.1408%, 1.4175% and 3.1925% for Facility A, Facility B and Facility C
respectively. The termination date of the term loans is 25 September 2023.
Facility D was not drawn down at 31 March 2022 or 31 March 2021. The rate of interest for Facility D is set at each roll-over
date and is made up of a fixed margin of 1.0% plus SONIA rate. In addition, a commitment fee of 0.45% per annum is payable
in respect of Facility D. The repayment date of Facility D is the last day of its interest period and the termination date is the
30September 2023.
The main covenant under the agreement requires the company to ensure that, at the end of each month, the aggregate of the
loans outstanding does not exceed an amount equal to 25% of its net tangible assets and, unless otherwise agreed with the
lender, net tangible assets are not less than £100,000,000.
As at 31 March 2022 the company had drawn down the full amount of the loan facilities A to C and the balances as at that date
were for Facility A £1,500,000, Facility B £3,792,000 (€4,500,000) and Facility C £9,709,000 (US$12,750,000) (31 March 2021:
Facility A £1,500,000, Facility B £3,832,000 (€4,500,000), Facility C £9,253,000 (US$12,750,000).
Note 12: Called up share capital
Number
of shares
As at
31March 2022
£000
Number
of shares
As at
31March 2021
£000
Ordinary shares of 1p
Ordinary shares in issue at the beginning of the year 102,468,075 1,025 104,760,635 1,048
Ordinary shares issued from treasury during the year 100,000 1 625,000 6
Ordinary shares bought back to treasury during
the year (3,043,000) (31) (2,917,560) (29)
Ordinary shares in issue at the end of theyear 99,525,075 995 102,468,075 1,025
Treasury shares (ordinary shares 1p)
Treasury shares in issue at the beginning of the year 19,831,073 198 17,538,513 175
Ordinary shares issued from treasury during the year (100,000) (1) (625,000) (6)
Ordinary shares bought back to treasury during
the year 3,043,000 31 2,917,560 29
Treasury shares in issue at the end of theyear 22,774,073 228 19,831,073 198
Total ordinary shares in issue and in treasury at the
end of the year 122,299,148 1,223 122,299,148 1,223
There were 3,043,000 shares bought back during the year to 31March 2022 at a cost of £6,431,000 (2021: 2,917,560 at a cost of
£5,692,000). During the year, the company issued 100,000 shares for net proceeds of £199,000 (2020: 625,000 shares for net
proceeds of £1,267,000). The share premium represents the surplus amount over the nominal value of the issued share capital
excluding costs, with any related issuance cost allocated to the special distributable capitalreserve.
NOTES TO THE FINANCIAL STATEMENTS
The analysis of the capital reserve is as follows:
Realised
capital reserve
£000
Investment
holding gains
£000
Total
capital reserve
£000
As at 31March 2021 88,668 5,860 94,528
Gains on realisation of investments at fair value 11 — 11
Realised currency losses during the year (445) — (445)
Movement in unrealised gains — 29,221 29,221
Capital expenses (704) — (704)
As at 31March 2022 87,530 35,081 122,611
The above split in capital reserve is shown in accordance with provisions of the Statement of Recommended Practice
‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’, 2021. Only the realised capital reserve is
regarded as being available for distribution.
Note 13: Net asset value per share
As at 31 March
2022
As at 31 March
2021
Net assets attributable to Shareholders (£’000) 229,657 207,678
Shares in issue at the year end 99,525,075 102,468,075
Net asset value per share 230.75p 202.68p
Note 14: Analysis of debt
As at 31March 2021
£000
Cash flows
£000
Exchange movements
£000
As at 31March 2022
£000
Cash at bank 825 40 — 865
Bank borrowings (14,585) — (416) (15,001)
Net debt (13,760) 40 (416) (14,136)
Note 15: Related party transactions
With the exception of the management and secretarial fees, directors’ fees and directors’ shareholdings (disclosed on
page32), there have been no related party transactions during the year, or in the prioryear.
The management fee payable in respect of the year ended 31 March 2022 was £635,000 (2021: £814,000), of which £373,000
(2021: £nil) was outstanding at the year-end. The secretarial and directors’ fees payable in respect of the year ended 31 March
2022 are detailed in note 3. The amount outstanding at the year end for secretarial fees and directors’ fees was £3,000 (2021:
£nil) and £nil (2021: £nil) respectively.
Note 16: Derivatives and other financial
instruments
The company’s financial instruments comprise securities and
other investments, cash balances, loans and debtors and
creditors that arise directly from its operations; for example,
in respect of sales and purchases awaiting settlement, and
debtors for accrued income. The company also has the ability
to enter into derivative transactions in the form of forward
foreign currency contracts, futures and options, for the
purpose of managing currency and market risks arising from
the company’s activities.
