shiresincome.co.uk

Shires Income PLC

Annual Report 31 March 2024

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Shires Income PLC 1

“The year to 31 March 2024 was good for equities

globally, with growing expectations of interest rate

reductions during the course of 2024 which

provides a positive outlook for the year ahead.”

Robert Talbut, Chairman

“The NAV total return for the year was 5.1%. The

Company lagged a rising market as we would

expect, given the defensive and income focused

nature of the portfolio holdings.”

Iain Pyle and Charles Luke,

abrdn Investments Limited

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2 Shires Income PLC

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR

IMMEDIATE ATTENTION. If you are in any doubt about the

action you should take, you are recommended to seek

your own financial advice from your stockbroker, bank

manager, solicitor, accountant or other financial adviser

authorised under the Financial Services and Markets Act

2000 (as amended by the Financial Services Act 2012) if

you are in the United Kingdom or, if not, from another

appropriately authorised financial adviser.

If you have sold or otherwise transferred all your Ordinary

shares in Shires Income PLC, please forward this

document, together with the accompanying documents

immediately to the purchaser or transferee, or to the

stockbroker, bank or agent through whom the sale or

transfer was effected for transmission to the purchaser

or transferee.

Overview

Performance Highlights 3

Financial Calendar and Highlights 4

Strategic Report

Chairman’s Statement 8

Overview of Strategy 12

Promoting the Success of the Company 20

Performance 24

Investment Manager’s Review 28

Investment Case Studies 33

The Investment Manager’s Approach to ESG 35

Portfolio

Ten Largest Investments 42

Investment Portfolio - Equities 43

Investment Portfolio - Other Investments 46

Distribution of Assets and Liabilities 47

Sector Analysis 48

Governance

Board of Directors 52

Directors’ Report 55

Directors’ Remuneration Report 64

Audit Committee’s Report 68

Statement of Directors’ Responsibilities 72

Independent Auditor’s Report to the

Members of Shires Income PLC 73

Financial Statements

Statement of Comprehensive Income 82

Balance Sheet 83

Statement of Changes in Equity 84

Cash Flow Statement 85

Notes to the Financial Statements 86

Corporate Information

Information about the Investment Manager 108

Investor Information 111

Glossary of Terms 113

Alternative Performance Measures 116

AIFMD Disclosures (Unaudited) 119

General

Notice of Annual General Meeting 121

Appendix to Notice of Annual General Meeting 127

Contact Addresses 129

Contents

Shires Income PLC 3

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Net asset value per Ordinary share

total return

Share price total return

+5.1%

–5.7%

2023

–2.2%

2023

–5.5%

Benchmark index total return Earnings per share (revenue)

+8.4%

14.75p

2023

+2.9%

2023

14.83p

Dividends per Ordinary share Dividend yield

14.40p

6.5%

2023

14.20p

2023

5.7%

Alternative Performance Measure (see pages 116 to 118).

Net asset value per

Ordinary share*

Ordinary share price*

Dividends per

Ordinary share

At 31 March – pence

Year ended 31 March – pence

207.4

262.4

278.3

257.9

256.0

20 21 22 23 24

200.5

248.0

279.0

250.0

222.0

20 21 22 23 24

13.20

13.80

14.20

14.40

20 21 22 23 24

*excludes dividend reinvestment

Performance Highlights

4 Shires Income PLC

Financial Calendar

Online Shareholder Presentation

25 June 2024

Annual General Meeting

5 July 2024

Expected payment dates of quarterly dividends

31 July 2024

31 October 2024

31 January 2025

30 April 2025

Half year end

30 September 2024

Expected announcement of results for the six months

ending 30 September 2024

November 2024

Financial year end

31 March 2025

Expected announcement of results for year ending

31 March 2025

May 2025

Financial Calendar and Highlights

Shires Income PLC 5

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Highlights

31 March 2024

31 March 2023

Total assets (as defined on page 115)

£124,920,000

£98,864,000

Shareholders’ funds

£105,957,000

£79,913,000

Market capitalisation

£91,840,000

£77,411,000

Net asset value per Ordinary share (as defined on page (114)

256.00p

257.92p

Share price

222.00p

250.00p

Discount to NAV (cum-income)

13.3%

3.1%

Net gearing

16.4%

22.2%

Dividend and earnings

Revenue return per share

14.75p

14.83p

Dividend per share

14.40p

14.20p

Dividend cover

1.02

1.04

Revenue reserves

£7,388,000

£7,040,000

Dividend yield

6.5%

5.7%

Operating costs

Ongoing charges ratio (excluding look-through costs)

1.09%

1.03%

Ongoing charges ratio (including look-through costs)

1.10%

1.17%

Represents the number of Ordinary shares in issue in the Company multiplied by the Company’s share price.

Net asset value per Ordinary share is calculated after the repayment of the capital paid up on Cumulative Preference shares (see

note 16 on page 98).

Considered to be an Alternative Performance Measure, as defined on pages 116 and 117.

Measures the revenue earnings for the year divided by the weighted average number of Ordinary shares in issue (see Statement of

Comprehensive Income).

The figures for dividend per share reflect the years in which they were earned (see note 9 on pages 92 and 93).

The revenue reserve figure does not take account of payment of the third interim or final dividend amounting to £3,310,000 (2023 –

£2,415,000) combined.

6 Shires Income PLC

Strategic

Report

Shires Income PLC 7

The Company’s investment objective

is to provide shareholders with a high

level of income, together with the

potential for growth of both income

and capital, from a diversified

portfolio substantially invested in UK

equities but also in preference

shares, convertibles and other fixed

income securities.

The Company has a largely retail

investor shareholder base.

Regular updates are provided

through the Company’s website at

www.shiresincome.co.uk

8 Shires Income PLC

Highlights

· Successful completion of the combination with abrdn

Smaller Companies Income Trust plc (“aSCIT”).

· Increased dividend of 14.40p per Ordinary share,

providing a dividend yield of 6.5% based on the year end

share price.

· Confidence that the dividend remains sustainable.

· NAV total return of 5.1%, compared to a total return of

8.4% from the FTSE All-Share Index.

Markets and Performance

The year to 31 March 2024 was good for equities globally,

with growing expectations of interest rate reductions

during the course of 2024. The UK market, as represented

by the FTSE All-Share Index, delivered a total return of

8.4%. The Company’s net asset value (“NAV”) total return

for the year was lower, at 5.1%. Although lagging the

market return, the performance for the year is in line with

what we would expect, given the defensive and income

focused nature of the portfolio, and delivered the

Company’s objective of providing shareholders with a high

level of income, together with the potential for growth of

both income and capital.

Revenue earnings per share for the year were broadly

similar to last year and the total dividends for the year

have been increased to 14.40p per Ordinary share. This

represents a dividend yield of 6.5% based on the year end

share price.

The share price performance for the year was

disappointing, with a negative total return of 5.7%,

reflecting a significant widening of the discount, to 13.3%

at the year end. Discount widening has been exhibited

across much of the investment trust universe. The

persistence of higher interest rates is a factor, as is

decreased demand for collective funds generally, but, in

the case of Shires, the decision of abrdn to transfer its in-

house savings scheme to Interactive Investor certainly

contributed to some short-term selling of our shares. The

Board’s view was that this unprecedented level of discount

was unwarranted, and, to address this imbalance of

supply and demand for the Company’s shares, the

Company made use of its share buy back authority during

the year and will continue to make use of this authority

going forward if considered appropriate.

More detailed information on performance for the year

and investment activity within the portfolio are contained

within the Investment Manager’s Review.

Earnings and Dividends

The Company’s revenue earnings per share for the year

were 14.75p (2023 – 14.83p). Investment income was

13.7% higher than last year, due mainly to the impact of a

larger portfolio following the aSCIT transaction, including a

special dividend of £445,000 from aSCIT at the time of the

transaction. The transaction also resulted in a larger share

capital base meaning that the per share revenue earnings

for the year were broadly unchanged.

The Company has paid three interim dividends of 3.20p

per Ordinary share (2023: 3.20p). The Board is proposing a

final dividend of 4.80p per Ordinary share (2023: 4.60p),

which will be paid on 31 July 2024 to shareholders on the

Ordinary share dividends for the year to 14.40p per share.

“The final dividend brings total

Ordinary share dividends for the year

to 14.40p per share, representing a

dividend yield of 6.5%.”

With the total dividends for the year covered by earnings,

revenue reserves will stand at 0.69 times (2023 – 1.05

times) the current annual Ordinary share dividend cost.

The reduction in reserve cover during the year is as a

result of the larger capital base following the aSCIT

transaction, but it should still allow the Company to

support future dividend payments in times of reduced

earnings. In addition, the Company also has the flexibility

to pay dividends from its realised capital reserves,

although the Board has no current intention of making use

of this flexibility. As explained below, we propose to create

greater flexibility through cancelling the amount standing

to the credit of the Company’s Share Premium Account.

Through the proposed changes to the investment policy

described below and the cancellation of the Share

Premium Account, together with the already healthy level

of revenue reserves, shareholders should take comfort

that maintaining and potentially growing the dividend

remains realistic.

Chairman’s Statement

Shires Income PLC 9

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Allocation of Costs

The Company has historically allocated management

fees and finance costs 50% to Revenue and 50% to Capital

in the Statement of Comprehensive Income. Following a

review of this allocation after the completion of the aSCIT

transaction, the Board has decided that, with effect from 1

April 2024, these costs will be charged 40% to Revenue

and 60% to Capital. The Board considers that this

allocation better reflects the expected long-term view of

the nature of the future investment returns of the enlarged

portfolio and is consistent with the treatment adopted by

other UK Equity Income investment trusts.

Discount and Share Buy Backs

The discount at which the price of the Company’s

Ordinary shares traded relative to the NAV widened

during the period, to 13.3% as at 31 March 2024 compared

to 3.1% at the start of the year. While it is disappointing to

see the Company’s discount widen, this is consistent with

what we have seen in the investment trust sector more

generally. It is important to note that Shires, as a high yield,

relatively risk averse, company is seen by some as in more

direct competition with cash deposits than many of its

peers. Recent interest rate rises have made cash

investments more attractive and we suspect that this

has had a detrimental effect on demand for the

Company’s shares.

Market forecasts of reductions in interest rates later this

year should make Shires relatively more attractive to

investors. In the meantime, we believe that what the Board

sees as the quite secure dividend and the potential for

capital growth and inflation protection provided by the

Company, makes it a much more compelling option

compared to cash.

The Board has recently used share buybacks for the first

time in the Company’s history to address the liquidity of

the Company’s shares - excess supply being one of the

factors which can impact the discount level. The extent of

buybacks is somewhat limited by the size of the Company

and its gearing. It is in all interests to grow the Company

over time in order to spread fixed costs and increase

liquidity. Buying back shares acts against this and so has

been used with caution.

The Company bought back 863,532 Ordinary shares

during the year at a cost of £1.9 million and an average

discount of 9.3%, thereby providing a modest

enhancement to the NAV. All shares bought back are

held in treasury for potential future resale at a premium

to the NAV.

The Board will seek the renewal of the share buy back

authority at the AGM and will make use of this authority if it

considers it in the best interests of shareholders to do so.

It is encouraging to see that the discount has started to

narrow since the year end.

Proposed Changes to Investment Policy

Following a review by the Board and Manager of the

Company’s investment policy we propose to seek

shareholder approval at the AGM, principally to increase

the limit on exposure to overseas companies from 10% of

total assets to 20% of total assets. At the year end, 9.2% of

the Company’s total assets were invested in the equity

securities of overseas companies. The Board considers

that this change will provide the Investment Manager with

greater flexibility to achieve the Company’s investment

objective. The Company will remain in the AIC’s UK Equity

Income Sector following the change.

The full text of the proposed amendments may be found

in the Appendix to the Notice of Annual General Meeting

on page 127.

Proposed Cancellation of Share Premium

Account

Following the issue of new Ordinary shares to

shareholders of aSCIT, the value of the Company’s Share

Premium Account now amounts to £50.0 million. This

reserve cannot be used for distributions, including share

buy backs or the payment of dividends, although the

Company is permitted to use its realised capital reserve,

which amounted to £27.5 million at the year end, for

these purposes.

The Board will propose a special resolution at the AGM to

cancel the amount standing to the credit of the Share

Premium Account. The cancellation will also require court

approval which will be sought following the AGM. Once

this exercise is complete, the newly created distributable

reserve will be available to fund the cost of share buy

backs and dividend payments. The Board considers that it

is in shareholders’ interests for the Company to have this

flexibility, although it has no current intention of making

use of it for dividend payments which will continue to be

resourced through net revenue and revenue reserves.

10 Shires Income PLC

Gearing

The Company has a £20 million loan facility of which £19

million was drawn down at the year end. Net of cash, this

represented gearing of 16.4%, compared to 22.2% at the

start of the year. The reduction is due mainly to the impact

of the aSCIT transaction, with the Company having the

same value of borrowings but a larger asset base. The

weighted average borrowing cost at the year end was

5.3% (31 March 2023 - 4.7%).

The Board continually monitors the level of gearing and

takes the view that the borrowings are notionally invested in

the less volatile fixed income part of the portfolio which

generates a high level of income, giving the Investment

Manager greater ability to invest in a range of equity stocks

with lower yields and higher growth prospects. The Board

believes that this combination should enable the Company

to achieve a high and potentially growing level of dividend,

and also deliver some capital appreciation for shareholders.

Manager’s Fee Re-Investment Programme

The Board notes the announcement by abrdn plc in

December 2023 of the initiation of a programme to invest

up to six months’ worth of the management fees received

from the UK investment trusts it manages, in the

underlying companies’ shares.

We welcome this proposal as it demonstrates

commitment by abrdn to the Company and the

investment trust sector.

aSCIT Transaction

On 26 July 2023, the Company announced that it had

agreed terms with the Board of aSCIT for a proposed

combination of the assets of the Company with those of

aSCIT (the “aSCIT transaction”). This was achieved by a

scheme of reconstruction and winding up of aSCIT, where

assets were transferred to the Company in exchange for

the issue of new Ordinary shares to aSCIT shareholders. A

cash exit was also available under the scheme. aSCIT and

Shires shareholders approved the scheme on 20

November 2023 and it completed on 1 December. Shires

issued 11,268,494 new Ordinary shares to aSCIT

shareholders, with the new shares admitted to trading on

4 December 2023. The terms of the scheme were such

that Shires shareholders did not suffer any dilution in their

interests from the costs of the scheme, and an important

component of the scheme offsetting these costs was the

elimination of the discount to net asset value on the

Company’s holding in aSCIT via the switch to directly held

smaller companies, which are now valued at their

market price.

The transaction increased the size of Shires by more than

35%, to net assets of £101 million at the point when aSCIT’s

assets transferred. Other than as highlighted above, the

Company will continue with its existing investment policy

and management arrangements, and now has a focused

and direct exposure to UK smaller companies rather than

obtaining its exposure through investing in aSCIT. This

provides an additional benefit of allowing the Investment

Manager to spread risk amongst a number of investments

rather than all risk being concentrated in one vehicle. In

addition, as a result of the transaction, the Company’s

gearing ratio has fallen as explained above.

Board Composition

The Board is pleased to welcome Simon White as an

independent non-executive Director of the Company with

effect from 1 January 2024. Simon has a background in UK

equity fund management and significant experience in

the investment trust sector. He was, until June 2022, Co-

Head of Investment Trusts at BlackRock where he was

responsible for overseeing the company secretarial, sales,

marketing and third-party administration services. Simon

has an excellent understanding of the investment trust

sector and we believe he will make a significant

contribution to the Board going forward.

As previously announced, I shall be stepping down from

the Board at the AGM in July, having served for nine years.

Robin Archibald, who is the current Chair of the Audit

Committee and Senior Independent Director, will replace

me as Chairman, Jane Pearce will become the new Chair

of the Audit Committee and Helen Sinclair will become the

new Senior Independent Director.

I would like to thank my colleagues on the Board for their

support during my time as Chairman. I am confident that

the Board has the appropriate collective skills and

experience to take the Company forward and I wish the

Company every success in the future.

“An online shareholder presentation

will be held at 10.00am on Tuesday

25 June 2024.”

Chairman’s Statement

Continued

Shires Income PLC 11

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Online Shareholder Presentation and Annual

General Meeting (“AGM”)

Given the popularity of our Online Shareholder

Presentation in previous years, we have decided to hold

another online presentation this year, in addition to the

AGM. This will be held at 10.00am on Tuesday 25 June

2024. A presentation will be given by the Investment

Manager, and those in attendance will be given the

opportunity to ask questions of the Chairman and

Investment Manager both during the presentation and in

advance. Full details on how to register for the event can

be found at: https://bit.ly/Shires-Income. Details are also

contained on the Company’s website. Should you be

unable to attend the online event, it will be made available

on the Company’s website shortly afterwards. For those

wishing to submit questions in advance, you can do this at

the following email address: shires.income@abrdn.com

The Company’s AGM will take place at 12 noon on Friday

5 July 2024 at the offices of abrdn plc, 18 Bishops Square,

London E1 6EG, and will be followed by lunch. As well as

the formal business of the meeting, the Investment

Manager will provide a short presentation on the

Company and there will be an opportunity for

shareholders to ask questions of the Manager and the

Board. Irrespective of whether you are able to attend, we

do encourage all shareholders to complete and return the

Proxy Form enclosed with the Annual Report to ensure

that your votes are represented at the meeting. If you hold

your shares in the Company via a share plan or a platform

and would like to attend and / or vote at the AGM, then

you will need to make arrangements with the

administrator of your share plan or platform.

The Notice of the Meeting is contained on pages

121 to 127.

Outlook

There remain a number of geo-political uncertainties that

could impact stock markets over the months ahead,

including the continuing impact of the conflicts in Ukraine

and the Middle East, as well as the outcomes of the

elections in the US and the UK. It seems likely that interest

rates in the UK and globally have peaked and will be

reduced later in the year, which should be a positive for

equity market valuations. The Board also believes that this

will be beneficial for the rating of the Company’s shares,

which is something that we will continue to monitor

very carefully.

“The Investment Manager has a strong

long term track record of delivering

the Company’s income and capital

growth objective.”

In this environment, good stock selection will continue to

be key. The Investment Manager has a strong long term

track record of delivering the Company’s income and

capital growth objective. Despite the various macro

uncertainties, the Board remains confident in the

Company’s ability, to continue to achieve its objective

going forward.

Robert Talbut

Chairman

22 May 2024

12 Shires Income PLC

Business Model

The business of the Company is that of an investment

company which qualifies as an investment trust for tax

purposes. The Directors do not envisage any change in

this activity in the foreseeable future.

Benchmark

In assessing its performance, the Company compares its

returns with the returns of the FTSE All-Share Index

(total return).

Investment Objective

The Company’s investment objective is to provide

shareholders with a high level of income, together with the

potential for growth of both income and capital, from a

diversified portfolio substantially invested in UK equities but

also in preference shares, convertibles and other fixed

income securities.

Investment Policy

The Company’s investment policy is to invest principally in

the ordinary shares of UK quoted companies, and in

preference shares, convertibles and other fixed income

securities with above average yields. The Company

generates income primarily from ordinary shares,

preference shares, convertibles and other fixed income

securities. It also generates income by writing call and put

options on shares owned, or shares the Company would

like to own. By doing so, the Company generates

premium income.

Gearing

The Directors are responsible for determining the gearing

strategy of the Company. Gearing is used with the

intention of enhancing long-term returns. It is subject to a

maximum equity gearing level of 35% of net assets at the

time of drawdown. Any borrowing except in relation to

short-term liquidity requirements is used for investment

purposes.

Diversification of Risk and Investment Restrictions

In order to ensure adequate diversification, limits are set

within the investment policy which the AIFM and

Investment Manager must operate. All of these limits are

measured at the point of acquisition of investments, unless

otherwise stated, as follows:

General Investment Limits

· a maximum of 10% of total assets may be invested in

the equity securities of overseas companies;

· a maximum of 7.5% of total assets may be invested in

the securities of one company (historically excluding

abrdn Smaller Companies Income Trust plc);

· any investment must not represent more than 5% of a

quoted investee company’s ordinary shares (historically

excluding abrdn Smaller Companies Income Trust plc);

and

· a maximum of 10% of total assets may be invested

directly in AIM holdings.

Limits in Relation to Preference Shares

· a maximum of 7.5% of total assets may be invested in

the preference shares of any one company; and

· the Company may not hold more than 10% of any

investee company’s preference shares.

Limits in Relation to Traded Option Contracts

There are principal guidelines put in place to manage the

risks associated with these contracts, including:

· call options written are to be covered by stock;

· put options written are to be covered by net current

assets/borrowing facilities;

· call options are not to be written on more than 10% of

the equity portfolio; and

· put options are not to be written on more than 10% of

the equity portfolio.

The Board assesses on a regular basis with the Investment

Manager the applicability of these investment limits, the

use of gearing and risk diversification, whilst aiming to

meet the overall investment objectives of the Company.

In accordance with the Listing Rules, the Company will not

make any material change to its published investment

policy without the prior approval of the FCA and the

approval of its shareholders by ordinary resolution.

As set out in the Chairman’s Statement on page 9, the

Directors are seeking shareholder approval for certain

amendments at the forthcoming Annual General Meeting.

Investment Process

The investment process and risk controls employed by the

Investment Manager are described on pages 109 to 110.

Overview of Strategy Overview of Strategy

Shires Income PLC 13

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Promoting the Success of the Company

The Board’s statement on pages 20 to 23 describes how

the Directors have discharged their duties and

responsibilities over the course of the financial year under

section 172 (1) of the Companies Act 2006 and how they

have promoted the success of the Company for the

benefit of the members as a whole.

Key Performance Indicators (“KPIs”)

The Board uses a number of financial performance

measures to assess the Company’s success in achieving

its objective and determining the progress of the

Company in pursuing its investment policy. The main KPIs

identified by the Board in relation to the Company, which

are considered at each Board meeting, are shown in the

table below:

KPI

Description

Performance against benchmark index The Board measures performance over the medium to long-term, on a total return basis

against the benchmark index – the FTSE All-Share Index (total return). The figures for this

year and the past three and five years are set out on page 24 and a graph showing

performance against the benchmark index over the past five years is shown on page 25.

Share price performance

The Board monitors the performance of the Company’s share price on a total return

basis. The returns for this year and for the past three and five years are set out on page 24

and a graph showing the share price total return performance against the benchmark

index over the past five years is included on page 25.

Premium/discount to NAV

The premium/discount relative to the NAV per share represented by the share price is

closely monitored by the Board. A graph showing the history of the premium/discount for

the past five years is included on page 25. The Board also monitors trading activity in the

Company’s shares on a regular basis.

Revenue return per Ordinary share

The Board monitors the Company’s net revenue return (earnings per share). The

revenue returns per Ordinary share for each of the past ten years are set out on page 27.

