### (formerly Securities Trust of Scotland plc) ## Annual ## Report ## Year to 31 March 2023 ## www.stsplc.co.uk ## About STS Global Income & Growth Trust | What we do | Experienced team | | --- | --- | | STS Global Income & Growth Trust plc (the | The Company is managed by James Harries | | ‘Company’) is a UK-based investment trust, | at Troy, alongside Tomasz Boniek. James has | | managed by Troy Asset Management Limited | more than 20 years experience of managing | | (the ‘Manager’ or ‘Troy’), which invests in a | global equity income strategies, with an average | | portfolio of global equities. It aims to meet the | annual total return of 9%. | needs of investors looking for a growing level of income and steady capital growth over the long ### Discount management term, whilst also wanting to preserve the value The Company introduced a discount control of their money. mechanism in November 2020 which aims to ensure, in normal market conditions, that the ### A quality investment approach shares trade consistently close to their net asset | The Company seeks to invest in a small number | value, providing liquidity for all shareholders. | | --- | --- | | of companies (typically 30 – 50 companies) | Under the discount control mechanism, the | | which the Manager deems to be high-quality | Company has committed to buying back shares | | and hold them for very long periods to capture | when there is excess supply and issuing shares | | the compounding power of those companies. | when there is excess demand. | | Dependable income | Independent oversight | | The Company aims to provide a steady, | The Company is overseen by an independent | | regular income with the intention of growing | Board. By engaging with and listening to | | this consistently from year to year. Dividends | shareholders, the Board ensures that the | | are paid quarterly in April, July, October | Company continues to offer a distinctive | | and January. | investment proposition that is relevant to | investors’ needs. www.stsplc.co.uk STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Contents ### Overview Financial highlights 2 Chairman’s statement 4 Manager’s review 7 Portfolio summary 10 Portfolio holdings 11 Strategic report 12 Board of directors 19 Governance Financial review Investor informationOverview ### Governance Report of the directors 21 Corporate governance statement 28 Directors’ remuneration statement 35 Audit and risk committee report 38 ### Financial review Independent auditor’s report 41 Statement of comprehensive income 48 Statement of financial position 49 Statement of changes in equity 50 Statement of cash flow 51 Notes to the financial statements 52 AIFMD disclosures (unaudited) 65 ### Investor information Alternative performance measures 66 Glossary of terms 68 Ways to invest in the company 69 Notice of annual general meeting 70 Corporate information 75 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 Board 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 Board nor the Company take responsibility for matters outside of their control. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 1 ## Financial highlights ### The objective is to deliver rising income and long-term capital growth through investment ### in a balanced portfolio constructed from global equities. ### Dividend Dividend per share (pence) A total annual dividend 6.41 6.25 6.20 of 6.20p, an increase 6.10 5.95 5.875 6 5.80 of 5.5% from 2022 5.70 and 8.8% from 2021, 4.90 when the dividend was 5 4.75 4.80 rebased following the change of manager. 4 3 2 1 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ### Long-term capital growth | | | ** | | Over the last ten years, | | --- | --- | --- | --- | --- | | 240 | Share price total return | | | | | | | | ** | shareholders have enjoyed | Net asset value total return a 105.1% increase in share 220 price (total return). 200 The share price return has been positive in eight out 7 180 of the last ten years even through some of the most 160 turbulent market conditions. 140 120 (%) (pence) 100 Source: Refinitiv Datastream. **See Alternative Performance Measures on page 66 for definitions. 2 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Mar 23Mar 22Mar 21Mar 20Mar 19Mar 18Mar 17Mar 16Mar 15Mar 14Mar 13 Overview Governance Financial review Investor information ### Total returnsˆ (including reinvested dividends) | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | 31 March 2023 | | | 31 March 2022 | | | | | | % | | | % | Net asset value per share (1.8) 16.8 Lipper Global – Equity Global Income Index 0.5 10.8 Share price (4.8) 17.4 ### Key data As at As at 31 March 2023 31 March 2022 Net asset value per share (cum income)ˆ 220.37p 230.75p Net asset value per share (ex income)ˆ 218.37p 229.01p Share price 214.00p 231.00p (Discount)/premiumˆ (2.89)% 0.11% Net assets £219,235,000 £229,657,000 ### Income Year ended Year ended 31 March 2023 31 March 2022 Revenue return per share 6.34p 5.82p Dividend per share 6.20p 5.875p ### Ongoing chargesˆ Year ended Year ended 31 March 2023 31 March 2022 Ongoing charges 0.94% 0.93% ˆ Alternative performance measures see pages 66 and 67 for further information. ### Five-year record Annual total returns (including dividends reinvested) over 12 month periods to 31 March 2023 2022 2021 2020 2019 Net asset value per share (1.8)% 16.8% 28.5% (8.3)% 11.4% Share price (4.8)% 17.4% 23.7% 2.7% 9.6% Source: Refinitiv Datastream. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 3 # Chairman's statement ![img-0.jpeg](img-0.jpeg) “ > A total dividend of 6.20 pence per ordinary share has been declared, representing a 5.5% increase over the previous financial year. ” The year to 31 March 2023 proved to be eventful in terms of both geopolitical and economic developments. It was dominated by the immediate and longer term effects of the dreadful war in Ukraine precipitated by the invasion by Russian forces in February 2022. An immediate economic effect of the conflict was the increase in prices of oil & gas on wholesale markets and this increase added to the inflationary pressures already pushing through as economies recovered post pandemic. The boost to inflation arrived at a time when Central Banks, virtually worldwide, were raising short term interest rates and reversing the very lax monetary policies that had been in place since the financial crisis in 2007/2008. As might be expected bond markets found this background to be challenging and were significantly lower over the year (the Investment Association Sterling Corporate Bond Sector Index, for example, returned -9.4%). Not surprisingly, equity markets struggled to generate positive returns against such a difficult background. Over the 12 month period the net asset value total return for your Company was -1.8%, marginally behind the +0.5% total return for the comparator benchmark, Lipper Global – Equity Global Income Index. The relative return for the year was consistent in the sense that when markets, and generally in the first half of the period, were in a “risk off” mode relative returns were good. However, later in the period as confidence rose and markets returned to sectors and stock that had driven the post pandemic bounce relative returns were poorer. Your Manager’s philosophy and portfolio positioning has remained consistent and returns have been likewise consistent against a frequently changing narrative in respect of markets. It is a feature of stock markets that rallies begin with a reversion to what had driven previous returns but often this effect fades and new drivers emerge as investors adapt to changing circumstances. This may well be what is happening currently as the rally in the second half of the financial year was led by sectors with higher valuations despite what is a fundamental change in the monetary background. The era of virtually free and abundant debt has ended to be replaced by a period in which capital has an economic cost and has to be allocated on a much more rational basis. Your Board and Manager believe that in such an environment the focus on investing in strong companies in terms of market positioning and financial robustness will produce good relative returns. ## Revenue and dividends Total revenue earned for the year was £8.2 million, an increase of 11.7% on the previous year. This is a meaningful rise in income and has two principal sources. First, the underlying dividend performance of the Company’s investments has been robust and is a testament to the stock selection of the Manager. Second, with 47% of income arising from US dollar denominated dividends the weakness of sterling vs the US dollar over the year has been a boost to sterling revenues as dollar payments are translated at more favourable rates. (For your information the average £/$ rate for the year was 1.21 compared with 1.37 in the previous year). In arriving at a dividend level for the year your Board has been realistic and cognisant of the fact that shareholders are expecting consistent dividend growth over the longer term. While most encouraged by the underlying dividend performance of our investment portfolio, the benefit of currency changes has been welcome but is likely to be volatile and may even be reversed. 4 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 The Board will therefore transfer to reserves some of the currency benefit in order that in the event of a period of less favourable currency movements there is flexibility to use reserves to smooth the long term progression in dividends paid to shareholders. Consequently a total dividend of 6.20 pence per ordinary share has been declared representing a 5.5% increase over the 5.875 pence per share paid in respect of the previous financial year. ## Change of name The current and previous Boards have discussed the suitability of the name of your Company on several occasions. The Board now believes that it is appropriate to implement a new name for the Company which better explains the Company's aims and objectives. The investment mandate and strategy remain the same; providing defensive capital returns with growing income by investing in a concentrated portfolio of global companies. The Board is also conscious of changes in its investor base, as well as changes in the ways in which investors hold their shares. The Company's shares are now held through a broad range of wealth managers and retail platforms and we believe the name change will make it easier for individual retail investors to find the Company on platforms when searching for global income and growth investment opportunities. Consequently, it was decided to change the name of your Company to "STS Global Income & Growth Trust plc". In accordance with the Company's articles of association, this change of name has been actioned by a resolution of the directors and the name change took effect on 5 June 2023. It is important to emphasise that nothing else will change, the ticker symbol (STS) will remain the same as will the SEDOL and ISIN. You will not need or receive new share certificates. The Board believes that this name change will enhance the marketability of the shares and bring the Company more easily to the attention of not only the retail investor but all potential buyers of the shares. ## Board changes The Board is aware of the need to have a succession process in place and this is particularly important as compliance with the best practice of corporate governance in respect of terms of appointment and diversity is a key objective of the Board. Therefore and in line with its long term planning I am pleased to announce that Gillian Elcock will be appointed as a non-executive director on 21 September 2023. Gillian is a non-executive director of International Biotechnology Trust plc and a member of the Board of the CFA UK. I am delighted that Gillian is joining our Board. She has a wealth of investment experience and will bring a valuable perspective to Board discussions. My colleagues and I very much look forward to working with her. ## Discount management Your Company 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 consistently valued close to their net asset value, providing liquidity for all shareholders. Shares are bought by the Company should they trade at a discount to net asset value and if there are sellers in the market. Likewise shares will be issued at a premium to net asset value to meet demand should there be buyers. In the year to 31 March 2023, 1,616,500 shares were purchased by the Company at an average discount of 1.9% and 1,575,000 shares were issued at an average premium of 1.2%. ## Borrowing facilities Your Company currently has debt facilities totalling £15.8 million. The use of these facilities is discussed regularly and also at every Board meeting. The £15 million multicurrency facility that the Company has had available since 2016 is due to expire in September of this year. Negotiations are underway to replace this facility with an appropriately flexible facility that will allow the Manager to utilise the debt in a cost effective manner with the objective of enhancing returns to shareholders over time. ## ESG The Board continues to recognise the importance of considering environmental, social, and governance ('ESG') factors when making investment decisions and in the ongoing stewardship of investee companies and is supportive of the Manager's approach to responsible investing, which fully integrates ESG analysis into the fundamental research and investment process. More information can be found on pages 12 and 13 and on the responsible investing section of the Company's website, www.stsplc.co.uk/responsible-investment. Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 5 ## Chairman’s statement continued ### AGM The Annual General Meeting of your Company will be held on 20 September 2023 at the offices of Juniper Partners, 28 Walker Street, Edinburgh at 2.00 pm. The Board looks forward to meeting shareholders in person at that meeting. ### Keeping in touch I would encourage shareholders to visit the Company’s website at www.stsplc.co.uk as it offers a wealth of information about the Company. It is regularly updated and has recently been redesigned. Through the website you can also subscribe to monthly email updates including the factsheet which provides portfolio and performance information. You can also contact the Manager or our Company Secretary, Juniper Partners, through the website or by using the email address on page 74 of this report. ### Outlook Much of the focus of financial markets is on the timing and scale of changes in short term interest rates. We may be near the peak of the current cycle – there are a myriad of views. However, whilst the cost of debt may change it is unlikely that Central Banks will relent on their liquidity policies as these have to address 14 years of largesse. Many of the well-publicised issues in the US and other banking systems recently owe more to the effects of the quantitative tightening than the higher cost of money. The rate of inflation may be declining, or be forecast to do so, but prices are still rising at unfamiliar levels. Your Manager backs sound well established companies with managements and processes that have been tested in many economic circumstances and have stood the test of time. Whilst we would not make firm predictions as to what lies ahead we can be confident that we are invested in companies that have proved their ability to deliver throughout the cycle and have belief in their ability to continue to do so. John Evans 7 June 2023 6 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Manager’s review Overview Governance Financial review Investor information ### We remain confident that the Company ### will continue to deliver growing free ### cash flow to fund an attractive and ### growing income stream as well as long ### term capital growth. remains excellent value. Recent results have been ### As detailed in the Chairman’s statement, received well by investors as they re-appraise the steady ### in a tumultuous year for global equity if unspectacular growth of this company. The shares have ### markets the Company’s NAV declined by begun to appreciate after a long spell of dull returns. ### 1.8% compared to a return of 0.5% for the The key source of underperformance was our real estate ### Lipper Global –Equity Global Income Index investments. Of the three which we hold, two – Vonovia ### comparator. Since the inception of Troy’s and Boston Properties – were the greatest detractors to ### management of the Company the NAV has performance over the year. The scale of the rise in interest rates and the pace that they have risen has been remarkable. ### risen by 15.3%. The effect of this change is likely to be felt in the economy After delivering strong returns in 2022, this year has been a and markets with a lag. The impact on property has been far year of consolidation for the Company and for equity markets. more immediate. For each of these businesses we believed Rising interest rates to combat inflation as well as the ongoing there was a specific reason to invest. war in Ukraine made for a challenging backdrop. The income Vonovia is the largest listed owner of German residential account remains robust, however, with the dividend for the real estate (as well as having some exposure to Sweden and year increasing by 5.5%. Austria). With property in Germany valued at a discount to replacement cost and bolstered by structural factors such ### Performance as urbanisation and a trend towards smaller households we The last 12 months have demonstrated once again the viewed this an attractive asset. This was further supported power of branded consumer goods. At a time of rapidly by an interest rate that was arguably too low for the German rising interest rates driven by the re-emergence of inflation, economy since it is set at the EU level. Unfortunately, these our consumer staples portfolio companies have been able trends were overwhelmed by the shift in the structure of to raise prices to offset these headwinds. The combination interest rates. As detailed on the next page, Vonovia was of well-loved brands, the habit of repeat purchases and subsequently sold and was no longer part of the portfolio at powerful distribution networks enables these companies the year end. to generate attractive and sustainable returns on capital employed. It is these same competitive advantages that Similarly, we believed Boston Properties to be attractive gives these businesses pricing power. They also benefit from owing to its ownership of A grade office property in the having limited capital requirements. This strength has been coastal cities of the US. It is our contention that the current rewarded by investors over this period as four out of the top post-COVID norm of hybrid working practices is unlikely to five contributors were consumer staples companies. These outlast a more difficult economic environment. However, this were Unilever, PepsiCo, Philip Morris and Hershey. trend reversal is taking time and when combined with a rising cost of capital caused the shares to decline in value. The fifth most significant contributor was Swiss healthcare company, Novartis. This is a high-quality franchise that STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 7 ## Manager’s review continued The next two holdings which detracted from performance profile. The company has limited capital requirements and is were both in the healthcare sector, broadly defined. Roche, therefore able to pay a healthy dividend. like Novartis (see previous page) is a high quality Swiss For a variety of reasons, the performance of GSK towards the pharmaceutical company. It also has an excellent diagnostics beginning of this period had been strong. These included business. The underperformance of the shares derives from the spinning-off of the consumer business (named Haleon) a spike in the share price which coincided with the end of following a failed bid by Unilever, a change in dividend March 2022. It is the retreat from this precipitous high that is policy and US dollar strength (GSK has substantial US dollar captured in the poor showing over the last 12 months rather earnings). This provided an attractive time to sell. than more worrying operational concerns. The shares remain excellent value. Conversely Admiral had been a poor performer. During COVID, Admiral’s customers had been paying premiums Medtronic is a high-quality medical technology franchise without being able to use their cars, giving a short-term lift to covering a range of therapeutic and diagnostic medical profits. This was reflected in a strong share price. As this effect products. The company suffered during COVID as many faded, so too did the company’s valuation. A reallocation of elective procedures were postponed. However, it has been capital from GSK to Admiral was therefore timely. rather slower to recover from this disruption than we would like. There have however been some encouraging signs Texas Instruments (‘TI’) is a leader in analog semiconductors. recently including the approval of a new insulin management We have spent the last few years patiently building our device for diabetics. The shares remain in the portfolio. semiconductor industry knowledge. TI designs and manufactures relatively low specification chips which don’t Finally, Domino’s Pizza was weak during the year. We continue require the latest manufacturing technology and have to believe this is an excellent business trading at a very incredibly long shelf lives. While other semiconductor attractive valuation. The last few years have been marred by 1 companies constantly design and manufacture new CPUs friction between the company and the underlying franchisees to satisfy the insatiable need for greater computing power, as well as several management changes including the loss TI chips work for decades. We believe that roughly half of of the CEO, for whom they have yet to find a permanent TI’s sales derive from chips designed more than ten years replacement. Further, investors have worried about the ago. The result is a business with little technological risk and health of the UK consumer. These concerns have weighed relatively low capital intensity. on the shares. We believe that these problems will ultimately be solved, and the strategic direction of the business is The semiconductor industry has a degree of cyclicality, becoming clearer. We are patiently waiting for the improving however in the case of TI, we consider this risk to be operational momentum to be reflected in the share price and mitigated by having a conservative balance sheet it remains a long term investment for the Company. and capital allocation policy that rewards long-term shareholders. Indeed, we believe TI has one of the clearest ### Portfolio activity frameworks for value creation, as described in the Investor Consistent with Troy’s long term investment approach, activity Overview document on TI’s website. The business is within the portfolio has been limited. We established two new fantastically profitable, ranking in the 89th percentile of investments, Admiral Group and Texas Instruments funded S&P500 companies in terms of free cash flow margins. from the sale of GSK, Western Union and Vonovia. We also We considered the valuation to be attractive at purchase added to our investments in Nintendo, Reckitt Benckiser and including offering us a c.3% prospective dividend yield. Link REIT. The investment was funded by the sale of Western Union and Admiral Group (‘Admiral’) is an excellent business. the reduction in our investment in ADP. Dominated by its UK car insurance business, Admiral’s market Finally, we sold Vonovia and re-invested the proceeds in Link leadership is based on expertise in specialist insurance. REIT. Link REIT is the largest and, we believe, best managed This specialisation leads to an extensive data set affording real estate investment trust in Asia. The company used its accurate pricing of risk. As such, and unusually for an scale and reputation to be first to raise equity via a rights issue insurance business, the company makes an underwriting to offset the problems being felt across the industry from profit over the cycle. This persistent and consistent rising interest rates. We participated in the issue and then profitability allows Admiral to offload the insurance risk subsequently added to the investment, funded from the sale to Munich Re but to retain much of the profitability. Costs of Vonovia. Link REIT now has a low debt profile and is well are contained giving the company a very attractive return placed to acquire distressed assets. 