The main risks the company faces from its financial
instruments are (a) market price risk (comprising of (i)
interest rate risk, (ii) currency risk and (iii) other price risk),
(b) liquidity risk and (c) credit risk.
The board regularly reviews and agrees policies for
managing each of these risks. The manager’s policies for
managing these risks are summarised below and have been
applied throughout the year. The numerical disclosures
exclude short-term receivables and creditors, other than for
currency disclosures.
(a) Market price risk
The fair value or future cash flows of a financial instrument
held by the company may fluctuate because of changes in
market prices. This market risk comprises three elements –
interest rate risk, foreign currency risk and other price risk.
(i) Market risk arising from interest rate risk
Interest rate movements may affect:
• the fair value of the investments in fixed interest rate
securities;
• the level of income receivable on cash deposits; and
• the level of interest payable on borrowings.
The possible effects on fair value and cash flows that could
arise as a result of changes in interest rates are taken into
account when making investment and borrowing decisions.
The board imposes borrowing limits to ensure gearing levels
are appropriate to market conditions and reviews these on
a regular basis. The company has a revolving multi-currency
loan facility with The Royal Bank of Scotland International
Limited which provides flexibility to finance opportunities
in the short term. Current guidelines state that the total
borrowings will not exceed 20per cent of the net tangible
assets of the company. Details of borrowings at 31March
2022 are shown in note 11 on page51.
Interest risk profile
The interest rate risk profile of the portfolio of financial assets and liabilities at the date of the statement of financial position
was as follows:
As at 31March 2022
Interest rate
%
Local currency
000
Foreign
exchange rate
GBP sterling
equivalent
£000
Assets:
Pound Sterling 0.00 865 n /a 865
Tot a l 865
Liabilities:
Bank loan – Pound Sterling 2.14 1,500 n/a 1,500
Bank loan – Euro 1.42 4,500 1.187 3,792
Bank loan – US dollar 3.19 12,750 1.313 9,709
Tot a l 15,001
NOTES TO THE FINANCIAL STATEMENTS
As at 31March 2021
Interest rate
%
Local currency
000
Foreign
exchange rate
GBP sterling
equivalent
£000
Assets:
Pound Sterling 0.00 825 n/a 825
Tot a l 825
Liabilities:
Bank loan – Pound Sterling 2.14 1,500 n/a 1,500
Bank loan – Euro 1.42 4,500 1.175 3,832
Bank loan – US dollar 3.19 12,750 1.378 9,253
Tot a l 14,585
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates at the statement of financial
position date and the stipulated change taking place at the beginning of the financial year and held constant throughout the
reporting period in the case of instruments that have floating rates.
The following table illustrates the sensitivity of the return aer taxation to an increase or decrease of 0.75% (2021: 0.75%) in
interest rates.
Year to 31March 2022 Year to 31March 2021
0.75% Increase
in rate
£000
0.75% Decrease
in rate
£000
0.75% Increase
in rate
£000
0.75% Decrease
in rate
£000
Effect on revenue return (2) 2 (2) 2
Effect on capital return (4) 4 (4) 4
Effect on total return and on net assets (6) 6 (6) 6
In the opinion of the directors, the above sensitivity analysis may not be representative of the year as a whole, since exposure
may change as investments are made, borrowings are drawn down and may be repaid throughout the year.
(ii) Market risk arising from foreign currency risk
A significant proportion of the company’s investment portfolio is invested in overseas securities and the statement of financial
position can be significantly affected by movements in foreign exchange rates. It is not the company’s policy to hedge
this risk on a continuing basis but the company may, from time to time, match specific overseas investment with foreign
currencyborrowings.
Foreign currency risk profile
Foreign currency risk exposure by currency of denomination:
As at 31March 2022 As at 31March 2021
Investment
exposure
£000
Net monetary
exposure
£000
Total currency
exposure
£000
Investment
exposure
£000
Net monetary
exposure
£000
Total currency
exposure
£000
US dollar 132,588 (9,363) 123,225 117,393 (9,055) 108,338
Euro 5,713 (3,794) 1,919 6,203 (3,832) 2,371
Swiss franc 22,884 — 22,884 20,863 — 20,863
Hong Kong dollar 4,158 — 4,158 4,660 — 4,660
Japanese yen 4,784 75 4,859 2,147 33 2,180
Total foreign
currency exposure
170,127 (13,082) 157,045 151,266 (12,854) 138,412
Pound Sterling 74,434 (1,822) 72,612 70,505 (1,239) 69,266
Total net assets 244,561 (14,904) 229,657 221,771 (14,093) 207,678
The asset allocation between specific markets can vary from time to time based on the manager’s opinion of the attractiveness
of the individual markets.
Foreign currency sensitivity
At 31March 2022, if sterling had strengthened by 10% in relation to all currencies (2021: 10%), with all other variables held
constant, total net assets and total return on ordinary activities would have decreased by the amounts shown below. A 10%
weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect
on the financial statement amounts.