Dividend per share

The Board monitors the Company’s annual dividends per Ordinary share and the extent

to which dividends are covered by current net revenue and revenue reserves. The

dividends per share for each of the past ten years are set out on page 27. The Board gives

active consideration to growth in the Company’s dividend given that this forms part of the

Company’s investment objective.

Ongoing charges The Board monitors the Company’s operating costs carefully. Ongoing charges for the

year and the previous year are disclosed on page 5.

14 Shires Income PLC

Principal and Emerging Risks

and Uncertainties

The Board carries out a regular review of the risk

environment in which the Company operates, changes to

that environment and to individual risks. The Board also

identifies emerging risks which might impact the

Company. During the year, the most significant risks were

inflation and high interest rates and the resultant volatility

that this created in global stock markets. In addition, the

conflicts in Ukraine and the Middle East and other geo-

political tensions have created geo-political uncertainty

which has further increased market risk premia and

volatility. The most significant direct issue that the

Company has faced is the increasing discounts to net

asset value that have affected the entire investment

company sector, including income funds, resulting from

selling pressure and lack of investor demand.

There are a number of other risks which, if realised, could

have a material adverse effect on the Company and its

financial condition, performance and prospects. The

Board has carried out a robust assessment of the

Company’s principal and emerging risks, which include

those that would threaten its business model, future

performance, solvency, liquidity or reputation and has

endeavoured to find means of mitigating those risks,

wherever practical.

The principal risks and uncertainties faced by the

Company are reviewed by the Audit Committee in the

form of a risk matrix. The assessment of risks and their

mitigation continues to be an area of significant focus for

the Audit Committee. The principal risks and uncertainties

facing the Company at the current time, together with a

description of the mitigating actions the Board has taken,

are set out in the table below.

The principal risks associated with an investment in the

Company’s shares are published monthly in the

Company’s factsheet and they can be found in the

pre-investment disclosure document (“PIDD”) published

by the Manager, both of which are available on the

Company’s website.

Description

Mitigating Actions

Strategic objectives and investment

policy – a lack of demand for the

Company’s shares due to its

objectives becoming unattractive

to investors, or a negative

perception of investment trusts,

could result in a fall in the value of its

shares and a widening of the

discount of the share price to its

underlying NAV.

The Board formally reviews the Company’s objectives and strategies for achieving them on

an annual basis, or more regularly if appropriate.

The Board is cognisant of the importance of regular communication with shareholders and

knowledge of what encourages investment in the Company. Directors attend meetings with

shareholders where practical, host the Annual General Meeting as a forum for shareholder

contact and regularly discuss shareholder investment behaviour with the Manager, including

trends on investment platforms and shareholder themes. The Board reviews shareholder

feedback through reports provided by the Manager’s Investor Relations team and also

receives feedback from the Company’s Stockbroker.

The Board and Manager keep the level of discount under constant review, as well as changes

to the Company’s shareholder register. There has been regular review in the last year

culminating in the use of share buy backs as appropriate.

Overview of Strategy

Continued

Shires Income PLC 15

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Description

Mitigating Actions

Investment performance –

performance of the portfolio when

measured against the benchmark.

The Board meets the Manager on a regular basis and keeps investment performance under

close review. This includes performance attribution by sector and stock, and liquidity analysis,

as well as the degree of diversification in the portfolio and income sustainability through

examination of forward income projections.

Representatives of the Investment Manager attend all Board meetings and a detailed

formal appraisal of the abrdn Group is carried out annually by the Management

Engagement Committee.

The Board sets, and monitors, the investment restrictions and guidelines, and receives regular

reports which include performance reporting on the implementation of the investment policy,

the investment process, risk management and application of the guidelines.

Investment risk within the portfolio is managed in four ways:

· Adherence by the Investment Manager to the investment process in order to minimise

investments in poor quality companies and/or overpaying for investments.

· Diversification of investment - seeking to invest in a wide variety of companies with strong

balance sheets and the earnings power to pay increasing dividends. In addition, investments

are diversified by sector in order to reduce the risk of a single large exposure. The Company

invests mainly in equities and preference shares.

· Adherence by the Investment Manager to the investment limits set by the Board

(see page 12).

· Examination of changes to the portfolio and emerging investment themes, including relative

to benchmark constituents and in order to provide income.

Investment in preference shares

The Company has longstanding holdings in a number of preference shares with no fixed

redemption dates, as detailed on page 46 (representing 19.8% of the Company’s portfolio as

at 31 March 2024). The Directors regularly review these investments, which are held primarily

to enhance the income generation of the Company. By their nature, their price movements

will be subject to a number of factors, including prevailing and changing interest rates, and, in

normal market conditions, will tend to respond less to pricing movements in equity markets.

Issue sizes of these preference shares are normally relatively small and with associated low

secondary market liquidity by comparison with the equity component of the portfolio. The

Board also considers the long-term nature of these investments and the impact of any

potential changes on the duration of the portfolio and its returns, as well as the sustainability of

the dividends paid.

16 Shires Income PLC

Overview of Strategy

Continued

Description

Mitigating Actions

Failure to maintain, and grow the

dividend over the longer term –

the level of the Company’s

dividends and future dividend

growth will depend on the

performance of the

underlying portfolio.

The Directors review detailed income forecasts at each Board meeting and discuss the

Investment Manager’s outlook for dividends. The Company has revenue reserves which it can

draw upon should there be a shortfall in revenue returns in a year, and also has the ability to

pay dividends from realised capital reserves but would only resort to this in circumstances

where there was an unexpected fall in net income.. The Board regularly reviews forward net

revenue projections and takes into account revenue reserves in setting quarterly dividend

levels.

Share price and shareholder

relations – the adoption of an

inappropriate marketing strategy,

failure to address shareholder

concerns or other factors, including

the setting of an unattractive

strategic investment proposition,

changing investor sentiment and

investment underperformance,

may lead to a decrease in demand

for the Company’s shares and a

widening of the difference

between the share price and the

NAV per share.

The Board monitors the Company’s Ordinary share price relative to the NAV per share and

keeps the level of premium or discount at which the Company’s shares trade under review.

The Board also keeps the investment objective and policy under review and holds an annual

strategy meeting where it reviews investor relations reports and updates from the Manager

and the Company’s Stockbroker.

The Directors are updated at each Board meeting on the composition of, and any movements

in, the shareholder register, which is retail investor dominated. The Board annually agrees a

marketing and communications programme and budget with the Manager, and receives

updates regularly on both marketing and investor relations.

The Board has a close focus on investor platform activity which has been the dominant

change over recent years in how retail investors choose to acquire and hold their shares. This

includes contact with the platform operators through the Manager. The transfer of the abrdn

Savings Plans to the Interactive Investor platform during the last twelve months has given rise

to some selling pressure on the Company’s shares.

Gearing – a fall in the value of the

Company’s investment portfolio

could be exacerbated by the

impact of gearing. It could also

result in a breach of loan covenants

and the forced sale

of investments.

The Board sets the gearing limits within which the Investment Manager can operate. Gearing

levels and compliance with loan covenants are monitored on an ongoing basis by the

Manager and at scheduled Board meetings, or between Board meetings if required. In the

event of a possible impending covenant breach, appropriate action would be taken to reduce

borrowing levels. The financial covenants attached to the Company’s borrowings currently

provide for significant headroom. The maximum equity gearing level is 35% of net assets at

the time of drawdown, which constrains the amount of gearing that can be invested in

equities which are more volatile than the fixed interest part of the portfolio. The use of gearing

has been an important facilitator of the income returns from the portfolio, particularly in

financing the high yield preference share proportion of the portfolio which has historically

provided significant dividend income for the Company.

The Company’s gearing includes a revolving credit facility which can be reduced without any

significant financial penalties for early repayment and at relatively short notice.

Accounting and financial reporting

inadequate controls over financial

record keeping and forecasting

could result in inaccurate financial

reporting, the Company being

unable to meet its financial

obligations or inability to pay a

dividend, losses to the Company

and impact its ability to continue

trading as a going concern.

At each Board meeting, the Board reviews management accounts and receives a report from

the Administrator, detailing any breaches during the period under review. The Company’s

annual financial statements are audited. The Audit Committee receives bi-annual compliance

and internal reports from the Manager and meets a representative from its Internal Audit

team on at least an annual basis and discusses any findings and recommendations relevant

to the Company.

Shires Income PLC 17

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Description

Mitigating Actions

Regulatory and governance – failure

to comply with relevant laws and

regulations could result in fines, loss

of reputation and potentially loss of

an advantageous tax regime.

The Board and Manager monitor changes in government policy and legislation which may

have an impact on the Company, and the Audit Committee monitors compliance with

regulations by reviewing internal control reports from the Manager. There is also a regular

review of adherence to governance guidelines that affect investment companies and how

the Company is meeting existing or proposed guidelines.

The Board is kept aware of proposed changes to laws and regulations, considers the changes

and applies them as appropriate, if they are not already being met.

From time to time the Board employs external advisers to advise on specific regulatory and

governance matters.

Operational

– the Company is

dependent on third parties for the

provision of all systems and

services (in particular, those of the

abrdn Group) and any control

failures and gaps in their systems

and services, including in relation to

cyber security, could result in a loss

or damage to the Company.

The Board receives reports from the Manager on its internal controls and risk management

processes and receives assurances from the Manager and all its other significant service

providers on at least an annual basis, including on matters relating to operational resilience

and cyber security. Written agreements are in place with all third party service providers. The

Manager monitors closely the control environments and quality of services provided by third

parties, including those of the Depositary, through service level agreements, regular meetings

and key performance indicators. In the last year this has included close monitoring of the

activities involved in consolidating the interests of the Company with abrdn Smaller

Companies Income Trust plc, including setting the terms of participation.

Exogenous risks such as health,

social, financial, economic, climate

and geo-political – the financial

impact of such risks, associated

with the portfolio or the Company

itself, could result in losses to

the Company.

At any given time, the Company has sufficient cash resources to meet its operating

requirements. In common with most commercial operations, exogenous risks over which

the Company has no control are always a risk. The Company does what it can to address

these risks where possible and to try and meet the Company’s investment objectives.

The Board is supportive of the Investment Manager’s approach to environmental, social and

governance (“ESG”) risks and welcomes its active engagement with company management.

Through this activity, the Investment Manager aims to identify and manage the exposure to

such risks over time. The Investment Manager’s Approach to ESG Matters is included on pages

35 to 39.

The financial and economic risks associated with the Company include market risk, liquidity

risk and credit risk, all of which the Investment Manager seeks to mitigate. Further details of the

steps taken to mitigate the financial risks associated with the portfolio are set out in note 18 to

the financial statements.

18 Shires Income PLC

External Agencies

In addition to the services provided to the Company by the

abrdn Group, the Board has contractually delegated

certain services to external service suppliers, including:

depositary services (which include the safekeeping of the

Company’s assets) (BNP Paribas Trust Corporation UK

Limited) and share registration services (Equiniti Limited).

Each of these services was entered into after full and

proper consideration by the Board of the quality and

cost of services offered. In addition, day-to-day

accounting and administration services are provided,

through delegation by the Manager, by the Administrator,

BNP Paribas Securities Services.

Promotional Activities

The Board recognises the importance of promoting the

Company to prospective investors both for improving

liquidity and enhancing the rating of the Company’s

shares. The Board believes one effective way to achieve

this is through subscription to, and participation in, the

promotional programme run by the abrdn Group on

behalf of a number of investment trusts under its

management. The Company’s financial contribution to

the programme is matched by the abrdn Group. The

Company also supports the Manager’s investor relations

programme which involves regional roadshows to existing

and potential shareholders, promotional and public

relations campaigns. The Manager’s promotional and

investor relations teams report to the Board on a quarterly

basis giving analysis of the promotional activities as well as

updates on the shareholder register and any changes in

the make up of that register.

The purpose of the promotional and investor relations

programmes is both to communicate effectively with

existing shareholders and to gain new shareholders, with

the aim of improving liquidity and enhancing the value and

rating of the Company’s shares. Communicating the long-

term attractions of the Company is key. The promotional

programme includes commissioning independent paid for

research on the Company, most recently from Kepler

Trust Intelligence. A copy of the latest research note is

available from the Company's website.

Environmental, Social and Human

Rights Issues

The Company has no employees as the Board has

delegated the day-to-day management and

administrative functions to the Manager. There are

therefore no disclosures to be made in respect of

employees or environmental matters.

Modern Slavery Act

Due to the nature of the Company’s business, being a

company that does not offer goods and services to

customers, the Board considers that it is not within the

scope of the Modern Slavery Act 2015 because it has no

turnover. The Company is therefore not required to make

a slavery and human trafficking statement. In any event,

the Board considers the Company’s supply chains, dealing

predominantly with professional advisers and service

providers in the financial services industry, to be low risk in

relation to this matter.

Environmental, Social and Governance

(“ESG”) Matters

The Board is supportive of the Investment Manager’s

approach to ESG issues, including climate change, and

welcomes its active engagement with company

management. The Investment Manager’s Approach to

ESG Matters is included on pages 35 to 39.

The UK Stewardship Code and Proxy Voting

The Company supports the UK Stewardship Code, and

seeks to play its role in supporting good stewardship of the

companies in which it invests. Responsibility for actively

monitoring the activities of portfolio companies has been

delegated by the Board to the Manager which has sub-

delegated that authority to the Investment Manager.

abrdn plc is a tier 1 signatory of the UK Stewardship Code

which aims to enhance the quality of engagement by

investors with investee companies in order to improve

their socially responsible performance and the long-term

investment return to shareholders. While delivery of

stewardship activities has been delegated to the

Manager, the Board acknowledges its role in setting the

tone for the effective delivery of stewardship on the

Company’s behalf.

The Board has also given discretionary powers to the

Manager to exercise voting rights on resolutions proposed

by the investee companies within the Company’s portfolio.

The Manager reports on a quarterly basis on stewardship

(including voting) issues.

Overview of Strategy

Continued

Shires Income PLC 19

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report

from its operations, nor does it have responsibility for any

other emissions producing sources under the Companies

Act 2006 (Strategic Report and Directors’ Reports)

Regulations 2013.

Under Listing Rule 15.4.29(R), the Company, as a

closed ended investment company, is exempt from

complying with the Task Force on Climate-related

Financial Disclosures.

Board Diversity

The Board’s disclosures in relation to its diversity are

included on pages 59 and 59.

Viability Statement

The Board considers the Company, with no fixed life, to be

a long-term investment vehicle but, for the purposes of

this viability statement, has decided that three years is an

appropriate period over which to report, irrespective of

any exogenous risks that the Company may face. The

Board considers that this period reflects a balance

between a longer-term investment horizon, the inherent

uncertainties within equity markets and the specifics of a

closed-end investment company where its central

purpose is different from other listed commercial and

industrial companies.

In assessing the viability of the Company over the

review period, the Directors have focused upon the

following factors:

· The principal risks and uncertainties detailed on pages

14 to 17 and the steps taken to mitigate these risks.

· The ongoing relevance of the Company’s investment

objective.

· The liquidity of the Company’s portfolio. The majority of

the portfolio is invested in readily realisable listed

securities.

· The level of ongoing expenses. The Company’s annual

revenue expenses, excluding the cost of the dividend,

are expected to continue to be covered by investment

income.

· The level of gearing. This is closely monitored and stress

testing is carried out by the Manager. The financial

covenants attached to the Company’s borrowings

provide for significant headroom.

· Regulatory or market changes.

· The robustness of the operations of the Company’s third

party service providers.

· The operation of share buy backs undertaken by

the Company.

In making its assessment, the Board has considered that

there are other matters that could have an impact on the

Company’s prospects or viability in the future, including

the current events in Ukraine and the Middle East,

economic shocks, significant stock market volatility, the

emerging risk of climate change, and changes in

regulation or investor sentiment, including to income

propensities.

Taking into account the Company’s current position and

the potential impact of its principal risks and uncertainties

and emerging risks, the Directors have a reasonable

expectation that the Company will be able to continue in

operation and meet its liabilities as they fall due for a

period of three years from the date of approval of

this Report.

Outlook

The Board’s view on the general outlook for the Company

can be found in the Chairman’s Statement on page 11

whilst the Investment Manager’s views on the outlook for

the portfolio are included on pages 31 to 32.

On behalf of the Board

Robert Talbut

Chairman

22 May 2024

20 Shires Income PLC

How the Board Meets its Obligations Under

Section 172 of the Companies Act

The Board is required to describe to the Company’s

shareholders how the Directors have discharged their

duties and responsibilities over the course of the financial

year under section 172 (1) of the Companies Act 2006

(the “Section 172 Statement”). The Board provides below

an explanation of how the Directors have promoted the

success of the Company for the benefit of its members as

a whole, taking into account, amongst other things, the

likely long-term consequences of decisions, the need to

foster business relationships with all stakeholders and the

impact of the Company’s operations on the environment.

The Purpose of the Company and Role

of the Board

The purpose of the Company is to act as an investment

vehicle to provide, over time, financial returns (both

income and capital) to its shareholders. Investment trusts,

such as the Company, are long-term investment vehicles

and are typically externally managed, have no

employees, and are overseen by an independent non-

executive board of directors.

The Board, which, at the year end, comprised five

independent non-executive Directors with a broad range

of skills and experience across all major functions that

affect the Company, retains responsibility for taking all

decisions relating to the Company’s investment objective

and policy, gearing, corporate governance and strategy,

and for monitoring the performance of the Company’s

service providers.

The Board’s philosophy is that the Company should

operate in a transparent culture where all parties are

treated with respect and provided with the opportunity to

offer practical challenge and participate in positive

debate which is focused on the aim of achieving the

expectations of shareholders and other stakeholders alike.

The Board reviews the culture and manner in which the

Manager and Investment Manager operate at its regular

meetings and receives regular reporting and feedback

from the other key service providers. The Board is very

conscious of the ways it promotes the Company’s culture

and ensures as part of its regular oversight that the

integrity of the Company’s affairs is foremost in mind in

the way that the activities are managed and promoted.

The Board works very closely with the Manager and

Investment Manager in reviewing how stakeholder issues

are handled, ensuring good governance and responsibility

in managing the Company’s affairs, as well as visibility and

openness in how the affairs are conducted.

The Company’s main stakeholders have been identified

as its shareholders, the Manager/Investment Manager,

service providers, investee companies, its debt provider

and, more broadly, the community at large and

the environment.

How the Board Engages with Stakeholders

The Board considers its stakeholders at Board meetings

and receives feedback on the Manager’s interactions

with them.

The Board and Manager also continue to consider how

best to engage with private investors who invest through

platforms, not least to increase voting participation at

general meetings of the Company and to try and increase

investor demand for diversified income from retail

investors.

Stakeholder

How We Engage

Shareholders Shareholders are key stakeholders and the Board places great importance on communication

with them. The Board welcomes all shareholders’ views and aims to act fairly between all

shareholders. The Company’s shareholder register is retail dominated. The Manager and

Company’s Stockbroker regularly meet with current and prospective shareholders from the

wealth management and IFA community to discuss performance. Shareholder feedback is

discussed by the Directors at each Board meeting. The Company subscribes to the Manager’s

investor relations programme in order to maintain communication channels with shareholders.

Regular updates are provided to shareholders through the Annual Report, Half-Yearly Report,

monthly factsheets, Company announcements, including daily NAV announcements, and through

the Company’s website, which includes up to date information on the Company. The Company’s

Annual General Meeting provides a forum, both formal and informal, for shareholders to meet and

Promoting the Success of the Company

Shires Income PLC 21

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Stakeholder

How We Engage

discuss issues with the Directors and Manager. The Board encourages as many shareholders as

possible to attend the Company’s Annual General Meeting and to provide feedback on the

Company. In addition to the Annual General Meeting, there will be an Online Shareholder

Presentation again this year following a favourable response in the past to this informal on-line

event. The Board welcomes contact with shareholders and has various ways of receiving

shareholder questions and responding to them, including through the Company Secretary. During

the year, the Investment Manager held meetings with a number of the Company’s larger

shareholders to update them on the Company and to receive any feedback or concerns,

particularly in relation to the corporate action involving abrdn Smaller Companies Income

Trust plc.

The Board is keen to have increased shareholder voting at general meetings of the Company and

reviews ways in which there can be greater communication with the largely retail investor

shareholder base.

Manager/Investment Manager

The Investment Manager’s Review on pages 28 to 32 details the key investment decisions taken

during the year. The Investment Manager has continued to manage the Company’s assets in

accordance with the mandate agreed with the Company, with the oversight of the Board.

The Board regularly reviews the Company’s performance against its investment objective and

undertakes an annual strategy review meeting to ensure that the Company is positioned well for

the future delivery of its objective for its shareholders. The Board receives presentations from the

Investment Manager at every Board meeting to help it to exercise effective oversight of the

Investment Manager and the Company’s strategy.

The Board, through the Management Engagement Committee, formally reviews the performance

of the Manager and Investment Manager at least annually. More details are provided on page 60.

Service Providers

The Board seeks to maintain constructive relationships with the Company’s suppliers either

directly or through the Manager with regular communications and meetings.

The Management Engagement Committee conducts an annual review of the performance, terms

and conditions of the Company’s main service providers to ensure they are performing in line with

Board expectations, undertaking their responsibilities and providing value for money.

Investee Companies

Responsibility for actively monitoring the activities of portfolio companies has been delegated by

the Board to the Manager which has sub-delegated that authority to the Investment Manager.

The Board has also given discretionary powers to the Manager to exercise voting rights on

resolutions proposed by the investee companies within the Company’s portfolio. The Manager

reports to the Board on a quarterly basis on stewardship (including voting) issues. Through

engagement and exercising voting rights, the Investment Manager actively works with companies

to improve corporate standards, transparency and accountability. Further details are provided on

page 39.

The Board monitors investments made and divested and questions the rationale for investment

and voting decisions.

Debt Provider

On behalf of the Board, the Manager maintains a positive working relationship with the provider of

the Company’s loan facility, and provides regular updates to the Board on business activity and

compliance with its loan covenants. Gearing is an important component of the Company’s

capital structure.

22 Shires Income PLC

Stakeholder

How We Engage

Environment and Community The Board and Manager are committed to investing in a responsible manner and the Investment

Manager embeds Environmental, Social and Governance (“ESG”) considerations into its research

and analysis as part of the investment decision-making process. Further details are provided on

pages 35 to 39.

Specific Examples of Stakeholder

Consideration During the Year

The Board is fully engaged in both oversight and the

general strategic direction of the Company. During the

year, the Board’s main strategic discussions focussed

around the aSCIT transaction.

While the importance of giving due consideration to the

Company’s stakeholders is not a new requirement, and is

considered during every Board decision, the Directors

were particularly mindful of stakeholder considerations

during the following decisions undertaken during the year

ended 31 March 2024.

aSCIT Transaction

On 26 July 2023, the Company announced that it had

agreed terms with the Board of aSCIT for a proposed

combination of the assets of the Company with those of

aSCIT (the “aSCIT transaction”). The scheme of

reconstruction completed on 1 December 2023. Further

details of the transaction and the benefits to shareholders

are contain in the Chairman’s Statement.