1 Central Processing Units 8 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 The overall shape of the portfolio is largely unchanged. To us this optimism is being driven by the reasonable Overview Governance Financial review Investor information Branded consumer goods, healthcare and enterprise expectation that inflation and therefore interest rates are software represent a material proportion of the Company. peaking. We fear however that this will simply be the opening Conversely, we have very limited exposure to sectors that we scene of a drama that develops ultimately into recession. It consider to be more cyclical and require significant capital may be therefore that while this year capital markets had to investment to operate. contend with rising rates, next year they may have to deal with declining earnings. 2 On an underlying revenue basis the Company has 48.5% invested in the US, 27.9% in Asia and Emerging Markets (EM), At the same time many of our portfolio companies, notably 15.7% in Europe and 7.0% in the UK. in the consumer staples sector, are beginning to benefit from softening input costs. We are beginning to see the first signs We continue to view the US to be the best economy with the of expanding gross and operating margins as a result. When best companies which is reflected in the significant exposure combined with still healthy demand for these repeat-purchase we have to that country. products we are confident our companies will weather a more difficult economic environment relatively well. The proportion of revenue coming from Asia and EM may increase over time. These economies have attractive growth Further we continue to wait patiently to redeploy capital into prospects, in part owing to having much younger populations favoured sectors, but which remain, for now, stubbornly too (with the important exception of China). Consumer expensive. If events play out as we have suggested above, expenditure is likely to structurally increase over the long this may be about to change. term. Our portfolio company management teams are likely to allocate further capital to these areas in the coming years to We remain confident that the Company will continue to take advantage of this opportunity. deliver growing free cash flow to fund an attractive and growing income stream as well as long term capital growth. Our favoured way of gaining exposure to these dynamic Further we are excited by the opportunities that may become economies is via developed market listed businesses. We available in the coming year. find them to have superior corporate governance and to demonstrate better capital allocation. James Harries ### Investment strategy 7 June 2023 Equity markets have staged a remarkable recovery from the lows seen in October 2022. We would caution investors that this advance may not be markets sounding the economic “all-clear”. We continue to think that the effect of rapidly rising rates and the absence of quantitative easing is working their way through the global economy, albeit with a lag. The notable inversion of the US yield curve (a situation where short-term interest rates are higher than longer term interest rates which usually presages a recession) combined with still elevated equity market valuations is a time for caution. 2 As at 31 March 2023 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 9 ## Portfolio summary ## Portfolio distribution as at 31 March 2023 ### By region (excluding cash) 31 March 2023 31 March 2022 % % North America 52.9 54.2 Europe 41.0 42.1 Asia 6.1 3.7 100.0 100.0 ### By sector (excluding cash) 31 March 2023 31 March 2022 % % Consumer staples 39.9 38.7 Information technology 20.2 20.2 Healthcare 12.9 16.9 Consumer discretionary 7.1 6.0 Financials 6.7 4.7 Industrials 6.2 5.7 Real estate 3.9 5.8 Communication services 3.1 2.0 100.0 100.0 ### By asset class (including cash and borrowings) 31 March 2023 31 March 2022 % % Equities 106.5 106.1 Cash 0.7 0.4 Borrowings (7.2) (6.5) 100.0 100.0 ### Largest 10 holdings | 31 March 2023 | | 31 March 2023 | | 31 March 2022 | | 31 March 2022 | | | --- | --- | --- | --- | --- | --- | --- | --- | | Market value | | | % of total | Market value | | | % of total | | | £000 | | portfolio | | £000 | | portfolio | British American Tobacco 13,070 5.6 15,683 6.4 Paychex 12,274 5.3 13,724 5.6 Unilever 12,081 5.2 10,158 4.2 PepsiCo 11,984 5.1 10,740 4.4 Reckitt Benckiser 11,824 5.1 10,541 4.3 Philip Morris 10,402 4.4 12,079 4.9 CME Group 9,934 4.2 11,590 4.7 Diageo 9,417 4.0 10,799 4.4 Automatic Data Processing 9,294 4.0 11,348 4.7 Novartis 9,235 3.9 8,341 3.4 10 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 # Portfolio holdings As at 31 March 2023 | | Sector | Country | Market value £000 | % of total portfolio | | --- | --- | --- | --- | --- | | **North America** | | | **124,002** | **52.9** | | Paychex | Information technology | United States | 12,274 | 5.3 | | PepsiCo | Consumer staples | United States | 11,984 | 5.1 | | Philip Morris | Consumer staples | United States | 10,402 | 4.4 | | CME Group | Financials | United States | 9,934 | 4.2 | | ADP | Information technology | United States | 9,294 | 4.0 | | Microsoft | Information technology | United States | 9,104 | 3.9 | | Johnson & Johnson | Healthcare | United States | 7,697 | 3.3 | | Cisco Systems | Information technology | United States | 7,201 | 3.1 | | Procter & Gamble | Consumer staples | United States | 6,652 | 2.8 | | Medtronic | Healthcare | United States | 6,432 | 2.7 | | McDonald's | Consumer discretionary | United States | 5,983 | 2.6 | | Fastenal | Industrials | United States | 5,509 | 2.4 | | Texas Instruments | Information technology | United States | 5,427 | 2.3 | | Hershey | Consumer staples | United States | 4,294 | 1.8 | | Accenture | Information technology | United States | 3,857 | 1.6 | | Coca-Cola | Consumer staples | United States | 3,269 | 1.4 | | Clorox | Consumer staples | United States | 2,694 | 1.1 | | Boston Properties | Real estate | United States | 1,995 | 0.9 | | **Europe** | | | **96,267** | **41.0** | | British American Tobacco | Consumer staples | United Kingdom | 13,070 | 5.6 | | Unilever | Consumer staples | United Kingdom | 12,081 | 5.2 | | Reckitt Benckiser | Consumer staples | United Kingdom | 11,824 | 5.1 | | Diageo | Consumer staples | United Kingdom | 9,417 | 4.0 | | Novartis | Healthcare | Switzerland | 9,235 | 3.9 | | Relx | Industrials | United Kingdom | 9,002 | 3.8 | | Roche | Healthcare | Switzerland | 7,134 | 3.0 | | Admiral Group | Financials | United Kingdom | 5,950 | 2.5 | | Domino's Pizza | Consumer discretionary | United Kingdom | 5,407 | 2.3 | | Intercontinental Hotels | Consumer discretionary | United Kingdom | 5,253 | 2.2 | | Nestle | Consumer staples | Switzerland | 5,191 | 2.2 | | Imperial Brands | Consumer staples | United Kingdom | 2,703 | 1.2 | | **Asia** | | | **14,093** | **6.1** | | Nintendo | Communication services | Japan | 7,075 | 3.1 | | Link REIT | Real estate | Hong Kong | 7,018 | 3.0 | | **Total portfolio** | | | **234,362** | **100.0** | Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 11 ## Strategic report ### Business model Environmental, social and governance (ESG) The Company, as an investment trust, is a UK closed-end The materiality of environmental and social factors has public limited company which invests in a diversified increased over recent years as individuals and regulators portfolio of assets meeting certain tax conditions. have sought to differentiate between companies acting in a responsible and sustainable way and those which are not. The Company has no employees, and the Board Companies with strong corporate governance and capable outsources its entire operational infrastructure to third party management teams will be better placed to navigate these organisations. In particular, the Board appoints and oversees changes and create long-term value for shareholders. Troy Asset Management Limited (‘Troy’ or the ‘Manager’) as independent manager to manage the investment portfolio The availability of relevant non-financial information and and Juniper Partners Limited (‘Juniper Partners’ or the data has improved, resulting in a commensurate increase ‘Company Secretary’) to provide AIFM, company secretarial in the Board and Manager’s focus on ESG factors. As such, and administrative services and to operate the discount the Company’s duty to investors necessitates that analysis control mechanism. The Board sets the Company’s strategy, of material ESG risks and opportunities is integrated into decides the appropriate financial policies to manage the the investment process which includes engagement with assets and liabilities of the Company, ensures compliance companies and voting at their AGMs. This is particularly with tax, legal and regulatory requirements and reports relevant in relation to climate risk which the Manager regularly to shareholders on the Company’s performance. believes to be both material and systemic. The directors do not envisage any change to this model in Both the Board and Manager support the principles of the foreseeable future. the 2020 UK Stewardship Code, issued by the Financial For more information on investment trusts please visit Reporting Council (‘FRC’). These principles typify a high www.theaic.co.uk. standard of responsible investment and stewardship practices. Troy is a signatory to the UK Stewardship Code; a copy of Troy’s Stewardship Report can be viewed at ### Purpose and values www.taml.co.uk. Troy has also been a member of the Purpose United Nations’ Principles for Responsible Investment since The Company’s objective is to achieve rising income and September 2016, further demonstrating its commitment to long-term capital growth which it seeks to deliver for upholding responsible investment practices. shareholders through investment in a balanced portfolio constructed from global equities. Research process Troy’s investment approach is conservative, with attention Values always paid to the downside risk of any investment. Troy’s Independence: to act independently in the interests responsible investment approach aims to ensure alignment of shareholders. with its investment objectives. Central to this is an assessment of ESG-related risks and opportunities during Sustainability: to ensure that the companies in which the the research process. Company invests are supportive of good environmental, social and governance practices and that the Manager Troy may also seek to either mitigate the adverse encourages continuous improvement in these areas. impact or improve the positive impact of investments on the environment or society if doing so is aligned with Transparency: to report transparently and accurately to improving those investments’ risk and return profile. The shareholders on the condition, performance and prospects Manager would only do so if this does not run contrary to of the Company. the investment objectives of the Company. Culture Since materiality is dynamic, the Manager does not seek to limit the categories that ESG encompasses. Rather, The Board considers that its culture of open debate the Manager’s aim is to analyse the ESG factors that combined with strong governance and the benefits of a are material to each company. Troy does not employ a diverse Board is central to delivering its purpose, values prescriptive checklist nor does it seek to score holdings and strategy. The Board monitors and reviews its culture on ESG grounds. Instead, the ESG risks and opportunities as part of its annual evaluation process and monitors the relevant to each company are qualitatively assessed. Some culture within the Manager to ensure that it is closely of the ESG factors considered are outlined below, though aligned with that of the Company. this is not an exhaustive list. 12 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Overview Governance Financial review Investor information Product safety Corporate Climate change Natural capital & responsibility Human capital governance Carbon pricing, Natural resource Product use and Human rights, Board effectiveness, energy mix, management, harm, chemical use, workplace culture and management technological biodiversity, data privacy and employee treatment capability, corporate disruption, pollution, waste and cyber security. and empowerment. behaviour and net zero alignment circularity. business ethics. and physical risk. Climate change reduce their carbon emissions which entails seeking ways to reduce their footprint along their entire value chain. This The extreme weather-related events of 2022 reinforced the means they increasingly apply pressure on their suppliers, gravity with which climate-related calamities can impact like Fastenal, to develop a decarbonisation strategy that is entire economies, communities and the health and stability Paris-aligned. Troy engaged with the company, including of financial markets. meeting senior executives, to encourage Fastenal to Troy’s long holding periods and the potential for a changing provide better reporting and stronger governance on climate to impact physical assets, supply chains and cause climate as well as to set decarbonisation goals that were wide-spread systemic disruptions, heightens the need for supportive of a longer-term transition towards net zero. effective climate change mitigation today to minimise the This engagement has since been closed as successful physical risks at a future date. While the portfolio’s exposure to following Fastenal’s publication of a net zero target and high-impact sectors remains limited given the Manager’s bias decarbonisation strategy in January 2023. towards capital-light and non-cyclical businesses, the Manager The Manager considers (proxy) voting an important part assesses the transition strategies of all investee companies in of its stewardship activities and investment process and order to limit exposure to unmanaged climate-related risks aims to use its voting rights to both safeguard the interests as we transition towards a lower carbon economy. For those of investors and encourage environmental and social interested in learning more, Troy recently published its first sustainability (where these objectives are aligned). The Climate Report aligned with the recommendations of the Task Manager will seek to instruct votes, on behalf of investors, Force for Climate-Related Financial Disclosures (‘TCFD’). on all resolutions for which it has voting authority. Active ownership (engagement and voting) ### Whilst the Manager seeks to invest in companies whose Strategy business strength and corporate governance mean Investment policy they generally do not require significant shareholder The Company’s policy is to invest primarily in global intervention, the Manager recognises that engagement is equities. The majority of the Company’s portfolio is an important aspect of its fiduciary duty. Engagement is invested in large capitalisation companies (market generally conducted proactively but will occasionally be capitalisations over £1 billion). The resulting diversified more reactive if a company takes a course of action that portfolio of international quoted companies is focused, the Manager feels is counter to the creation of long-term typically containing between 30 and 50 high conviction shareholder value. The impetus to engage may stem from stocks selected on the basis of detailed research analysis. a breach by the company of generally accepted business The equity portfolio consists of listed shares and is practice norms, Troy’s proxy voting process or integrated diversified across a range of holdings. ESG analysis. The Manager has unconstrained discretion to select stocks Any engagement would be expected to be constructive, except that: have a clear objective and be material in nature. • no more than 10% of the Company’s gross assets may As an example of such engagement, Troy’s Investment be invested in listed investment companies (including Team carried out climate scoping analysis in early 2021. UK listed investment trusts); This analysis revealed that Fastenal, a global leader in • the Board must approve in advance all investments the distribution of industrial and construction products, in investment schemes which are sponsored by did not have a Paris-aligned carbon reduction target and the Manager; lacked a comprehensive climate strategy. While Fastenal is not a very carbon intensive company itself, its industrial • the sum of all holdings over 5% of the total portfolio customers are under increased stakeholder pressure to must not exceed 40% of the portfolio; STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 13 # Strategic report continued - 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. 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 2023 of 0.5%. 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 reviewed 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 16 and 17 of this report. ## Marketing The marketing strategy seeks to: - increase demand for the Company's shares; - obtain ratings and buy recommendations; and - grow the profile of the Company across the investment space. This is achieved through active promotion by the Manager and the public relations firm employed by the Company. The Manager maintains the Company's website to provide relevant information relating to performance, outlook and significant developments as they occur. The Company regularly produces other engaging materials for shareholders and potential investors. 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 19 September 2023, for £15,795,000 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 30 September 2023. This was unutilised at 31 March 2023. Further information on the Company's covenants can be found in note 12 on page 58. As noted in the Chairman's statement on page 5, the Board is currently discussing renewal terms to replace this facility with an appropriately flexible facility which it expects to be in place when the current facility expires in September 2023. ## 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; 14 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 • the desirability of the Company maintaining a with other third-party suppliers, on behalf of the Overview Governance Financial review Investor information reputation for high standards of business conduct; and Company. The Management Engagement Committee conducts an annual review of the performance, terms • the need to act fairly as between members of the and conditions of the Company’s main service providers Company. to ensure they are performing in line with Board The Board is focused on promoting the long-term success of expectations and providing value for money. the Company and regularly reviews the Company’s long-term • Debt provider – On behalf of the Board, the strategic objectives, including consideration of the impact Manager and Juniper Partners maintain a positive of the Manager’s actions on the marketability and reputation working relationship with The Royal Bank of Scotland of the Company and the likely impact on the Company’s International, the provider of the Company’s loan stakeholders of the Company’s principal strategies. facilities, and provides regular updates on business activities and compliance with its loan covenants. The main stakeholders in the Company are its shareholders, the Manager, service providers and debt provider, along with • Communities and the environment – The Board the wider community in which the Company operates. The expects good governance standards to be maintained Manager also engages with the investee companies where at the companies in which the Company is invested and appropriate, particularly on performance and ESG issues. reviews the engagement and voting activities which are undertaken by the Manager. Further details of the The Board regularly considers its stakeholders at Board Company’s purpose, values and strategy are outlined meetings and receives feedback on the Manager’s on page 12. The ESG strategy followed by the Manager interactions with them. is also detailed on pages 12 and 13. • Shareholders – The Board receives regular reports The Board is always mindful of its responsibilities to the from the Manager on shareholder engagement, with stakeholders of the Company and this forms part of the Manager tasked with maintaining regular and open every Board decision. Specific examples of stakeholder dialogue with major shareholders. Directors, primarily considerations during the year were: through the Chairman, also meet regularly with major shareholders to understand their views and to help • Dividends – In line with the Board’s ambition to provide inform the Board’s decision-making process. The consistent and sustainably rising dividends over time, Company maintains a website which hosts copies of the the Company has continued to pay quarterly dividends, annual and interim reports along with factsheets and which have increased by 5.5% from 2022 and by 8.8% other relevant materials. Shareholders are also invited since the dividend was rebased in 2021. to attend the AGM and the annual investment trust • Discount control mechanism – The Board continued the seminar run by the Manager at which they have the formal discount control mechanism (‘DCM’) to monitor opportunity to speak directly with directors. the discount/premium levels at which the Company’s • Manager – The Manager’s review on pages 7 to 9 details shares are traded. The DCM operates under a policy the key investment decisions taken during the year. The whereby shares can only be issued at a premium and Board works closely with the Manager to develop and bought at a discount to net asset value. The Board monitor its investment strategy and activities, not just to believes the continued operation of the DCM is very achieve its investment objective, but also to deliver the important for shareholders as it provides liquidity and Company’s values of independence, sustainability, and reduced discount volatility. Details of shares bought transparency. The Board receives presentations from back/issued can be found in note 13 on page 58. the Manager at every Board meeting to help it exercise • Succession planning – In line with the Company’s effective oversight of the Manager and the Company’s tenure policy, Angus Gordon Lennox retired at the strategy. The Management Engagement Committee is AGM on 4 July 2022. The Board regularly reviews tasked with reviewing the performance of the Manager its composition and succession planning ensuring at least annually. that there remains an appropriate level of skills and • Service providers – The Board seeks to maintain experience on the Board to provide an effective constructive relationships with the Company’s key oversight structure for the Company’s operations. As suppliers, either directly or through the Manager or a result of these considerations, Alexandra Innes was the Company Secretary, with regular communications appointed as a director on 4 April 2022. In addition, and meetings. A key relationship is with Juniper Sarah Harvey assumed the role of Senior Independent Partners, who provide AIFM, company secretarial and Director and the Board commenced a search for an fund administration services, as well as operating the additional director. Following a rigorous recruitment discount control mechanism. The Company Secretary process, Gillian Elcock will be appointed to the Board on is tasked with maintaining a constructive relationship 21 September 2023. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 15 ## Strategic report continued • Communication – The Board are aware of the changing ### Principal risks and uncertainties nature of the way in which investors hold their shares Risk and mitigation and that the majority of investors now hold through online platforms. The Board are keen to ensure that the The Company’s business model is longstanding and Company remains as accessible as possible to existing resilient to most of the short-term uncertainties that it and future investors. faces, which the Board believes are effectively mitigated by its internal controls and the oversight of the Manager, as During the year the Company undertook a detailed described in the table below. The principal and emerging marketing review, with the assistance of external risks and uncertainties are therefore largely longer term consultants, to better understand investors views of the and driven by the inherent uncertainties of investing in Company and the information they wish to receive. As global equity markets. a result of this review a number of marketing initiatives have been implemented including a refreshed website The Board believes that it is able to respond to these and a wider distribution plan to ensure all investors longer-term risks and uncertainties with effective mitigation have access to the relevant information on the so that both the potential impact and the likelihood Company regardless of how they hold their shares. of these seriously affecting shareholders’ interests are • Name change – As part of the wider marketing project materially reduced. and the aim to improve the marketability of the shares the Board also undertook a detailed review of the Operational and management risks along with a review of Company’s name. The conclusion of this review was potential emerging risks, are regularly monitored at Board that the name be changed to STS Global Income & meetings and the Board’s planned mitigation measures Growth Trust. Further explanation of the rationale for for the principal and emerging risks are described in the the name change can be found on page 5. table below. As part of its annual strategy meeting, the Board carries out a robust assessment of the principal and Principal developments and future prospects emerging risks facing the Company, including those that would threaten its business model, future performance, The principal business developments over the course of solvency or liquidity. the year and an update on the future prospects for the Company are set out in the Chairman’s statement on The Board maintains a risk register and also carries out a pages 4 to 6 and the Manager’s review on pages 7 to 9. detailed risk analysis as part of its annual strategy meeting. The future performance of the Company depends upon the The Board has identified the following principal and success of the Company’s investment strategy in the light of emerging risks to the Company: economic factors and equity markets developments. Principal risks Mitigation and management Investment strategy and objectives – Pursuing The Board formally reviews the Company’s objective and strategy on an an investment strategy to fulfil the Company’s annual basis, or more regularly if appropriate. The Board also receives objective which the market perceives to be updates at each Board meeting from the Manager with regards to the unattractive or inappropriate may lead to portfolio and its performance; receives broker updates on the market; and reduced returns for shareholders and, as a is updated on the make-up and movements in the shareholder register. result, the Company may become unattractive In addition, the Company operates a discount control mechanism; the to investors, leading to decreased demand for marketing and distribution activity is actively reviewed; and the Board and its shares and a widening discount. Manager proactively engage with shareholders on an ongoing basis. Investment management – If the longer-term The Board manages the risk of investment underperformance by relying performance of the investment portfolio on the Manager’s stock selection skills within a framework of diversification does not deliver income and capital returns and other investment restrictions and guidelines. in line with the investment objective and/ The Board monitors the implementation and results of the investment or consistently underperforms market process with the Manager (who attends all Board meetings) and reviews expectations, the Company may become data that shows statistical measures of the Company’s risk profile. Should unattractive to investors. 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. 16 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Principal risks Mitigation and management Macro-economic and market risk – The The Board receives regular updates on the Company’s portfolio and Company’s portfolio is invested in listed the investment environment in which the Manager is operating. An equities and is therefore exposed to events explanation of the different components of market risk and how they are or developments which can affect the individually managed is contained in note 18 to the financial statements on general level of share prices, including pages 60 to 63. 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. Governance Financial review Investor informationOverview Gearing and leverage risk – The Company The Company’s gearing is maintained at a conservative and manageable may borrow money for investment purposes. level. All borrowing facilities require prior approval of the Board and While this has the potential to enhance actual borrowing levels are discussed by the Board and Manager at investment returns in rising markets, in falling every meeting. Details of the Company’s current borrowings and unused markets the impact could be detrimental facilities can be found in note 12 to the financial statements on page 58. to performance. If borrowing facilities are The Company’s investments are in quoted securities that are readily not renewed, the Company may have to sell realisable and the Board regularly reviews the liquidity level of the investments to repay borrowings. portfolio in order to assess how quickly, if necessary, the borrowings could be repaid. The Board, through the Company Secretary, maintains an open and constructive dialogue with the Company’s lenders to ensure that any renewal of the facilities is co-ordinated well in advance of the expiration of any existing facilities. Discount risk – The discount/premium at The Company operates a discount control mechanism which aims to which the Company’s shares trade relative to ensure, in normal market conditions, the Company’s shares trade, on a its net asset value can fluctuate. The risk of a consistent basis, at or very close to net asset value. The Board reviews the widening discount is that it may undermine operation of the discount control mechanism at each Board meeting and investor confidence in the Company. 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 The Board carries out an annual evaluation of its service providers and dependent on third parties for the provision gives regular feedback to the Manager and Company Secretary through of all services and systems. Any fraud, control the Management Engagement Committee. The Board receives and failures, cyber threats, business continuity reviews control reports from all service providers where appropriate. issues at, or poor service from, these third Periodically, the Board requests representatives from third party service parties could result in financial loss or providers to attend Board meetings to give the Board the opportunity to reputational damage to the Company. discuss the controls that are in place directly with the third-party providers. Accounting, legal and regulatory – In order The Board considers that, given the regular oversight of this risk carried to continue to qualify as an investment out by the Company Secretary and reviewed by the Board, the likelihood trust, the Company must comply with of this risk occurring is minimal. The Audit and Risk Committee regularly the requirements of section 1158 of the reviews the eligibility conditions and the Company’s compliance against Corporation Tax Act 2010. Breaches of the each, including the minimum dividend requirements and shareholder UK Listing Rules, the Companies Act or composition for close company status. other regulations with which the Company is The Board receives reports from the Manager and Juniper Partners required to comply, could lead to a number in its capacity as AIFM and Company Secretary to enable it to ensure of detrimental outcomes. compliance with all applicable rules. Climate change risk – There is increasing The investment process is focused on ESG issues and, as set out on awareness of the challenges and emerging pages 12 and 13, this includes an assessment of the potential impact of risks posed by climate change. climate change. Overall the specific potential effects of climate change are difficult, if not impossible to predict and the Board and Manager continue to monitor material physical and transition risks and opportunities as part of the investment process. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 17 # Strategic report continued | Principal risks | Mitigation and management | | --- | --- | | 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 seeks 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 2023 was (1.8)% against the Lipper Global-Equity Global Income Index total return of 0.5%, resulting in an underperformance of 2.3% (2022: overperformance of 6.0%). ### 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 fell to 220.37p at 31 March 2023, from 230.75p as at 31 March 2022, a decrease of 4.5% (2022: increase of 13.8%). The Chairman's statement, on pages 4 to 6, and the Manager's review, on pages 7 to 9, 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 ended 31 March 2023 were 0.94% (2022: 0.93%) and therefore the KPI was achieved. | Summary of KPIs | Target | Actual | Achieved | | --- | --- | --- | --- | | 1. Performance comparison | Total return to exceed the Lipper Global – Equity Global Income Index | (2.3)% | ✗ | | 2. Growth in net assets | Growth in cum income NAV | (4.5)% | ✗ | | 3. Ongoing charges | Below 1.0% | 0.94% | ✓ | | 4. Average premium/(discount) | At or very close to NAV | 0.5% | ✓ | | 5. Rising income | Dividend per share growth | 5.5% | ✓ | Approved by the Board John Evans 7 June 2023 ### 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 2023, the share price was at a discount of 2.89% (31 March 2022 – premium of 0.11%). The average premium for the year was 0.5% (2022: discount of 1.6%). 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 through 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 2023 was 6.20p, an increase of 5.5% on the annual dividend for the year ended 31 March 2022 of 5.875p. 18 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Board of directors Overview Governance Financial review Investor information ## John Evans Sarah Harvey Independent Non-Executive Director – Chairman Senior Independent Director – Chair of the Marketing and Communications Committee John has over 40 years of experience in the investment Sarah has extensive experience in corporate strategy, trust sector as both a manager and subsequently as a non- product and technology, marketing and operations. Sarah executive director. In 1990 John was one of the founders has worked in general management roles for a variety of of Aberforth Partners, a specialist investment management fast growing, international scale up businesses including firm that invests in UK smaller quoted companies, generally Prodigy Finance Ltd, Square Inc and Tough Mudder on behalf of institutional investors. Following his retirement Inc and now advises a number of mid-cap and scale up from Aberforth, John has been a director and Chair of a firms. Her career began with Bain & Company before number of investment trusts. In addition to being Chair of working in strategy on a range of international projects STS Global Income & Growth Trust he is currently Chair of for businesses and not for-profit organisations. She was JP Morgan Mid Cap Investment Trust. He joined the Board appointed to the Board of STS Global Income & Growth of STS Global Income & Growth Trust in February 2016 and Trust in October 2018. was appointed Chairman in November 2019. ## Mark Little Angus Cockburn Independent Non-Executive Director – Chairman of the Independent Non-Executive Director – Chairman of Audit and Risk Committee the Management Engagement Committee Mark has an extensive knowledge of the investment After six years as Group Chief Financial Officer of Serco industry, as the former Managing Director of Barclays Group plc, Angus stepped down from the Serco Board Wealth Scotland and Northern Ireland. Mark held this in April 2021. Angus is a chartered accountant with position for eight years until 2013 when he retired. Prior to considerable experience gained in a variety of sectors. He this, Mark held the position of Global Head of Automotive has an MBA from the IMD Business School in Switzerland, Research at Deutsche Bank where he managed and is an Honorary Professor at the University of Edinburgh coordinated its global automotive research product. He is and a member of the Institute of Chartered Accountants currently a non-executive director of Majedie Investments of Scotland. Prior to joining Serco Group plc in 2014 plc, BlackRock Smaller Companies Trust plc, abrdn Equity Angus held roles as Chief Financial Officer and Interim Income Trust plc and acts as a consultant to Lindsays LLP. Chief Executive of Aggreko plc, Managing Director of He was appointed to the Board of STS Global Income & Pringle of Scotland and held senior finance positions Growth Trust in October 2014. at PepsiCo Inc including Regional Finance Director for Central Europe. 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 STS Global Income & Growth Trust in May 2021. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 19 ## Board of directors continued ## Alexandra Innes Gillian Elcock Independent Non-Executive Director – Chair of the Gillian will be appointed to the Board of STS Global Nomination and Remuneration Committee Income & Growth Trust on 21 September 2023 Alexandra is a non-executive Committee Member Gillian is the founder of Denny Ellison, an independent at the Bank of England, a non-executive adviser and investment research and training company, and was its member of the Group Executive Board at Knight Frank Managing Director for ten years. Prior to this, she worked LLP, and a non-executive director of Dowlais Group Plc, as an equity research analyst for several years at Putnam Waverton Investment Management Group Ltd, Schroder Investments and Insight Investment. She was named a Real Estate Investment Trust Ltd, and the UCI Cycling finalist in the ‘Investment Analyst of the Year’ category World Championships Ltd, as well as being the Senior of the Women in Investment Awards 2018. She started Independent Director at Facilities by ADF plc. Alexandra’s her career as a management consultant at The Boston international executive career spanned investment banking, Consulting Group. Gillian is a Non-Executive Director of global capital markets, and investment management, most International Biotechnology Trust plc. She is also a member latterly as Managing Director at Barclays plc, and prior of the Board of the CFA UK and was previously Chair of to that as Director of Global Markets at Bank of America its Networks Steering Committee and a member of its Merrill Lynch. She is a Fellow of Chapter Zero, holds an MA Nominating Committee. Gillian holds an MBA from the Hons Economics from Cambridge University, is a Chartered Harvard Business School and MEng and BSc degrees from Member of the CISI (MCSI), a Green and Sustainable the Massachusetts Institute of Technology. Finance Professional, Chartered Banker Institute (CCBI GSFP), and holds the CFA Certificate in ESG Investing. She was appointed to the Board of STS Global Income & Growth Trust in April 2022. 20 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 # Report of the directors The directors present their report and the audited financial statements of the Company for the year ended 31 March 2023 ## 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 after expenses, interest and taxation was £6,341,000 (2022: £5,854,000), equivalent to a return of 6.34p per share (2022: 5.82p). Interim dividends totalling 4.35p have been paid during the year. The directors recommend a fourth interim dividend of 1.85p per share to be paid on 14 July 2023 to holders on the register at the close of business on 16 June 2023, making a total for the year of 6.20p (2022: 5.875p). ## Share capital As at 31 March 2023, the Company had 99,483,575 ordinary shares of one pence each in issue (2022: 99,525,075) and 22,815,573 ordinary shares held in treasury (2022: 22,774,073). The Company repurchased 1,616,500 shares into treasury at a cost of £3,586,000 during the year. This represented 1.6% of the issued share capital at the year end and had a nominal value of £16,165. During the year 1,575,000 shares held in treasury were reissued for net proceeds of £3,631,000. A special resolution to renew the authorities to issue and repurchase shares will be put to shareholders for approval at the AGM. ## Directors The Board currently consists of five non-executive directors. The names and biographies of the current directors are set out on pages 19 and 20, 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. As noted in the Chairman's statement on page 5, Gillian Elcock will be appointed as a non-executive director on 21 September 2023. 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. 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 28 to 34 which forms part of this report of the directors. ## Management arrangements ### The Manager The Company appointed Troy Asset Management Limited as investment 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 as its alternative investment fund manager with effect from 12 November 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 £64,000. The AIFM has formally delegated the portfolio 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. Troy also made an 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. Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 21 ## Report of the directors continued ### Continued appointment of the Manager Substantial interests The Board, through the work of the Management During the year to 31 March 2023 the Company received Engagement Committee, conducts an annual performance notification in accordance with the FCA’s Disclosure appraisal of the Manager against a number of criteria, Guidance and Transparency Rule 5.1.2R of the following including operational performance, investment interests in the voting rights attaching to the Company’s performance, investment management fees and other issued share capital: contractual considerations. % issued Following the review by the Management Engagement As at 31 March 2023 No. of shares share capital Committee outlined on page 32, the Board considers the continuing appointment of the Manager to be in the best Rathbone Investment interests of the shareholders at this time. Management 12,964,585 13.0 As at 31 March 2023 James Harries had an interest in Since the year end and up to the date of this report, the 100,000 shares of the Company. Tomasz Boniek, Assistant Company has been notified of the following: Manager, had an interest in 15,974 shares of the Company. % issued | Company secretarial, accounting and administration | | No. of shares | share capital | | --- | --- | --- | --- | | Juniper Partners provides company secretarial, | Rathbone Investment | | | | accounting and administration services to the Company. | Management 12,884,803 13.0 | | | Juniper Partners also operates the Company’s discount As at 6 June 2023, the last practicable date prior to the control mechanism. printing of this report, the Company has 98,508,575 Depositary and custodian ordinary shares in issue (excluding treasury shares). JP Morgan Europe Limited is the Company’s depositary ### and the custodian is JP Morgan Chase Bank N.A. The Shareholder and voting rights depositary’s responsibilities include cash monitoring, Each ordinary shareholder is entitled to one vote on a safe keeping of the Company’s financial instruments and show of hands and, on a poll, to one vote for every share monitoring the Company’s compliance with investment held. The ordinary shares carry a right to receive dividends limits and leverage requirements. The depositary has which are declared from time to time by the Company. On delegated the safe keeping function to the custodian. a winding-up, after meeting the liabilities of the Company, any surplus assets would be paid to ordinary shareholders | Shareholder analysis | | | | | in proportion to their shareholdings. | | --- | --- | --- | --- | --- | --- | | | | % of issued | | % of issued | There are no restrictions on the transfer of ordinary shares | | | share capital at | | share capital at | | in the Company other than certain restrictions which may | | | 31 March 2023 | | 31 March 2022 | | from time to time be imposed by law (for example, insider | trading law) and there are no special rights attached to Wealth managers 55.1 55.0 any of the ordinary shares. The Company is not aware of D2C Platform 26.9 26.8 any agreements between shareholders which may result in Institution 5.0 5.1 restrictions on the transfer of ordinary shares or the voting rights attached to them. IFA Platform 1.3 1.1 Other 11.7 12.0 ### Corporate governance statement 100.0 100.0 The Company’s corporate governance statement is set out on pages 28 to 34 and forms part of this report of Source: RDIR the directors. 22 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Voting policy 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, confirms: - 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. ## 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. ## 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 2023 is shown on the statement of financial position on page 49. The statement of cash flow of the Company is set out on page 51. Note 18 on pages 60 to 63 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 2023. 