As at 31March 2022
£000
As at 31March 2021
£000
US dollar 12,322 10,834
Euro 192 237
Swiss franc 2,288 2,086
Hong Kong dollar 416 466
Japanese yen 486 218
15,704 13,841
NOTES TO THE FINANCIAL STATEMENTS
(iii) Market risk arising from other price risk
Other price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the
value of the quoted investments.
It is the board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from
factors specific to a particular sector. The allocation of assets and the stock selection process, as detailed on page11, both act
to reduce market risk. The manager actively monitors market prices throughout the year and reports to the board, which meets
regularly in order to review investment strategy. All investments held by the company are listed on stock exchanges worldwide.
Other price risk sensitivity
The following table illustrates the sensitivity of the return aer taxation and the net asset value to an increase or decrease
of 15% in the fair value of the company’s equities (2021: 15%). The calculations are based on the portfolio valuations as at the
respective statement of financial position date, and the consequent impact on the investment management fees for the year,
and are not representative of the year as a whole.
Year to 31March 2022 Year to 31March 2021
15% Increase in
fair value
£000
15% Decrease in
fair value
£000
15% Increase in
fair value
£000
15% Decrease in
fair value
£000
Effect on revenue return (83) 83 (43) 43
Effect on capital return
36,529 (36,529) 33,186 (33,186)
Effect on total return and on
netassets 36,446
(36,446)
33,143 (33,143)
(b) Liquidity risk
This is the risk that the company will encounter difficulty in meeting obligations associated with financial liabilities.
Liquidity risk is not considered to be significant as the company’s assets comprise mainly readily realisable securities, which
can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdra
facilities (see note 11 for more details).
The contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be
required are as follows:
As at 31March 2022 As at 31March 2021
Three months
or less
£000
More than
three months
£000
Tot a l
£000
Three months
or less
£000
More than
three months
£000
Tot a l
£000
Trade payables:
Bank loans 15 15,583 15,598 13 15,548 15,561
Other trade payables 474 — 474 116 — 116
489 15,583 16,072 129 15,548 15,677
(c) Credit risk
This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could
result in the company suffering a loss.
The risk is not considered to be significant by the board, and is managed as follows:
• investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by
the investment manager, and limits are set on the amounts that may be due from any one broker; and
• cash is held only with reputable banks with high quality external credit ratings.
The maximum credit risk exposure as at 31March 2022 was £1,719,000 (2021: £1,553,000). This was due to dividend receivables
and cash as per notes 9 and 14.
Fair value of financial assets and financial liabilities
All financial assets and liabilities of the company are included in the statement of financial position at fair value or the
statement of financial position amount is a reasonable approximation of fair value.
Note 17: Capital management policies and procedures
The company’s capital management objectives are:
• to ensure that the company will be able to continue as a going concern; and
• to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt.
The capital of the company consists of equity, comprising issued capital, reserves and retained earnings.
The board monitors and reviews the broad structure of the company’s capital on an ongoing basis. This review includes the
nature and planned level of gearing, which takes account of the manager’s views on the market and the extent to which
revenue in excess of that which is required to be distributed should be retained.
Note 18: Fair value hierarchy
Under FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, an entity is required to
classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the
measurements. The fair value hierarchy shall have the following levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments,
credit risk, etc); or
• Level 3: significant unobservable input (including the company’s own assumptions in determining the fair value of investments).
The financial assets measured at fair value through profit and loss are grouped into the fair value hierarchy as follows:
At 31March 2022
Level 1
£000
Level 2
£000
Level 3
£000
Tot a l
£000
Financial assets at fair value through profit or loss
Quoted equities 244,561 — — 244,561
Net fair value 244,561 — — 244,561
At 31March 2021
Level 1
£000
Level 2
£000
Level 3
£000
Tot a l
£000
Financial assets at fair value through profit or loss
Quoted equities 221,771 — — 221,771
Net fair value 221,771 — — 221,771
Note 19: Company information
The Securities Trust of Scotland plc is a closed-ended investment company, registered in Scotland No SC283272, with its ordinary
shares listed on the London Stock Exchange. The address of the registered office is 28 Walker Street, Edinburgh EH3 7HR.
In accordance with the AIFM Directive, information in relation to the company’s leverage and the remuneration of the
company’s AIFM, Juniper Partners Limited, is required to be made available to investors. In accordance with the Directive, the
AIFM’s remuneration policy and the numerical remuneration disclosures in relation to the AIFM’s year ended 3o April 2021 and
30April 2020 are available from the company secretary on request.