Management of the Portfolio

The Investment Manager’s Review on pages 28 to 32

details the key investment decisions taken during the year.

The overall shape and structure of the investment

portfolio is an important factor in delivering the

Company’s stated investment objective.

As explained in more detail on page 60, during the year,

the Board, through the Management Engagement

Committee, decided that the continuing appointment of

the Manager was in the best interests of shareholders.

Proposed Change to Investment Policy

As explained in the Chairman’s Statement, following a

review by the Board and Manager of the Company’s

investment policy, the Board proposes to seek

shareholder approval at the Annual General Meeting to

increase the limit on exposure to overseas companies

from 10% of total assets to 20% of total assets. The Board

considers that this change will provide the Investment

Manager with greater flexibility to achieve the Company’s

investment objective and is therefore in the best interests

of shareholders. The Company will remain in the AIC’s UK

Equity Income Sector following the change.

Dividend

Following the payment of the final dividend for the year, of

4.80p per Ordinary share, total dividends for the year will

amount to 14.40p per Ordinary share, representing a

dividend yield of 6.5% based on the share price of 222p at

the end of the financial year. This is in accordance with the

Company’s objective to provide shareholders with a high

level of income.

In deciding on the level of dividend for the year, the Board

took into account the revenue earnings per Ordinary

share for the year, forecast revenues for subsequent

years, the level of revenue reserves and the increase in

issued share capital following the aSCIT transaction, as

well as the impact of share buy backs.

Through meetings with shareholders and feedback from

the Manager and the Company’s Stockbroker, the Board

remains conscious of the importance that shareholders

place on the level, and sustainability, of dividends paid by

the Company.

Promoting the Success of the Company

Continued

Shires Income PLC 23

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Allocation of Costs

As explained in the Chairman’s Statement, the Board has

decided that, with effect from 1 April 2024, management

fees and finance costs will be charged 40% to Revenue

and 60% to Capital. The Board considers that this

allocation better reflects the expected long-term view of

the nature of the future investment returns of the enlarged

portfolio and is consistent with the treatment adopted by

other UK Equity Income investment trusts. The Board

therefore considers that this change is in the best interests

of shareholders.

Share Buy Backs

During the year, the Company bought back 863,532

Ordinary shares to be held in treasury, providing a small

accretion to the NAV per share and a degree of liquidity to

the market at times when the discount to the NAV per

share had widened in normal market conditions. It is the

view of the Board that this policy of periodically using buy

back powers, but not in a mechanical fashion, is in the

interest of all shareholders.

Proposed Cancellation of Share Premium Account

As explained in the Chairman’s Statement, the Board will

propose a special resolution at the Annual General

Meeting to cancel the amount standing to the credit of the

Share Premium Account. The cancellation will also require

court approval which will be sought following the Annual

General Meeting. Once this exercise is complete, the

newly created distributable reserve will be available to

fund the cost of share buy backs and dividend payments.

The Board considers that it is in shareholders’ interests for

the Company to have this flexibility, although it has no

current intention of making use of it for dividend payments

which will continue to be resourced through net revenue

and revenue reserves.

Board Succession

As explained in the Directors’ Report on page 56, Simon

White was appointed as an independent non-executive

Director on 1 January 2024 in advance of the retirement of

Robert Talbut from the Board at the forthcoming Annual

General Meeting. New Board appointments seek to

achieve a good balance of skills, experience, gender and

ethnicity. The Board believes that shareholders’ interests

are best served by ensuring a smooth and orderly

refreshment of the Board which serves to provide

continuity and maintain the Board’s open and

collegiate style.

Following the Annual General Meeting, Robin Archibald,

current Audit Committee Chairman and Senior

Independent Director (“SID”), will assume the role of

Chairman of the Board and Jane Pearce will assume the

role of Chair of the Audit Committee, with Helen Sinclair

acting as the SID.

Online Shareholder Presentation

As explained in the Chairman’s Statement, to encourage

and promote interaction and engagement with the

Company’s shareholders, the Board has again decided to

hold an interactive Online Shareholder Presentation which

will be held at 10.00am on 25 June 2024. At the

presentation, shareholders will receive updates from the

Chairman and Investment Manager and there will be an

interactive question and answer session. The online

presentation is being held ahead of the Annual General

Meeting in order to allow shareholders to submit their

proxy votes prior to the meeting.

On behalf of the Board

Robert Talbut

Chairman

22 May 2024

24 Shires Income PLC

Performance (Total Return)

1 year

3 year

5 year

% return

Net asset value

+5.1

+14.5

+25.7

Share price

(based on mid-market)

–5.7

+5.6

+9.2

FTSE All-Share Index

+8.4

+26.1

+30.3

Considered to be an Alternative Performance Measure. See page 118 for further information.

All figures are for total return and assume re-investment of net dividends excluding transaction costs.

Source: abrdn plc, Morningstar & Factset

Analysis of Total Return Performance

Gross assets total return

6.7

Total NAV return per share

5.1

Total return on FTSE All-Share Index

8.4

Relative performance of NAV compared to FTSE All-Share Index

-3.3

Analysis of Performance for the year relative to the FTSE All-Share Index

-3.0

-4.5

1.5

1.0

-0.2

1.0

-1.1

-1.2

-0.1

0.3

Lis ted equities

- Stock selection*

- Asset allocation*

Preference shares

Cash

Bid pricing ad justment

Loans

Fees & expenses

Tax charge

Technical differences

The above table shows the composition of the relative performance of the NAV total return compared to the benchmark index. In

particular, it shows the contribution from the Listed Equities Portfolio and from the Preference shares. Within the Listed Equites Portfolio,

the contributions to relative performance come from exposure to individual stocks (Stock Selection) and sectors (Asset Allocation).

* Further analysis of performance attributable to listed equities.

Performance

Shires Income PLC 25

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Total Return of NAV and Ordinary Share Price vs FTSE All-Share Index

Five years to 31 March 2024. Figures are total return and have been rebased to 100 at 31 March 2019

100

110

120

130

31/03/19 31/03/20 31/03/21 31/03/22 31/03/23 31/03/24

S M & b d

NAV

Shar e Price

Benchmark

Source: Morningstar & abrdn

Ordinary Share Price Premium/(Discount) to NAV (cum-income)

Five years to 31 March 2024

-14%

-12%

-10%

-8%

-6%

-4%

-2%

31/03/19 31/03/20

31/03/21

31/03/22 31/03/23

31/03/24

Source: Morningstar & abrdn

26 Shires Income PLC

Dividends

Rate per share

XD date

Record date

Payment date

First interim dividend

3.20p

5 October 2023

6 October 2023

27 October 2023

Second interim dividend

3.20p

4 January 2024

5 January 2024

31 January 2024

Third interim dividend

3.20p

4 April 2024

5 April 2024

30 April 2024

Proposed final dividend

4.80p

4 July 2024

5 July 2024

31 July 2024

2023/24

14.40p

First interim dividend

3.20p

6 October 2022

7 October 2022

28 October 2022

Second interim dividend

3.20p

5 January 2023

6 January 2023

27 January 2023

Third interim dividend

3.20p

6 April 2023

11 April 2023

28 April 2023

Final dividend

4.60p

6 July 2023

7 July 2023

28 July 2023

2022/23

14.20p

Dividends Per Share

Five years to 31 March 2024

13.20p 13.20p

13.80p

14.20p

14.40p

2020 2021 2022 2023 2024

Dividend Yield

Five years to 31 March 2024

2020 2021 2022 2023 2024

Sh ir es I ncom e PLC

FTSE All-S hare Index

Performance

Continued

Shires Income PLC 27

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Ten Year Financial Record

Year to 31 March

2015

2016

2017

2018

2019

2020

2021*

2022*

2023*

2024*

Revenue available for ordinary dividends

(£’000)

3,877

3,617

3,925

4,106

3,920

3,961

3,796

4,379

4,584

5,068

Per share (p)

Net revenue earnings

12.9

12.1

13.1

13.7

13.1

13.0

12.3

14.2

14.8

Net dividends paid/proposed

12.25

12.75

13.00

13.20

13.80

14.20

14.40

Net total earnings

23.1

(17.8)

54.5

9.4

10.3

(45.4)

68.2

29.5

(6.6)

(4.3)

Net asset value

259.5

229.4

271.6

268.2

265.5

207.4

262.4

278.3

257.9

256.0

Share price (mid-market)

252.0

202.0

243.3

260.0

267.0

200.5

248.0

279.0

250.0

222.0

Shareholders’ funds (£m)

77.8

68.8

81.5

80.5

80.1

63.9

80.9

85.8

79.9

106.0

* Net asset value per share is calculated after the repayment of the capital paid up on Cumulative Preference shares (see note 16 on

page 98).

Cumulative Performance

Rebased to 100 at 31 March 2014

As at 31 March

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Net asset value

100.0

104.5

92.3

109.4

108.0

106.9

83.5

105.7

112.1

103.8

103.1

Net asset value total return

100.0

109.7

102.0

127.0

131.2

136.4

111.8

149.8

166.8

163.1

171.5

Share price performance

100.0

99.9

80.1

96.4

103.1

105.8

79.5

98.3

110.6

99.1

88.0

Share price total return

100.0

104.9

88.7

113.0

126.9

137.0

107.9

141.6

167.7

158.5

149.6

Benchmark performance

100.0

103.0

95.5

112.2

109.5

111.9

87.4

107.7

117.8

116.9

122.0

Benchmark total return

100.0

106.6

102.4

124.9

126.4

134.5

109.7

138.9

157.1

161.6

175.3

Total return figures are based on reinvestment of net income.

28 Shires Income PLC

Highlights

· NAV total return of 5.1% compared to the FTSE All-Share

Index total return of 8.4%.

· The equity portfolio lagged a rising market, as we would

expect given the defensive and income focused nature

of the holdings.

· The total return from the preference share portfolio was

16.1%, with yields compressing as interest rate

expectations began to move lower.

· The Company successfully completed the combination

with abrdn Smaller Companies Income Trust

(the “aSCIT transaction”), adding scale and liquidity

and improving exposure to a focused set of high

quality small-cap companies.

Portfolio Strategy

We take a long term approach to investing, believing that,

whilst there might be volatility in the short and even

medium term, share prices will ultimately reflect the

fundamental value of a company. Consequently, there

was no change to our approach to the construction of the

portfolio during the year under review. The Company’s

investment portfolio continues to be invested in equities

and preference shares. At the year end, 80% of the

portfolio was invested in equities and 20% was invested in

preference shares.

Equity Market Review

The year to the end of March 2024 was a good one for

equities, with the MSCI World Global Index delivering a

total return of around 25%, well ahead of the long term

average. This return was heavily weighted to the second

half of the year. The market move has generally tracked

inflation and therefore interest rate expectations, with

valuations improving once investors had a line of sight on

the peak of inflation and interest rates.

By geography, the US performed well, with a 30% return

from the S&P 500 Index and an even more impressive 40%

gain for the technology focused Nasdaq Index. Europe,

returning 15%, and the UK, 8% were comparative

laggards. Emerging markets were also relatively weaker,

returning 8% in aggregate, although there were distinct

winners and losers within that: the MSCI China Index

returned a negative 17%; the MSCI India Index returned a

positive 40%, highlighting the stark difference in investor

positions of these two economies over the period.

The above performance data highlights the significant

outperformance of the US in developed markets and

particularly of the group of large cap technology

companies known as the “Magnificent Seven”. These

companies have been direct beneficiaries of accelerated

revenue growth due to the early adoption of artificial

intelligence technologies alongside increased investor

optimism on the sector. They have also been natural

beneficiaries of investor expectations that interest rates

have peaked and will begin to fall in the second half of

2024 (more on this in the Outlook section below). In

contrast, European and UK markets, which have a lower

weighting to technology and growth companies, have

relatively underperformed.

“The NAV total return for the year

was 5.1%, lagging the FTSE All-Share

Index which returned 8.4%. This

performance is roughly in line

with what we would expect in

these markets.”

Within the UK market, technology also performed well,

with the sector returning 35%. The problem was that with

a weighting of only 1.4% in the FTSE 350 Index at the end of

the year, it was not enough to drive the wider market.

Other sectors that performed well were Industrials (+27%),

Financials (+14%), Consumer Discretionary (+13%) and

Energy (+11%). These were offset by weaker returns from

Telecoms (-13%), Consumer Staples (-6%), Basic

Materials (-5%) and Utilities (flat on the year). In general,

the UK’s weighting to some defensive and income

sectors meant it failed to keep up with a rapidly rising

global market.

The UK market ended the year on a material valuation

discount to global markets – roughly a 40% discount on a

price to earnings multiple. While much of this is justified by

the lower growth from the UK’s sectoral exposure, the

discount remains around 20% once we adjust for this.

Investment Manager’s Review

Shires Income PLC 29

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Investment Performance

The equity portfolio returned 5.1% over the 12 month

period, lagging the FTSE All-Share Index which returned

8.4%. This performance is roughly in line with what we

would expect in these markets. The equity portfolio is

defensive and weighted to higher income sectors, so can

lag a rising market. That being said, stock section in the

year detracted from portfolio returns and that was

disappointing. After taking into account the performance

of the preference share portfolio (see below) and

adjusting for costs, the net asset value (“NAV”) total return

of the Company was also 5.1%.

On a stock specific level, there were a number of strong

performers in the portfolio. Intermediate Capital, a private

equity fund manager, delivered robust performance and

flows, with its shares rising by 78%. The exposure to banks

performed well as returns improved, benefitting from

higher interest rates and low credit write-offs: NatWest’s

shares increased by 31% during the period and Standard

Chartered increased by 16%. Industrials generally

performed well as economic activity remained robust and

valuations recovered. Melrose Industrials (+65%) re-rated

after spinning out its lower quality autos business and

Morgan Sindall (+45%) delivered continued growth as its fit

out and construction businesses performed strongly.

Finally, the addition of a number of small cap UK

companies around the middle of the year also had a

positive impact as these responded well to robust results

and falling interest rate expectations. Hollywood Bowl

(+24%) and 4Imprint (+46%) performed particularly well.

Offsetting this, the portfolio suffered from holding a

number of companies that disappointed in the year for

fundamental reasons. XP Power, which provides power

supply to high tech manufacturing, fell by 61% after issuing

a profit warning as end clients de-stocked. This was

particularly disappointing, coming only a matter of weeks

after management had reassured on the outlook for the

business. XP Power was one company that fell victim to a

lack of visibility in client orders as many industries went

through a de-stocking cycle, having built up inventory

during the pandemic period. Dr. Martens (-36%) faced

similar issues, with high inventory levels in US wholesalers

and supply chain challenges causing downgrades to

expectations. Another cyclical disappointment was Genus,

with its shares down 40% due to weakening demand for

pork in China. Close Brothers fell by 51% after the

announcement of an FCA review into auto lending in the

UK, although we feel the impact of this is overstated. Some

commodity companies also suffered from falling prices:

Anglo American fell by 24% due to lower metals prices and

disappointing production figures, while Diversified Energy

fell 40% due to a sustained fall in the US gas prices to very

low levels. Given its weighting in the portfolio, the fall in

Diversified Energy had a meaningful impact on the

portfolio, detracting 1.4% from performance over the

year.

Gearing and Preference Share Portfolio

The total return from the preference share portfolio for

the year was 16.1%, with yields compressing as interest

rate expectations began to move lower. This

performance is very much as expected – during a period

of rapidly rising interest rates we would expect the bond

like characteristics of preference shares to mean they

decline in value, and in an environment when interest rates

are falling we would expect this to provide a boost to the

portfolio. Our view on the long term attractions of the

preference shares has not changed. From here onwards it

is more likely that interest rates eventually decline

gradually, acting as a modest tailwind for the valuation of

this part of the portfolio. Secondly, the attraction of these

instruments is their high, dependable yield. This has not

changed and the preference share portfolio offered a

forward yield of almost 7% as at the year end.

“The total return from the preference

share portfolio for the year was

16.1%, with yields compressing as

interest rate expectations began to

move lower.”

The gearing level at the year end was 16.4%. The

Company’s borrowings are notionally invested in the

preference share portfolio. At the year end these

securities had a value of £24.2 million, materially in excess

of net indebtedness which stood at £17.3 million.

Revenue Account

Revenue earnings per share were broadly flat at 14.75p.

While the income generation of the portfolio in absolute

terms has continued to increase, the aSCIT transaction in

December resulted in an increased share-count. We

expect the impact of this to be limited over time, but the

timing of the transaction meant that we received a

number of holdings from aSCIT which did not pay

dividends during the remainder of the financial year,

resulting in a short term shortfall in income. We remain

optimistic on the income growth potential of the portfolio

over the longer term.

30 Shires Income PLC

The following table details the Company’s main sources of

income over the last five years.

2024

2023

2022

2021

2020

Ordinary dividends

63.0

62.8

66.5

57.2

60.0

Preference dividends

25.7

29.1

26.9

33.2

31.0

abrdn Smaller

Companies Income

Trust

9.4

6.6

5.2

5.7

5.4

Fixed interest and bank

interest

1.4

0.2

0.3

Traded option

premiums

0.5

1.3

1.4

3.9

3.3

Total

100.0

Total income (£'000s)

6,429

5,673

5,239

4,529

4,807

Portfolio Activity

Over the course of the year, we remained active in the

portfolio, adding 14 new positions and exiting 18. The

number of positions in the portfolio therefore reduced and,

despite the aSCIT transaction, we have maintained a

reasonably concentrated portfolio, while diversifying

sources of income widely.

The aSCIT transaction allowed us to select, alongside the

abrdn small-cap team, those holdings from the portfolio

which best suited our requirements of income growth and

long term capital growth. The result was a more

concentrated and meaningful small-cap exposure than

through our previous indirect exposure through aSCIT. We

added five new names: Greggs is a growing UK food

retailer with a strong market position and cost competitive

offering; Hollywood Bowl is a well-run leisure company

gaining market share in the UK and expanding

internationally in Canada; 4Imprint is a digital business

providing corporate marketing products and is winning

market share in a fragmented industry; Bytes Technology

is an IT re-seller with exposure to growing software

demand; and Hunting is a high quality engineer focused on

energy services and benefiting from increased visibility on

sales as offshore activity recovers. In aggregate, these

companies give us exposure to a diversified mix of quality

and growth within the portfolio.

Other additions reflected changing outlooks for some

sectors. We added exposure to UK banks via Lloyds given

the outlook for more resilient income as interest rates

have normalised. We also added some modest real estate

exposure after a period of weakness, adding Sirius Real

Estate and Assura - two companies with strong

management teams and track records of growing value

and dividends. Our view that the aerospace sector had an

improving outlook was reflected in a purchase of Melrose

Industrials, which also re-rated after the spin out of its

lower quality auto business.

“We remain optimistic on the income

growth potential of the portfolio over

the longer term.”

We also reflected changes in our analysts’ preference by

switching holdings within sectors. For example, we

replaced Smith & Nephew with Convatec given our view

that there was more margin improvement and end

market growth to come from Convatec in the near term.

In the banking sector, we switched Nordea into ING given

the more defensive nature of the business and a

preference to move away from Nordic banks after a

strong run and higher valuations. Also overseas, we

continued to look for ways to diversify income, adding

Mercedes-Benz, where the valuation looked very

attractive and Enel which gives exposure to diversified

utilities and strong capital growth from energy transition in

its end markets.

Exits during the year primarily reflected changes to our

view on the fundamental value of the businesses. RS

Group, Howden Joinery and Coca-Cola Hellenic all

performed reasonably well and reached levels where we

saw more limited upside compared to other holdings. For

Diageo and British American Tobacco we had some

concerns around the potential for revenue growth in the

near term and decided to move onto higher conviction

ideas. Sales of Vistry, Urban Logistics, Nordea, Bawag and

Smith & Nephew reflected a preference for other

companies in the same sectors. Veterinary

pharmaceuticals producer Dechra Pharmaceuticals was

sold after the company was bid for by a private equity firm

at a healthy premium.

Investment Manager’s Review

Continued

Shires Income PLC 31

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

In most cases of disappointing performance we chose to

hold onto the positions, taking the view that the long term

quality of the businesses remained and a lower price

reflected short term changes in outlook. However, we did

sell out of XP Power after a profit warning and Direct Line

Insurance following a dividend cut, given decreased

visibility on cash generation and the ability to pay a stable

and growing source of income over time.

As usual, the preference share portfolio has seen limited

change, although we did add two new fixed income

investments issued by Standard Chartered and Lloyds. This

enabled the portfolio to retain its weighting of around 20%

to preference shares after the aSCIT transaction. Both

positions offered around a 7% yield at the time of

purchase, an attractive level relative to equities and with a

higher degree of income protection in the long term.

Stewardship

We believe that, as long term owners of the businesses in

which we are invested, it is not sufficient merely to seek out

assets that we believe to be undervalued. It is also

incumbent upon us to take a proactive approach to our

stewardship of these companies. Therefore, we engage

extensively with investee companies. We have attended a

range of meetings with chairmen, non-executive directors

and other stakeholders. Topics covered have included the

composition of boards, environmental and social issues,

and remuneration. Risk is a very broad subject that is

interpreted in varying manners by different companies.

However, by engaging on this subject we secure a deeper

understanding of how the boards of investee companies

perceive and seek to manage these issues. Such

interactions also enable us to push for improved disclosure

and better management practices and on occasion

different decisions where appropriate. We have had

conversations regarding companies’ financing choices.

We find that it is always worthwhile communicating our

preference for conservatively structured balance sheets

that place a company’s long term fortunes ahead of

possible short term share price gains. Such activity is by its

nature time consuming but we regard it as an integral

aspect of our role as long term investors.

Consideration of Environmental, Social and Governance

(“ESG”) factors forms an important part of our investment

process. Whilst the management of the Company’s

investments is not undertaken with any specific

instructions to exclude certain asset types or classes, we

embed ESG into the portfolio and sector specific research

on all positions as part of the investment process. ESG

investment is about active engagement with the goal of

improving the performance of assets held by the

Company. We aim to make the best possible investments

for the Company by understanding the whole picture -

before, during and after an investment is made. That

includes understanding the ESG risks and opportunities

they present, and how these could affect longer-term

performance and valuation. ESG considerations underpin

all investment activities.

Outlook

The last 12 months have delivered positive NAV growth,

increased scale and continued income growth for the

Company. Performance has not kept pace with a rising

market and that is, of course, disappointing, but we

continue to focus on capital and income growth. Positions

in defensive, income generating sectors, such as utilities

have lagged faster growth areas of the market such as

technology, but that does not mean they have been bad

investments or that they will fail to deliver an attractive

total return for investors over the long term.

“The portfolio has performed well in

the last few months and our

expectation would be that a focus on

capital and income growth will deliver

results over the long term.”