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. Discussions are ongoing 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 16 and 17. 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 2025, which is at least 12 months from the date the financial statements are authorised for issue. Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 23 ## Report of the directors continued ### Viability statement Performance, outlook and trends likely to ### The Company’s business model is designed to achieve affect future performance rising income and long-term capital growth through Please refer to the Chairman’s statement on pages 4 to 6 investment in a balanced portfolio constructed from and the Manager’s review on pages 7 to 9 for an update global equities unconstrained by geography, sector, stock on the performance of the Company over the year and or market capitalisation. The business model is based outlook for 2023, together with information on the trends on having no fixed or limited life provided global equity likely to affect the future performance of the Company. markets continue to operate normally. The Board has assessed its viability over a five year period as it believes ### AGM this is an appropriate period over which it does not expect The AGM of the Company will be held at 2.00pm on there to be any significant change to the principal risks 20 September 2023, at 28 Walker Street, Edinburgh EH3 7HR. and adequacy of the mitigating controls in place. The Board considers that this reflects the minimum period Shareholders are encouraged to vote by proxy. If shares which should be considered in the context of its long-term are not held directly, for example either through a platform objective but one which is limited by the inherent and or a wealth manager, investors are encouraged to arrange increasing uncertainties involved in assessment over a for their nominee to vote on their behalf. Questions to the longer period. AGM may be written on the form of proxy in the space provided, and a written response will be posted on the In making this assessment the directors took comfort Company’s website following the meeting. The Notice of from the results of a series of stress tests that considered AGM is included on pages 70 to 73. Resolutions relating to the impact of severe market downturn scenarios on the the following items of business will be proposed: Company’s financial position. The directors also considered the following risks to its ongoing viability: Remuneration report – ordinary resolution • the principal and emerging risks and uncertainties and In accordance with the provisions of the Companies Act the mitigating actions set out on pages 16 and 17; 2006 the directors’ remuneration report will be put to • the mitigation measures which key service providers an annual shareholder vote by ordinary resolution. The including the Manager have in place to maintain vote is advisory in nature and is in respect of the overall operational resilience; remuneration package which is in place for directors of the Company, and not specific to individual levels • the challenges posed by climate change; of remuneration. • the ongoing relevance of the Company’s investment objective in the current environment; Remuneration policy – ordinary resolution • the level of income forecast to be generated by the The Company seeks approval of the directors’ Company and the liquidity of the Company’s portfolio; remuneration policy every three years. The policy was • the level of fixed costs and debt relative to its liquid last approved at the annual general meeting held in 2020 assets; and and is therefore due for approval again at the upcoming • the expectation is that the current portfolio could AGM. Resolution 3, which is an ordinary resolution, seeks be liquidated to the extent of 97.6% within three approval of the policy which is set out in detail on page 35. trading days. Dividend policy – ordinary resolution Based on this assessment, the Board has a reasonable As a result of the timing of the payment of the Company’s expectation that the Company will be able to continue in quarterly dividends in January, April, July and October, operation and meet its liabilities as they fall due over the the Company’s shareholders are unable to approve a final next five years. dividend each year. As an alternative the Board intend to put the Company’s dividend policy to shareholders for ### Post balance sheet events approval on an annual basis. Since 31 March 2023, there are no commitments/ contingent liabilities and post balance sheet events which would require the adjustment of or disclosure in the financial statements. 24 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Resolution 4, 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 and outlook. ### Election and re-election of directors – ordinary resolutions Biographical detail of the directors can be found on pages 19 and 20. 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 evaluation, each director continues to make an effective and valuable contribution to the Board and demonstrates commitment to their role. ### Aggregate directors' remuneration – ordinary resolution The articles of association provide that directors' fees shall not, in aggregate, exceed £200,000 per annum. Although there are currently no plans to make any further changes to the levels of fees paid to the non-executive directors, save for those increases disclosed in the remuneration report, the Board wish to propose an increase to the fee limit contained in the articles of association to reflect the increased size of the Board and to allow for the recruitment of additional non-executive directors as part of the continued refreshment of the Board. It is proposed that the fee limit be increased to £250,000 per annum in aggregate. Directors' remuneration will continue to be paid in accordance with the approved directors' remuneration policy. ### 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 13 seeks to renew the directors' authority to allot shares up to a maximum aggregate nominal amount of £328,362 (being an amount equal to one third of the issued share capital of the Company (excluding treasury shares) as at 6 June 2023, 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 6 June 2023, being the last practicable date prior to the publication of this document, the Company held 23,790,573 ordinary shares in treasury, representing approximately 24.2% of the Company's issued share capital (excluding treasury shares). The authority will expire on 30 September 2024 or, if earlier, at the AGM of the Company to be held in 2024, unless previously cancelled or varied by the Company in general meeting. ### Disapplication of statutory pre-emption rights – special resolution Resolution 14 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, including treasury shares as at 6 June 2023, 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 6 June 2023, being the last practicable date prior to the publication of this document, the Company held 23,790,573 ordinary shares in treasury, representing approximately 24.2% 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 15. 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 15 specifies the maximum number of shares that may be acquired being 14.99% of the issued share capital as at 6 June 2023, being the last practicable date prior to the publication of this document, and the maximum and minimum prices at which they may be bought and, if passed, would lapse at the Company's AGM in 2024. Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 25 # Report of the directors continued 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 2023, the Company bought back 1,616,500 ordinary shares to be held in treasury. As at 31 March 2023, the Company holds 22,815,573 shares in treasury representing 22.9% of the issued share capital of the Company. As at 6 June 2023 being the last practicable date before publication of the accounts, the Company holds 23,790,573 shares in the treasury representing 24.2% 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 16 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 Standard 102 '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; - 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. 26 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 The directors are responsible for keeping adequate ### Responsibility statement accounting records that are sufficient to show and explain We confirm that to the best of our knowledge: the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company • the financial statements, prepared in accordance with and enable them to ensure that the financial statements United Kingdom Generally Accepted Accounting comply with the Companies Act 2006. They are also Practice, including FRS 102 ‘The Financial Reporting responsible for safeguarding the assets of the Company Standard applicable in the UK and Republic of Ireland’, and hence for taking reasonable steps for the prevention give a true and fair view of the assets, liabilities, and detection of fraud and other irregularities. financial position and profit or loss of the Company; • the annual report, including the strategic report, Under applicable law and regulations, the directors are includes a fair review of the development and also responsible for preparing a strategic report, directors’ performance of the business and the position of the report, directors’ remuneration report and corporate Company, together with a description of the principal governance statement that comply with that law and and emerging risks and uncertainties that it faces; and those regulations. • the annual report and financial statements, taken as The financial statements are published on the Company’s a whole, are fair, balanced and understandable and website, www.stsplc.co.uk, which is maintained by the provide the information necessary for shareholders to Manager. The maintenance and integrity of the website assess the Company’s performance, business model is, so far as it relates to the Company, the responsibility of and strategy. the Manager. This responsibility statement was approved by the Board of The directors are responsible for the maintenance and Financial review Investor informationOverview Governance directors on 7 June 2023 and is signed on its behalf by: integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and John Evans dissemination of financial statements may differ from 7 June 2023 legislation in other jurisdictions. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 27 ## Corporate governance statement An investment trust Board provides a very specific and ### Corporate governance proactive form of direct oversight of the investment of the Corporate governance is the process by which the Board shareholders’ funds. seeks to look after shareholders’ interests and protect and enhance shareholder value. Shareholders hold the The Board takes this responsibility extremely seriously directors responsible for the stewardship of the Company, and serves shareholders by ensuring that the interests of delegating authority and responsibility to the directors to the Manager are aligned as closely as possible with those manage the Company on their behalf and holding them of shareholders. accountable for its performance. The Board consists of a Chairman and four non-executive The Board is ultimately responsible for framing and directors, all of whom are considered under the AIC executing the Company’s strategy and for closely Code to be independent of the Manager and free of monitoring risks. It aims to run the Company in a manner any relationship which could materially interfere with the which is responsible and consistent with our belief in exercise of their independent judgement on issues of honesty, transparency and accountability. In our view, strategy, performance, resources and standards of conduct. good governance means managing our business well and Biographies for all of the directors are on pages 19 and 20, engaging effectively with investors. The Board consider which demonstrate a breadth of investment knowledge, the practice of good governance to be an integral part business and financial skills which enable them to provide of the way it manages the Company and is committed effective strategic leadership and proper governance of to maintaining high standards of financial reporting, the Company. transparency and business integrity. The number of routine Board and committee meetings This report, which is part of the Report of the directors, attended by each director during the year compared explains how the Board addresses its responsibility, to the total number of meetings that each director was authority and accountability. eligible to attend is detailed in the table on page 29. The Board meets formally at least five times a year, and more Compliance with the AIC Code frequently where business needs require. In addition, the The Board of the Company has considered the Principles Board maintains regular contact with the Manager and and Provisions of the 2019 AIC Code of Corporate Company Secretary. Governance (‘AIC Code’). The AIC Code addresses the The primary focus at regular Board meetings is a review of principles and provisions set out in the 2018 UK Corporate investment performance and associated matters including Governance Code (the ‘UK Code’), as well as setting asset allocation, promotion and investor relations, peer out additional provisions on issues that are of specific group information and industry issues. To enable the Board relevance to investment companies. The Board considers to function effectively and allow directors to discharge that reporting against the principles and provisions of their responsibilities, full and timely access is given to the AIC Code, which has been endorsed by the Financial all relevant information. In the case of Board meetings, Reporting Council provides more relevant information to this consists of a comprehensive set of papers, including Shareholders than if it had adopted the UK Code. The AIC the portfolio manager’s review, performance reports and Code is available on the AIC website (www.theaic.co.uk). It discussion documents regarding specific matters. Directors includes an explanation of how the AIC Code adapts the have made further enquiries where necessary. Principles and Provisions set out in the UK Code to make them relevant for investment companies. The Board sets the Company’s values and objectives and ensures that its obligations to its shareholders are met. ### Role of the Board It has formally adopted a schedule of matters which are Investment companies have a board of directors whose required to be brought to it for decision, thus ensuring duty it is to govern the Company to secure the best that it maintains full and effective control over appropriate possible return for shareholders within the framework strategic, financial, operational and compliance issues. set out in the Company’s articles of association – in The Board undertakes an annual review of culture, policies other words, to look after the interests of shareholders. and practices to ensure that they are aligned with the The Board met five times during the year on a formal Company’s values and objectives. basis and on an ad-hoc basis when required, to consider the Company’s strategy and monitor the Company’s performance (see table on the next page). The directors are directly answerable to shareholders. 28 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 The role of the Chairman and Senior Independent appraisal of the Chairman’s performance and is available Director to shareholders to discuss any concerns they may have. As noted in the Chairman’s statement, Sarah Harvey assumed The Chairman is responsible for providing effective the role of Senior Independent Director following Angus leadership to the Board, by setting the tone of the Gordon Lennox’s retirement at the 2022 AGM. Company, demonstrating objective judgement and promoting a culture of openness and debate. The Committee structure Chairman facilitates effective contribution, and encourages active engagement, by each director. The Chairman There are four Board committees: Audit and Risk, also ensures that directors receive accurate, timely and Marketing and Communications, Management clear information to assist them with effective decision- Engagement and Nomination and Remuneration. Terms making. The Chairman leads the evaluation of the Board of reference for each of the committees are available via and individual directors, and acts upon the results of the Company Secretary. Directors who are not members of the evaluation process by recognising strengths and committees may attend at the invitation of the committee addressing any weaknesses. The Chairman also engages chairman. Further details of the work of each committee with major shareholders and ensures that all directors and their members is set out on page 33. understand shareholder views. Directors’ meetings The Senior Independent Director acts as a sounding The following table shows the number of formal Board and Board for the Chairman and acts as an intermediary for Board Committee meetings held during the year and the other directors, when necessary. Working closely with the number attended by each director. Nomination and Remuneration Committee, the Senior Independent Director takes responsibility for the annual Financial review Investor informationOverview Governance | | | Management | | | Nomination and | | Marketing and | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Engagement | Audit and Risk | | Remuneration | | Communications | | | | Board | Committee | | Committee | | Committee | | Committee | | (5 meetings) | | (1 meeting) | | (3 meetings) | | (1 meeting) | | (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 2/2 0/0 1/1 0/0 0/0 Sarah Harvey 5/5 1/1 3/3 1/1 2/2 Alexandra Innes 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 and Risk Committee but attended each of the meetings. 2. Angus Gordon Lennox retired on 4 July 2022. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 29 ## Corporate governance statement continued ### Directors’ independence and succession Tenure ### planning The Board has adopted a tenure policy for all directors, The Board consists of five non-executive directors, each including the Chairman, which states that the Board of whom is considered independent. Directors are initially believes that it is an advantage to have the continuous appointed until the following annual general meeting contribution of directors over a period of time during when, under the Company’s articles of association, it which they are able to develop awareness and insight of is required that they be elected by shareholders. The the Company and thereby be able to make a valuable Board has decided that all directors will stand for annual contribution to the Board as a whole. The Board believes re-election in line with best practice under the AIC Code. that it is appropriate for a director to serve for up to nine years following their initial election at their first AGM, and The Board does not believe that length of service in itself it is expected that directors will stand down from the Board necessarily disqualifies a director from seeking re-election after that time. However, a flexible approach to tenure but, when making a recommendation, the Board will has been adopted and that period may be extended for take into account the ongoing requirements of the AIC a limited time to facilitate effective succession planning Code, including the need to refresh the Board and whilst still ensuring regular refreshment and diversity on its committees. the Board. In accordance with the AIC Code, all directors are ### Board diversity considered to be independent of the Manager. They are free of any relationship which could materially interfere with The Nomination and Remuneration Committee considers the exercise of their independent judgement on issues of diversity, including balance of skills, knowledge, gender, strategy, performance, resources and standards of conduct social and ethnic backgrounds, cognitive and personal and demonstrate a breadth of investment knowledge, strengths and experience , amongst other factors when business and financial skills which enable them to provide reviewing the composition of the Board. effective strategic leadership and proper governance of The Nomination and Remuneration Committee does not the Company. consider it appropriate to establish diversity targets or The Board plans for its own succession with the assistance quotas at this time. However, it is conscious of the diversity of the Nomination and Remuneration Committee. This targets set out in the FCA Listing Rules and the AIC Code process involves the identification of the need for a new of Corporate Governance in appointing appropriately appointment, and the preparation of a brief including diverse, independent non-executive directors who set the a description of the role and specification of the operational and moral standards of the Company and aims capabilities required. to have an appropriate level of diversity on the Board. The Nomination and Remuneration Committee may seek In accordance with Listing Rule 9.8.6R (9), (10) and (11) the assistance in identifying suitable candidates by appointing Board has provided the following information in relation to an external recruitment firm. During the year the Company its diversity as at 31 March 2023, being the financial year- engaged Stonehaven Search Limited as its external end of the Company. The information included in the tables recruitment firm as part of the recruitment of Gillian Elcock, below has been obtained following confirmation from the who will be appointed to the Board on 21 September 2023. individual directors. As shown in the tables, the Company Stonehaven does not have any other connections with the did not meet the FCA ethnic diversity target as at 31 March Company. It would typically consider candidates from a 2023, however, with effect from 21 September 2023 and the wide range of backgrounds, having consideration for the appointment of Gillian Elcock, the Company will meet the diversity of the Board as a whole, including but not limited new target. The Board will continue to take all matters of to gender and ethnicity. diversity into account as part of its succession planning and aims to have an appropriate level of diversity on the Board. 30 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Board gender as at 31 March 2023 | Number of | | | | Number of | | Number in | | Percentage of | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Board | Percentage | senior positions | | | executive | | | executive | | | | | | | | 4 | | 1 | | | 1 | | members | | of the Board | on the Board | | | management | | management | | | Men 3 60% 1 n/a n/a 2 3 Woman 2 40% 1 n/a n/a Not specified/prefer not to say – – – n/a n/a Board ethnic background as at 31 March 2023 | Number of | | | | Number of | | Number in | | Percentage of | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Board | Percentage | senior positions | | | executive | | | executive | | | | | | | | 4 | | 1 | | | 1 | | members | | of the Board | on the Board | | | management | | management | | | White British or other white 5 (including minority-white groups) 5 100% 2 n/a n/a Mixed/multiple ethnic groups – – – n/a n/a Asian/Asian British – – – n/a n/a Black/African/Caribbean/ Black British – – – n/a n/a Other ethnic group, Financial review Investor informationOverview Governance including Arab – – – n/a n/a Not specified/prefer not to say – – – n/a n/a 1. The number of Directors in executive management is not applicable for an investment trust. 