The company’s maximum and actual leverage levels are shown below:
Gross method Commitment method
Leverage Exposure At 31 March 2022 At 31 March 2021 At 31 March 2022 At 31 March 2021
Maximum permitted limit 300% 300% 200% 200%
Actual 106% 107% 106% 107%
The leverage limits are set by the AIFM and approved by the board and are in line with the maximum leverage levels permitted
in the company’s articles of association. The AIFM is also required to comply with the gearing parameters set by the board in
relation to borrowings.
AIFMDDISCLOSURESUNAUDITED
ALTERNATIVE PERFORMANCE MEASURES
The Alternative Performance Measures (‘APMs’) detailed below are used by the board to assess the company’s performance
against a range of criteria and are viewed as particularly relevant to an investment trust. Other terms detailed below are
forreference.
NAV total return Net asset value (‘NAV’) total return measures the increase or decrease in NAV per share plus
the dividends paid in the period, which are assumed to be reinvested at NAV at the time that the
share price is quoted ex-dividend.
2022 2021
Opening NAV per share A 202.68p 162.72p
Closing NAV per share B 230.75p 202.68p
% change in NAV C=(B-A)/A 13.8% 24.6%
Impact of dividends reinvested D 3.0% 3.9%
NAV total return E=C+D 16.8% 28.5%
Share price total return Share price total return measures the increase or decrease in share price plus the dividends paid
in the period, which are assumed to be reinvested at the share price at the time that the share
price is quoted ex-dividend.
2022 2021
Opening share price A 202.00p 168.50p
Closing share price B 231.00p 202.00p
% change in share price C=(B-A)/A 14.4% 19.9%
Impact of dividend reinvested D 3.0% 3.8%
Share price total return E=C+D 17.4% 23.7%
Premium/discount to NAV The amount by which the share price is higher/lower than the NAV per share, expressed as a
percentage of the NAV per share.
2022 2021
NAV per share A 230.75p 202.68p
Share price B 231.00p 202.00p
Premium/(discount) C=(B-A)/A 0.11% (0.3)%
NAV per share This is the main measure of the underlying value of a share in an investment company. TheNAV (cum
income) per share includes undistributed current year income and the calculation is included in note
13. NAV (ex income) per share is calculated by deducting undistributed current year income from the
NAV. To determine the NAV (ex income) per share the following calculation is applied:
2022 2021
Net assets per Statement of Financial Position A 229,657,000 207,678,000
Current year revenue return B 5,854,000 7,045,000
Dividends paid for the current year (note 5) C 4,118,000 4,278,000
NAV (ex income) D=A-(B-C) 227,921,000 204,911,000
Shares in issue at the year-end E 99,525,075 102,468,075
Net asset value per share (ex income) F=D/C 229.01p 199.98p
ALTERNATIVE PERFORMANCE MEASURES
Ongoing charges Ongoing charges are the total of the company’s management fees and other operating expenses
expressed as a percentage of average net assets in the year. Operating costs exclude costs of
buying and selling investments, finance costs, taxation, and the direct costs of buying back or
issuing ordinary shares. The ongoing charges figure has been calculated in line with the AIC’s
recommended methodology.
2022
£000
2021
£000
Investment management fee 635 814
Other expenses 516 995
Discount control costs (fixed element) 30 11
Total expenses 1,181 1,820
Effect of 12 month management fee holiday* 873 500
Cost of manager change — (446)
Ongoing charges A 2,054 1,874
Average net assets B 220,068 202,118
Ongoing charges ratio C=A/B 0.93% 0.93%
* Troy agreed to waive its management fee for a period of 12 months from the date of their appointment
(12November 2020). If Troy had not waived its fee until 12November 2021 the investment management fee
payable in the year ended 31March 2022 would have been £873,000 higher (2021: £500,000 higher).
GLOSSARY OF TERMS
AIFMD
The Alternative Investment Fund Managers Directive
(‘AIFMD’) is a European Union (‘EU’) directive governing the
regulation of alternative investment fund managers (‘AIFMs’)
operating in the EU. AIFMs are responsible for managing
investment products that fall within the category of
alternative investment funds and investment trusts, including
the company, are included in this.
Assets
Anything owned or controlled that has value. For investment
companies, this might include shares and securities,
property,cash etc.
Benchmark
An index or other measure against which the performance of
an investment company is compared or its objectives are set.
The annual report and accounts will normally include an
explanation of how the company has performed against its
benchmark over the year and the reasons for any under or
over performance.
Bid price
The price at which you sell your shares when two prices are
quoted. This is sometimes shown as the ‘sell’ price and will be
the lower of the two prices shown.
Discount control mechanism
The policy through which the company issues ordinary
shares where there is demand in the market or buys back
ordinary shares when there are excess shares available in the
market with the aim of ensuring, in normal market conditions,
that the ordinary shares trade consistently close to their net
assetvalue.