32 Shires Income PLC

Making forecasts for the next 12 months is always difficult,

and especially at the moment. In the last three months we

have seen interest rate expectations move back and

forward, with global markets pushed to new highs before

retreating again. At this time, it seems that interest rates

will need to stay higher for longer to counteract inflation

and continued strong growth from the US economy - but

which direction we will be heading a year from now is hard

to guess. Economic policy and market sentiment is very

data dependent, and the data can change quickly. The

added complication of a record year for democratic

elections globally, including the US and the UK, makes the

outlook even cloudier.

Stretching our time horizon perhaps makes the task

easier. Interest rates are higher than they have been for

some time and although they are not going back to the

extreme lows we have seen in the last decade, the

likelihood is that the direction of travel is back towards an

equilibrium rate of 3-3.5% within our investment

timeframe. Rates at that level should allow for a more

normal market, with equity performance broadening out,

something we have started to see in March and April 2024.

Market performance in the past year has been unusually

concentrated - history would indicate that is unlikely to

remain the case forever. Similarly, the discount on UK

equities is historically high, providing a margin of safety.

Without a re-rating of the benchmark index we will

continue to see UK companies acquired by

international peers.

The portfolio has performed well in the past few months

and our expectation would be that a focus on capital and

income growth will deliver results over the long term. We

also expect a reduction in interest rates to increase the

relative appeal of the proposition. Currently, investors can

earn an attractive return on cash deposits and that has led

many to understandably take a “risk-free” approach in

allocation. The Company’s dividend yield is already

superior to cash, while also providing the prospect of

capital growth and a hedge to inflation, but as deposit

rates reduce it is likely that a high level income will become

more appealing again.

Iain Pyle and Charles Luke

abrdn Investments Limited

22 May 2024

Investment Manager’s Review

Continued

Shires Income PLC 33

Hunting

Hunting is a precision engineer, making premium metal

tools and connections used primarily in the global energy

industry. Sales are weighted to the US, but the company is

experiencing increased demand from international

markets as offshore development activity has increased in

recent years. This has allowed for much better visibility on

order book growth than in previous cycles. With a high

degree of operating leverage, the Investment Manager

expects the company to deliver profit and dividend

growth over the next few years, with further potential to

expand sales into clean energy markets over the

long term.

Investment Case Studies

34 Shires Income PLC

Novo-Nordisk

Novo-Nordisk is a Danish pharmaceutical company with a

strong record of Research & Development and customer

service. Having had a long-term market leadership

position in diabetes care, it has recently developed highly

effective anti-obesity treatments. These have seen rapid

growth in the past few years, with widespread adoption in

developed markets. The Investment Manager expects the

company to deliver continued strong growth, supported

by increased access and duration of use. The Investment

Manager also sees the potential for expansion of the

addressable market as clinical trials prove the benefit of

these products in other indications. While Novo-Nordisk

does not have a high dividend yield, it does have a track

record of continued dividend growth.

Investment Case Studies

Continued

Shires Income PLC 35

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Introduction

The Board relies on its Investment Manager to apply

appropriate Environment, Social and Governance (“ESG”)

principles to how the portfolio is constructed and

managed within the confines of its investment objective

and policy. Having an income objective means that the

Company needs to acquire investments which typically

provide a higher than average yield which in some cases

means more exposure to older industries such as energy

and consumables but, even here, ESG principles are

applied in deciding on a specific investment within these

more mature industries as it is evident that the possibility of

engagement by the Investment Manager can lead to

changes to their business models to account for social

and environmental responsibilities, irrespective of

government interventions.

Although ESG factors are not the overriding criteria in

relation to the investment decisions taken by the

Investment Manager, significant prominence is placed on

ESG and climate-related factors throughout the

investment process. The following pages highlight the

way that ESG and climate change are considered by the

Investment Manager.

Core beliefs: Assessing Risk, Enhancing Value

Whilst the management of the Company’s investments is

not undertaken with any specific instructions to exclude

certain asset types or classes, the consideration of ESG

factors is a fundamental part of the Investment Manager’s

process and has been so for over 30 years. It is one of the

key criteria on which the Investment Manager assesses

the investment case for any company in which it invests

for three key reasons as set out in the table below.

Responsible Investing – Integration of ESG into the Investment Manager's Process

“By embedding ESG factors into our active equity investment process, we aim to reduce risk, enhance potential value for

our investors and foster companies that can contribute positively to the world.”abrdn

Financial Returns

ESG factors can be financially material – the level of consideration they are given in a company will

ultimately have an impact on corporate performance, either positively or negatively. Those

companies that take their ESG responsibilities seriously tend to outperform those that do not.

Fuller Insight Systematically assessing a company’s ESG risks and opportunities alongside other financial metrics

allows the Investment Manager to make better investment decisions.

Corporate Advancement

Informed and constructive engagement helps foster better companies, protecting and enhancing the

value of the Company’s investments.

“We believe that the market systematically undervalues the importance of ESG factors. We believe that in-depth ESG

analysis is part of both fundamental company research and portfolio construction and will lead to better client

outcomes.”abrdn

The Investment Manager’s Approach to ESG

36 Shires Income PLC

Researching Companies: Deeper Company

Insights for Better Investor Outcomes

The Investment Manager conducts extensive and high-

quality fundamental and first-hand research to fully

understand the investment case for every company in its

global universe. A key part of the Investment Manager’s

research involves focusing its extensive resources on

analysis of ESG issues. As set out in more detail in the table

below, the Investment Manager’s portfolio managers, ESG

equity analysts and central ESG Investment Team

collaborate to generate a deep understanding of the ESG

risks and opportunities associated with each company.

Stewardship and active engagement with every company

are also fundamental to the investment process, helping

to produce positive outcomes that lead to better risk-

adjusted returns.

Global ESG Infrastructure

The Investment Manager has around 150 equity

professionals globally. Each systematically analyses ESG

risks and opportunities as part of the research output for

each company. Its central team and ESG equity analysts

support the Investment Manager’s first-hand company

analysis, producing research into specific themes (e.g.

labour relations or climate change), sectors (e.g. forestry)

and ESG topics to understand and highlight best practice.

Examples of thematic and sector research can be found

on the Manager’s website.

Portfolio Managers

All of the Investment Manager’s equity portfolio managers seek to engage actively with

companies to gain insight into their specific risks and provide a positive ongoing influence on their

corporate strategy for governance, environmental and social impact.

ESG Equity Analysts The Investment Manager has dedicated and highly experienced ESG equity analysts located

across the UK, US and Asia. Working as part of individual investment teams, rather than as a

separate department, these specialists are integral to pre-investment due diligence and post-

investment ongoing company engagement. They are also responsible for reviewing thematic

research produced by the central ESG Investment Team (see below), interpreting

and translating it into actionable insights and engagement programmes for its regional

investment strategies.

ESG Investment Team

This central team of more than 20 experienced specialists based in Edinburgh and London

provides ESG consultancy and insight for all asset classes. Taking a global approach both

identifies regions, industries and sectors that are most vulnerable to ESG risks and identifies those

that can take advantage of the opportunities presented. Working with portfolio managers, the

team is key to the Investment Manager’s active stewardship approach of using shareholder voting

and corporate engagement to drive positive change.

The Investment Manager’s Approach to ESG

Continued

Shires Income PLC 37

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Climate Change

Climate change is one of the most significant challenges

of the 21st century and has big implications for investors.

The energy transition is underway in many parts of the

world, and policy changes, falling costs of renewable

energy, and a change in public perception are happening

at a rapid pace. Assessing the risks and opportunities

arising as a result of climate change is a core part of the

investment process. In particular, the Investment

Manager considers:

· Transition risks and opportunities

Governments could take robust climate change

mitigation actions to reduce emissions and transition to

a low-carbon economy. This is reflected in targets,

policies and regulation and can have a considerable

impact on high-emitting companies.

· Physical risks and opportunities

Insufficient climate change mitigation action will lead to

more severe and frequent physical damage. This results

in financial implications, including damage to crops and

infrastructure, and the need for physical adaptation

such as flood defences.

The Investment Manager has aligned its approach with

that advocated by the investor agenda of the Principles

for Responsible Investment (“PRI”) – a United Nations-

supported initiative to promote responsible investment as

a way of enhancing returns and better managing risk.

PRI provides an intellectual framework to steer the

massive transition of financial capital towards low-carbon

opportunities. It also encourages fund managers to

demonstrate climate action across four areas:

investments; corporate engagement; investor disclosure;

and policy advocacy as explained below:

38 Shires Income PLC

From Laggards to Best in Class: Rating

Company ESG Credentials

A systematic and globally-applied approach to evaluating

stocks allows the Investment Manager to compare

companies consistently on their ESG credentials – both

regionally and against their peer group.

The Investment Manager captures the findings from its

research and company engagement meetings in formal

research notes.

Some of the key questions include:

· Which ESG issues are relevant for this company, how

material are they, and how are they being addressed?

· What is the assessment of the quality of this company’s

governance, ownership structure and management?

· Are incentives and key performance indicators

aligned with the company’s strategy and the interests

of shareholders?

Having considered the regional universe and peer group in

which the company operates, the Investment Manager’s

equity team then allocates it an ESG rating between one

and five (see below). This is applied across every

company that the Investment Manager covers globally.

The Investment Manager also uses a combination of

external and proprietary in-house quantitative scoring

techniques to complement and cross-check analyst-

driven ESG assessments. ESG analysis is peer-reviewed

within the equities team, and ESG factors impacting both

sectors and stocks are discussed as part of the formal

sector reviews. To be considered ‘best in class’, the

management of ESG factors must be a material part of

the company’s core business strategy. It must provide

excellent disclosure of data on key risks. It must also have

clear policies and strong governance structures, among

other criteria.

1. Best in class

2. Leader

3. Average

4. Below average

5. Laggard

ESG considerations are

material part of the

company’s core

business strategy

Excellent disclosure

Makes opportunities

from strong ESG risk

management

ESG considerations

not market leading

Disclosure is good, but

not best in class

Governance is

generally very good

ESG risks are considered

as a part of principal

business

Disclosure in line with

regulatory requirements

Governance is generally

good but some minor

concerns

Evidence of some

financially material

controversies

Poor governance or

limited oversight of key

ESG issues

Some issues in treating

minority shareholders

poorly

Many financially

material controversies

Severe governance

concerns

Poor treatment of

minority shareholders

The Investment Manager’s Approach to ESG

Continued

Shires Income PLC 39

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Working with Companies: Staying

Engaged, Driving Change

Once the Investment Manager invests in a company, it is

committed to helping that company maintain or raise its

ESG standards further, using the Investment Manager’s

position as a shareholder to press for action as needed.

The Investment Manager actively engages with the

companies in which it invests to maintain ESG focus and

encourage improvement.

The Investment Manager views this programme of regular

engagement as a necessary fulfilment of its duty as a

responsible steward of clients’ assets. It is also an

opportunity to share examples of best practice seen in

other companies and to use its influence to effect positive

change. The Investment Manager’s engagement is not

limited to the company’s management team. It can

include many other stakeholders such as non-

government agencies, industry and regulatory bodies, as

well as activists and the company’s clients. What gets

measured gets managed, so the Investment Manager

strongly encourages companies to set clear targets or key

performance indicators on all material ESG risks.

The investment process consists of four interconnected

and equally important stages.

Monitor

Contact

Engage

Act

Ongoing due diligence

· Business performance

· Company financials

· Corporate governance

· Company’s key risks and

opportunities

Frequent dialogue

· Senior executives

· Board members

· Heads of departments and

specialists

· Site visits

Exercise rights

· Attend AGM/EGMs

· Always vote

· Explain voting decisions

· Maximise influence to drive

positive outcomes

Consider all options

· Increase or decrease

shareholding

· Collaborate with other

investors

· Take legal action if

necessary

During the year ended 31 March 2024, the Investment Manager held 140 separate meetings with portfolio companies

where ESG topics were raised. By topic, corporate governance remains the most discussed area, but there was

significant engagement on environmental and climate issues and increasing engagement on labour management and

corporate behaviour. The pie chart below shows the overlapping topics covered at the meetings held during the year.

Human Rights & Stakeholders

Environment

Corporate Behaviour

Climate

Labour Management

Corporate Governance

40 Shires Income PLC

Portfolio

Shires Income PLC 41

42 Shires Income PLC

As at 31 March 2024

AstraZeneca

Shell

AstraZeneca researches, develops,

produces and markets pharmaceutical

products. The company has a significant

focus on oncology which offers

significant growth potential over the

medium term.

Shell is an integrated energy company. It

produces and refines crude oil, produces

chemicals and runs retail operations

globally. It has particular strength in

natural gas markets and is one of the

world’s leading energy traders.

Morgan Sindall

Energean

Morgan Sindall operates as a

construction and regeneration group.

The group's five specialist and

complementary divisions provide office

design, fitting out, refurbishment,

building contracting, property

investment, and related specialist

services. It serves customers in the

United Kingdom.

Energean is a gas producer with

operations focused in the Eastern

Mediterranean region. It has developed

the Karish project offshore Israel, with

long term gas sales agreements in place

to protect cashflows and allow for the

payment of an attractive dividend. In

addition, it has assets in Egypt and Italy

and is developing a carbon capture and

storage project offshore Greece.

Intermediate Capital Group

BP is a fully integrated energy company

involved in the exploration, production,

refining, transportation and marketing

of oil and natural gas.

Intermediate Capital Group operates as

a private equity firm. The firm invests in

private debt, credit and equity, bridge

financing, acquisitions, and other

financial instruments.

HSBC Holdings

Inchcape

HSBC Holdings provides a variety of

international banking and financial

services. It operates worldwide but has

particular strength in the Hong Kong and

UK markets.

Inchcape is a global automotive

distributor. The company acts as a

vehicle and parts distributor in multiple

markets. Over two thirds of the group

profit is derived from Asia Pacific and

emerging markets.

Rio Tinto

4Imprint Group

Rio Tinto operates as a diversified mining

company. The company focuses on the

production of iron ore, predominantly

from Australia.

4imprint Group supplies imprinted

promotional merchandise. The

company offers a wide range of

imprinted products ranging from

clothing and caps to pens and pencils to

customers worldwide.

Ten Largest Investments

Shires Income PLC 43

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

As at 31 March 2024

Valuation

Total

Valuation

2024

portfolio

2023

Company

FTSE All-Share Index Sector

£’000

AstraZeneca

Pharmaceuticals and Biotechnology

5,440

4.5

4,136

Shell

Oil, Gas and Coal

4,674

3.8

3,931

Morgan Sindall

Construction and Materials

3,642

3.0

883

Energean

Oil, Gas and Coal

3,333

2.7

1,894

Oil, Gas and Coal

3,281

2.7

3,184

Intermediate Capital Group

Investment Banking and Brokerage Services

3,234

2.6

1,078

HSBC Holdings

Banks

3,232

2.6

903

Inchcape

Industrial Support Services

2,931

2.4

1,226

Rio Tinto

Industrial, Metals and Mining

2,637

2.2

1,152

4Imprint Group

Media

2,637

2.2

–

Ten largest investments

35,041

28.7

Chesnara

Life Insurance

2,399

2.0

1,222

Anglo American

Industrial, Metals and Mining

2,384

1.9

2,748

Hollywood Bowl

Travel and Leisure

2,334

1.9

–

Diversified Energy

Oil, Gas and Coal

2,292

1.9

2,499

National Grid

Gas, Water and Multiutilities

2,283

1.9

1,726

SSE

Electricity

2,265

1.9

2,661

TotalEnergies

Oil, Gas and Coal

2,218

1.8

1,839

Telecom Plus

Telecommunications Service Providers

2,161

1.7

754

Sirius Real Estate

Real Estate Investment Trusts

1,991

1.6

–

Bytes Technology

Software and Computer Services

1,914

1.6

–

Twenty largest investments

57,282

46.9

Investment Portfolio - Equities

44 Shires Income PLC

Investment Portfolio - Equities

Continued

As at 31 March 2024

Valuation

Total

Valuation

2024

portfolio

2023

Company

FTSE All-Share Index Sector

£’000

Balfour Beatty

Construction and Materials

1,780

1.5

967

Lloyds Banking

Banks

1,779

1.5

–

Standard Chartered

Banks

1,771

1.4

1,526

M&G

Investment Banking and Brokerage Services

1,723

1.4

1,051

NatWest

Banks

1,722

1.4

1,042

Melrose Industrials

General Industrials

1,614

1.3

–

Enel

Electricity

1,609

1.3

–

GSK

Pharmaceuticals and Biotechnology

1,576

1.3

835

Convatec

Health Care Equipment and Services

1,563

1.3

–

Softcat

Software and Computer Services

1,500

1.2

563

Thirty largest investments

73,919

60.5

Assura

Real Estate Investment Trusts

1,487

1.2

–

Hunting

Oil Equipment Services and Distribution

1,410

1.2

–

Imperial Brands

Tobacco

1,362

1.1

1,351

Games Workshop Group

Leisure Goods

1,302

1.1

654

Mercedes-Benz Group

Automobiles and Parts

1,222

1.0

–

Novo-Nordisk

Pharmaceuticals and Biotechnology

1,186

1.0

1,272

Engie

Gas, Water and Multiutilities

1,182

1.0

981

ING Group

Banks

1,080

0.9

–

Hiscox

Non-life Insurance

1,066

0.9

982

OSB

Finance and Credit Services

1,035

0.7

995

Forty largest investments

86,251

70.6

Shires Income PLC 45

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

As at 31 March 2024

Valuation

Total

Valuation

2024

portfolio

2023

Company

FTSE All-Share Index Sector

£’000

Greggs

Food and Drug Retailers

995

0.8

–

AXA

Non-life Insurance

977

0.8

906

IP Group

Investment Banking and Brokerage Services

975

0.8

–

Berkeley Group Holdings

Household Goods and Home Construction

953

0.8

–

Ashmore

Investment Banking and Brokerage Services

875

0.7

641

Unilever

Personal Care, Drug and Grocery Stores

873

0.7

1,378

Mondi

General Industrials

866

0.8

855

Drax

Electricity

809

0.7

578

Wood Group

Oil Equipment Services and Distribution

781

0.6

648

Prudential

Life Insurance

764

0.6

1,149

Fifty largest investments

95,119

77.9

Close Brothers

Banks

721

0.6

810

Dr. Martens

Personal Goods

668

0.5

673

Bodycote

Industrial Engineering

627

0.5

553

Genus

Pharmaceuticals and Biotechnology

480

0.4

–

Oxford Instruments

Electronic and Electrical Equipment

359

0.3

833

Total equity investments

97,974

80.2

Purchases and/or sales of portfolio holdings effected during the year and the transaction with aSCIT result in 2024 and 2023 values not

being directly comparable.

46 Shires Income PLC

As at 31 March 2024

Valuation

Total

Valuation

2024

portfolio

2023

Company

£’000

Preference shares

Ecclesiastical Insurance Office 8 5/8%

5,837

4.8

5,512

Royal & Sun Alliance 7 3/8%

4,899

4.0

4,437

Santander 10.375%

4,244

3.5

3,616

General Accident 7.875%

4,116

3.4

3,654

Standard Chartered 8.25%

3,197

2.6

2,900

Lloyds Bank 11.75%

960

0.8

–

R.E.A. Holdings 9%

686

0.5

776

Standard Chartered 7.375%

256

0.2

–

Total Preference shares

24,195

19.8

Total Investments

122,169

100.0

None of the preference shares listed above have a fixed redemption date.

Purchases and/or sales of portfolio holdings effected during the year and the transaction with aSCIT result in 2024 and 2023 values

not being directly comparable.

Investment Portfolio - Other Investments

Shires Income PLC 47

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Movement during the year

Valuation at

Gains/

Valuation at

31 March 2023

Purchases

Sales

(losses)

31 March 2024

£’000

Listed investments

Equities

75,760

94.8

75,634

(44,372)

(9,048)

97,974

92.5

Preference shares

20,895

26.2

3,300

24,195

22.8

Total investments

96,655

121.0

75,634

(44,372)

(5,748)

122,169

115.3

Current assets

2,559

3.2

3,242

3.1

Current liabilities

(9,350)

(11.7)

(9,491)

(9.0)

Non-current liabilities

(9,951)

(12.5)

(9,963)

(9.4)

Net assets

79,913

100.0

105,957

100.0

Net asset value per Ordinary share

257.9p

256.0p

Distribution of Assets and Liabilities

48 Shires Income PLC

Analysis of Listed Equity Portfolio

0% 5% 10% 15% 20% 25% 30%

aSC IT*

Basic Materials

Consumer Discretionary

Consumer Staples

En ergy

Financials

Health Care

Indus trials

Real Estate

Technology

Telec omm unications

Utilities

2024

2023

Shires Income PLC relative to the FTSE All-Share Index

-12% -1 0% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12%

aSC IT*

Basic Materials

Consumer Discretionary

Consumer Staples

En ergy

Financials

Health Care

Indus trials

Real Estate

Technology

Telec omm unications

Utilities

2024

2023

* While the Company’s investment in abrdn Smaller Companies Income Trust plc (“aSCIT”) is classified under “Financials” for FTSE

classification purposes, it is shown separately in the above tables given its materiality to the Company

Sector Analysis

AUM

Invest

Shires Income PLC 49

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Listed equities sector allocation 2024

5.1%

6.1%

6.5%

18.4%

27.3%

10.5%

12.1%

3.5%

2.2%

8.3%

Basic Materials - 5.1%

Consumer Discretionary - 6.1%

Consumer Staples - 6.5%

Energy - 18.4%

Financial s - 27. 3%

Health Ca re - 10.5%

Industrials - 12.1%

Technology - 3.5%

Telecommunications - 2.2%

Utilities - 8.3%

Listed equities sector allocation 2023

10.0%

5.2%

1.2%

13.5%

18.5%

20.3%

9.6%

10.2%

0.7%

3.0%

7.8%

aS CIT - 10. 0%

Basic Materials - 5.2%

Consumer Discretionary - 1.2%

Consumer Stapl es - 13. 5%

Energy - 18.5%

Financials - 20.3%

Health Care - 9.6%

Industrials - 10.2%

Technology - 0.7%

Telecommunications - 3.0%

Utilities - 7.8%

Invest

50 Shires Income PLC

Governance

Shires Income PLC 51

[Section Divider Text]

The Company is committed to high standards

of corporate governance and applies the

principles and provisions identified in the AIC

Code of Corporate Governance.

All Directors are considered by the Board to

be independent of the Company and the

Manager and free of any material relationship

with the Manager.

52 Shires Income PLC

Robert Talbut

Independent non-executive Chairman and

Chairman of the Management Engagement Committee

(will retire from the Board following the AGM)

Experience:

Robert Talbut was formerly Chief Investment Officer of

Royal London Asset Management and has over 30 years

of financial services experience. He has represented the

asset management industry through the chairmanship of

both the ABI Investment Committee and the Asset

Management Committee of the Investment Association.

He has also been a member of the Audit & Assurance

Council of the FRC and the Financial Conduct Authority’s

Listing Authority Advisory Panel. He is Chairman of

Schroder UK Mid Cap Fund plc and JPMorgan American

Investment Trust PLC and a non-executive director of

Pacific Assets Trust plc.