2. This meets the Listing Rules target of 40%. 3. This meets the Listing Rules target of at least one senior position on the Board to be held by a woman. 4. For the purposes of the Listing Rule disclosures only the positions of Chairman and Senior Independent Director are relevant for an investment trust. 5. With effect from 21 September 2023, following the appointment of Gillian Elcock, the Company will meet the Listing Rules target on ethnic diversity of one ethnic individual. ### Induction and training Performance evaluation The Company Secretary provides all directors with A formal, annual, appraisal system has been agreed induction training on appointment, tailored to the needs for the evaluation of the Board, its committees and the of individual appointees. The induction programme individual directors, including the Chairman. The Board includes one-to-one meetings with representatives of the and Committee evaluation questionnaires are drawn Manager and the Company Secretary. Regular briefings are up by the Company Secretary and completed by each provided on changes in regulatory requirements that affect Director. The responses are collated and discussed. The the Company and directors. Directors are encouraged Chairman leads the evaluation of the Board, committee to attend industry and other seminars covering issues and individual directors, including consideration of the and developments relevant to investment trusts. Board time commitment, skills and experience of the directors, meetings regularly include agenda items on recent while the Senior Independent Director leads the evaluation developments in governance and investment trust issues. 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 ### Directors’ indemnity results of the evaluation process were presented to and The Company provides a deed of indemnity to each considered by the Board. There were no significant actions director to the extent permitted by United Kingdom arising from the evaluation process and it was agreed that law whereby the Company is able to indemnify such a the current composition of the Board and its committees director against any defence costs incurred in proceedings reflected a suitable mix of skills and experience. It brought by the Company against a director in which the concluded that the Board as a whole, the individual director successfully defends. The Company also has in directors and its committees were functioning effectively. place a director and officer liability insurance policy that is renewed annually. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 31 ## Corporate governance statement continued As a result of the Board’s evaluation process the Chairman ### Modern slavery statement confirms that all directors continue to be effective and their The Modern Slavery Act 2015 requires certain companies election/re-election is recommended. to prepare a slavery and human trafficking statement. As the Company has no employees and does not supply The Board also regularly reviews the performance of the goods and services, it does not fall within the scope of the Manager. The Management Engagement Committee meets Modern Slavery Act and therefore no slavery or human to review the continuing appointment of the Manager trafficking statement is included in the annual report. and reviews the terms of the investment management Whilst the Company is not within the scope of the Modern agreement, to ensure that it remains competitive and in Slavery Act 2015, it has considered its supply chains to be the best interest of shareholders along with the continuing of low risk. The Company’s supply chain is limited, and appointment of other key service providers. its suppliers include Troy as Manager, Juniper Partners as AIFM, Company Secretary and administrator and a ### Company secretary number of other professional firms and advisers. The The Board has direct access to company secretarial Company takes a zero-tolerance approach to slavery and advice and services of Juniper Partners which, through its human trafficking and expects all those it deals with to nominated representatives, is responsible for ensuring that demonstrate the same attitude. Board and committee procedures are followed, and that applicable regulations are complied with. ### Relations with shareholders The Company places great importance on communication ### Conflicts of interest with shareholders. It aims to provide shareholders with Directors are required to disclose all actual and potential a full understanding of the Company’s activities and conflicts of interest to the Board as they arise for performance and reports formally to shareholders twice a consideration and approval. The Board may impose year by way of the annual report and the half-yearly report. restrictions or refuse to authorise such conflicts if deemed The net asset value of the Company’s shares is available appropriate. The Board regularly monitors the interests daily through the London Stock Exchange and the of each director and a register of directors’ interests, Company’s monthly updates are available on the website. including potential conflicts of interest, is maintained by In addition, the Chairman meets major shareholders the Company. Directors who have potential conflicts of annually or as necessary without the Manager present. interest will not take part in any discussions which relate to that particular conflict. The Board considers that the The Board monitors the shareholder base of the framework has worked effectively throughout the year Company at every Board meeting. All shareholders have under review. the opportunity to attend the Company’s AGM and the Manager’s annual investment trust seminar at which the directors and representatives of the Manager are available ### Anti-bribery to meet shareholders and answer questions. The Manager The Board has a zero tolerance policy towards bribery and also presents a review of the Company’s performance and ensures that its service providers and associated persons invites questions from shareholders at both events. have adequate anti-bribery policies and procedures in place which are high level, proportionate and risk based. The Manager’s business development team also maintains regular contact with the Company’s shareholders and In relation to the corporate offence of failing to prevent tax reports regularly to the Board. Shareholders can also evasion, it is the Company’s policy to conduct all business contact the directors throughout the year, through the in an honest and ethical manner. The Company takes Company Secretary. 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. 32 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 • understanding the shareholder register and agreeing ### Board committees the distribution strategy with the Manager. Management Engagement Committee The Committee has also reviewed the preparations that The Committee, chaired by Angus Cockburn and both Juniper Partners as AIFM and Troy as Manager have comprising of all directors, met once during the year and undertaken in preparation for the new FCA Consumer its responsibilities include: Duty (the ‘Duty’). The Duty introduces a new standard • reviewing the continuing appointment of the Manager; of care that firms are expected to provide to consumers and creates a variety of obligations that are designed to • reviewing the performance of the Manager in terms of deliver better outcomes for retail customers. The Duty investment performance, marketing and administration does not apply directly to the Company as it is not a services provided; regulated entity, however it does apply to the key external • reviewing the terms of the investment management service providers who manage the portfolio and distribute agreement, to ensure that it remains competitive and in the Company’s shares, including Juniper Partners and the best interests of Shareholders; and the Manager. The Committee has therefore undertaken • reviewing the performance of other service providers a detailed review of the plans in place in relation to the to the Company including the Company Secretary, implementation of the Duty and the additional systems and depositary, registrar and broker. controls and proposed reporting obligations to ensure they are comfortable with the proposed arrangements. Sarah Nomination and Remuneration Committee Harvey, as Chair of the Committee, will be responsible The Committee, chaired by Alexandra Innes and for the continued oversight of the service provider’s comprising of all directors, met once during the year and compliance with the Duty and any exception reporting Financial review Investor informationOverview Governance its responsibilities include: to the Board from Juniper Partners and the Manager going forward. • assessing the skills, knowledge, experience and diversity required on the Board and the extent to which Audit and Risk Committee each are represented; The Committee, chaired by Mark Little, comprises all the • establishing processes for the review of the directors save for John Evans, the Company’s Chairman, performance of the the Board and its committees as a who in line with best practice does not formally sit whole; on the Committee but attends each of the meetings. • establishing processes for the identification of suitable The Committee met three times during the year. candidates for appointment to the Board; Further information may be found in the Audit and Risk • overseeing succession planning for the Board; Committee’s report on pages 38 to 40. • reviewing the performance of each director during the Internal control period in which they have been a member of the Board and considering the recommendation to shareholders The AIC Code and the FCA’s Disclosure Guidance and to approve their re-appointment; and Transparency Rules require directors, at least annually, to review the effectiveness of the Company’s system of • to consider the directors’ remuneration policy and internal control and include a description of the main approve any changes to directors’ remuneration arising features relating to the financial reporting process. as a result of such policy. Investment management and all administrative services are Marketing and Communications Committee provided to the Company by Troy and Juniper Partners, The Committee, chaired by Sarah Harvey and comprising respectively, the company’s system of internal control mainly of all directors, met twice during the year and its comprises monitoring the services provided by them, responsibilities include: including the operating controls established by them, to ensure that they meet the Company’s business objectives. • considering the marketing strategy for the Company The Company does not have an internal audit function of and associated key performance indicators; its own, but relies on the risk and compliance department • reviewing the Company’s communications with its of both firms. This arrangement is kept under review. shareholders; and Juniper Partners also carries out a review of the custodial activities carried out by J.P. Morgan Chase Bank N.A. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 33 ## Corporate governance statement continued The Board, either directly or through its Committees, • corporate actions are identified and generated reviews the effectiveness of the Company’s system of respectively, and then processed and recorded internal control by monitoring the operation of the key accurately and in a timely manner; controls of main service providers and: • investment income is accurately recorded in the proper period; • reviews an internal control report as provided to the • investments are valued using current prices obtained Board annually by the Manager. This report details from independent external pricing sources; significant risks, regulatory issues, error management and complaint handling; • cash and securities positions are completely and accurately recorded and reconciled to third party data; • reviews the terms of the management agreement; and • reviews reports on the internal controls and the • investment management fees are accurately calculated operations of the Manager and of the custodian; and and recorded. • reviews the risk profile of the Company and considers investment risk at every Board meeting. The system of internal control can only be designed to manage rather than eliminate the risk of failure to achieve There is an ongoing process for identifying, evaluating business objectives and therefore can provide only and managing the significant risks faced by the Company reasonable, but not absolute, assurance against fraud, including the principal and emerging risks as outlined material mis-statement or loss. on pages 16 and 17. This process accords with the FRC’s ‘Guidance on Risk Management, Internal Control and By the means of the procedures set out above, the Related Financial and Business Reporting’. Board confirms that it has reviewed the effectiveness of the Company’s systems of internal control for the year During the course of its review of internal controls, the ended 31 March 2023, and to the date of approval of this Board has not identified or been advised of any failings or annual report. weaknesses which it has determined to be significant, and is satisfied with the arrangements. John Evans Internal control and risk management systems in Chairman relation to the financial reporting process The directors are responsible for the Company’s system 7 June 2023 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; 34 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 # 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' remuneration levels. ## 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 pages 41 to 47. ## 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 31 March 2024 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. Thereafter 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 upcoming AGM this year. ## 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 and recognising the importance of an appropriate level of fees for the recruitment process, with effect from 1 April 2023, it was agreed that directors' fees would increase to £30,000 per annum (2022/2023: £26,500), the Chairman of the Audit and Risk Committee's fee would increase to £35,000 per annum (2022/2023: £31,500) and the Chairman's fee would increase to £45,000 (2022/2023: £40,500). In recognition of the additional work and responsibility of the role, it was also agreed that an additional fee of £3,000 per annum would be paid to the Senior Independent Director. ## Directors' shareholdings (audited) The directors in office at 31 March 2023 and the number of shares in the Company over which they held an interest (including those of connected persons) are listed below. | As at 31 March | 2023 | 2022 | | --- | --- | --- | | John Evans | 50,000 | 50,000 | | Angus Cockburn | 100,000 | 100,000 | | Sarah Harvey | 503 | 503 | | Alexandra Innes | – | – | | Mark Little | 16,213 | 16,213 | As at 7 June 2023 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 4 July 2022, the Shareholders voted in favour of the directors' remuneration report for the year ended 31 March 2022. Of the proxy votes received, 99.83% of votes were cast in favour of the directors' remuneration report (56,824 proxy votes were cast against the report and 3,647,820 proxy votes were withheld). Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 35 # Directors' remuneration statement continued ## Company performance A graph showing the Company's share price total return compared to the Lipper Global-Equity Global Income Index, over the last 10 years is shown below. This index is deemed to be the most appropriate one against which to measure the Company's long-term performance. ### Total return (% change over 10 years) ![img-1.jpeg](img-1.jpeg) 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) | | 2022/2023 £ | 2021/2022 £ | 2020/2021 £ | | --- | --- | --- | --- | | John Evans (Chairman of the Board) | 40,500 | 39,000 | 38,500 | | Mark Little (Chairman of the Audit and Risk Committee) | 31,500 | 30,500 | 30,000 | | Angus Cockburn (appointed on 1 May 2021) | 26,500 | 23,458 | – | | Angus Gordon Lennox (retired on 4 July 2022) | 6,829 | 25,500 | 25,000 | | Sarah Harvey (Senior Independent Director) | 26,500 | 25,500 | 25,000 | | Alexandra Innes (appointed 4 April 2022) | 26,330 | – | – | | | 158,159 | 143,958 | 118,500 | 36 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Annual percentage change in remuneration of directors The table below is a 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 2023 compared to the financial years ended 31 March 2022 and 31 March 2021. The percentage change reflects changes in role and less than full year appointment. | | | 2023 | | 2022 | | 2021 | | --- | --- | --- | --- | --- | --- | --- | | | Total fees | | Total fees | | Total fees | | | Director | % change | | % change | | % change | | 1 John Evans 3.8% 1.3% 21.1% Mark Little 3.3% 1.7% 1.7% 2 Angus Cockburn 13.0% n/a n/a 3 Angus Gordon Lennox (73.2%) 2.0% 2.0% Sarah Harvey 3.9% 2.0% 2.0% 4 Alexandra Innes – – – 1 John Evans assumed the role of chairman on 17 September 2019. 2 Angus Cockburn appointed on 1 May 2021. 3 Angus Gordon Lennox retired on 4 July 2022. 4 Alexandra Innes appointed on 4 April 2022. Financial review Investor informationOverview Governance ### 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. 2022/2023 2021/2022 Change £000’s £000’s £000’s Directors’ total remuneration 158 144 14 Dividends paid and payable 6,170 5,872 298 On behalf of the board Alexandra Innes Chairman of the Nomination and Remuneration Committee 7 June 2023 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 37 ## Audit and Risk Committee report I am pleased to present the Committee’s report to external auditors, their remuneration, terms of their shareholders for the year ended 31 March 2023. This report engagement and reviewing their independence and describes the range of work undertaken by the Committee. objectivity, effectiveness, and overall effectiveness of the audit process; The Audit and Risk Committee is chaired by Mark Little • reviewing the external auditor’s audit plan and year and comprises all of the directors with the exception of end report; John Evans, Chairman of the Company. The Company • developing and implementing policy on the Chairman attended each of the meetings by invitation from engagement of the external auditors to supply non- the Committee. The Board reviews the relevant skills and audit services; experience of the Audit and Risk Committee as part of the annual Board review and believes that the members of the • reporting to the Board, identifying any matter in respect Committee have the appropriate skills and experience. of which it considers that action or improvement is Biographies of the members of the Committee are on needed and making recommendations as to the steps pages 19 and 20. to be taken; and • assessing the need for an internal audit function. ### Role and responsibilities ### The Committee has continued to support the Board Activities during the year in fulfilling its oversight responsibilities, reviewing the The Committee met three times during the year where financial reporting process, the systems of internal control it reviewed the Company’s risk register, internal controls and management of risk, the audit process and the and risk and compliance reports from third party service Company’s process for monitoring compliance with laws providers and considered the half yearly and annual and regulations. financial reports to shareholders. The Committee also considered and approved the external auditors’ plan and The Audit and Risk Committee’s responsibilities include: scope for the audit of the financial statements for the year • monitoring and reviewing the integrity of financial ended 31 March 2023. statements and ensuring in particular that, taken as a The Audit and Risk Committee takes account of the whole, they are fair, balanced and understandable; most significant issues and risks, both operational and • review of the internal financial controls; financial, that are likely to impact the Company’s financial • making recommendations to the Board in relation statements. to the appointment, evaluation and dismissal of the The following significant areas were considered by the Audit and Risk Committee in relation to the financial statements: Matter Action Accuracy of portfolio valuation Controls are in place to ensure that valuations are appropriate and existence is verified and ownership of investments 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 and Risk Committee reviews a summary of the SOC 1 report from JP Morgan Chase Bank N.A. on key controls over the assets of the Company and any significant issues are reported to the 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’s assets. 38 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Matter Action Strength of processes and The Committee together with the Board have established clear lines of responsibility internal controls at outsourced between the Manager, Custodian, Company Secretary and receive appropriate reports providers 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. 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 the Russian invasion of Ukraine, may have on the portfolio and income forecasts. The allocation of expenses is reviewed by the Audit and Risk Committee annually taking into account the long-term split of returns from the portfolio, both historic and projected and the objectives of the Company. 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. Financial review Investor informationOverview Governance ### Auditors’ report Effectiveness of the external audit process At the conclusion of the audit, Ernst & Young LLP (‘EY’) did The Committee also evaluated the effectiveness of not highlight any issues to the Audit and Risk Committee the external audit process. This evaluation involved which would cause it to qualify its audit report, nor did it an assessment of the effectiveness of the auditor’s highlight any fundamental internal control weaknesses. performance against criteria including qualification, Their audit report is included on pages 41 to 47. expertise and resources, independence and effectiveness of the audit process. Having reviewed the performance of the external auditor as described above, the Committee is ### Conclusions in respect of the annual report satisfied with the external audit process undertaken by EY The production and audit of the Company’s annual in relation to this annual report and its financial statements. report is a comprehensive process which requires input from a number of different contributors. One of the key ### Auditor’s independence governance requirements of the Company’s annual report is that it is fair, balanced and understandable. The Board The Company has in place a policy governing the requested that the Audit and Risk Committee confirm provision of non-audit services by the external auditor, whether it considered that the annual report, when taken so as to safeguard its independence and objectivity. as a whole, fulfils this requirement. This is achieved by prohibiting non-audit work where independence may be compromised or conflicts arise. As part of its review of the annual report, the Committee Any non-audit work requires specific approval of the noted that: audit and risk committee in each case. The audit fee was £47,500 plus VAT for the year ended 31 March 2023 (2022: • comprehensive reviews had been undertaken at £40,000 plus VAT). There were no non audit fees for the different levels in the production process of the annual year ended 31 March 2023 (2022: nil). Following its review, report by the Company Secretary, Manager, auditor the Committee is satisfied that the Company’s auditor, EY, and the Committee to ensure consistency and overall remains independent. 