Dividend
Income from an investment in shares. Not all investment
companies pay dividends. Dividend income isn’t guaranteed
and may fall as well as rise. The company pays dividends
quarterly in April, July, October and January.
Dividend yield
The annual dividends expressed as a percentage of the
current share price.
Ex and cum income
Also shown as ‘ex div’ or ‘xd’, this means that, if you buy
the shares today, you won’t receive the most recently
declareddividend.
Shares are being traded all the time on stock markets, so
for administrative reasons there needs to be a point when
buyers and sellers agree whether they will receive the most
recently declared dividend. The point when the shares
purchased will no longer receive the dividend is known as
the ‘ex dividend date’ and the shares are said to have ‘gone
ex dividend’. The share price will normally fall by the amount
of the dividend to reflect this.
If you buy the shares when you’re still entitled to the most
recently declared dividend, this is known as the shares being
cum dividend.
Gearing
At its simplest, gearing means borrowing money to buy more
assets in the hope the company makes enough profit to pay
back the debt and interest and leave something extra for
shareholders. However, if the investment portfolio doesn’t
perform well, gearing can increase losses. The more an
investment company gears, the higher the risk.
The gearing currently employed is discussed in the strategic
report on page12.
Investment trust
An investment company which is based in the UK and which
meets certain tax conditions so that it does not pay UK
corporation tax on gains made within the portfolio.
Investment company
A closed-ended fund which invests in a diversified portfolio
of assets. Investors buy and sell their shares in the
investment company on a stock exchange.
Leverage
Leverage, for the purposes of the AIFMD, is any method
which increases the company’s exposure to stockmarkets
whether through borrowings, derivatives, or any other
means. It is expressed as a ratio of the company’s exposure
to its NAV. In summary, the gross method measures the
company’s exposure before applying hedging or netting
arrangements. The commitment method allows certain
hedging or netting arrangements to be offset. As at 31 March
2022, the company had no hedging or netting arrangements.
Net assets
A measure of the size of an investment company. The total
value of all assets held, less liabilities and prior charges,
including income for the current year.
GLOSSARY OF TERMS
Comparison index
The company’s investment performance (on a total return
basis) is measured against the Lipper Global – Equity Global
Income Index.
Share buy backs
Describes an investment company buying its own shares and
reducing the number of shares in existence.
Share buy backs can be used to return money to
shareholders, but are also oen used to tackle the company’s
discount. Discounts may reflect an imbalance between the
demand for shares and the number of shares in existence.
The hope is that, by reducing the number of shares in
existence, the buy back will help to prevent the discount
widening or even reduce it.
Share price
The price of a share as determined by the stock market.
If you see a single share price shown, it’s likely that this is the
mid-market price. This is different to the price at which you
buy and sell the shares, which are known as the bid price
(sell) and offer price (buy).
Treasury shares
Shares in a company’s own share capital which the company
itself owns and which can be sold to investors to raise
newfunds.
Treasury shares only come into existence when a company
buys back its own shares. Instead of cancelling the shares
(i.e. they cease to exist) they are held ‘in treasury’ by the
company and can be sold at a later date to raise new funds.
The company’s shares quality for tax efficient wrapper
products like individual savings accounts (‘ISAs’) and self-
invested personal pensions (‘SIPPs’) as well as may other
investment wrappers that can be used, including those
designated for children.
Platforms, fund supermarkets and online
stockbrokers
You can invest using a number of fund platforms and fund
supermarkets. Many offer wrapper products like ISAs and
SIPPs and children’s savings products. A number of real-time
execution only stockbroking services also allow you to trade
online, manage your portfolio and buy UK listed shares.
These services do not offer financial advice and if you are
unsure about investing, we recommend that you speak to a
qualified financial adviser.
Retail distribution/NMPI status
The company’s shares are ‘excluded securities’ for
the purposes of the rules relating to non-mainstream
pooled investment (‘NMPI’) products. This means
they can be recommended by independent financial
advisers to their ordinary retail clients, subject to normal
suitabilityrequirements.
Independent financial advisers
An increasing number of independent financial advisers
are including investment trusts within their investment
recommendations for clients. To find an adviser who
recommends on investment trusts, visit www.unbiased.co.uk.
Private client stockbrokers
If you have a large sum to invest, you may want to contact
a private client stockbroker. They can manage your entire
portfolio of shares and will advise you on your investments.
To find a private client stockbroker visit the Wealth
Management Association: www.thewma.co.uk.
Trading Codes
(You may be asked for these when investing)
TIDM code: STS
Sedol: B09G3N2
ISIN: GB00B09G3N23
WAYS TO INVEST IN THE COMPANY
Notice is hereby given that the annual general meeting of
Securities Trust of Scotland plc (the ‘company’) will be held at
The Library of Mistakes, 33A Melville Street Lane, Edinburgh
EH37QB, on Monday 4 July 2022 at 12.30pm (the ‘meeting’)
for the following purposes:
Ordinary business
To consider and, if thought fit, pass the following resolutions
as ordinary resolutions:
1. To receive the audited financial statements for the year
ended 31March 2022 together with the reports of the
directors and the auditor thereon.