Length of service:

9 years, appointed a Director in April 2015 and

Chairman in July 2017

Last re-appointed to the Board:

6 July 2023

Committee member:

Audit Committee, Management Engagement Committee

(Chairman), Remuneration Committee

Contribution:

The Board has reviewed the contribution of Robert Talbut

and has concluded that he has continued to chair the

Company expertly, fostering a collaborative spirit

between the Board and Manager whilst ensuring that

meetings remain focused on the key areas of stakeholder

relevance. In addition, with his investment management

knowledge and experience of other current roles, he has

continued to provide significant investment insight to

the Board and knowledge of the investment

management sector. Robert Talbut will retire from the

Board following the conclusion of the AGM on 5 July 2024.

Robin Archibald

Senior Independent non-executive Director and

Chairman of the Audit Committee (will be appointed as

Chairman following the AGM)

Experience:

Robin Archibald has a wide range of experience in

advising and managing transactions in the UK closed-end

funds sector over his 35 year career as a corporate

financier including with Samuel Montagu, S G Warburg

and Natwest Markets. He retired from Winterflood

Investment Trusts in May 2014, where he was formerly

Head of Corporate Finance and Broking. He is currently a

non-executive director of AEW UK REIT plc, Capital

Gearing Trust PLC and Henderson European Focus Trust

plc, and currently serves as audit chair on two of these

other investment companies. He is a Chartered

Accountant.

Length of service:

7 years, appointed a Director in May 2017

Last re-appointed to the Board:

6 July 2023

Committee member:

Audit Committee (Chairman), Management Engagement

Committee, Remuneration Committee

Contribution:

The Board has reviewed the contribution of Robin

Archibald in light of his proposed re-appointment at the

AGM and has concluded that he has continued to chair

the Audit Committee expertly and continues to provide

significant corporate insight to the Board. In addition, his

advisory experience and the benefits of his roles as a non-

executive director, audit committee chairman and senior

independent director of other investment company

boards have contributed to his specific knowledge of

investment companies to the benefit of the Company.

Board of Directors

Shires Income PLC 53

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Jane Pearce

Independent non-executive Director and Chairman of the

Remuneration Committee (will be appointed as Audit

Committee Chair following the AGM)

Experience:

Jane Pearce had an executive career as an equity analyst

at leading investment banks and latterly was an equity

strategist at Lehman Brothers and Nomura International.

She is a non-executive director of three UK subsidiaries of

Morgan Stanley and is also a non-executive director and

Chair of the Audit Committee of Polar Capital Technology

Trust PLC. She is a Chartered Accountant and was a

Member of the Governing Council of the Institute of

Chartered Accountants of Scotland from 1999-2000.

Length of service:

4 years, appointed a Director in January 2020

Last re-appointed to the Board:

6 July 2023

Committee member:

Audit Committee, Management Engagement Committee,

Remuneration Committee (Chairman)

Contribution:

The Board has reviewed the contribution of Jane Pearce

in light of her proposed re-appointment at the AGM and

has concluded that she has continued to provide

significant financial and investment insight to the Board

and knowledge of the investment management sector.

Helen Sinclair

Independent non-executive Director (will be appointed as

Senior Independent Director following the AGM)

Experience:

Helen Sinclair began her career in investment banking and

spent nearly eight years at 3i plc focusing on

management buy-outs and growth capital investments.

She later co-founded Matrix Private Equity (which

became Mobeus Equity Partners) in 2000 and

subsequently became Managing Director of the company

before moving to take on a number of non-executive

director roles. She is Chairman of Octopus Future

Generations VCT plc and a non-executive director of

Sherborne Investors (Guernsey) C Limited and BlackRock

Smaller Companies Trust plc.

Length of service:

2 years, appointed a Director in February 2022

Last re-appointed to the Board:

6 July 2023

Committee member:

Audit Committee, Management Engagement Committee,

Remuneration Committee

Contribution:

The Board has reviewed the contribution of Helen Sinclair

in light of her proposed re-appointment at the AGM and

has concluded that she has continued to provide

significant corporate insight and knowledge of the

investment management sector to the Board.

54 Shires Income PLC

Simon White

Independent non-executive Director

Experience:

Simon White has a background in UK equity fund

management and significant experience in the

investment trust sector. He was, until June 2022, Co-Head

of Investment Trusts at BlackRock where he was

responsible for overseeing the company secretarial, sales

and marketing and third-party administration services. He

was also involved in successful fundraisings and significant

secondary issuance within the investment trust business.

He is currently a Senior Adviser to Cadarn Capital, an

independent distribution and investor relations company

servicing London-listed investment companies.

Length of service:

Appointed a Director on 1 January 2024

Last re-appointed to the Board:

n/a, will stand for appointment at the AGM on 5 July 2024

Committee member:

Audit Committee, Management Engagement Committee,

Remuneration Committee

Contribution:

The Board has reviewed the contribution of Simon White

in light of his proposed appointment at the AGM and has

concluded that, since his appointment to the Board, he

has provided a significant contribution through his

experience of the investment trust sector and the

investment management sector more generally.

Board of Directors

Continued

Shires Income PLC 55

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

The Directors present their report and audited financial

statements for the year ended 31 March 2024.

Results and Dividends

The financial statements for the year ended 31 March

2024 are contained on pages 82 to 106. Dividends paid

and proposed for the year amounted to 14.40p per

Ordinary share.

First, second and third interim dividends for the year, each

of 3.20p per Ordinary share, were paid on 27 October

2023, 31 January 2024 and 30 April 2024 respectively. The

Directors recommend a final dividend of 4.80p per

Ordinary share, payable on 31 July 2024 to shareholders

on the register on 5 July 2024. The ex-dividend date is 4

July 2024. Under UK-adopted international accounting

standards the third interim and final dividends will be

accounted for in the financial year ended 31 March 2025.

A resolution in respect of the final dividend will be

proposed at the forthcoming Annual General Meeting.

Investment Trust Status

The Company is registered as a public limited company

(registered in England and Wales No. 00386561) and is an

investment company within the meaning of Section 833 of

the Companies Act 2006. The Company has been

approved by HM Revenue & Customs as an investment

trust subject to it continuing to meet the relevant eligibility

conditions of Section 1158 of the Corporation Tax Act

2010 and the ongoing requirements of Part 2 Chapter 3

Statutory Instrument 2011/2999 for all financial years

commencing on or after 1 April 2012. The Directors are of

the opinion that the Company has conducted its affairs for

the year ended 31 March 2024 so as to enable it to comply

with the ongoing requirements for investment trust status.

Individual Savings Accounts

The Company satisfies the requirements as a qualifying

security for Individual Savings Accounts. The Directors

intend that the Company will continue to conduct its

affairs in this manner.

aSCIT Transaction

On 26 July 2023 the Company announced that it had

agreed terms with the board of abrdn Smaller Companies

Income Trust plc (“aSCIT”) in respect of a proposed

combination of the assets of the Company with those of

aSCIT (the “aSCIT transaction”). Shareholders were sent

documentation in October explaining that this was to be

effected by way of a scheme of reconstruction and

winding up of aSCIT under section 110 of the Insolvency

Act 1986 (the “Scheme”) and the associated transfer of

the assets of aSCIT to the Company in exchange for the

issue of new Ordinary shares in the Company to those

aSCIT shareholders who rolled their shareholdings into the

Company in accordance with the Scheme.

Shareholders approved the Scheme proposals at the

Company’s General Meeting held on 20 November 2023

and aSCIT’s shareholders approved the Scheme

proposals at their General Meeting held on the same day.

The Scheme completed on 1 December. On that date the

Company issued 11,268,494 new Ordinary shares to

aSCIT shareholders in accordance with the Scheme.

The new shares were admitted to trading on

4 December 2023.

Capital Structure

During the year the Company issued 11,268,494 Ordinary

shares of 50p each in connection with the aSCIT

transaction as referred to above. In addition, the

Company bought back 863,532 Ordinary shares at a

discount to net asset value, to hold in treasury. The issued

Ordinary share capital as at 31 March 2024 comprised

41,369,542 Ordinary shares of 50p each, 863,532 Ordinary

shares held in treasury and 50,000 3.5% Cumulative

Preference shares of £1 each.

Directors’ Report

56 Shires Income PLC

Voting Rights

Each Ordinary and Cumulative Preference share carries

one vote at general meetings of the Company. The

Cumulative Preference shares carry a right to receive a

fixed rate of dividend and, on a winding up of the

Company, to the payment of such fixed cumulative

preferential dividends to the date of such winding up and

to the repayment of the capital paid up on such shares

in priority to any payment to the holders of the

Ordinary shares.

The Ordinary shares, excluding any treasury shares, carry

a right to receive dividends and, on a winding up or other

return of capital, after meeting the liabilities of the

Company, the surplus assets will be paid to Ordinary

shareholders in proportion to their shareholdings.

There are no restrictions on the transfer of Ordinary or

Cumulative Preference shares in the Company other than

certain restrictions which may from time to time be

imposed by law.

Management Agreement

The Company has appointed abrdn Fund Managers

Limited (“aFML”), a wholly owned subsidiary of abrdn plc,

as its alternative investment fund manager. aFML has

been appointed to provide investment management, risk

management, administration, company secretarial

services and promotional activities to the Company. The

Company’s portfolio is managed by abrdn Investments

Limited by way of a group delegation agreement in place

between aFML and abrdn Investments Limited. In addition,

aFML has sub-delegated administrative and company

secretarial services to abrdn Holdings Limited and

promotional activities to abrdn Investments Limited.

Details of the management fee and fees payable for

promotional activities are shown in notes 4 and 5 to the

financial statements.

The management agreement is terminable on not less

than six months’ notice. In the event of termination by the

Company on less than the agreed notice period,

compensation is payable to the Manager in lieu of the

unexpired notice period.

Substantial Interests

Information provided to the Company by major

shareholders pursuant to the FCA’s Disclosure Guidance

and Transparency Rules is published by the Company via

a Regulatory Information Service.

The table below sets out the interests in 3% or more of the

issued share capital of the Company, of which the Board

was aware as at 31 March 2024.

Shareholder

Number of

Ordinary

shares held

% of

Ordinary

shares held

Interactive Investor

13,410,525

32.4

Hargreaves Lansdown

8,562,529

20.7

AJ Bell

2,841,009

6.9

HSDL

2,363,079

5.7

There have been no changes notified to the Company

between the year end and the date of approval of

this Report.

Directors

Simon White was appointed as an independent non-

executive Director on 1 January 2024. In respect of the

appointment of Mr White, the Board used the services of

an external search consultant, Fletcher Jones Limited.

Fletcher Jones Limited does not have any other

connections with the Company or individual Directors.

At the end of the year the Board comprised five

non-executive Directors, each of whom is considered by

the Board to be independent of the Company and

the Manager.

The Directors attended scheduled Board and Committee

meetings during the year ended 31 March 2024 as follows

(relevant meetings in brackets):

Director

Board

Audit

Committee

Management

Engagement

Committee

Remuneration

Committee

Robert Talbut

5 (5)

2 (2)

1 (1)

Robin Archibald

5 (5)

2 (2)

1 (1)

Jane Pearce

5 (5)

2 (2)

1 (1)

Helen Sinclair

5 (5)

2 (2)

1 (1)

Simon White

1 (1)

- (-)

1 (1)

Appointed 1 January 2024

Continued

Directors’ Report

Shires Income PLC 57

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

The Board meets more frequently when business needs

require and has regular dialogue between formal Board

meetings, including with the Manager. During the year,

there were an additional 11 Board/Board Committee

meetings held principally in relation to the aSCIT

transaction, but also in relation to share buy backs, Board

succession and the approval of the Annual and Half Yearly

Reports.

Under the terms of the Company’s Articles of Association,

Directors must retire and be subject to appointment at the

first Annual General Meeting after their appointment by

the Board, and be subject to re-appointment every three

years thereafter. However, the Board has decided that all

Directors will seek annual re-appointment after initial

appointment to the Board.

Having served for nine years, Robert Talbut will retire at the

Annual General Meeting on 5 July 2024. Simon White will

stand for appointment and each of Helen Sinclair, Robin

Archibald and Jane Pearce will seek re-appointment at

the meeting.

The Board believes that all the Directors seeking

appointment/re-appointment remain independent of the

Manager and free from any relationship which could

materially interfere with the exercise of their judgement

on issues of strategy, performance, resources and

standards of conduct. The biographies of each of the

Directors are shown on pages 52 to 54, setting out their

range of skills and experience as well as length of service

and contribution to the Board during the year. The Board

believes that each Director has the requisite high level and

range of business, investment and financial experience

which enables the Board to provide clear and effective

leadership, oversight and proper governance of

the Company.

During the year, the Board undertook an annual appraisal

of the Chairman of the Board, individual Directors and the

performance of Committees and the Board as a whole.

This process involved the completion of questionnaires by

each Director and follow-on discussions between the

Chairman and each Director. The appraisal of the

Chairman was undertaken by the Senior Independent

Director. Following this process, the Board considers that it

continues to operate in an efficient and effective manner

and that the performance of each of the Directors seeking

appointment/re-appointment continues to be effective.

Each Director has demonstrated commitment to the role

and the Board is satisfied that their individual

performances contribute to the long-term sustainable

success of the Company. All of the Directors have

demonstrated that they have sufficient time and

commitment to fulfil their directorial roles with the

Company. The Board therefore recommends the

appointment/re-appointment of each of the Directors at

the Annual General Meeting.

Board’s Policy on Tenure

In normal circumstances, it is the Board’s expectation that

Directors will not serve beyond the Annual General

Meeting following the ninth anniversary of their

appointment. However, the Board takes the view that

independence of individual Directors is not necessarily

compromised by length of tenure on the Board and that

continuity and experience can add significantly to the

Board’s strength. The Board believes that

recommendation for re-election should be on an

individual basis following a rigorous review which assesses

the contribution made by the Director concerned, but also

taking into account the need for regular refreshment

and diversity, as well as providing continuity of experience

of the Company.

It is the Board’s policy that the Chairman of the Board will

not normally serve as a Director beyond the Annual

General Meeting following the ninth anniversary of his/her

appointment to the Board. However, this may be

extended in certain circumstances including the

facilitation of effective succession planning and the

development of a diverse Board. In such a situation the

reasons for the extension will be fully explained to

shareholders and a timetable for the departure of the

Chairman clearly set out.

The Role of the Chairman and Senior

Independent Director

The Chairman is responsible for providing effective

leadership to the Board, by setting the tone of the

Company, demonstrating objective judgement and

promoting a culture of openness and debate. The

Chairman facilitates the effective contribution and

encourages active engagement by each Director. In

conjunction with the Company Secretary, the Chairman

ensures that Directors receive accurate, timely and clear

information to assist them with effective decision-making.

The Chairman acts upon the results of the Board

evaluation process by recognising strengths and

addressing any weaknesses and also ensures that the

Board engages with major shareholders and that all

Directors understand shareholder views.

58 Shires Income PLC

The Senior Independent Director acts as a sounding board

for the Chairman and acts as an intermediary for other

Directors, when necessary. Working closely with the other

Directors, the Senior Independent Director takes

responsibility for an orderly succession process for the

Chairman, and leads the annual appraisal of the

Chairman’s performance. The Senior Independent

Director is also available to shareholders to discuss any

concerns they may have.

Directors’ and Officers’ Liability Insurance

The Company maintains insurance in respect of Directors’

and Officers’ liabilities in relation to their acts on behalf of

the Company. In addition, the Company has entered into

a separate deed of indemnity with each of the Directors

reflecting the scope of the indemnity in the Articles of

Association. Under the Articles of Association, each

Director is entitled to be indemnified out of the assets of

the Company to the extent permitted by law against any

loss or liability incurred by him or her in the proper

execution of his or her duties in relation to the affairs of

the Company.

Management of Conflicts of Interest

The Board has a procedure in place to deal with a

situation where a Director has a conflict of interest. As part

of this process, each Director prepares a list of other

positions held and all other conflict situations that may

need to be authorised either in relation to the Director

concerned or his or her connected persons. The Board

considers each Director’s situation and decides whether

to approve any conflict, taking into consideration what is in

the best interests of the Company and whether the

Director’s ability to act in accordance with his or her wider

duties is affected. Each Director is required to notify the

Company Secretary of any potential, or actual, conflict

situations that will need authorising by the Board.

Authorisations given by the Board are reviewed at each

Board meeting.

No Director has a service contract with the Company

although all Directors are issued with letters of

appointment, which may be amended from time to time

to reflect regulatory and other changes. Other than the

deeds of indemnity referred to above and the Directors’

letters of appointment, there were no contracts during,

or at the end of the year, in which any Director

was interested.

The Company has a policy of conducting its business in an

honest and ethical manner. The Company takes a zero-

tolerance approach to bribery and corruption and has

procedures in place that are proportionate to the

Company’s circumstances to prevent them. The Manager

also adopts a group-wide zero-tolerance approach and

has its own detailed policy and procedures in place to

prevent bribery and corruption. Copies of the Manager’s

anti-bribery and corruption policies are available on

its website.

In relation to the corporate offence of failing to prevent tax

evasion, it is the Company’s policy to conduct all business

in an honest and ethical manner. The Company takes a

zero-tolerance approach to facilitation of tax evasion

whether under UK law or under the law of any foreign

country and is committed to acting professionally,

fairly and with integrity in all its business dealings

and relationships.

Board Diversity

The Board recognises the importance of having a range

of skilled and experienced individuals with the right

knowledge represented on the Board in order to allow it to

fulfil its obligations. The Board also recognises the benefits

and is supportive of the principle of diversity in its

recruitment of new Board members. The Board will not

display any bias for age, gender, race, sexual orientation,

socio-economic background, religion, ethnic or national

origins or disability in considering the appointment of its

Directors. In view of its size, the Board will continue to

ensure that all appointments are made on the basis of

merit against the specification prepared for each

appointment. In doing so, the Board will take account of

the targets set out in the FCA’s Listing Rules, which are set

out in the tables below.

The Board has resolved that the Company’s year end

date is the most appropriate date for disclosure purposes.

The following information has been provided by each

Director through the completion of questionnaires. There

have been no changes since the year end.

Directors’ Report

Continued

Shires Income PLC 59

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Table for reporting on gender as at 31 March 2024

Number of Board

members

Percentage of

the Board

Number of senior

positions on the Board

(CEO, CFO, Chair and

SID)

Number in

executive

management

Percentage of

executive

management

Men

60%

n/a

(note 3)

n/a

(note 3)

n/a

(note 3)

Women

40%

(note 1)

Not specified/prefer not to say

Table for reporting on ethnic background as at 31 March 2024

Number of Board

members

Percentage of

the Board

Number of senior

positions on the Board

(CEO, CFO, Chair and

SID)

Number in

executive

management

Percentage of

executive

management

White British or other White

(including minority-white groups)

5 100%

n/a

(note 3)

n/a

(note 3)

n/a

(note 3)

Minority ethnic

(note 2)

Not specified/prefer not to say

Notes:

1. Meets target that at least 40% of Directors are women as set out in LR 9.8.6R (9)(a)(i).

2. Does not meet target that at least one Director is from a minority ethnic background as set out in LR 9.8.6R (9)(a)(iii). The Directors

will take this into account when making future Board appointments.

3. This column is not applicable as the Company is externally managed and does not have any executive staff. Specifically, it does not

have either a CEO or CFO. The Company considers that the roles of Chairman of the Board, Senior Independent Director and

Chairman of the Audit Committee are senior Board positions. During the year ended 31 March 2024 the Company did not meet the

target set out in LR 9.8.6R (9)(a)(ii) that at least one of the senior Board positions is held by a woman. However, it will meet the target

following the Annual General Meeting on 5 July 2024 when Jane Pearce will be appointed as Chair of the Audit Committee and

Helen Sinclair will be appointed as SID.

Corporate Governance

The Company is committed to high standards of

corporate governance and the Board is accountable to

the Company’s shareholders for good governance. The

Board has considered the principles and provisions of the

AIC Code of Corporate Governance as published in

February 2019 (the “AIC Code”). The AIC Code addresses

the principles and provisions set out in the UK Corporate

Governance Code as published by the FRC in July 2018

(the “UK Code”), as well as setting out additional

provisions on issues that are of specific relevance to

investment trusts.

The Board considers that reporting against the principles

and provisions of the AIC Code, which has been endorsed

by the FRC, provides more relevant information to

shareholders than if it had adopted the UK Code. The AIC

Code is available on the AIC’s website: theaic.co.uk. It

includes an explanation of how the AIC Code adapts the

principles and provisions set out in the UK Code to make

them relevant for investment trusts.

The Board confirms that, during the year, the Company

complied with the principles and provisions of the

AIC Code.

Further details of the Company’s compliance with the AIC

Code can be found on its website.

60 Shires Income PLC

The Board and its Committees

Mr Talbut is the Chairman of the Board and Mr Archibald is

the Senior Independent Director.

The Board has appointed committees with specific

responsibilities as set out below. Copies of the terms of

reference of each committee are available on the

Company’s website, or upon request from the Company.

Given the size of the Board and because all of the

Directors are non-executive, the Board does not consider

it appropriate for the Company to have a nominations

committee. The business of nominations and succession

planning, and Board evaluations, is covered by the

full Board.

Audit Committee

The Audit Committee comprises all Directors and is

chaired by Mr Archibald and will be chaired by Ms Pearce

following the Annual General Meeting on 5 July 2024.

The Audit Committee’s Report is contained on pages

68 to 71.

Management Engagement Committee

The Management Engagement Committee comprises all

Directors and is chaired by Mr Talbut. The purpose of the

Committee is to review the terms of the agreement with

the Manager including, but not limited to, the

management fee, and also to review the performance of

the Manager in relation to the achievement of the

Company’s objectives. These reviews were conducted

during the year and the outcomes are noted below. In

addition, the Committee conducts an annual review of the

performance, terms and conditions of the Company’s

other main service providers.

The key terms of the management agreement and fees

payable to the Manager are set out on page 56 and in

notes 4 and 5 to the financial statements. The Board

believes the fee arrangements are competitive with

reference to other investment trusts with a similar

investment mandate and are priced appropriately given

the level of service provided by the abrdn Group. As stated

above, the Committee reviews the performance of the

Manager annually. The Board is satisfied with the

Company’s performance since the appointment of the

abrdn Group as Manager in 2008 and believes that the

Investment Manager has positioned the portfolio well in

order to seek to achieve good medium and long-term

performance in line with the Company’s investment

objective. The Board is also satisfied with the standard of

company secretarial, administration and promotional

support provided by the Manager. It therefore considers

the continuing appointment of the Manager on the terms

agreed to be in the best interests of shareholders.

Remuneration Committee

The Remuneration Committee comprises all Directors and

is chaired by Ms Pearce who has relevant experience and

understanding of the Company. The Committee’s duties

include reviewing the Company’s remuneration policy

and determining Directors’ remuneration, including for

the Chairman.