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. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 39 ## Audit and Risk Committee report continued ### 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 originally served as audit engagement partner since the appointment of EY. The audit partner, with effect from November 2022, is Denise Davidson. 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 and Risk Committee 7 June 2023 40 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Independent auditor’s report The non-audit services prohibited by the FRC’s Ethical ### Independent auditor’s report to the Standard were not provided to the Company and we ### members of STS Global Income & Growth remain independent of Company in conducting the audit. ### Trust plc ### Opinion Conclusions relating to going concern We have audited the financial statements of STS Global In auditing the financial statements, we have concluded Income & Growth Trust plc (“the Company”) for the year that the directors’ use of the going concern basis of ended 31 March 2023 which comprise the Statement accounting in the preparation of the financial statements of Comprehensive Income, the Statement of Financial is appropriate. Our evaluation of the directors’ assessment Position, the Statement of Changes in Equity, the of the Company’s ability to continue to adopt the going Statement of Cash Flow and the related notes 1 to 21, concern basis of accounting included: including a summary of significant accounting policies. • Confirmation of our understanding of the Company’s The financial reporting framework that has been applied going concern assessment process and engaged with in their preparation is applicable law and United Kingdom the Directors and the Company Secretary to determine Accounting Standards including FRS 102 “The Financial if all key factors that we have become aware of during Reporting Standard applicable in the UK and Republic of our audit were considered in their assessment. Ireland” (United Kingdom Generally Accepted Accounting Practice). • Inspection of the Directors’ assessment of going concern, including the revenue forecast, for the period In our opinion, the financial statements: to 31 March 2025 which is at least twelve months from the date the financial statements were authorised for • give a true and fair view of the Company’s affairs as at issue. In preparing the revenue forecast, the Company Financial review Investor informationOverview Governance 31 March 2023 and of its loss for the year then ended; has concluded that it is able to continue to meet its • have been properly prepared in accordance with United ongoing costs as they fall due. Kingdom Generally Accepted Accounting Practice; and • Review of the factors and assumptions, including • have been prepared in accordance with the the impact of the current economic environment, requirements of the Companies Act 2006. as applied to the revenue forecast and the liquidity assessment of the investments. We considered the ### Basis for opinion appropriateness of the methods used to calculate the revenue forecast and the liquidity assessment and We conducted our audit in accordance with International determined, through testing of the methodology and Standards on Auditing (UK) (ISAs (UK)) and applicable law. calculations, that the methods, inputs and assumptions Our responsibilities under those standards are further utilised were appropriate to be able to make an described in the Auditor’s responsibilities for the audit of assessment for the Company. the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and • Assessment of the risk of breaching the debt covenants appropriate to provide a basis for our opinion. as a result of a reduction in the value of the Company’s portfolio. We calculated the Company’s compliance with debt covenants, and we performed reverse stress ### Independence testing in order to identify what factors would lead to We are independent of the Company in accordance with the Company breaching the financial covenants. the ethical requirements that are relevant to our audit of • Consideration of the mitigating factors included in the the financial statements in the UK, including the FRC’s revenue forecasts and covenant calculations that are Ethical Standard as applied to public interest entities, within the control of the Company. We reviewed the and we have fulfilled our other ethical responsibilities in Company’s assessment of the liquidity of investments accordance with these requirements. held and evaluated the Company’s ability to sell those investments in order to cover working capital requirements should revenue decline significantly. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 41 ## Independent auditor’s report continued • Review of the Company’s going concern disclosures nothing material to add or draw attention to in relation to included in the annual report in order to assess that the the directors’ statement in the financial statements about disclosures were appropriate and in conformity with the whether the directors considered it appropriate to adopt reporting standards. the going concern basis of accounting. Based on the work we have performed, we have not Our responsibilities and the responsibilities of the directors identified any material uncertainties relating to events with respect to going concern are described in the relevant or conditions that, individually or collectively, may cast sections of this report. However, because not all future significant doubt on the Company’s ability to continue as a events or conditions can be predicted, this statement is not going concern for the period to 31 March 2025 a guarantee as to the Company’s ability to continue as a going concern. In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code, we have ### 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 £2.19m (2022: £2.30m) which represents 1% (2022: 1%) of total shareholders’ funds. ### An overview of the scope of our audit Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the Tailoring the scope financial statements as set out in Note 1a and conclusion Our assessment of audit risk, our evaluation of materiality that there was no further impact of climate change to be and our allocation of performance materiality determine taken into account as the investments are valued based on our audit scope for the Company. This enables us to market pricing as required by FRS102. We also challenged form an opinion on the financial statements. We take into the Directors’ considerations of climate change in their account size, risk profile, the organisation of the Company assessment of viability and associated disclosures. and effectiveness of controls, the potential impact of climate change and changes in the business environment when assessing the level of work to be performed. Climate change Stakeholders are increasingly interested in how climate change will impact the Company. The Company has determined that the most significant future impacts from climate change on its operations will be from how climate change could affect the Company’s investments and overall investment process. This is explained on page 17 in the principal risks and uncertainties. This disclosure forms part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited 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, in line with our responsibilities on “Other information”. 42 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### 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. Key observations communicated Risk Our response to the risk to the Audit Committee Incomplete or inaccurate revenue We have performed the following procedures: The results of our procedures recognition, including the identified no material We obtained an understanding of the processes classification of special dividends as misstatement in relation to and controls surrounding revenue recognition, revenue or capital in the Statement incomplete or inaccurate including the classification of special dividends, by of Comprehensive Income (as revenue recognition, including performing walkthrough procedures. | described on page 39 in the Audit | | incorrect classification of | | --- | --- | --- | | and Risk Committee’s Report and | For all dividends received, we recalculated the | special dividends as revenue or | | as per the accounting policy set out | dividend income by multiplying the investment | capital items in the Statement | | on page 52). | holdings at the ex-dividend date, traced from the | of Comprehensive Income. | accounting records, by the dividend per share, The total revenue for the year to which was agreed to an independent data vendor. 31 March 2023 was £8.24m (2022: Financial review Investor informationOverview Governance For a sample of dividends received, we agreed £7.38m), consisting primarily amounts to bank statements and agreed the of dividend income from listed exchange rates used to an external source. equity investments. For all accrued dividends, we reviewed the The investment income receivable investee company announcements to assess by the Company during the year whether the dividend entitlements arose prior directly affects the Company’s to 31 March 2023. We agreed the dividend rate revenue return. There is therefore to corresponding announcements made by the a risk of incomplete or inaccurate investee company, recalculated the dividend recognition of revenue through amount receivable by multiplying the investment the failure to recognise proper holdings at the ex-dividend date, traced from income entitlements or to apply an the accounting records, and confirmed this was appropriate accounting treatment. consistent with cash received as shown on post In addition to the above, the year end bank statements, where paid. Directors may be required to To test completeness of recorded income, we verified exercise judgment in determining that expected dividends for each investee company whether income receivable in held during the year had been recorded as income the form of special dividends with reference to investee company announcements should be classified as ‘revenue’ obtained from an independent data vendor. or ‘capital’ in the Statement of Comprehensive Income. For all investments held during the year, we reviewed the type of dividends paid with reference In the year to 31 March 2023, the to an external data vendor to identify those which Company received three special were special. Based on the work performed, we dividends of which £0.37m (2022: identified three special dividends were received by £0.18m) was classified as revenue the Company; all of which were above our testing and £0.27m (2022: £nil) was classified threshold. We assessed the appropriateness of as capital. management’s classification as revenue, or a revenue and capital split, for the special dividends above our testing threshold by reviewing the underlying rationale of the distribution. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 43 # Independent auditor's report continued | 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 38 in the Report of the Audit and Risk Committee and as per the accounting policy set out on page 52). The valuation of the investment portfolio at 31 March 2023 was £234.36m (2022: £244.56m) consisting primarily of listed investments. The valuation of the assets held in the investment portfolio is the primary driver of the Company's net asset value and total return. Incorrect investment pricing, or a failure to maintain proper legal title of the assets held by the Company could have a significant impact on the portfolio valuation and the return generated for shareholders. The fair value of listed investments is determined by reference to stock exchange quoted market bid prices at the close of business on the reporting date. | **We performed the following procedures:** We obtained an understanding of the processes and controls surrounding investment pricing and legal title of listed investments by performing walkthrough procedures. 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. For all investments in the portfolio, we obtained the market prices, from an independent pricing vendor, for 5 business days pre and post the year end date and calculated the day-on-day movement and confirmed there are no stale prices. We compared the Company's investment holdings at 31 March 2023 to independent confirmations received directly from the Company's Custodian and Depositary. | 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 £2.19 million (2022: £2.30 million), which is 1% (2022: 1%) of shareholders' funds. We believe that shareholder's funds provide 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 exceeds materiality.* 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% (2022: 75%) of our planning materiality, namely £1.64m (2022: £1.72m). We have set performance materiality at this percentage due to the fact there has been no misstatements in prior periods. 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 £0.35m (2022: £0.32m), being 5% (2022: 5%) of revenue return on ordinary activities before taxation. 44 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Reporting threshold Opinions on other matters prescribed by ### An amount below which identified misstatements are the Companies Act 2006 considered as being clearly trivial. In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in We agreed with the Audit Committee that we would report accordance with the Companies Act 2006. to them all uncorrected audit differences in excess of £0.11m (2022: £.0.11m), which is set at 5% of planning materiality, In our opinion, based on the work undertaken in the course as well as differences below that threshold that, in our view, of the audit: warranted reporting on qualitative grounds. • the information given in the strategic report and the We evaluate any uncorrected misstatements against both the Directors’ report for the financial year for which the quantitative measures of materiality discussed above and in financial statements are prepared is consistent with the light of other relevant qualitative considerations in forming financial statements; and our opinion. • the strategic report and Directors’ reports have been prepared in accordance with applicable legal ### Other information requirements. The other information comprises the information included in the annual report other than the financial statements and ### Matters on which we are required to report our auditor’s report thereon. The Directors are responsible ### by exception for the other information contained within the annual In the light of the knowledge and understanding of the report. Company and its environment obtained in the course of Financial review Investor informationOverview Governance Our opinion on the financial statements does not cover the audit, we have not identified material misstatements in the other information and, except to the extent otherwise the strategic report or Directors’ report. explicitly stated in this report, we do not express any form We have nothing to report in respect of the following of assurance conclusion thereon. matters in relation to which the Companies Act 2006 Our responsibility is to read the other information and, requires us to report to you if, in our opinion: in doing so, consider whether the other information • adequate accounting records have not been kept, or is materially inconsistent with the financial statements returns adequate for our audit have not been received or our knowledge obtained in the course of the audit from branches not visited by us; or or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent • the financial statements and the part of the Directors’ material misstatements, we are required to determine Remuneration Report to be audited are not in whether this gives rise to a material misstatement in the agreement with the accounting records and returns; or financial statements themselves. If, based on the work • certain disclosures of Directors’ remuneration specified we have performed, we conclude that there is a material by law are not made; or misstatement of the other information, we are required to • we have not received all the information and report that fact. explanations we require for our audit We have nothing to report in this regard. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 45 ## Independent auditor’s report continued ### Corporate Governance Statement Auditor’s responsibilities for the audit of ### We have reviewed the Directors’ statement in relation the financial statements to going concern, longer-term viability and that part of Our objectives are to obtain reasonable assurance about the Corporate Governance Statement relating to the whether the financial statements as a whole are free from Company’s compliance with the provisions of the UK material misstatement, whether due to fraud or error, Corporate Governance Code specified for our review by and to issue an auditor’s report that includes our opinion. the Listing Rules. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance Based on the work undertaken as part of our audit, we with ISAs (UK) will always detect a material misstatement have concluded that each of the following elements of the when it exists. Misstatements can arise from fraud or Corporate Governance Statement is materially consistent error and are considered material if, individually or in the with the financial statements or our knowledge obtained aggregate, they could reasonably be expected to influence during the audit: the economic decisions of users taken on the basis of these financial statements. • Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and ### any material uncertainties identified set out on page 23; Explanation as to what extent the audit ### • Directors’ explanation as to its assessment of the was considered capable of detecting ### Company’s prospects, the period this assessment covers irregularities, including fraud and why the period is appropriate set out on page 24; Irregularities, including fraud, are instances of non- • Director’s statement on whether it has a reasonable compliance with laws and regulations. We design expectation that the group will be able to continue in procedures in line with our responsibilities, outlined above, operation and meets its liabilities set out on page 24; to detect irregularities, including fraud. The risk of not • Directors’ statement on fair, balanced and detecting a material misstatement due to fraud is higher understandable set out on page 27; than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, • Board’s confirmation that it has carried out a robust forgery or intentional misrepresentations, or through assessment of the emerging and principal risks set out collusion. The extent to which our procedures are capable of on pages 16 and 17; detecting irregularities, including fraud is detailed below. • The section of the annual report that describes the review of effectiveness of risk management and internal However, the primary responsibility for the prevention control systems set out on page 33; and and detection of fraud rests with both those charged with • The section describing the work of the audit committee governance of the Company and management. set out on page 38. • We obtained an understanding of the legal and regulatory frameworks that are applicable to the ### Responsibilities of directors Company and determined that the most significant As explained more fully in the Directors’ responsibilities are FRS 102, the Companies Act 2006, the Listing statement set out on page 27, the Directors are Rules, UK Corporate Governance Code, the responsible for the preparation of the financial statements Association of Investment Companies’ Code and and for being satisfied that they give a true and fair view, Statement of Recommended Practice, Section 1158 and for such internal control as the Directors determine is of the Corporation Tax Act 2010 and The Companies necessary to enable the preparation of financial statements (Miscellaneous Reporting) Regulations 2018. that are free from material misstatement, whether due to • We understood how the Company is complying with fraud or error. those frameworks through discussions with the Audit Committee and Company Secretary and review of In preparing the financial statements, the Directors are Board minutes and the Company’s documented responsible for assessing the Company’s ability to continue policies and procedures. as a going concern, disclosing, as applicable, matters related to going concern and using the going concern • We assessed the susceptibility of the Company’s basis of accounting unless the Directors either intend to financial statements to material misstatement, including liquidate the Company or to cease operations, or have no how fraud might occur by considering the key risks realistic alternative but to do so. impacting the financial statements. We identified a 46 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 fraud risk with respect to the incomplete or inaccurate ### Use of our report revenue recognition through incorrect the classification This report is made solely to the Company’s members, of special dividends as revenue or capital items. Further as a body, in accordance with Chapter 3 of Part 16 of the discussion of our approach is set out in the section on Companies Act 2006. Our audit work has been undertaken key audit matters above. so that we might state to the Company’s members • Based on this understanding we designed our audit those matters we are required to state to them in an procedures to identify non-compliance with such laws auditor’s report and for no other purpose. To the fullest and regulations. Our procedures involved review of the extent permitted by law, we do not accept or assume Company Secretary’s reporting to the Directors with responsibility to anyone other than the Company and the respect to the application of the documented policies Company’s members as a body, for our audit work, for this and procedures and review of the financial statements report, or for the opinions we have formed. to ensure compliance with the reporting requirements of the Company. Denise Davidson A further description of our responsibilities for the audit (Senior statutory auditor) of the financial statements is located on the Financial for and on behalf of Ernst & Young LLP Reporting Council’s website at https://www.frc.org.uk/ Statutory Auditor auditorsresponsibilities. This description forms part of our London auditor’s report. 7 June 2023 ### Other matters we are required to address • Following the recommendation from the audit and risk Financial review Investor informationOverview Governance 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 engagement including previous renewals and reappointments is 5 years, covering the years ending 31 March 2019 to 31 March 2023. • The audit opinion is consistent with the additional report to the audit and risk committee. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 47 # Statement of comprehensive income | | Note | Year to 31 March 2023 | | | Year to 31 March 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £000 | Capital £000 | Total £000 | Revenue £000 | Capital £000 | Total £000 | | Net (losses)/gains on investments | 9 | – | (8,800) | (8,800) | – | 29,232 | 29,232 | | Net currency (losses)/gains | | (4) | (869) | (873) | 3 | (445) | (442) | | Income | 2 | 8,238 | 266 | 8,504 | 7,378 | – | 7,378 | | Investment management fee | 3 | (531) | (985) | (1,516) | (222) | (413) | (635) | | Other expenses | 4 | (625) | – | (625) | (516) | – | (516) | | Net return before finance costs and taxation | | 7,078 | (10,388) | (3,310) | 6,643 | 28,374 | 35,017 | | Finance costs | 5 | (171) | (318) | (489) | (157) | (291) | (448) | | Net return on ordinary activities before taxation | | 6,907 | (10,706) | (3,799) | 6,486 | 28,083 | 34,569 | | Taxation on ordinary activities | 7 | (566) | – | (566) | (632) | – | (632) | | Net return attributable to ordinary shareholders | | 6,341 | (10,706) | (4,365) | 5,854 | 28,083 | 33,937 | | Net return per ordinary share | 8 | 6.34p | (10.70)p | (4.36)p | 5.82p | 27.92p | 33.74p | 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 2022). All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes on pages 52 to 64 form part of these financial statements. 48 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 # Statement of financial position | | Note | As at 31 March 2023 | | As at 31 March 2022 | | | --- | --- | --- | --- | --- | --- | | | | £000 | £000 | £000 | £000 | | **Fixed assets** | | | | | | | Investments held at fair value through profit or loss | 9 | | 234,362 | | 244,561 | | **Current assets** | | | | | | | Trade and other receivables | 10 | 1,113 | | 1,089 | | | Cash and cash equivalents | | 1,570 | | 865 | | | | | 2,683 | | 1,954 | | | **Current liabilities** | | | | | | | Bank loans | 12 | (15,795) | | – | | | Trade payables | 11 | (572) | | (489) | | | Dividend payable | 6 | (1,443) | | (1,368) | | | **Total current liabilities** | | **(17,810)** | | **(1,857)** | | | **Net current (liabilities)/assets** | | | **(15,127)** | | **97** | | **Total assets less current liabilities** | | | **219,235** | | **244,658** | | **Non-current liabilities** | | | | | | | Bank Loans | 12 | | – | | (15,001) | | **Total net assets** | | | **219,235** | | **229,657** | | Capital and reserves | | | | | | | Called up share capital | 13 | 1,223 | | 1,223 | | | Capital redemption reserve | | 78 | | 78 | | | Share premium account | | 31,808 | | 30,762 | | | Special distributable reserve | | 70,924 | | 71,925 | | | Capital reserve | 14 | 111,905 | | 122,611 | | | Revenue reserve | | 3,297 | | 3,058 | | | **Total shareholders' funds** | | | **219,235** | | **229,657** | | **Net asset value per ordinary share** | 15 | | **220.37p** | | **230.75p** | The Company is registered in Scotland no.SC283272. The notes on pages 52 to 64 form part of these financial statements. The financial statements were approved by the Board and signed on its behalf by John Evans Chairman 7 June 2023 Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 49 ## Statement of changes in equity | | Called up | | | Capital | | Share | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | redemption | | premium | | distributable | | Capital | Revenue | | | | For the year ended | | capital | | reserve | account | | | reserve* | reserve* | reserve* | | Total | | 31 March 2023 Note | | £000 | | £000 | | £000 | | £000 | £000 | | £000 | £000 | As at 1 April 2022 1,223 78 30,762 71,925 122,611 3,058 229,657 Net return attributable to shareholders** 8 – – – – (10,706) 6,341 (4,365) Shares issued from treasury 13 – – 1,046 2,585 – – 3,631 Shares bought back into treasury 13 – – – (3,586) – – (3,586) Dividends paid 6 – – – – – (6,102) (6,102) As at 31 March 2023 1,223 78 31,808 70,924 111,905 3,297 219,235 | | Called up | | | Capital | | Share | | Special | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | redemption | | premium | | distributable | | Capital | | Revenue | | | | For the year ended | | capital | | reserve | account | | | reserve* | reserve* | | reserve* | | Total | | 31 March 2022 Note | | £000 | | £000 | | £000 | | £000 | | £000 | | £000 | £000 | As at 1 April 2021 1,223 78 30,725 78,194 94,528 2,930 207,678 Net return attributable to shareholders** 8 – – – – 28,083 5,854 33,937 Shares issued from treasury 13 – – 37 162 – – 199 Shares bought back into treasury 13 – – – (6,431) – – (6,431) Dividends paid 6 – – – – – (5,726) (5,726) As at 31 March 2022 1,223 78 30,762 71,925 122,611 3,058 229,657 * These reserves are distributable with the exception of the unrealised portion of the capital reserve (see note 14), which is non-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 page 48, and therefore this is also the ‘Total comprehensive income’ for the year. The notes on pages 52 to 64 form part of these financial statements. 50 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 # Statement of cash flow | | Note | Year ended 31 March 2023 | | Year ended 31 March 2022 | | | --- | --- | --- | --- | --- | --- | | | | £000 | £000 | £000 | £000 | | **Cash flows from operating activities** | | | | | | | Net return on ordinary activities before taxation | | | (3,799) | | 34,569 | | **Adjustments for:** | | | | | | | Losses/(gains) on investments | 9 | 8,800 | | (29,232) | | | Finance costs | 5 | 489 | | 448 | | | Exchange movement on bank borrowings | 16 | 794 | | 416 | | | Purchases of investments* | 9 | (22,917) | | (17,528) | | | Sales of investments* | 9 | 24,316 | | 23,970 | | | Dividend income | 2 | (8,496) | | (7,378) | | | Other income | 2 | (8) | | – | | | Dividend income received | | 8,523 | | 7,252 | | | Other income received | | 8 | | – | | | (Increase)/decrease in receivables | | (5) | | 17 | | | Increase in payables | | 70 | | 358 | | | Overseas withholding tax deducted | | (612) | | (406) | | | | | | 10,962 | | (22,083) | | **Net cash flows from operating activities** | | | 7,163 | | 12,486 | | **Cash flows from financing activities** | | | | | | | Repurchase of ordinary share capital | | (3,586) | | (6,431) | | | Issue of ordinary share capital from treasury | | 3,631 | | 199 | | | Equity dividends paid from revenue | | (6,027) | | (5,768) | | | Interest paid on borrowings | | (476) | | (446) | | | **Net cash flows from financing activities** | | | (6,458) | | (12,446) | | **Net increase in cash and cash equivalents** | | | 705 | | 40 | | Cash and cash equivalents at the start of the year | | | 865 | | 825 | | **Cash and cash equivalents at the end of the year** | | | 1,570 | | 865 | * 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 Company's dealing operations. The notes on pages 52 to 64 form part of these financial statements. Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 51 ## Notes to the financial statements Estimates and judgements are continually evaluated ### Note 1: Accounting policies and are based on historical experience and other (a) STS Global Income & Growth Trust plc (the factors, including expectations of future events ‘Company’) is a public company limited by shares, is that are believed to be reasonable under the incorporated and domiciled in Scotland, and carries circumstances. There are no critical accounting on business as an investment trust. estimates or judgements. The accounts are prepared in accordance with the Functional currency – the Company is required to Companies Act 2006, United Kingdom Generally determine a functional currency, being the currency Accepted Accounting Practice (Accounting Standards in which the Company predominately operates. The ‘UK GAAP’) including Financial Reporting Standard Board has determined that sterling is the Company’s (FRS) 102 ‘The Financial Reporting Standard functional currency, which is also the currency in which applicable in the UK and Republic of Ireland’ and these financial statements are prepared. This is also the Statement of Recommended Practice ‘Financial the currency in which all expenses and dividends are Statements of Investment Trust Companies and paid in. Venture Capital Trusts’ (the ‘SORP’) issued by the Association of Investment Companies in July (b) Income from equity investments is recognised on 2022. All of the Company’s operations are of a the date on which the investments are quoted ex- continuing nature. dividend, or where no ex-dividend date is quoted, when the Company’s right to receive payment is The accounts have been prepared on a going established. UK dividends received are accounted concern basis under the historical cost convention, for at the amount receivable and are not grossed up as modified by the revaluation of investments held for any tax credit. Any special dividends are looked at fair value through profit or loss. In preparing these at individually to ascertain the reason behind the financial statements the directors have considered the payment. This will determine whether they are treated impact of climate change on the value of the listed as revenue or capital. Other income includes any investments that the Company holds. As the portfolio taxes deducted at source. Gains and losses arising consists of listed equities, which are valued using from the translation of income denominated in foreign quoted bid prices for investments in an active market, currencies are recognised in the revenue reserve. the fair value reflects the market participants’ view of Scrip dividends are treated as unfranked investment climate change risk. income; any excess in value of shares received over the amount of the cash dividend is recognised in The Company’s assets consist of a diverse portfolio of capital reserve. listed equity shares which, in most circumstances, are realisable within a very short timescale. The directors (c) Interest receivable and payable and management have reviewed revenue forecasts and they believe expenses are accounted for on an accruals basis. that the Company has adequate financial resources to continue its operational existence for the foreseeable (d) The management fee and finance costs are allocated future, and for the period to 31 March 2025, which 65% to capital and 35% to revenue in accordance with is at least 12 months from the date the financial the Board’s expected long-term split of returns in the statements are authorised for issue. form of capital gains and income, respectively. All other expenses are wholly allocated to revenue. The principal accounting policies are set out below. These policies have been applied consistently (e) Gains and losses on the realisation of investments throughout the current and prior year. 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. 52 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 (f) Acquisitions in foreign currencies are recorded in the Capital reserve functional currency of the Company at the prevailing Gains and losses on realisations of fixed asset exchange rate on the date of the transaction and investments, and transactions costs, together with retranslated at the rates of exchange ruling on appropriate exchange differences, are dealt with in the date of the statement of financial position. this reserve. Investments are recognised initially as at the trade date of a transaction. Subsequent to this, the disposal Increases and decreases in the valuation of fixed of an investment is accounted on the trade date asset investments (which are non-distributable) are of a transaction. also dealt with in this reserve along with receipts of special dividends considered capital in nature and (g) Revenue received and interest paid in foreign any payment of capital dividends. Also taken to this currencies are translated at the rates of exchange reserve are 65% of the management fees as detailed on the transaction date. Any exchange differences in note (d). between the recognition and settlement both for revenue transactions are recognised as revenue in the Revenue reserve statement of comprehensive income. Net revenue profits and losses of the company are recorded within this reserve, together with the (h) The Company’s investments are classified as ‘financial dividend payment made by the Company. The assets at fair value through profit or loss’ and are remaining 35% of the management fees are taken to valued at fair value. For listed investments this is this reserve. deemed to be bid market prices. Gains and losses arising from changes in fair value are included in the Special distributable reserve Financial review Investor informationOverview Governance capital return for the year. Records transactions of which are capital in nature (i) All other financial assets and liabilities are recognised – shares bought back into treasury and the related in the financial statements at amortised cost. stamp duty incurred. Also taken to this reserve are proceeds received, based on weighted average (j) The cost of share buybacks include the amount of purchase price, on shares issued from treasury. consideration paid, including directly attributable costs and are deducted from the special distributable (l) Dividends payable – under FRS 102 dividends should reserve until the shares are cancelled. Proceeds not be accrued in the financial statements unless received from the reissue of shares held in treasury they have been approved by shareholders before are treated in accordance with section 731 of the the statement of financial position date. Dividends to Companies Act 2006. Proceeds equivalent to the equity shareholders are recognised in the statement original cost, calculated by applying a weighted of changes in equity when the shareholder’s right to average price, are credited to the special distributable receive the payment is established. In the case of the reserve to replenish the profits available for fourth interim dividend this would be the ex-dividend distribution; proceeds in excess of the original cost date of 15 June 2023. are credited to the share premium account. (k) Nature of distributable reserve accounts STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 53 ## Notes to the financial statements continued ### Note 2: Revenue | Year to | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | | £000 | £000 | Revenue: From listed investments UK – equities 2,973 2,889 Overseas – equities 5,257 4,489 8,230 7,378 Other revenue Deposit interest 8 – Total allocated to revenue 8,238 7,378 Capital: From listed investments UK – equities 266 – Total allocated to capital 266 – Total 8,504 7,378 During the year ended 31 March 2023, the Company received £266,000 special dividends treated as capital (2022: £nil). ### Note 3: Investment management fee The increase in fee is a consequence of Troy agreeing to waive its fee from the date of their appointment to 12 November 2021. Had thay not waived their fee, the amount payable in the year to 31 March 2022 would have been £873,000 higher. ### Note 4: Other expenses | Year to | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | | £000 | £000 | Custody/depository fees 43 40 Directors’ fees 158 144 Secretarial fee 45 15 Other administration expenses 322 269 Total 568 468 Auditors’ remuneration*: – audit services 57 48 625 516 * The audit fees are payable to Ernst & Young LLP. There were no non-audit services for the year ended 31 March 2023 (2022: nil). 54 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Note 5: Finance costs Year to 31 March 2023 Year to 31 March 2022 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Interest on bank loans 171 318 489 157 291 448 ### Note 6: Dividends | Year to | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | | £000 | £000 | Year ended 31 March 2021 – fourth interim dividend of 1.575p – 1,608 Year ended 31 March 2022 – first interim dividend of 1.375p – 1,376 Year ended 31 March 2022 – second interim dividend of 1.375p – 1,374 Year ended 31 March 2022 – third interim dividend of 1.375p – 1,368 Year ended 31 March 2022 – fourth interim dividend of 1.75p 1,754 – Financial review Investor informationOverview Governance Year ended 31 March 2023 – first interim dividend of 1.45p 1,454 – Year ended 31 March 2023 – second interim dividend of 1.45p 1,451 – Year ended 31 March 2023 – third interim dividend of 1.45p 1,443 – 6,102 5,726 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 | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | | £000 | £000 | First interim dividend of 1.45p for the year ended 31 March 2023 (2022: 1.375p) 1,454 1,376 Second interim dividend of 1.45p for the year ended 31 March 2023 (2022: 1.375p) 1,451 1,374 Third interim dividend of 1.45p for the year ended 31 March 2023 (2022: 1.375p) 1,443 1,368 Proposed fourth interim dividend of 1.85p for the year ended 31 March 2023 (2022: 1.75p) 1,822 1,754 6,170 5,872 The revenue reserves as at 31 March 2023 are £3,297,000, of this £1,822,000 will be used to fund the fourth interim dividend. The amount reflected above for the cost of the proposed fourth interim dividend for 2023 is based on 98,508,575 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. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 55 ## Notes to the financial statements continued ### Note 7: Taxation on ordinary activities | Year to | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | | £000 | £000 | Irrecoverable overseas withholding tax 566 632 The corporation tax rate was 19.00% (2022: 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 | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | | £000 | £000 | Net return before taxation (3,799) 34,569 Corporation tax at rate of 19% (2022: 19%) (722) 6,568 Effects of: Losses/(gains) on investments (not taxable) 1,672 (5,554) Non taxable dividend income (1,548) (1,347) Irrecoverable overseas withholding tax 566 632 Currency losses (not taxable) 166 84 Increase in excess management and loan expenses 432 249 Total tax charge 566 632 As at 31 March 2023, the Company had unutilised management expenses of £21,851,000 (2022: £19,579,000) 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 8: Return per share | Year to | Year to | | --- | --- | | 31 March | 31 March | | 2023 | 2022 | Revenue return (£000) 6,341 5,854 Capital return (£000) (10,706) 28,083 Total (£000) (4,365) 33,937 Weighted average number of ordinary shares in issue 100,005,571 100,591,911 Revenue return per ordinary share 6.34p 5.82p Capital return per ordinary share (10.70)p 27.92p Total return per ordinary share (4.36)p 33.74p 56 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Note 9: Investments at fair value through profit or loss | | As at | | As at | | --- | --- | --- | --- | | 31 March | | 31 March | | | | 2023 | | 2022 | | | £000 | | £000 | Opening book cost 209,480 215,911 Opening investment holding gains 35,081 5,860 Opening market value 244,561 221,771 Acquisitions at cost 22,917 17,528 Disposals proceeds received (24,316) (23,970) (Losses)/gains on investments (8,800) 29,232 Market value of investments held 234,362 244,561 Closing book cost 206,662 209,480 Closing investment holding gains 27,700 35,081 Closing market value 234,362 244,561 The Company received £24,316,000 (2022: £23,970,000) from investments sold in the year. The average book cost of these Financial review Investor informationOverview Governance investments when they were purchased was £25,735,000 (2022: £23,959,000). 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 £68,000 (2022: £47,000). For disposals, transaction costs were £11,000 (2022: £9,000). ### Note 10: Trade and other receivables | | As at | | As at | | --- | --- | --- | --- | | 31 March | | 31 March | | | | 2023 | | 2022 | | | £000 | | £000 | Dividends receivable 827 854 Tax recoverable 253 207 Prepayments and other debtors 33 28 1,113 1,089 None of the Company’s trade receivables are past due or impaired. ### Note 11: Trade payables – amounts falling due within one year | | As at | | As at | | --- | --- | --- | --- | | 31 March | | 31 March | | | | 2023 | | 2022 | | | £000 | | £000 | Interest accrued 28 15 Other trade payables 544 474 572 489 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 57 ## Notes to the financial statements continued ### Note 12: Bank loans | | As at | | As at | | --- | --- | --- | --- | | 31 March | | 31 March | | | | 2023 | | 2022 | | | £000 | | £000 | Bank term loans due within one year 15,795 – Bank term loans due after more than one year – 15,001 15,795 15,001 The Company has a 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. 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 19 September 2023. Facility D was not drawn down at 31 March 2023 or 31 March 2022. 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 30 September 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 2023 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 £3,957,000 (€4,500,000) and Facility C £10,338,000 (US$12,750,000) (31 March 2022: Facility A £1,500,000, Facility B £3,792,000 (€4,500,000), Facility C £9,709,000 (US$12,750,000). ### Note 13: Called up share capital | | | As at | | | As at | | --- | --- | --- | --- | --- | --- | | | 31 March | | | 31 March | | | Number | | 2023 | Number | | 2022 | | of shares | | £000 | of shares | | £000 | Ordinary shares of 1p Ordinary shares in issue at the beginning of the year 99,525,075 995 102,468,075 1,025 Ordinary shares issued from treasury during the year 1,575,000 16 100,000 1 Ordinary shares bought back to treasury during the year (1,616,500) (16) (3,043,000) (31) Ordinary shares in issue at the end of the year 99,483,575 995 99,525,075 995 Treasury shares (ordinary shares 1p) Treasury shares in issue at the beginning of the year 22,774,073 228 19,831,073 198 Ordinary shares issued from treasury during the year (1,575,000) (16) (100,000) (1) Ordinary shares bought back to treasury during the year 1,616,500 16 3,043,000 31 Treasury shares in issue at the end of the year 22,815,573 228 22,774,073 228 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 1,616,500 shares bought back during the year to 31 March 2023 at a cost of £3,586,000 (2022: 3,043,000 shares at a cost of £6,431,000). During the year, the Company issued 1,575,000 shares for net proceeds of £3,631,000 (2022: 100,000 shares for net proceeds of £199,000). 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 capital reserve. 58 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Note 14: Capital reserve The analysis of the capital reserve is as follows: | Realised | | Investment | | | Total | | --- | --- | --- | --- | --- | --- | | capital | | | holding | | capital | | reserve | | | | gains | reserve | | | £000 | | | £000 | £000 | As at 31 March 2022 87,530 35,081 122,611 Losses on realisation of investments at fair value (1,419) – (1,419) Realised currency losses during the year (869) – (869) Movement in unrealised gains – (7,381) (7,381) Dividend income recognised as capital 266 – 266 Capital expenses (1,303) – (1,303) As at 31 March 2023 84,205 27,700 111,905 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’, 2022. Only the realised capital reserve is regarded as being available for distribution. Financial review Investor informationOverview Governance ### Note 15: Net asset value per share | | As at | | As at | | --- | --- | --- | --- | | 31 March | | 31 March | | | | 2023 | | 2022 | Net assets attributable to shareholders (£’000) 219,235 229,657 Shares in issue at the year end 99,483,575 99,525,075 Net asset value per share 220.37p 230.75p ### Note 16: Analysis of debt | | As at | | | | | As at | | --- | --- | --- | --- | --- | --- | --- | | 31 March | | Cash | Exchange | | 31 March | | | | 2022 | flows | movements | | | 2023 | | | £000 | £000 | | £000 | | £000 | Cash at bank 865 705 – 1,570 Bank borrowings (15,001) – (794) (15,795) Net debt (14,136) 705 (794) (14,225) ### Note 17: Related party transactions With the exception of the management and secretarial fees, directors’ fees and directors’ shareholdings (disclosed on page 35), there have been no related party transactions during the year, or in the prior year. The management fee payable in respect of the year ended 31 March 2023 was £1,516,000 (2022: £635,000), of which £386,000 (2022: £373,000) was outstanding at the year-end. The secretarial and directors’ fees payable in respect of the year ended 31 March 2023 are detailed in note 4. The amount outstanding at the year end for secretarial fees and directors’ fees was £18,000 (2022: £3,000) and £nil (2022: £nil) respectively. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 59 ## Notes to the financial statements continued ### Note 18: 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, although no such transactions have been undertaken in the current or prior year. 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 20% of the net tangible assets of the Company. Details of borrowings at 31 March 2023 are shown in note 12 on page 58. 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: | | Interest | | | Local | Foreign | | GBP sterling | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | rate | currency | | exchange | | equivalent | | | As at 31 March 2023 | | % | | 000 | | rate | | £000 | Assets: Pound Sterling 0.60 1,504 n/a 1,504 US dollar 1.37 82 1.233 66 Total 1,570 Liabilities: Bank loan – Pound sterling 2.14 1,500 n/a 1,500 Bank loan – Euro 1.42 4,500 1.137 3,956 Bank loan – US dollar 3.19 12,750 1.233 10,339 Total 15,795 60 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Note 18: Financial instruments continued | | Interest | | | Local | Foreign | | GBP sterling | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | rate | currency | | exchange | | equivalent | | | As at 31 March 2022 | | % | | 000 | | rate | | £000 | Assets: Pound sterling 0.00 865 n/a 865 Total 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 Total 15,001 The interest on the bank loans are fixed until maturity (note 12). 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 Financial review Investor informationOverview Governance the reporting period in the case of instruments that have floating rates. The following table illustrates the sensitivity of the return after taxation to an increase or decrease of 2.00% (2022: 0.75%) in interest rates. The sensitivity analysis is based on the Company’s cash and cash equivalents at the Statement of financial position date, with all other variables held constant. Year to 31 March 2023 Year to 31 March 2022 | 2.00% | | 2.00% | 0.75% | | 0.75% | | --- | --- | --- | --- | --- | --- | | Increase | Decrease | | Increase | Decrease | | | in rate | | in rate | in rate | | in rate | | £000 | | £000 | £000 | | £000 | Effect on revenue return 31 (31) 6 (6) Effect on capital return – – – – Effect on total return and on net assets 31 (31) 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 currency borrowings. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 61 ## Notes to the financial statements continued ### Note 18: Financial instruments continued Foreign currency risk profile Foreign currency risk exposure by currency of denomination: As at 31 March 2023 As at 31 March 2022 | Investment | | Net monetary | | | Total currency | | | Investment | | Net monetary | | | Total currency | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | exposure | | | exposure | | | exposure | | exposure | | | exposure | | | exposure | | | | £000 | | | £000 | | | £000 | | £000 | | | £000 | | | £000 | US dollar 124,002 (9,875) 114,127 132,588 (9,363) 123,225 Euro – (3,883) (3,883) 5,713 (3,794) 1,919 Swiss franc 21,560 149 21,709 22,884 – 22,884 Hong Kong dollar 7,018 – 7,018 4,158 – 4,158 Japanese yen 7,075 119 7,194 4,784 75 4,859 Total foreign currency exposure 159,655 (13,490) 146,165 170,127 (13,082) 157,045 Pound Sterling 74,707 (1,637) 73,070 74,434 (1,822) 72,612 Total net assets 234,362 (15,127) 219,235 244,561 (14,904) 229,657 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 31 March 2023, if sterling had strengthened by 10% in relation to all currencies (2022: 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 | | As at | | --- | --- | --- | --- | | 31 March | | 31 March | | | | 2023 | | 2022 | | | £000 | | £000 | US dollar 11,413 12,322 Euro (388) 192 Swiss franc 2,171 2,288 Hong Kong dollar 702 416 Japanese yen 719 486 14,617 15,704 (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 pages 13 and 14, 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. 62 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ### Note 18: Financial instruments continued Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation and the net asset value to an increase or decrease of 15% in the fair value of the Company’s equities (2022: 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 31 March 2023 Year to 31 March 2022 | 15% increase | | 15% decrease | | 15% increase in | | | 15% decrease | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | in fair value | | in fair value | | | fair value | | in fair value | | | | £000 | | £000 | | | £000 | | £000 | Effect on revenue return (80) 80 (83) 83 Effect on capital return 35,005 (35,005) 36,529 (36,529) Effect on total return and on net assets 34,925 (34,925) 36,446 (36,446) (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 Financial review Investor informationOverview Governance overdraft facilities (see note 12 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 31 March 2023 As at 31 March 2022 | Three months | | | More than | | | Three months | | | More than | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | or less | three months | | | Total | | or less | three months | | | Total | | | £000 | | | £000 | £000 | | £000 | | | £000 | £000 | Trade payables: Bank loans 28 15,992 16,020 15 15,583 15,598 Other trade payables 544 – 544 474 – 474 572 15,992 16,564 489 15,583 16,072 (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 31 March 2023 was £2,397,000 (2022: £1,719,000). This was due to dividend receivables and cash as per notes 10 and 16. 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. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 63 # Notes to the financial statements continued ## Note 19: 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 20: 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 31 March 2023 | Level 1 £000 | Level 2 £000 | Level 3 £000 | Total £000 | | --- | --- | --- | --- | --- | | Financial assets at fair value through profit or loss | | | | | | Quoted equities | 234,362 | – | – | 234,362 | | **Net fair value** | **234,362** | **–** | **–** | **234,362** | | At 31 March 2022 | Level 1 £000 | Level 2 £000 | Level 3 £000 | Total £000 | | --- | --- | --- | --- | --- | | Financial assets at fair value through profit or loss | | | | | | Quoted equities | 244,561 | – | – | 244,561 | | **Net fair value** | **244,561** | **–** | **–** | **244,561** | ## Note 21: Company information STS Global Income & Growth Trust 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. 64 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## AIFMD Disclosures (Unaudited) In accordance with the AIFM Directive, information in relation to the Company’s leverage and the remuneration of the Company’s AIFM, Juniper Partners, 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 30 April 2022 and 30 April 2021 are available from the Company Secretary on request. The Company’s maximum and actual leverage levels are shown below: Gross method Commitment method | | | At | | At | | At | | At | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 March | | 31 March | | 31 March | | 31 March | | | Leverage Exposure | | 2023 | | 2022 | | 2023 | | 2022 | Maximum permitted limit 300% 300% 200% 200% Actual 107% 106% 108% 106% 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 Manager is also required to comply with the gearing parameters set by the Board in relation to borrowings. Financial review Investor informationOverview Governance STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 65 # 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 for reference. ## 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. | | | 2023 | 2022 | | --- | --- | --- | --- | | Opening NAV per share | A | 230.75p | 202.68p | | Closing NAV per share | B | 220.37p | 230.75p | | % change in NAV | C=(B-A)/A | (4.5)% | 13.8% | | Impact of dividends reinvested | D | 2.7% | 3.0% | | **NAV total return** | **E=C+D** | **(1.8)%** | **16.8%** | ## 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. | | | 2023 | 2022 | | --- | --- | --- | --- | | Opening share price | A | 231.00p | 202.00p | | Closing share price | B | 214.00p | 231.00p | | % change in share price | C=(B-A)/A | (7.4)% | 14.4% | | Impact of dividend reinvested | D | 2.6% | 3.0% | | **Share price total return** | **E=C+D** | **(4.8)%** | **17.4%** | ## 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. | | | 2023 | 2022 | | --- | --- | --- | --- | | NAV per share | A | 220.37p | 230.75p | | Share price | B | 214.00p | 231.00p | | (Discount)/premium | C=(B-A)/A | (2.89)% | 0.11% | 66 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## NAV per share This is the main measure of the underlying value of a share in an investment company. The NAV (cum income) per share includes undistributed current year income and the calculation is included in note 15. 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: | | | 2023 | 2022 | | --- | --- | --- | --- | | Net assets per statement of financial position | A | 219,235,000 | 229,657,000 | | Current year revenue return | B | 6,341,000 | 5,854,000 | | Dividends paid for the current year (note 6) | C | 4,348,000 | 4,118,000 | | NAV (ex income) | D=A-(B-C) | 217,242,000 | 227,921,000 | | Shares in issue at the year-end | E | 99,483,575 | 99,525,075 | | Net asset value per share (ex income) | F=D/E | 218.37p | 229.01p | ## 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. | | | 2023 £000 | 2022 £000 | | --- | --- | --- | --- | | Investment management fee | | 1,516 | 635 | | Other expenses | | 625 | 516 | | Discount control costs (fixed element) | | 32 | 30 | | Total expenses | | 2,173 | 1,181 | | Effect of 12 month management fee holiday* | | – | 873 | | One-off costs | | (50) | – | | Ongoing charges | A | 2,123 | 2,054 | | Average net assets | B | 226,835 | 220,068 | | Ongoing charges ratio | C=A/B | 0.94% | 0.93% | * Troy agreed to waive its management fee for a period of 12 months from the date of their appointment (12 November 2020). If Troy had not waived its fee until 12 November 2021 the investment management fee payable in the year ended 31 March 2022 would have been £873,000 higher. Overview Governance Financial review Investor information STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 67 ## Glossary of terms extra for shareholders. However, if the investment portfolio ### AIFM doesn’t perform well, gearing can increase losses. The An alternative investment fund manager (‘AIFM’) is an entity more an investment company gears, the higher the risk. that provides certain investment services, including portfolio and risk management services. The Company has appointed The gearing currently employed is discussed in the Juniper Partners as its AIFM. AIFMs are responsible for strategic report on page 14. managing investment products that fall within the category of ### alternative investment funds and investment trusts, including Leverage the Company, are included in this. Leverage, for the purposes of the AIFMD, is any method which increases the Company’s exposure to stockmarkets ### Comparison index whether through borrowings, derivatives, or any other The Company’s investment performance (on a total return means. It is expressed as a ratio of the Company’s basis) is measured against the Lipper Global – Equity exposure to its NAV. In summary, the gross method Global Income Index for comparison purposes. measures the Company’s exposure before applying hedging or netting arrangements. The commitment ### Discount control mechanism method allows certain hedging or netting arrangements The policy through which the Company issues shares where to be offset. As at 31 March 2023, the Company had no there is demand in the market or buys back shares when hedging or netting arrangements. there are excess shares available in the market with the aim ### Net assets of ensuring, in normal market conditions, that the shares trade consistently close to their net asset value. A measure of the size of an investment company. The total value of all assets held, less liabilities and prior charges, ### Dividend including income for the current year. Income from an investment in shares. Not all investment ### Share buy backs companies pay dividends. Dividend income is not guaranteed and may fall as well as rise. The Company pays Describes an investment company buying its own shares dividends quarterly in April, July, October and January. and reducing the number of shares in issue. Share buy backs can be used to return money to ### Dividend yield shareholders, but are also often used to tackle the The annual dividends expressed as a percentage of the Company’s discount. Discounts may reflect an imbalance current share price. between the demand for shares and the number of shares in existence. The hope is that, by reducing the number of ### Ex and cum income shares in existence, the buy back will help to prevent the Also shown as ‘ex div’ or ‘xd’, this means that, if you buy discount widening or even reduce it. the shares today, you will not receive the most recently ### declared dividend. Share price Shares are being traded all the time on stock markets, so The price of a share as determined by the stock market. for administrative reasons there needs to be a point when If you see a single share price shown, it’s likely that this is buyers and sellers agree whether they will receive the most the mid-market price. This is different to the price at which recently declared dividend. The point when the shares you buy and sell the shares, which are known as the bid purchased will no longer receive the dividend is known price (sell) and offer price (buy). as the ‘ex dividend date’ and the shares are said to have ‘gone ex dividend’. The share price will normally fall by the ### Treasury shares amount of the dividend to reflect this. Shares in the Company’s own share capital which the If you buy the shares when you are still entitled to the most Company itself owns and which can be sold to investors to recently declared dividend, this is known as the shares raise new funds. being cum dividend. Treasury shares only come into existence when the Company buys back its own shares. Instead of cancelling the shares ### Gearing (i.e. they cease to exist) they are held ‘in treasury’ by the At its simplest, gearing means borrowing money to buy Company and can be sold at a later date to raise new funds. more assets in the hope the Company makes enough profit to pay back the debt and interest and leave something 68 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Ways to invest in the Company The Company’s shares quality for tax efficient wrapper ### Independent financial advisers products like individual savings accounts (‘ISAs’) and self- An increasing number of independent financial invested personal pensions (‘SIPPs’) as well as may other advisers are including investment trusts within their investment wrappers that can be used, including those investment recommendations for clients. To find designated for children. an adviser who recommends on investment trusts, visit www.unbiased.co.uk. ### Platforms, fund supermarkets and online ### stockbrokers ### Private client stockbrokers You can invest using a number of fund platforms and fund If you have a large sum to invest, you may want to contact supermarkets. Many offer wrapper products like ISAs and a private client stockbroker. They can manage your entire SIPPs and children’s savings products. A number of real- portfolio of shares and will advise you on your investments. time execution only stockbroking services also allow you To find a private client stockbroker visit the Wealth to trade online, manage your portfolio and buy UK listed Management Association: www.thewma.co.uk. shares. These services do not offer financial advice and if you are unsure about investing, we recommend that you ### Trading Codes speak to a qualified financial adviser. (You may be asked for these when investing) ### Retail distribution/NMPI status TIDM code: STS The Company’s shares are ‘excluded securities’ for Sedol: B09G3N2 the purposes of the rules relating to non-mainstream pooled investment (‘NMPI’) products. This means Financial review Investor informationOverview Governance ISIN: GB00B09G3N23 they can be recommended by independent financial advisers to their ordinary retail clients, subject to normal suitability requirements. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 69 # Notice of Annual General Meeting Notice is hereby given that the annual general meeting of STS Global Income & Growth Trust plc (the 'Company') will be held at 28 Walker Street, Edinburgh, EH3 7HR, on 20 September 2023 at 2.00pm 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 31 March 2023 together with the reports of the directors and the auditor thereon. 2. To approve the directors' remuneration report for the year ended 31 March 2023. 3. To approve the directors' remuneration policy 4. To approve the dividend policy. 5. To re-elect John Evans as a director of the Company. 6. To re-elect Angus Cockburn as a director of the Company. 7. To re-elect Sarah Harvey as a director of the Company. 8. To re-elect Alexandra Innes as a director of the Company. 9. To re-elect Mark Little as a director of the Company. 10. 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. 11. To authorise the directors to fix the remuneration of the auditor for the year ending 31 March 2024. 12. To increase the aggregate limit on directors' remuneration from £200,000 to £250,000 per annum. 13. 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 £328,362 (being one third of the issued share capital of the company as at 6 June 2023; 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 30 September 2024 or, if earlier, at the conclusion of the annual general meeting of the company in 2024 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 after 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: 14. 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 13 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 6 June 2023; being the latest practical date before the date of this notice). 70 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Overview Governance Financial review Investor information This authority shall expire, unless previously revoked or renewed by the company in a general meeting, on 30 September 2024 or, if earlier, at the conclusion of the annual general meeting of the Company to be held in 2024, 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 after 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. 15. 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 14,766,435 (being 14.99% of the issued share capital as at 6 June 2023, 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 carried out; (iv) the authority hereby conferred shall expire 15 months after 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 after 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. 16. That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear 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 7 June 2023 Registered office: 28 Walker Street, Edinburgh EH3 7HR STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 71 # Notice of Annual General Meeting continued ## 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 after 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 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 6 June 2023 (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 23,790,573 shares are held in treasury. Each share carries one vote, therefore, the total voting rights in the Company are 98,508,575 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, (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. 72 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 Overview Governance Financial review Investor information 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 28 Walker 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. STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 73 ## 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. ### Register for monthly updates Subscribe to monthly email updates that offer information on the following: • latest prices • performance data • latest factsheet • press releases and articles • manager videos • portfolio information • research • annual and half yearly reports ### Enquiries If you have an enquiry about STS Global Income & Growth Trust, please get in touch. 0131 378 0500 l companysecretary@stsplc.co.uk The Chairman c/o Company Secretary STS Global Income & Growth Trust plc 28 Walker Street Edinburgh EH3 7HR chairman@stsplc.co.uk 74 STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 ## Corporate information | Directors | Bankers | | --- | --- | | John Evans (Chairman) | The Royal Bank of Scotland International Limited | | Angus Cockburn | 71 Bath Street | | Sarah Harvey (Senior Independent Director) | St Helier | | Alexandra Innes | Jersey JE4 8PJ | Mark Little ### Depositary ### AIFM and Company Secretary J.P. Morgan Europe Limited Juniper Partners Limited 25 Bank Street 28 Walker Street Canary Wharf Edinburgh EH3 7HR London E14 5JP Juniper Partners Limited is authorised and regulated by the Financial Conduct Authority. ### Brokers JPMorgan Cazenove Limited ### Manager 25 Bank Street Troy Asset Management Limited Canary Wharf 33 Davies Street London E14 5JP London W1K 4BP Troy Asset Management Limited is authorised and regulated by ### Association of Investment Companies the Financial Conduct Authority. 9th Floor Financial review Investor informationOverview Governance ### Registered office 24 Chiswell Street London EC1Y 4YY STS Global Income & Growth Trust plc www.theaic.co.uk 28 Walker Street Edinburgh EH3 7HR STS Global Income & Growth Trust is a member of the AIC (the Registered in Scotland, registered number SC283272 trade body of the investment company industry). ### Independent auditor ### Shareholder information Ernst & Young LLP Website: www.stsplc.co.uk 25 Churchill Place Canary Wharf London E14 5EY ### Custodians J.P. Morgan Chase Bank N.A. 25 Bank Street Canary Wharf London E14 5JP ### Financial calendar – key dates 2023 Year end figures Annual General announced and Meeting half-yearly financial report annual report issued issued Half-yearly results, announced January OctoberApril July SeptemberJune Second interim Third interim Fourth interim First interim dividend payment dividend paid dividend paid dividend paid STS Global Income & Growth Trust plc Annual Report for the year to 31 March 2023 75 (formerly Securities Trust of Scotland plc) ### stsplc.co.uk 28 Walker Street Edinburgh EH3 7HR