2. To approve the directors’ remuneration report for the
year ended 31March 2022.
3. To approve the dividend policy.
4. To re-elect John Evans as a director of the company.
5. To re-elect Angus Cockburn as a director of the company.
6. To re-elect Sarah Harvey as a director of the company.
7. To re-elect Mark Little as a director of the company.
8. To elect Alexandra Innes as a director of the company.
9. That Ernst & Young LLP be re-appointed as auditor of
the company, to hold office from the conclusion of this
meeting until the conclusion of the next general meeting
at which accounts are laid before the company.
10. To authorise the directors to fix the remuneration of the
auditor for the year ending 31March 2023.
11. In substitution of any existing authority of the directors,
the directors of the company be and are hereby generally
and unconditionally authorised pursuant to s551 of the
Companies Act 2006 (the ‘Act’) to allot equity securities
(as defined in s560 of the Act) and to grant rights to
subscribe for or to convert any security into shares in the
company up to a maximum aggregate nominal amount
of £333,347 (being one third of the issued share capital
of the company as at 18 May 2022; being the latest
practicable date before the date of this notice) provided
that the authority hereby given shall expire (unless
previously varied as to duration, revoked or renewed
by the company in general meeting) on 30September
2023 or, if earlier, at the conclusion of the annual general
meeting of the company in 2023 save that the company
may, at any time before the expiry of such authority, make
an offer or enter into an agreement which would or might
require equity securities to be allotted aer the expiry
of such authority and the directors may allot equity
securities in pursuance of such an offer or agreement as
if such authority had not expired.
Special business
To consider and, if thought fit, pass the following resolutions
as special resolutions:
12. That the directors be empowered pursuant to s570 and
s573 of the Act to allot equity securities (as defined
in s560 of the Act) for cash pursuant to the general
authority conferred on them by resolution 11 above and/
or to sell equity securities held as treasury shares for
cash pursuant to s727 of the Act, in each case as if s561
of that Act did not apply to any such allotment or sale,
provided that this power shall be limited to:
(a) any such allotment and/or sale of equity securities
in connection with an offer or issue by way of
rights or other pre-emptive offer or issue, open for
acceptance for a period fixed by the directors, to
holders of ordinary shares (other than the company)
on the register on any record date fixed by the
directors in proportion (as nearly as may be) to the
respective number of ordinary shares deemed to
be held by them, subject to such exclusions or other
arrangements as the directors may deem necessary
or expedient in relation to fractional entitlements,
legal or practical problems arising in any overseas
territory, the requirements of any regulatory body or
stock exchange or any other matter whatsoever; and
(b) any such allotment and/or sale of equity securities,
otherwise than pursuant to sub-paragraph (a) above,
having, in the case of ordinary shares, an aggregate
nominal value or, in the case of other equity securities,
giving the right to subscribe for or convert into
ordinary shares having an aggregate nominal value,
not exceeding the sum of £244,598 (representing
20% of the issued ordinary share capital as at 18May
2022; being the latest practical date before the date
of thisnotice).
This authority shall expire, unless previously revoked
or renewed by the company in a general meeting, on
30September 2023 or, if earlier, at the conclusion
of the annual general meeting of the company to be
held in 2023, except that the company may at any
time before such expiry make any offer or agreement
which would or might require equity securities to be
allotted or equity securities held as treasury shares
to be sold aer such expiry and the directors may
allot equity securities and/or sell equity securities
held as treasury shares in pursuance of such an
offer or agreement as if the power conferred by this
resolution had not expired.
NOTICE OF ANNUAL GENERAL MEETING
13. That, in accordance with s701 of the Act, and in
substitution for any existing authority, the company be
and is hereby generally and unconditionally authorised
to make market purchases (within the meaning of s693 of
the Act) of ordinary shares of 1p each in the capital of the
company provided that:
(i) the maximum aggregate number of ordinary shares
authorised to be purchased is 14,990,800 (being
14.99% of the issued share capital as at 18May 2022,
being the last practicable date before this notice);
(ii) the minimum price which may be paid for an ordinary
share is 1p per share which amount shall be exclusive
of expenses;
(iii) the maximum price (exclusive of expenses) which
may be paid for an ordinary share shall be not more
than the higher of (i) 105% of the average of the
mid-market quotations for an ordinary share of the
company as derived from the Daily Official List of
the London Stock Exchange for the five business
days immediately preceding the date of purchase
or (ii) the higher of the price quoted for (a) the last
independent trade of and (b) the highest current
independent bid for, any number of ordinary
shares on the trading venue where the purchase is
carriedout;
(iv) the authority hereby conferred shall expire 15 months
aer the date of passing of this resolution or at the
conclusion of the next annual general meeting of
the company following the passing of this resolution,
whichever first occurs, unless such authority is
renewed or revoked prior to such time; and
(v) the company may enter into a contract to purchase
ordinary shares under this authority prior to the
expiry of such authority which will or may be
executed wholly or partly aer the expiry of such
authority and may make a purchase of ordinary shares
in pursuance of any such contract as if the authority
hereby conferred had not expired.