Going Concern

The Company’s assets consist mainly of equity shares in

companies listed on the London Stock Exchange. The

Board has performed stress testing and liquidity analysis

on the portfolio and considers that, in most foreseeable

circumstances, the majority of the Company’s

investments are realisable within a relatively

short timescale.

The Board has set limits for borrowing and regularly

reviews actual exposures, cash flow projections and

compliance with banking covenants, including the

headroom available. At the year end, the Company had a

£20 million loan facility which is due to mature in May 2027.

Having taken these factors into account, the Directors

believe that the Company has adequate resources to

continue in operational existence for the foreseeable

future and has the ability to meet its financial obligations

as they fall due for the period to 30 June 2025, which is at

least twelve months from the date of approval of this

Report. For these reasons, they continue to adopt the

going concern basis of accounting in preparing the

financial statements.

Accountability and Audit

The respective responsibilities of the Directors and the

Auditor in connection with the financial statements

appear on page 72, and pages 73 to 80.

Each Director confirms that, so far as he or she is aware,

there is no relevant audit information of which the

Company’s Auditor is unaware, and they have taken all

the steps that they could reasonably be expected to have

taken as Directors in order to make themselves aware of

any relevant audit information and to establish that the

Company’s Auditor is aware of that information.

Directors’ Report

Continued

Shires Income PLC 61

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Independent Auditor

The Company’s Auditor, Ernst & Young LLP, has indicated

its willingness to remain in office. The Board will place

resolutions before the Annual General Meeting to re-

appoint Ernst & Young LLP as Auditor for the ensuing year

and to authorise the Directors to determine its

remuneration.

Relations with Shareholders

The Directors place a great deal of importance on

communications with shareholders. Shareholders and

investors may obtain up to date information on the

Company through its website and the Manager’s

information service.

The Board’s policy is to communicate directly with

shareholders and their representative bodies without the

involvement of the management group (including the

Company Secretary or the Manager) in situations where

direct communication is required, and representatives

from the Manager meet with major shareholders on at

least an annual basis in order to gauge their views. In

addition, the Company Secretary only acts on behalf of

the Board, not the Manager, and there is no filtering of

communication. At each Board meeting the Board

receives full details of any communication from

shareholders to which the Chairman responds personally

as appropriate.

Directors make themselves available to attend meetings

with the Company’s largest shareholders and meet other

shareholders at the Annual General Meeting and, as

explained in the Chairman’s Statement, the Company

will hold an Online Shareholder Presentation in advance

of the Annual General Meeting this year including

the opportunity for an interactive question and

answer session.

The notice of the Annual General Meeting is, where

practicable, sent out at least 20 working days in advance

of the meeting. All shareholders have the opportunity to

put questions to the Board and Manager at the meeting.

Further details regarding the arrangements for this year’s

Annual General Meeting and separate Online Shareholder

Presentation are set out in the Chairman’s Statement on

page 11.

Annual General Meeting

The Annual General Meeting will be held at 18 Bishops

Square, London E1 6EG on Friday 5 July 2024 at 12 noon.

The Notice of Annual General Meeting is included on

pages 121 to 127.

There are 17 resolutions to consider, including four

resolutions put as special resolutions which require the

approval of 75% of the votes cast. The 13 ordinary

resolutions include adopting the accounts and Auditor’s

report, adopting the Directors’ Remuneration Report,

approving the final dividend, the appointment/re-

appointment of Directors, the re-appointment and

determining the remuneration of the Auditor, increasing

the limit on Directors’ remuneration, a general share

allotment authority and a resolution to approve a change

to the investment policy. Further details of the ordinary

and special resolutions to be proposed at the meeting are

set out below.

Allotment of Shares

Resolution 11, which is an ordinary resolution, will, if

approved, give the Directors a general authority to allot

new securities up to 10% of the issued Ordinary share

capital of the Company as at the date of the passing of

the resolution (up to a maximum aggregate nominal

amount of £2,068,477 based on the number of Ordinary

shares in issue as at the date of this Report), such authority

to expire on 30 September 2025 or, if earlier, at the

conclusion of the next Annual General Meeting of the

Company (unless previously revoked, varied or extended

by the Company in general meeting).

Limit on Directors’ Fees

Resolution 12, which is an ordinary resolution, will, if

approved, increase the annual limit on aggregate

Directors' fees from £175,000 to £200,000. The proposal is

explained in more detail in the Directors' Remuneration

Report on page 65 and is permitted under Article 80 of the

Company's Articles of Association. If Resolution 12 is

passed, the increase in the annual limit will take effect

from the conclusion of the Annual General Meeting.

Change of Investment Policy

The Company is proposing to amend its investment policy,

principally to increase from 10% to 20% the limit of total

assets that may be invested in the equity securities of

overseas companies. The full text of the proposed

amendments may be found in the Appendix to the Notice

of Annual General Meeting on page 127 while further

information on the reasons for this amendment may be

found in the Chairman’s Statement on page 9. The

amendment requires both FCA and shareholder approval

and it is intended that Resolution 13 will be put to

shareholders at the forthcoming Annual General Meeting

for their approval.

62 Shires Income PLC

Disapplication of Pre-emption Provisions

Resolution 14, which is a special resolution, will, if approved,

give the Directors power to allot Ordinary shares

(including Ordinary shares held in treasury) for cash,

otherwise than pro-rata to existing shareholders, up to a

maximum aggregate nominal amount representing 10%

of the Company’s issued Ordinary share capital as at the

date of the passing of the resolution (up to an aggregate

nominal amount of £2,068,477 based on the number of

Ordinary shares in issue as at the date of this Report).

Ordinary shares would only be issued for cash at a

premium to the net asset value per share. This authority

will expire on 30 September 2025 or, if earlier, at the

conclusion of the next Annual General Meeting of the

Company (unless previously revoked, varied or extended

by the Company in general meeting). As noted, this

disapplication of pre-emption rights also applies in respect

of treasury shares which the Company may sell.

Purchase of the Company's own Ordinary Shares

Resolution 15, which is a special resolution, will, if approved,

renew the Company’s authority to make market

purchases of its own shares. The maximum number of

Ordinary shares which may be purchased pursuant to the

authority is 14.99% of the issued share capital of the

Company as at the date of the passing of the resolution

(approximately 6.2 million Ordinary shares as at the date

of this Report). The minimum price which may be paid for

an Ordinary share (exclusive of expenses) is 50p. The

maximum price which may be paid (exclusive of

expenses) is an amount being not more than the higher of

(i) 105% of the average of the middle market quotations

for the Company’s Ordinary shares for the five business

days immediately preceding the date of purchase and (ii)

the higher of the price of the last independent trade and

the highest current independent bid relating to an

Ordinary share on the trading venue where the purchase

is carried out.

This authority, if conferred, will only be exercised if shares

are purchased for cash at a price below the prevailing net

asset value per share and the Directors believe it is in the

best interests of shareholders generally. Shares so

repurchased may be held in treasury or cancelled. Any

purchase of shares will be made within guidelines

established from time to time by the Board. This authority

will expire on 30 September 2025 or, if earlier, at the

conclusion of the next Annual General Meeting of the

Company (unless previously revoked, varied or extended

by the Company in general meeting).

Cancellation of Share Premium Account

Resolution 16 is a special resolution to cancel the entire

amount standing to the credit of the Company’s Share

Premium Account. Subject to the passing of the resolution,

the cancellation of the Share Premium Account will be

completed by means of a Court approved capital

reduction, as described below.

The Share Premium Account represents the excess over

the nominal value for new Ordinary shares issued, less the

costs of issue. The reserve represented by the Share

Premium Account can only be used for very limited

applications and cannot, for example, be used to pay

dividends or apply against future share buybacks.

On completion of the capital reduction, the Company's

entire Share Premium Account will be cancelled and,

subject to the Court being satisfied with the Company’s

approach to creditors, as outlined below, an equivalent

amount will be added to the Company’s distributable

reserves, which can be used for the future payment of

dividends to shareholders or to carry out share buybacks

should it be desirable to do so.

Under the Companies Act 2006, the cancellation of the

Share Premium Account is conditional upon (a) the

sanction of the special resolution of shareholders, (b) the

confirmation of the Court, (c) the registration of the

Court’s order confirming the capital reduction and (d) the

capital reduction not otherwise being unlawful.

In considering the Company’s application for the Court

order, the Court will need to be satisfied that the interests

of any creditors (including contingent creditors) of the

Company, whose debts remain outstanding on the date

on which the Court order is registered, are not prejudiced

by the capital reduction. The Company intends that an

application will be made for the Court to approve the

capital reduction as soon as reasonably practicable after

the Annual General Meeting, provided that Resolution 16 is

passed as a special resolution.

The completion of the capital reduction will not affect the

rights attaching to the Ordinary shares and will not result in

any change to the number of Ordinary shares in issue.

Neither will the capital reduction involve a return of capital

to shareholders nor any reduction in the Company’s

net assets.

Continued

Directors’ Report

Shires Income PLC 63

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Notice Period for General Meetings

The Company’s Articles of Association enable it to call

general meetings (other than an Annual General Meeting)

on 14 clear days' notice. In order for this to be effective, the

shareholders must also annually approve the calling of

meetings on 14 days' notice by separate resolution.

Resolution 17, which is a special resolution, seeks such

approval. The approval will be effective until the

Company's next Annual General Meeting, when it is

intended that a similar resolution will be proposed. The

Company will also need to meet the requirements for

electronic voting under the Companies Act 2006 (as

amended by the Shareholders’ Rights Regulations) before

it can call a general meeting on 14 days' notice. It is the

Board’s intention to only use this authority where it is

merited by the purpose of the meeting.

Recommendation

The Directors believe that the resolutions to be proposed

at the Annual General Meeting are in the best interests of

the Company and its shareholders and recommend that

shareholders vote in favour of the resolutions, as they

intend to do in respect of their own beneficial

shareholdings totalling 70,981 Ordinary shares,

representing 0.17% of the issued share capital.

By order of the Board

abrdn Holdings Limited

Company Secretary

1 George Street

Edinburgh EH2 2LL

22 May 2024

64 Shires Income PLC

This Directors’ Remuneration Report comprises

three parts:

a) a Remuneration Policy which is subject to a binding

shareholder vote every three years (or sooner if

varied during this interval) - most recently voted on at

the Annual General Meeting on 7 July 2021, and will be

put to shareholders for approval at the Annual

General Meeting on 5 July 2024;

b) an Implementation Report which is subject to an

advisory vote on the level of remuneration paid during

the year; and

c) an Annual Statement.

The law requires the Company’s Auditor to audit certain of

the disclosures provided in the Directors’ Remuneration

Report. Where disclosures have been audited, they are

indicated as such. The Auditor’s opinion is included on

pages 73 to 80.

The Directors’ Remuneration Policy and level of Directors’

remuneration are determined by the Remuneration

Committee, which is chaired by Ms Pearce, and comprises

all of the Directors. The Remuneration Policy is reviewed

by the Remuneration Committee on an annual basis.

The Directors’ Remuneration Policy takes into

consideration the principles of the UK Corporate

Governance Code and the AIC’s recommendations

regarding the application of those principles to

investment companies.

No shareholder views have been sought in setting the

Remuneration Policy (approved by shareholders at the

Annual General Meeting in 2021) although any comments

received from shareholders are considered.

Remuneration Policy

The Board’s policy is that the remuneration of non-

executive Directors should reflect the nature of the

Directors’ duties, responsibilities, the value of their time

spent and be fair and comparable to that of other

investment trusts that are similar in size, and have similar

capital structures and investment objectives.

Remuneration should also be sufficient to attract Directors

of the quality and with the skills required to oversee the

Company’s activities successfully.

Appointment Terms

· All the Directors are non-executive and are appointed

under the terms of letters of appointment which are

updated from time to time for updated regulatory

provisions.

· Under the terms of the Company’s Articles of

Association, Directors must retire and be subject to

appointment at the first Annual General Meeting after

their appointment by the Board, and be subject to re-

appointment every three years thereafter. However, the

Board has decided that all Directors will seek annual

re-appointment.

· Any Director newly appointed to the Board will receive

the fee applicable to each of the other Directors at the

time of appointment together with any other fee then

currently payable in respect of a specific role which the

new Director is to undertake for the Company.

· Additional fees may be payable to take account of

specific circumstances that might arise where a

Director is required to perform services (i) outside the

scope of the ordinary duties of a Director; or (ii) outside

the ordinary course of Company business, and in

each case where this is exceptional in terms of

time commitment.

· No incentive or introductory fees will be paid to

encourage a person to become a Director.

· Directors are not eligible for bonuses, pension benefits,

share options, long-term incentive schemes or

other benefits.

· Directors are entitled to re-imbursement of out-of-

pocket expenses incurred in connection with the

performance of their duties, including travel and

accommodation expenses as necessary.

· The Company indemnifies its Directors under deeds of

indemnity for all costs, charges, losses, expenses and

liabilities which may be incurred in the discharge of

duties as a Director of the Company.

· The Directors’ remuneration is not subject to any

performance related fee.

· No Director has a service contract.

· The terms of appointment provide that a Director may

be removed without notice in certain circumstances.

· Compensation will not be due upon leaving office.

· No Director is entitled to any other monetary payment

or any assets of the Company.

· Directors’ & Officers’ liability insurance cover is

maintained by the Company on behalf of the Directors.

Directors’ Remuneration Report

Shires Income PLC 65

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Statement of Voting at General Meeting on the

Remuneration Policy

At the Annual General Meeting held on 7 July 2021,

shareholders approved the Directors’ Remuneration

Policy. 86.8% of proxy votes were in favour of the

resolution and 13.2% were against. There were

abstentions in respect of 113,961 Ordinary shares.

Implementation Report

Limit on Directors’ Fees

Directors’ fees are set within the limits of the Company’s

Articles of Association which limit the aggregate fees per

annum payable to the Board of Directors. The current limit

specified in the Articles of Association, as approved by

shareholders at the Annual General Meeting on 6 July

2023, is £175,000 per annum (or such other amount as

may from time to time be determined by ordinary

resolution of the Company).

An ordinary resolution will be proposed at the Annual

General Meeting on 5 July 2024 to increase the annual

limit on aggregate Directors' fees from £175,000 to

£200,000. This higher amount is considered necessary to

allow for modest fee increases in the future and also for a

higher level of aggregate fees during years where new

Directors are appointed as part of the Board’s succession

planning. If the resolution is passed, the increase to the

annual limit will take effect from the conclusion of the

Annual General Meeting.

Review of Directors’ Fees

The levels of fees for the year and the preceding year are

set out in the table below.

31 March

2024

31 March

2023

Chairman

41,000

39,000

Chairman of Audit Committee

33,500

32,000

Director

29,000

27,500

An additional fee of £1,000 per annum (2023: £1,000) is

paid to the Senior Independent Director.

The Remuneration Committee carried out a review of the

level of Directors’ fees during the year by reference to

peer group and sector comparisons. Following this review,

it was decided that fees would be increased with effect

from 1 April 2024 to £43,500 per annum for the Chairman,

£35,000 per annum for the Audit Committee Chairman

and £30,500 for the other Directors. It was also decided

that a separate fee of £1,000 per annum would continue

to be paid to the Senior Independent Director.

These fee levels are considered to reflect the

responsibility, time commitment, experience, and skills

and expertise required of a director of an investment

trust company.

Company Performance

The graph below shows the share price and NAV total

return (assuming all dividends are reinvested) to Ordinary

shareholders compared to the total return from the FTSE

All-Share Index for the ten year period to 31 March 2024

(rebased to 100 at 31 March 2014). This Index was chosen

for comparison purposes, as it is the benchmark used for

investment performance measurement purposes.

1 00

1 20

1 40

1 60

1 80

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

NAV Sh are P rice Index

Spend on Pay

As the Company has no employees, the Directors do not

consider it appropriate to present a table comparing

remuneration paid to employees with distributions to

shareholders. The total fees paid to Directors are

shown below.

66 Shires Income PLC

Fees Payable (Audited)

The Directors who served during the year received the

following fees, which exclude employers’ National

Insurance contributions:

Director

2024

2023

Robert Talbut

41,000

39,000

Robin Archibald

34,500

32,553

Marian Glen

7,585

Jane Pearce

29,000

27,500

Helen Sinclair

29,000

27,500

Simon White

7,250

Total

140,750

134,138

Appointed Senior Independent Director 12 September 2022

Retired 6 July 2022

Appointed 1 January 2024

Fees are pro-rated where a change takes place during a

financial year. There were no payments to third parties

included in the fees referred to in the table above.

Annual Percentage Change in Directors’ Remuneration

The table below sets out the annual percentage change in

Directors’ fees for the past four years.

Year

ended

March

2024

Year

ended

March

2023

Year

ended

March

2022

Year

ended

March

2021

Director

Robert Talbut

5.1

5.4

4.2

Robin Archibald

6.0

6.7

5.2

3.7

Jane Pearce

5.5

3.8

6.0

n/a

Helen Sinclair

5.5

n/a

Simon White

n/a

Appointed Chairman of the Audit Committee on 4 July 2019 and Senior

Independent Director on 12 September 2022

Appointed 1 January 2020

Appointed 1 February 2022

Appointed 1 January 2024

Directors’ Interests in the Company (Audited)

The Directors are not required to have a shareholding in

the Company. The Directors (including their connected

persons) at 31 March 2024 and 31 March 2023 had no

interest in the share capital of the Company other than

those interests, all of which are beneficial, shown in the

table below.

31 March 2024

31 March 2023

Ordinary shares

Robert Talbut

18,496

Robin Archibald

22,471

20,294

Jane Pearce

7,014

3,000

Helen Sinclair

3,000

Simon White

20,000

No Director had an interest in the 3.5% Cumulative

Preference shares at any time during the year.

There have been no changes to the Directors’ interests

in the share capital of the Company since the end of

the year.

Statement of Voting at General Meeting on the

Remuneration Report

At the Company’s last Annual General Meeting, held on 6

July 2023, shareholders approved the Directors’

Remuneration Report (excluding the Directors’

Remuneration Policy) in respect of the year ended 31

March 2023. 88.0% of proxy votes were in favour of the

resolution and 12.0% were against. There were

abstentions in respect of 133,536 Ordinary shares.

A resolution will be proposed at the Annual General

Meeting to approve the Directors’ Remuneration Report

(excluding the Directors’ Remuneration Policy) in respect

of the year ended 31 March 2024.

Continued

Directors’ Remuneration Report

Shires Income PLC 67

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Annual Statement

On behalf of the Board and in accordance with Part 2 of

Schedule 8 of the Large and Medium-sized Companies

and Groups (Accounts and Reports) (Amendment)

Regulations 2013, it is confirmed that the above

Remuneration Report summarises, as applicable, for the

year to 31 March 2024:

· the major decisions on Directors’ remuneration;

· any substantial changes relating to Directors’

remuneration made during the year; and

· the context in which the changes occurred and

decisions have been taken.

On behalf of the Board

Jane Pearce

Director

22 May 2024

68 Shires Income PLC

The Audit Committee presents its Report for the year

ended 31 March 2024.

Committee Composition

The Audit Committee comprises all of the Directors of the

Company with Mr Archibald acting as Chairman. Mr

Archibald is a Chartered Accountant and has served as

audit committee chair on other investment company

boards for more than a decade. The Board is satisfied that

he has recent and relevant financial experience and

knowledge of the investment company sector, and that

the Committee as a whole has competence relevant to

the sector. Ms Pearce, also a Chartered Accountant and

experienced audit committee chair on another

investment company, will be appointed as Chair of the

Audit Committee following the Annual General Meeting

on 5 July 2024, when Mr Archibald will take over as

Chairman of the Board following Mr Talbut’s retirement as

a Director.

The Board considers that, given its size and the nature of

the Company’s activities, it is appropriate for the

Chairman of the Board to be a member of the

Committee. Mr Talbut was independent upon his

appointment to the Board in April 2015. It is expected that

Mr Archibald will continue as a member of the Audit

Committee when he assumes the chair of the Company

as he remains independent as he was when he was

appointed to the Board in May 2017.

Functions of the Audit Committee

The principal role of the Audit Committee is to assist the

Board in relation to the reporting of financial information,

the review of financial controls and the management of

risk. The Committee has defined terms of reference which

are reviewed and re-assessed for their adequacy on at

least an annual basis. Copies of the terms of reference are

published on the Company’s website and are available

from the Company on request.

The Committee’s main functions are listed below:

· to review and monitor the internal control systems and

risk management systems (including review of non-

financial risks) on which the Company is reliant (the

Directors’ statement on the Company’s internal controls

and risk management is set out below);

· to consider whether there is a need for the Company to

have its own internal audit function;

· to monitor the integrity of the half-yearly and annual

financial statements of the Company by reviewing, and

challenging where necessary, the actions and

judgements of the Manager and how the financial

statements are presented;

· to review, and report to the Board on, the significant

financial reporting issues and judgements made in

connection with the preparation of the Company’s

annual and half-yearly financial statements,

announcements and related formal statements and to

test the validity of these judgements on a regular basis;

· to review the content of the Annual Report and advise

the Board on whether, taken as a whole, it is fair,

balanced and understandable and provides the

information necessary for shareholders to assess the

Company’s position and performance, business model

and strategy;

· to review the proposed audit programme and planning

with the Auditor;

· to meet with the Auditor to review the audit results

report;

· to develop and implement policy on the engagement of

the Auditor to supply non-audit services. There were no

fees for non-audit services paid to the Auditor during the

year (2023: £nil). All non-audit services must be

approved in advance by the Audit Committee and will

be reviewed in the light of statutory requirements and

the need to maintain the Auditor’s independence;

· to make recommendations to the Board in relation to

the re-appointment of the Auditor or the appointment

of a new Auditor and to approve the remuneration and

terms of engagement of the Auditor;

· to monitor and review the Auditor’s independence,

objectivity, effectiveness, resources and qualification;

and

· to review a statement from the abrdn Group detailing

the arrangements in place within the group whereby

staff may, in confidence, escalate concerns about

possible improprieties in matters of financial reporting or

other matters.

Audit Committee’s Report

Shires Income PLC 69

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Activities During the Year

The Audit Committee met twice during the year when,

amongst other things, it considered the Annual Report and

the Half-Yearly Financial Report. Representatives of the

abrdn Group’s internal audit, risk and compliance

departments reported to the Committee at these

meetings on matters such as internal control systems, risk

and the conduct of the business in the context of its

regulatory environment. The Audit Committee also meets

privately with the Auditor to discuss issues arising from the

audit. Members of the Audit Committee had regular

meetings and communications with the Manager

between these formal Committee meetings.

The Audit Committee also kept close scrutiny on the

financial impact and reporting of the aSCIT transaction.

The Audit Committee reviews annually the split of

management expenses and finance costs between

income and capital, which has been applied as to 50:50 for

some time, and concluded that, in future, from the

commencement of the new financial year on 1 April 2024,

this should be applied as to 40:60 between income and

capital respectively. This change will not give rise to any

prior year adjustment.