14. That a general meeting of the company other than an
annual general meeting may be called on not less than
14clear days’ notice provided that this authority shall
expire at the conclusion of the next annual general
meeting of the company.
By order of the board
Juniper Partners Limited
Secretary
19 May 2022
Registered office: 28 Walker Street, Edinburgh EH3 7HR
NOTICE OF ANNUAL GENERAL MEETING
Notes to the notice of AGM
1. This document is important and requires your immediate
attention.
If you are in any doubt as to what action you should take,
you are recommended to seek your own financial advice
from your stockbroker or other independent adviser
authorised under the Financial Services and Markets Act
2000.
2. If you have sold or transferred all of your shares in the
company, please forward this document, together with
the accompanying documents, as soon as possible either
to the purchaser or transferee or to the person who
arranged the sale or transfer so they can pass these
documents to the person who now holds the shares.
3. The company has specified that to be entitled to
attend and vote at the meeting (and for the purpose
of determining the number of votes they may cast),
members must be entered on the register of members
48 hours before the time fixed for the meeting, or, if the
meeting is adjourned, on the register of members 48
hours before the time for holding any adjourned meeting.
Changes to entries on the share register aer the
relevant deadline will be disregarded in determining the
rights of any person to attend or vote at the meetings.
4. A member entitled to attend, speak and vote may appoint
a proxy or proxies to attend, speak and, on a poll, vote
instead of him/her. A proxy need not be a member of
the company. A shareholder may appoint more than one
proxy provided that each proxy is appointed to exercise
the rights attached to a different share or shares held by
that shareholder. To be valid, proxies must be lodged at
the office of the registrars of the company (Link Group,
10th Floor, Central Square, 29Wellington Street, Leeds
LS1 4DL) not less than 48 hours before the time of the
meeting. A form of proxy is enclosed. The notes to the
form of proxy explain how to direct your proxy, how to vote
on each resolution, or with-hold your vote. Appointment
of a proxy will not preclude a member from attending the
meeting and voting in person.
5. You may submit your proxy electronically using The Share
Portal service at signalshares.com. Shareholders can use
this service to vote or appoint a proxy online. The same
voting deadline of 48 hours (excluding non-working days)
before the time of the meeting applies as if you were
using the paper proxy form to vote or appoint a proxy by
post to vote for you. Shareholders will need to use the
unique personal investor code. This number can be found
on your share certificate. Shareholders should not show
this information to anyone unless they wish to give proxy
instructions on their behalf.
6. A corporation which is a member can appoint one or
more corporate representative(s) who may exercise,
on its behalf, all its powers as a member provided that
no more than one corporate representative exercises
powers over the same share.
7. As at 18 May 2022 (being the last practicable day prior
to the publication of this Notice) the company’s issued
voting share capital consists of 122,299,148 ordinary
shares, of which 22,294,073 shares are held in treasury.
Each share carries one vote, therefore, the total voting
rights in the company are 100,005,075 votes.
8. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for the meeting and any adjournment(s) thereof
by using the procedures described in the CREST Manual.
The message must be transmitted so as to be received
by the company’s agent, Link Group (CREST Participant
ID: RA10), no later than 48 hours (excluding non-working
days) before the time appointed for the meeting.
9. In the case of joint holders, where more than one of the
joint holders completes a proxy appointment, only the
appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which
the names of the joint holders appear in the company’s
register of members in respect of the joint holding (the
first-named being the most senior).
10. Pursuant to s319A of the Companies Act 2006, the
company must provide an answer to any question which
is put by a member attending the meeting relating to the
business being considered, except if a response would
not be in the interest of the company or for the good
order of the meeting or if to do so would involve the
disclosure of confidential information.
11. Pursuant to s338 of the Companies Act 2006, members
fulfilling the qualification criteria set out at Note 12
below, may, require the company to give notice of a
resolution which may properly be moved and is intended
to be moved at the meeting if a) the resolution would
not, if passed, be ineffective (whether by reason of
inconsistency with any enactment or the company’s
constitution or otherwise) and b) it is not defamatory of
any person, frivolous or vexatious.