Internal Control

The Board confirms that there is an ongoing process for

identifying, evaluating and managing the Company’s

significant business and operational risks, that it has been

in place for the year ended 31 March 2024 and up to the

date of approval of the Annual Report, that it is regularly

reviewed by the Board and accords with the FRC’s

guidance on internal controls.

The Board has overall responsibility for ensuring that there

is a system of internal controls in place and a process for

reviewing its effectiveness. Any system of internal control

is designed to manage rather than eliminate the risk of

failure to achieve business objectives and can only provide

reasonable and not absolute assurance against material

misstatement or loss.

The design, implementation and maintenance of controls

and procedures to safeguard the assets of the Company

and to manage its affairs properly extends to operational

and compliance controls and risk management. The

Board, through the Audit Committee, has prepared its

own risk register which identifies potential risks and it

considers the potential cause and possible impact of

these risks and changes to the individual risks as well as

reviewing the controls in place to mitigate them. A risk is

rated by having a likelihood and an impact rating and is

plotted on a “heat map”. There is also regular discussion

and identification of emerging risks, including those of an

exogenous nature.

Clear lines of accountability have been established

between the Board and the Manager. The Board receives

regular reports covering key performance and risk

indicators and considers control and compliance issues

brought to its attention. In carrying out its review, the

Board has had regard to the activities of the abrdn

Group, its internal audit and compliance functions

and the Auditor.

The Audit Committee has reviewed the effectiveness of

the abrdn Group’s system of internal control including its

annual internal controls report prepared in accordance

with the International Auditing and Assurance Standards

Board’s International Standard on Assurance

Engagements (“ISAE”) 3402, “Assurance Reports on

Controls at a Service Organization”. The Committee has

also reviewed the abrdn Group’s process for identifying

and evaluating the significant risks faced by the Company

and the policies and procedures by which these risks

are managed.

The Depositary, BNP Paribas Trust Corporation UK Limited,

reports annually to the Board. Its services are monitored

on an ongoing basis on behalf of the Company by the

Manager, and the Manager meets with the Depositary on

a regular basis and reviews internal control reports

produced by the Depositary.

Risks are identified and documented through a risk

management framework by each function within the

abrdn Group’s activities. Risk is considered in the context

of the FRC’s guidance on internal controls and includes

financial, regulatory, market, operational and reputational

risk. This helps the internal audit risk assessment model

identify those functions for review. Any weaknesses

identified are reported to the Board and timetables are

agreed for implementing improvements to systems. The

implementation of any remedial action required is

monitored and feedback provided to the Board.

70 Shires Income PLC

The key components designed to provide effective

internal control are outlined below:

· the Board and Manager have agreed clearly defined

investment criteria, specified levels of authority and

exposure limits. Reports on these issues, including

performance statistics and investment valuations, are

regularly submitted to the Board;

· written agreements are in place which specifically

define the roles and responsibilities of the Manager and

other third party service providers;

· the Manager prepares forecasts and management

accounts which allow the Board to assess the

Company’s activities and review its performance; the

emphasis is on obtaining the relevant degree of

assurance and not merely reporting by exception;

· as a matter of course the abrdn Group’s compliance

department continually reviews its operations; and

· at its meeting in May 2024, the Audit Committee carried

out an annual assessment of internal controls for the

year ended 31 March 2024 by considering

documentation from the abrdn Group including the

internal audit and compliance functions and taking

account of events since 31 March 2024.

The Board has considered the need for an internal audit

function but, given that the Audit Committee receives

reports from the Company’s key service providers on their

internal controls and, because of the compliance and

internal control systems in place within the abrdn Group,

has decided to place reliance on those systems and

internal audit procedures and concluded that it is not

necessary for the Company to have its own internal

audit function.

Financial Statements and Significant Issues

During its review of the Company’s financial statements

for the year ended 31 March 2024, the Audit Committee

considered the following significant issues, in particular

those communicated by the Auditor during its planning

and reporting of the year end audit:

Valuation and Existence of Investments

How the issue was addressed - The Company’s

investments have been valued in accordance with the

accounting policies as disclosed in note 2(b) to the

financial statements. All investments are in quoted

securities in active markets, are considered to be liquid

and have been categorised as Level 1 within the IFRS 13

fair value hierarchy. The portfolio holdings and their pricing

are reviewed and verified by the Manager on a regular

basis and management accounts, including a full portfolio

listing, are prepared for each Board meeting. The

Company uses the services of an independent depositary

(BNP Paribas Trust Corporation UK Limited) to hold the

assets of the Company. The Depositary checks the

consistency of its records with those of the Manager on a

monthly basis and reports to the Board on an annual basis.

Recognition of Investment Income

How the issue was addressed - The recognition of

investment income is undertaken in accordance with the

stated accounting policies. In addition, the Directors

review the Company’s income, including income received,

revenue forecasts and dividend comparisons at each

Board meeting. The Board also examines any unusual

items of income or receipts (including special dividends)

which could be categorised as capital or income and how

they should be treated for accounting purposes. The

Committee notes that there was no significant accounting

judgement required in relation to the classification of

special dividends and option premiums received during

the period.

Maintenance of Investment Trust Status

How the issue was addressed - Approval of the Company

as an investment trust under Sections 1158 and 1159 of

the Corporation Tax Act 2010 for financial years

commencing on or after 1 April 2012 has been obtained

and ongoing compliance with the eligibility criteria is

monitored on a regular basis by the Manager and

reported at each Board meeting.

Audit Committee’s Report

Continued

Shires Income PLC 71

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

The Impact of the aSCIT transaction and the Rating of the

Company’s Shares

How the issues were addressed – Enquiry of the Manager

as to how the issue of new Ordinary shares and the costs

of the aSCIT transaction, principally to capital and covered

by the uplift in the holding of aSCIT shares, were

accounted for and how the Company’s Ordinary share

price performance, a KPI, was reported over the short,

medium and longer term. Share buy backs during the

year were also scrutinised to ensure that the costs and

impacts of the buy backs were correctly accounted for.

Review of Auditor

The Audit Committee has reviewed the effectiveness of

the Auditor, Ernst & Young LLP (“EY”), including:

· Independence - the Auditor discusses with the Audit

Committee, at least annually, the steps it takes to ensure

its independence and objectivity and makes the

Committee aware of any potential issues, explaining all

relevant safeguards.

· Quality of audit work - including the ability to resolve

issues in a timely manner, its communications and

presentation of outputs, and its working relationship

with management.

· Quality of people and service - including continuity and

succession plans.

· Fees – including current and proposed fees for

future years.

The Committee has also reviewed developments in the

audit of listed companies and in governance and how this

impacts the audit function.

In common with all UK listed companies, including

investment companies, there has been upward pressure

on audit fees. The Audit Committee continues to monitor

the fees paid and payable by the Company and has been

satisfied that the continuity, experience and service levels

have been important in approving increased fees paid to

the Auditor in the past few years.

Tenure of the Auditor

EY was appointed as Auditor at the Annual General

Meeting on 6 July 2016. In accordance with present

professional guidelines the audit partner is rotated after

no more than five years and the year ended 31 March

2024 is the third year for which the present partner, James

Beszant, has served.

The Audit Committee is satisfied that EY is independent

and therefore supports the recommendation to the Board

that the re-appointment of EY be put to shareholders for

approval at the Annual General Meeting.

Robin Archibald

Chairman of the Audit Committee

22 May 2024

72 Shires Income PLC

The Directors are responsible for preparing the Annual

Report and the financial statements, in accordance with

applicable law and regulations.

Company law requires the Directors to prepare financial

statements for each financial year, and under that law

they have chosen to prepare the financial statements

in accordance with UK-adopted international

accounting standards.

The financial statements are required by law to 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

IAS 8 ‘Accounting Policies, Changes in Accounting

Estimates and Errors’ and then apply them consistently;

· make judgments and 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

the specific requirements in UK-adopted international

accounting standards is insufficient to enable users to

understand the impact of particular transactions, other

events and conditions on the Company’s financial

position and financial performance;

· state whether the financial statements have been

prepared in accordance with UK-adopted international

accounting standards subject to any material

departures disclosed and explained in the notes to the

financial statements; and

· prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping proper

accounting records that disclose with reasonable

accuracy at any time the financial position of the

Company and enable them to ensure that the financial

statements comply with the Companies Act 2006. They

have general responsibility for taking such steps as are

reasonably open to them to safeguard the assets of the

Company and to prevent and detect fraud and

other irregularities.

Under applicable law and regulations, the Directors are

also responsible for preparing a Strategic Report,

Directors’ Report, Directors’ Remuneration Report and

Statement of Corporate Governance that comply with

that law and those regulations.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information

included on the Company’s website, but not for the

content of any information included on the website that

has been prepared or issued by third parties. Legislation in

the UK governing the preparation and dissemination of

financial statements may differ from legislation in

other jurisdictions.

The Board confirms that to the best of its knowledge:

· the financial statements have been prepared in

accordance with applicable accounting standards and

give a true and fair view of the assets, liabilities, financial

position and profit or loss of the Company;

· in the opinion of the Directors, the Annual Report taken

as a whole, is fair, balanced and understandable and it

provides the information necessary to assess the

Company’s position and performance, business model

and strategy; and

· the Strategic Report and Directors’ Report include a fair

review of the development and performance of the

business and the position of the Company, together with

a description of the principal risks and uncertainties that

the Company faces.

On behalf of the Board

Robert Talbut

Chairman

22 May 2024

Statement of Directors’ Responsibilities

Shires Income PLC 73

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Opinion

We have audited the financial statements of Shires Income PLC (the “Company”) for the year ended 31 March 2024

which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow

Statement including the related notes 1 to 22, including a summary of significant accounting policies. The financial

reporting framework that has been applied in their preparation is applicable law and UK adopted international

accounting standards.

In our opinion, the financial statements:

· give a true and fair view of the Company’s affairs as at 31 March 2024 and of its loss for the year then ended;

· have been properly prepared in accordance with UK adopted international accounting standards; and

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

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the

financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we

have fulfilled our other ethical responsibilities in accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain

independent of the Company in conducting the audit.

Conclusions Relating to Going Concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting

in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the

Company’s ability to continue to adopt the going concern basis of accounting included:

· Confirmation of our understanding of the Company’s going concern assessment process. We engaged with the

Directors and the Company Secretary to determine if the key factors that we have become aware of during our audit

were considered in their assessment.

· Inspection of the Directors’ assessment of going concern, including the liquidity assessment of the investment portfolio

and the revenue forecast, for the period to 30 June 2025 which is at least 12 months from the date the financial

statements were authorised for issue. In preparing the revenue forecast and liquidity assessment, the Company has

concluded that it is able to continue to meet its ongoing costs as they fall due.

· Review of the factors and assumptions, including the impact of the current economic environment, as applied to the

revenue forecast and the liquidity assessment of the investment portfolio. We considered the appropriateness of the

methods used to calculate the revenue forecast and the liquidity assessment and determined, through testing of the

methodology and calculations, that the methods, inputs and assumptions utilised were appropriate to be able to make

an assessment for the Company.

· Assessment of the risk of breaching the debt covenants as a result of a reduction in the value of the Company’s

portfolio. We calculated the Company’s compliance with debt covenants and we performed reverse stress testing in

order to identify what factors would lead to the Company breaching the financial covenants.

· Consideration of the mitigating factors included in the revenue forecasts and covenant calculations that are within the

control of the Company in relation to their stress testing. We reviewed the Company’s assessment of the liquidity of

investments held and evaluated the Company’s ability to sell those investments in order to cover the working capital

requirements should revenue decline significantly.

Independent Auditor’s Report to the Members

of Shires Income PLC

74 Shires Income PLC

Independent Auditor’s Report to the Members

of Shires Income PLC

Continued

· Review of the Company’s going concern disclosures included in the Annual Report in order to assess whether the

disclosures were appropriate and in conformity with the reporting standards.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions

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

period assessed by the Directors, being the period to 30 June 2025.

In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the

Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant

sections of this report. However, because not all future events or conditions can be predicted, this statement is not a

guarantee as to the Company’s ability to continue as a going concern.

Overview of Our Audit Approach

Key audit matters

Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends

and option premiums as revenue or capital items in the Statement of Comprehensive Income

· Risk of incorrect valuation or ownership of the investment portfolio

· Incorrect accounting for the transaction between the Company and abrdn Smaller Companies

Income Trust plc

Materiality · Overall materiality of £1.06 million (2023: £0.80 million) which represents 1% (2023: 1%) of

shareholder’s funds

An Overview of the Scope of our Audit

Tailoring the Scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our

audit scope for the Company. This enables us to form an opinion on the financial statements. We take into account size,

risk profile, the organisation of the Company and effectiveness of controls, the potential impact of climate change and

changes in the business environment when assessing the level of work to be performed.

Climate Change

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. This is explained on page 14 in the principal and

emerging risks and uncertainties section. 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”.

Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the

financial statements as set out in note 2(a) and conclusion that there was no further impact of climate change to be

taken into account as the investments are valued based on market pricing as required by UK adopted International

Accounting Standards. We also challenged the Directors’ considerations of climate change in their assessment of

viability and associated disclosures.

Shires Income PLC 75

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the

overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These

matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon,

and we do not provide a separate opinion on these matters.

Risk

Our response to the risk

Key observations

communicated to the

Audit Committee

Incomplete or inaccurate revenue recognition,

including the classification of special dividends

and option premiums as revenue or capital items

in the Statement of Comprehensive Income

(as

described on page 70 in the Audit Committee’s

Report and as per the accounting policy set out

on page 87).

The total revenue for the year to 31 March 2024

was £6.43 million (2023: £5.67 million),

consisting of dividend income from listed

investments and option premiums.

The Company received four (2023: four)

special dividends amounting to £0.50 million

(2023: £0.12 million), all of which were classified

as revenue. The total amount of revenue from

traded option premiums was £0.03 million

(2023 £0.07 million).

There is a risk of incomplete or inaccurate

revenue recognition through the failure to

recognise proper income entitlements or to

apply an appropriate accounting treatment.

In addition to the above, the Directors are

required to exercise judgement in determining

whether income receivable in the form of

special dividends and option premiums should

be classified as ‘revenue’ or ‘capital’ in the

Statement of Comprehensive Income.

We have performed the following procedures:

We obtained an understanding of the processes and

controls surrounding revenue recognition and

classification of special dividends and option

premiums by performing walkthrough procedures.

For all dividends received, including dividends on

preference shares, we recalculated the dividend

income by multiplying the investment holdings at the

ex-dividend date, traced from the accounting records,

by the dividend per share, which was agreed to an

independent data vendor. For all of dividends received,

we agreed amounts to bank statements and agreed

the exchange rates used to an external source.

For all accrued dividends, we reviewed the investee

company announcements to assess whether the

dividend entitlements arose prior to 31 March 2024.

We agreed the dividend rate to corresponding

announcements made by the investee company,

recalculated the dividend amount receivable and

agreed the subsequent cash receipts to the post year

end bank statements where the dividend had

been received.

To test completeness of recorded income, we verified

that expected dividends for each investee company

held during the year had been recorded as income

with reference to investee company announcements

obtained from an independent data vendor.

For all investments held during the year, we reviewed

the type of dividends paid with reference to an

external data source to identify those which were

‘special’. We identified four special dividends,

amounting to £0.50 million, were received during the

year. We have tested 1 special dividend, amounting to

£0.44 million, by assessing the appropriateness of

classification as revenue by reviewing the underlying

rationale of the distribution.

The results of our

procedures identified

no material

misstatement in relation

to incomplete or

inaccurate revenue

recognition, including

incorrect classification

of special dividends and

option premiums as

revenue or capital items

in the Statement of

Comprehensive

Income.

76 Shires Income PLC

Independent Auditor’s Report to the Members

of Shires Income PLC

Continued

Risk

Our response to the risk

Key observations

communicated to the

Audit Committee

The revenue from options is not material to our audit

and the risk of material misstatement is therefore

considered to be low. We have performed a test of

one to ensure that the process of recognising option

premiums was applied correctly.

Incorrect valuation or ownership of the

investment portfolio (as described on page 70

in the Audit Committee’s Report and as per the

accounting policy set out on page 87).

The valuation of the portfolio at 31 March 2024

was £122.17 million (2023: £96.65 million)

consisting of listed investments.

The valuation of the assets held in the

investment portfolio is the key driver of the

Company’s net asset value and total return.

Incorrect investment pricing, or failure to

maintain proper legal title of the investments

held by the Company, could have a significant

impact on the net asset value and the return

generated for shareholders.

The fair value of listed investments is

determined using quoted market bid prices at

close of business on the reporting date.

We performed the following procedures:

We obtained an understanding of the processes

surrounding investment pricing and legal title of listed

investments by performing walkthrough procedures.

For all listed investments in the portfolio, we compared

the market prices and exchange rates applied to an

independent pricing vendor and recalculated the

investment valuations as at the year end.

We confirmed with the Administrator that there were

no investments with stale prices as at the year-end

and therefore no stale pricing report produced. We

challenged this assertion by reviewing the daily

valuation of each investment for five business days

before and after 31 March 2024 to identify any stale

prices. Our testing did not identify any stale prices.

We compared the Company’s investment holdings at

31 March 2024 to the independent confirmation

received directly from the Company’s Depositary.

The results of our

procedures identified

no material

misstatement in relation

to the risk of incorrect

valuation or ownership

of the investment

portfolio

Incorrect accounting of the transaction between

the Company and abrdn Smaller Companies

Income Trust plc (as described on page 71 in

the Audit Committee’s Report).

On 26 July 2023 the board of abrdn Smaller

Companies Income Trust plc (“aSCIT”) agreed

terms with the Company for a transfer of the

assets of each company by means of a section

110 scheme of transaction. Implementation of

the transaction resulted in aSCIT shareholders

(who did not take the cash exit option) owning

shares in the Company based on a formula

asset value.

We recalculated the calculation by checking that

inputs to the calculation agreed to the supporting

documentation, and checked that the methodology

applied to the calculation agrees to the scheme of

reconstruction documents.

We agreed the number of shares issued pursuant to

the transaction to the RNS announcement and

compared to the accounting records of the Company.

We obtained a breakdown of total transaction cost

incurred by the Company related to the transaction,

and on a sample basis agreed the transaction cost to

invoices and bank statements. In addition, we also

checked through our review of the Annual Report and

financial statements whether the transaction cost has

been appropriately accounted for and disclosed in

accordance with UK adopted IAS and AIC SORP.

The results of our

procedures identified

no material

misstatement in relation

to the risk of incorrect

accounting for the

transaction with abrdn

Smaller Companies

Income Trust plc.

Shires Income PLC 77

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Risk

Our response to the risk

Key observations

communicated to the

Audit Committee

As part of the transaction all of aSCIT's

investments and cash were transferred to the

Company. The transaction was completed in

December 2023.

There is a risk that the assets transferred from

aSCIT to the Company are not complete or

recorded correctly. There is also a risk that the

issuance of shares related to the transaction is

incorrectly accounted for or incorrectly

disclosed in the financial statements of

the Company.

We reviewed the disclosures in the Annual Report and

financial statements to ensure the strategic report

and S172 statement provide details of the transaction.

We also agreed all related numbers disclosed in the

Annual Report and financial statements to supporting

documentation.

In the current year we have added a key audit matter on ‘Incorrect accounting of the transaction between the

Company and abrdn Smaller Companies Income Trust plc’ as it is a significant event that occurred during the period,

and has a significant impact on the financial statements of the Company.

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 £1.06 million (2023: £0.80 million), which is 1% (2023: 1%) of

shareholders’ funds. We believe that shareholders’ funds provides us with materiality aligned to the key measures 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 £0.79 million

(2023: £0.60 million). We have set performance materiality at this percentage due to the fact that there have 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 £0.26 million

(2023: £0.23 million) being 5% (2023: 5%) of revenue profit before tax.

78 Shires Income PLC

Independent Auditor’s Report to the Members

of Shires Income PLC

Continued

Reporting Threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.05

million (2023: £0.04 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in

our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above

and in light of other relevant qualitative considerations in forming our opinion.

Other Information

The other information comprises the information included in the Annual Report, other than the financial statements and

our Auditor’s report thereon. The Directors are responsible for the other information contained within the Annual Report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to

be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are

required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based

on the work we have performed, we conclude that there is a material misstatement of the other information, we are

required to report that fact.

We have nothing to report in this regard.

Opinions on Other Matters Prescribed by the Companies Act 2006

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance

with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

· the Strategic Report and Directors’ Report have been prepared in accordance with applicable legal requirements.

Matters on Which We Are Required to Report by Exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit,

we have not identified material misstatements in the Strategic Report or Directors’ Report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to

report to you if, in our opinion:

· adequate accounting records have not been kept, or returns adequate for our audit have not been received from

branches not visited by us; or

· the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with

the accounting records and returns; or

· certain disclosures of Directors’ remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Shires Income PLC 79

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Corporate Governance Statement

We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the

Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate

Governance Code specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained

during the audit:

· Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any

material uncertainties identified set out on page 60;

· Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why

the period is appropriate set out on page 19;

· Directors’ statement on whether they have a reasonable expectation that the Company will be able to continue in

operation and meets its liabilities set out on page 60;

· Directors’ statement on fair, balanced and understandable set out on page 72;

· Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 14;

· The section of the Annual Report that describes the review of effectiveness of risk management and internal control

systems set out on pages 69 and 70; and;

· The section describing the work of the Audit Committee set out on pages 68 to 71.

Responsibilities of Directors

As explained more fully in the Directors’ Responsibilities Statement set out on page 72, the Directors are responsible for

the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such

internal control as the Directors determine is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic

alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

Explanation as to What Extent the Audit Was Considered Capable of Detecting Irregularities,

Including Fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material

misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve

deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to

which our procedures are capable of detecting irregularities, including fraud is detailed below.

80 Shires Income PLC

Independent Auditor’s Report to the Members

of Shires Income PLC

Continued

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with

governance of the Company and management.

· We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and

determined that the most significant are UK adopted International Accounting Standards, the Companies Act 2006,

the Listing Rules, the UK Corporate Governance Code, the Statement of Recommended Practice for the Financial

Statements of Investment Trust Companies as issued by the Association of Investment Companies, Section 1158 of the

Corporation Tax Act 2010, and The Companies (Miscellaneous Reporting) Regulations 2018.

· We understood how the Company is complying with those frameworks by discussions with the Audit

Committee and Company Secretary, review of the Board and committee minutes and review of papers provided to

the Audit Committee.

· We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud

might occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to

the incomplete or inaccurate revenue recognition through incorrect classification of special dividends and option

premiums as revenue or capital in the Statement of Comprehensive Income. Further discussion of our approach is set

out in the section on key audit matters above.