12. Members fulfilling the qualification criteria set out below
may require the company, without payment, to place on its
website a statement, made available also to the company’s
auditor, setting out any matter relating to the audit of the
company’s accounts, including the Auditor’s Report and
the conduct of the audit; or any circumstance connected
with an auditor of the company ceasing to hold office
since the previous meeting at which the annual report
and accounts were laid in accordance with s437 of the
Companies Act 2006. The business of the AGM should
include any statement that the company has been required
to publish, under s527 of the Act, on its website.
The company becomes required to place such a statement
on the website, should a) members with at least 5% of
the total voting rights of the company or b) at least 100
members who are entitled to vote and on whose shares an
average sum per member of at least £100 has been paid,
have submitted such a request to the company, not later
than six weeks before the meeting. Members seeking to
do this should write to the company secretary.
13. Information regarding the meeting, including the
information required by s311A of the Companies Act
2006, is available from www.stsplc.co.uk.
14. The right to appoint a proxy does not apply to persons
whose shares are held on their behalf by another
person and who have been nominated to receive
communications from the company in accordance with
section 146 of the Companies Act 2006 (“nominated
persons”). Nominated persons may have a right under an
agreement with the registered shareholder who holds
the shares on their behalf to be appointed (or to have
someone else appointed) as a proxy. Alternatively, if
nominated persons do not have such a right, or do not
wish to exercise it, they may have a right under such an
agreement to give instructions to the person holding
the shares as to the exercise of voting rights. If you
have been nominated to receive general shareholder
communications directly from the company, it is
important to remember that your main contact in terms
of your investment remains as it was (so the registered
shareholder, or perhaps custodian or broker, who
administers the investment on your behalf). Therefore
any changes or queries relating to your personal details
and holding (including any administration thereof) must
continue to be directed to your existing contact at your
investment manager or custodian. The company cannot
guarantee dealing with matters that are directed to us in
error. The only exception to this is where the company,
in exercising one of its powers under the Companies Act
2006, writes to you directly for a response.
15. Copies of the letters of appointment of the directors of
the company and the articles of association are available
for inspection at the Company’s registered office at
28Walker Street, Edinburgh, EH3 7HR until the close of
the meeting and at the meeting (for 15 minutes prior to
the meeting and during the meeting).
16. Any electronic address provided either in this notice of
AGM or any related documents (including the form of
proxy) to communicate with the company may not be
used for any purposes other than those expressly stated.
Directors
John Evans (Chairman)
Angus Cockburn
Angus Gordon Lennox
Sarah Harvey
Alexandra Innes
Mark Little
AIFM and Company Secretary
Juniper Partners Limited
28 Walker Street
Edinburgh EH3 7HR
Juniper Partners Limited is authorised and regulated by the Financial
Conduct Authority.
Manager
Troy Asset Management Limited
33 Davies Street
London W1K 4BP
Troy Asset Management Limited is authorised and regulated
by the Financial Conduct Authority.
Registered office
Securities Trust of Scotland plc
28 Walker Street
Edinburgh EH3 7HR
Registered in Scotland, registered number SC283272
Independent auditor
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Custodians
J.P. Morgan Chase Bank N.A.
25 Bank Street
Canary Wharf
London E14 5JP
Bankers
The Royal Bank of Scotland International Limited
71 Bath Street
St Helier
Jersey JE4 8PJ
Depositary
J.P. Morgan Europe Limited
25 Bank Street
Canary Wharf
London E14 5JP
Brokers
JPMorgan Cazenove Limited
25 Bank Street
London E14 5JP
Association of Investment Companies
9th Floor
24 Chiswell Street
London EC1Y 4YY
www.theaic.co.uk
Securities Trust of Scotland is a member of the AIC (the trade body
of the investment company industry).
CORPORATE INFORMATION
Financial calendar – key dates 2022
First interim
dividend paid
Third interim
dividend paid
Half-yearly results announced,
half-yearly financial report
issued
lAnnual Genera
Meeting
Second interim
dividend payment
Fourth interim
dividend paid
Year end figures
announced and
annual report issued
Decembe
r
January OctoberApril JulyMay
EASY ACCESS TO INFORMATION
The company’s website can be found at www.stsplc.co.uk.
This offers a wealth of information about the company.
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Enquiries
If you have an enquiry about Securities Trust of Scotland, please get in touch.
0131 378 0500
I
companysecretary@stsplc.co.uk
The Chairman
c/o Company Secretary
Securities Trust of Scotland plc
28 Walker Street
Edinburgh
EH3 7HR
chairman@stsplc.co.uk
How to contact us
Tel: 0131 378 0500
Email: companysecretary@stsplc.co.uk
www.stsplc.co.uk
Calls to the above may be recorded.
The Chairman
c/o Company Secretary
Securities Trust of Scotland plc
28 Walker Street
Edinburgh
EH3 7HR
chairman@stsplc.co.uk
RegisteredinScotlandwithregisterednoSC