· Based on this understanding we designed our audit procedures to identify non-compliance with such laws and

regulations. Our procedures involved review of the reporting to the Directors with respect to the application of the

documented policies and procedures and review of the financial statements to ensure compliance with the reporting

requirements of the Company.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s report.

Other Matters we are Required to Address

· Following the recommendation from the Audit Committee, we were appointed by the Company on 6 July 2016 to

audit the financial statements for the year ending 31 March 2017 and subsequent financial periods.

· The period of total uninterrupted engagement including previous renewals and reappointments is eight years,

covering the years ending 31 March 2017 to 31 March 2024.

· The audit opinion is consistent with the additional report to the Audit Committee.

Use of Our Report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted

by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as

a body, for our audit work, for this report, or for the opinions we have formed.

James Beszant (Senior Statutory Auditor)

For and on behalf of Ernst & Young LLP, Statutory Auditor

London

22 May 2024

Shires Income PLC 81

Financial Statements

82 Shires Income PLC

Year ended

31 March 2024

31 March 2023

Revenue

Capital

Total

Revenue

Capital

Total

Notes

£’000

Losses on investments at fair value

(5,748)

(6,084)

Currency (losses)/gains

(56)

Income

Income from investments

6,361

5,593

Income from other investing activity

6,429

(5,804)

625

5,673

(6,045)

(372)

Expenses

Management fee

(210)

(420)

(207)

(414)

Administrative expenses

(505)

(24)

(529)

(417)

Finance costs

(502)

(1,004)

(363)

(726)

(1,217)

(736)

(1,953)

(987)

(570)

(1,557)

Profit/(loss) before taxation

5,212

(6,540)

(1,328)

4,686

(6,615)

(1,929)

Taxation

(144)

(102)

Profit/(loss) attributable to equity holders of the

Company

5,068

(6,540)

(1,472)

4,584

(6,615)

(2,031)

Earnings per Ordinary share (pence)

14.75

(19.03)

(4.28)

14.83

(21.40)

(6.57)

The Company does not have any income or expense that is not included in profit for the year, and therefore the “Profit for the year” is

also the “Total comprehensive income for the year”, as defined in IAS 1 (revised).

The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance

with UK adopted International Accounting Standards. The revenue and capital columns are supplementary to this and are prepared

under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations.

The accompanying notes are an integral part of these financial statements.

Statement of Comprehensive Income

Shires Income PLC 83

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

As at

31 March 2024

31 March 2023

Notes

£’000

Non-current assets

Ordinary shares

97,974

75,760

Preference shares

24,195

20,895

Securities at fair value

122,169

96,655

Current assets

Other receivables

1,567

1,383

Cash at bank

1,675

1,176

3,242

2,559

Creditors: amounts falling due within one year

Other payables

(491)

(350)

Short-term borrowings

(9,000)

(9,491)

(9,350)

Net current liabilities

(6,249)

(6,791)

Total assets less current liabilities

115,920

89,864

Non-current liabilities

Long-term borrowings

(9,963)

(9,951)

Net assets

105,957

79,913

Share capital and reserves

Called-up share capital

21,166

15,532

Share premium account

49,952

21,411

Capital reserve

27,451

35,930

Revenue reserve

7,388

7,040

Equity shareholders’ funds

105,957

79,913

Net asset value per Ordinary share (pence)

256.00

257.92

The financial statements were approved by the Board of Directors and authorised for issue on 22 May 2024 and were signed on its

behalf by:

Robert Talbut

Chairman

The accompanying notes are an integral part of these financial statements.

Balance Sheet

84 Shires Income PLC

Year ended 31 March 2024

premium

Capital

Revenue

capital

account

reserve

Total

Note

£’000

As at 31 March 2023

15,532

21,411

35,930

7,040

79,913

Issue of shares on the aSCIT transaction

5,634

29,594

–

35,228

Cost of shares issued in respect of the aSCIT transaction

–

(1,053)

–

(1,053)

Buyback of Ordinary shares for treasury

–

(1,939)

–

(1,939)

(Loss)/profit for the year

–

(6,540)

5,068

(1,472)

Equity dividends

–

(4,720)

As at 31 March 2024

21,166

49,952

27,451

7,388

105,957

Year ended 31 March 2023

premium

Capital

Revenue

capital

account

reserve

Total

£’000

As at 31 March 2022

15,460

21,109

42,545

6,705

85,819

Issue of Ordinary shares

302

–

374

(Loss)/profit for the year

–

(6,615)

4,584

(2,031)

Equity dividends

–

(4,249)

As at 31 March 2023

15,532

21,411

35,930

7,040

79,913

The Company has aggregate realised and distributable reserves of £34,839,000 as at 31 March 2024 (2023 – £42,970,000),

comprising a capital reserve of £27,451,000 (2023 – £35,930,000) and a revenue reserve of £7,388,000 (2023 – £7,040,000).

The accompanying notes are an integral part of these financial statements.

Statement of Changes in Equity

Shires Income PLC 85

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Year ended

31 March 2024

31 March 2023

£’000

Net cash inflow from operating activities

Dividend income received

6,171

5,478

Interest income received

Options premium received

Interest received from money market funds

Management fee paid

(397)

(415)

Other cash expenses

(539)

(432)

Cash generated from operations

5,332

4,716

Interest paid

(991)

(684)

Overseas tax paid

(140)

(184)

Net cash inflows from operating activities

4,201

3,848

Cash flows from investing activities

Purchases of investments

(43,873)

(16,518)

Sales of investments

44,372

16,199

Net cash outflow from investing activities

499

(319)

Cash flows from financing activities

Equity dividends paid

(4,720)

(4,249)

Issue of Ordinary shares

–

374

Buyback of Ordinary shares to Treasury

(1,838)

–

Net cash acquired and received following the aSCIT transaction

3,444

–

Cost of shares issued in respect of the aSCIT transaction

(1,031)

–

Loan repayment

–

(19,000)

Loan drawdown

–

19,000

Net cash outflow from financing activities

(4,145)

(3,875)

Increase/(decrease) in cash and cash equivalents

555

(346)

Reconciliation of net cash flow to movements in cash and cash equivalents

Increase/ (decrease) in cash and cash equivalents as above

555

(346)

Net cash and cash equivalents at start of year

1,176

1,483

Effect of foreign exchange rate changes

(56)

Net cash and cash equivalents at end of year

1,675

1,176

Cash Flow Statement

86 Shires Income PLC

Principal activity.

The Company is a closed-end investment company, registered in England and Wales No. 00386561, with its Ordinary shares

listed on the London Stock Exchange.

Accounting policies

(a)

Basis of accounting. The financial statements of the Company have been prepared in accordance with UK adopted

International Accounting Standards (“IAS”) and using the historical cost convention except for investments, which are

measured at fair value (see note 2(b) below) .

In preparing these financial statements the Directors have considered the impact of climate change risk as an

emerging risk as set out on page 17, and have concluded that it does not have a material impact on the Company’s

investments. In line with IAS, investments are valued at fair value, which for the Company are quoted bid prices for

investments in active markets at the Balance Sheet date and therefore reflect market participants view of climate

change risk.

The Company’s financial statements are presented in sterling, which is also the functional currency as it is the currency

in which shares are issued and expenses are generally paid. All values are rounded to the nearest thousand pounds

(£’000) except when otherwise indicated.

Where presentational guidance set out in the Statement of Recommended Practice (“SORP”): ‘Financial Statements of

Investment Trust Companies and Venture Capital Trusts’ issued by the Association of Investment Companies (“AIC”), is

consistent with the requirements of IAS, the Directors have sought to prepare the financial statements on a basis

compliant with the recommendations of the SORP issued in July 2022.

Going concern. The Company’s assets consist mainly of equity shares in companies listed on the London Stock

Exchange. The Board has performed stress testing and liquidity analysis on the portfolio and considers that, in most

foreseeable circumstances, the majority of the Company’s investments are realisable within a relatively short timescale.

The Board has set limits for borrowing and regularly reviews actual exposures, cash flow projections and compliance

with banking covenants, including the headroom available. At the year end, the Company had a £20 million loan facility

which is due to mature in May 2027. Having taken these factors into account, the Directors believe that the Company

has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its

financial obligations as they fall due for the period to 30 June 2025, which is at least twelve months from the date of

approval of this Report. For these reasons, they continue to adopt the going concern basis of accounting in preparing

the financial statements.

Significant accounting judgements, estimates and assumptions. The preparation of financial statements requires the use

of certain significant accounting judgements, estimates and assumptions which requires management to exercise its

judgement in the process of applying the accounting policies and are continually evaluated. The Directors do not

consider there to be any significant judgements and estimates within the financial statements for the year ended 31

March 2024. Special dividends are assessed and credited to capital or revenue according to their circumstances.

New and amended accounting standards and interpretations. At the date of authorisation of these financial statements,

the following amendments to Standards and Interpretations were assessed to be relevant and are all effective for

annual periods beginning on or after 1 January 2023 but are considered to not have a material impact on the financial

statements:

– IAS 1 Amendments (Disclosure of Accounting Policies) (effective from 1 January 2023)

Notes to the Financial Statements

For the year ended 3

1 March 2024

Shires Income PLC 87

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Future amendments to standards and interpretations. At the date of authorisation of these financial statements, the

following amendments to Standards and Interpretations were assessed to be relevant and are all effective for annual

periods beginning on or after 1 January 2024;

– IAS 1 Amendments (Classification of Liabilities as Current or Non-Current) (effective from 1 January 2024)

– IAS 1 Amendments (Non-current Liabilities with Covenants) (effective from 1 January 2024)

The Company intends to adopt the Standards and Interpretations in the reporting period when they become effective

and the Board does not anticipate that the adoption of these Standards and Interpretations in future periods will

materially impact the Company’s financial results in the period of initial application although there may be revised

presentations to the Financial Statements and additional disclosures.

(b) Investments. All investments are evaluated and managed on a fair value basis and are therefore classified as FVTPL

(“Fair Value Through Profit or Loss”).

Investments are recognised and de-recognised at the trade date where a purchase or sale is under a contract whose

terms require delivery within the timeframe established by the market concerned, and are measured at fair value. For

listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange’s electronic

trading service) stocks sourced from the London Stock Exchange.

Gains and losses arising from the changes in fair value are included in net profit or loss for the period as a capital item.

Transaction costs are treated as a capital cost.

shareholders’ rights to receive payment have been established, normally the ex-dividend date. Special dividends are

allocated to revenue or capital based on their individual merits.

If a scrip dividend is taken in lieu of a cash dividend, the net amount of the cash dividend declared is credited to the

revenue account. Any excess in the value of the shares received over the amount of the cash dividend foregone is

recognised as capital.

Income from preference shares which do not have a discretionary dividend are accounted for on a fair value basis.

Interest from deposits and interest from debt securities which do not have a discretionary dividend are accounted for

on an accruals basis.

The premium received from traded options is recognised in the revenue column of the Statement of Comprehensive

Income.

(d)

Expenses. All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital

items presented within the Statement of Comprehensive Income, all expenses have been presented as revenue items

except those where a connection with the maintenance or enhancement of the value of the investments held can be

demonstrated. Accordingly, the management fee and finance costs have been allocated 50% to revenue and 50% to

capital, in order to reflect the Directors’ expected long-term view of the nature of the future investment returns of the

Company.

(e)

Borrowings. Both short-term and long-term borrowings, which comprise interest bearing bank loans are initially

recognised at cost, being the fair value of the consideration received, net of any issue expenses and subsequently

measured at amortised cost using the effective interest method. The finance costs, being the difference between the

net proceeds of borrowings and the total amount of payments that require to be made in respect of those borrowings,

are amortised over the life of the borrowings.

88 Shires Income PLC

(f)

Taxation. The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in

the Statement of Comprehensive Income because it excludes items of income or expenditure that are taxable or

deductible in other years and it further excludes items that are never taxable or deductible. The Company has no

liability for current tax.

Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date, where transactions or

events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the

Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not

that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred

tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise, using tax rates

that are expected to apply at the date the deferred tax position is unwound.

Owing to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to

obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses

arising on the revaluation or disposal of investments.

(g)

Foreign currencies. Monetary assets and liabilities, comprising current assets, current liabilities and non-current liabilities

and non-monetary assets comprising non-current assets held at fair value which are denominated in foreign

currencies are converted into sterling at the rate of exchange ruling at the reporting date. Transactions during the year

in foreign currencies are converted at the rate of exchange ruling at the transaction date. Gains or losses on monetary

assets and liabilities arising from a change in exchange rates subsequent to the date of a transaction are included as a

currency gain or loss in revenue or capital column of the Statement of Comprehensive Income, depending on whether

the gain or loss is of a revenue or capital nature. Non-monetary assets that are measured at fair value and gains or

losses arising from a change in exchange rates subsequent to the date of a transaction are included as a gain or loss on

investments in the capital column of the Statement of Comprehensive Income.

(h) Derivatives. The Company may enter into certain derivatives (e.g. traded options). Traded option contracts are

restricted to writing out-of-the-money options with a view to generating income. Premiums received on traded option

contracts are recognised as income evenly over the period from the date they are written to the date when they expire

or are exercised or assigned. Losses on any movement in the fair value of open contracts at the year end and on the

exercise of the contracts are recorded in the capital column of the Statement of Comprehensive Income as they arise.

(i) Cash and cash equivalents

. Cash and cash equivalents comprise cash in hand and at banks and short-term deposits

with an original maturity of less than 90 days.

(j)

Other receivables. Financial assets classified as loans and receivables are held to collect contractual cash flows and give

rise to cash flows representing solely payments of principal and interest. As such they are measured at amortised cost.

Other receivables do not carry any interest, they have been assessed for any expected credit losses over their lifetime

due to their short-term nature.

(k) Other payables. Payables are non-interest bearing and are stated at their undiscounted cash flows.

(l) Dividends payable. Final dividends are recognised from the date on which they are approved by shareholders. Interim

dividends are recognised when paid.

(m)

Nature and purpose of reserves

Share premium account. The balance classified as share premium includes the premium above nominal value from the

proceeds on issue of any equity share capital comprising Ordinary shares of 50p per share and includes the premium

arising following the issue of shares on the transaction with abrdn Smaller Companies Income Trust plc on 1 December

2023 less the costs associated with the transaction. This reserve is not distributable.

Notes to the Financial Statements

Continued

Shires Income PLC 89

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Corporate

Information

Financial Statements

Capital reserve. This reserve reflects any realised gains or losses in the period together with any unrealised increases

and decreases that have been recognised in the Statement of Comprehensive Income. These include gains and losses

from foreign currency exchange differences. Additionally, expenses, including finance costs, are charged to this reserve

in accordance with (d) above.

The capital reserve, to the extent that the gains are deemed realised, is distributable, including by way of share

buybacks and dividends.

Revenue reserve

. This reserve reflects all income and costs which are recognised in the revenue column of the

Statement of Comprehensive Income. The revenue reserve is distributable, including by way of dividend.

(n)

Segmental reporting. The Directors are of the opinion that the Company is engaged in a single segment of business

activity, being investment business. Consequently, no business segmental analysis is provided.

Income

2024

2023

£’000

Income from listed investments

UK dividend income

5,254

4,784

Overseas dividend income

1,048

802

Interest from investment in money market funds

UK interest

–

6,361

5,593

Other income from investment activity

Deposit interest

Traded option premiums

Total income

6,429

5,673

90 Shires Income PLC

Management fees

2024

2023

Revenue

Capital

Total

Revenue

Capital

Total

£’000

Management fees

210

420

207

414

The management fee is based on 0.45% per annum up to £100 million and 0.40% over £100 million, by reference to the net

assets of the Company and including any borrowings up to a maximum of £30 million, and excluding commonly managed

funds, calculated monthly and paid quarterly. In addition, with effect from 1 December 2023, a further fee of £120,000 per

annum is charged for other services provided under the terms of the management agreement. The fee is allocated 50% to

revenue and 50% to capital. The management agreement is terminable on not less than six months’ notice. For the period 1

December 2023 to 30 May 2024, there is a management fee waiver in place as a result of the transaction with abrdn Smaller

Companies Income Trust plc (“aSCIT”). For this period the fee will be calculated at 0.29% per annum of net assets up to £100

million and 0.26% per annum of net assets over this threshold. After this waiver period has ended the fee will return to the

existing fee rates. Should the Company terminate the management agreement within three years of the date of the

transaction with aSCIT, then the Company undertakes to repay all or a proportion of the management fees waived by the

Manager based on the time elapsed since completion of the transaction. For the period to 31 March 2024 the value of the

management fee waiver was calculated to be £65,000. The total of the fees paid and payable during the year to 31 March

2024 was £420,000 (2023 – £414,000) and the balance due to abrdn Fund Managers Limited (“aFML”) at the year end was

£127,000 (2023 – £105,000).

Administrative expenses

2024

2023

£’000

Directors’ remuneration

141

134

Auditor’s remuneration: fees payable to the Company’s Auditor for the audit

of the Company’s annual accounts

Promotional activities

Professional fees

Directors’ & Officers’ liability insurance

Trade subscriptions

Share plan costs

Registrar’s fees

Printing, postage and stationery

Custody fees

Other administrative expenses

505

417

Capital administrative expenses – professional fees

–

529

417

Notes to the Financial Statements

Continued

Shires Income PLC 91

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General Portfolio

Corporate

Information

Financial Statements

The management agreement with aFML also provides for the provision of promotional activities, which aFML has delegated

to abrdn Investments Limited. The total fees payable under the management agreement in relation to promotional activities

were £50,000 (2023 – £40,000) with a balance due to aFML at the year end of £19,000 (2023 – £10,000). The Company’s

management agreement with aFML also provides for the provision of company secretarial and administration services to the

Company. No separate fee is charged to the Company in respect of these services, which have been delegated to abrdn

Holdings Limited.

Directors’ remuneration

The Company had no employees during the year (2023 – none). No pension contributions were paid for Directors

(2023 – £nil). Further details on Directors’ Remuneration can be found in the Directors’ Remuneration Report on page 66.

Finance costs

2024

2023

Revenue

Capital

Total

Revenue

Capital

Total

£’000

On bank loans

502

1,004

363

726

Taxation

2024

2023

Revenue

Capital

Total

Revenue

Capital

Total

£’000

(a)

Analysis of the charge for the year

Overseas tax

144

–

144

102

–

102

Total tax charge

144

–

144

102

–

102

92 Shires Income PLC

(b)

Factors affecting the tax charge for the year. The tax assessed for the year is lower than the effective rate of corporation

tax in the UK. The differences are explained in the reconciliation below:

2024

2023

Revenue

Capital

Total

Revenue

Capital

Total

£’000

Profit/(loss) before taxation

5,212

(6,540)

(1,328)

4,686

(6,615)

(1,929)

Corporation tax at an effective rate of 25%

(2023 – 19%)

1,303

(1,635)

(332)

890

(1,257)

(367)

Effects of:

Non-taxable UK dividend income

(1,329)

–

(1,329)

(903)

–

(903)

Excess management expenses not utilised

251

184

435

162

108

270

Expenses not deductible for tax purposes

–

Overseas withholding tax

144

–

144

102

–

102

Non-taxable overseas dividends

(228)

–

(228)

(149)

–

(149)

Losses on investments not taxable

–

1,437

–

1,156

Losses/(gains) on currency movements

–

(7)

Total tax charge

144

–

144

102

–

102

At 31 March 2024 the Company had surplus management expenses and loan relationship debits with a tax value of

£8,008,000 based on a corporation tax rate of 25% (2023 – £7,572,000 based on a corporation tax rate of 19%) in respect

of which a deferred tax asset has not been recognised. This is because the Company is not expected to generate

taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely

that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses.

Dividends

2024

2023

£’000

Amounts recognised as distributions to equity holders in the period:

Third interim dividend for 2023 of 3.20p (2022 – 3.20p) per share

991

986

Final dividend for 2023 of 4.60p (2022 – 4.20p) per share

1,425

1,294

First two interim dividends for 2024 totalling 6.40p (2023 – 6.40p) per share

2,308

1,982

Refund of unclaimed dividends from previous periods

(6)

(15)

4,718

4,247

3.5% Cumulative Preference shares

Total

4,720

4,249

Notes to the Financial Statements

Continued

Shires Income PLC 93

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

The third interim dividend of 3.20p for the year to 31 March 2024, which was paid on 30 April 2024, and the proposed final

dividend of 4.80p for the year to 31 March 2024, payable on 31 July 2024, have not been included as liabilities in these

financial statements.

Set out below are the total Ordinary dividends payable in respect of the financial year, which is the basis on which the

requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered:

2024

2023

£’000

Three interim dividends for 2024 totalling 9.60p (2023 – 9.60p) per share

3,632

2,973

Proposed final dividend for 2024 of 4.80p (2023 – 4.60p) per share

1,986

1,424

5,618

4,397

The amount reflected above for the cost of the proposed final dividend for 2024 is based on 41,369,542 Ordinary shares, being

the number of Ordinary shares in issue at the date of this Report.

10.

Earnings per Ordinary share

2024

2023

£’000

Earnings per Ordinary share are based on the following figures:

Revenue return

5,068

4,584

Capital return

(6,540)

(6,615)

Total return

(1,472)

(2,031)

Weighted average number of Ordinary shares

34,363,846

30,919,854

During the year and preceding years there were no potentially dilutive shares in issue.

94 Shires Income PLC

11.

Non–current assets – Securities at fair value

2024

2023

Listed

investments

£’000

Opening book cost

89,610

87,106

Opening investment holdings gains

7,045

15,319

Opening valuation

96,655

102,425

Assets acquired in relation to the aSCIT transaction

31,761

–

Purchases

43,873

16,513

Sales – proceeds

(44,372)

(16,199)

Losses on investments

(5,748)

(6,084)

Total investments held at fair value through profit or loss

122,169

96,655

2024

2023

Listed

investments

£’000

Closing book cost

119,549

89,610

Closing investment holdings gains

2,620

7,045

Total investments held at fair value through profit or loss

122,169

96,655

2024

2023

Losses on investments

£’000

Net realised (losses)/gains on sales of investments

(1,202)

2,210

Cost of call options exercised

(121)

(20)

Net realised (losses)/gains on sales

(1,323)

2,190

Movement in fair value of investments

(4,413)

(8,274)

Cost of put options assigned

(12)

–

(5,748)

(6,084)

Includes losses realised on the exercise of traded options of £133,000 (2023 – £20,000) which are reflected in the capital

column of the Statement of Comprehensive Income.

Notes to the Financial Statements

Continued

Shires Income PLC 95

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

The cost of exercising of call options and assigning put options is the difference between the market price of the underlying

shares and the strike price of the options. The premiums earned on options expired, exercised or assigned of £34,000 (2023 –

£73,000) have been dealt with in the revenue account.

The movement in the fair value of traded option contracts has been calculated in accordance with the accounting policy

stated in note 2(h) and has been charged to the capital reserve.

The Company received £44,372,000 (2023 – £16,199,000) from investments sold in the period. The book cost of these

investments when they were purchased was £45,695,000 (2023 – £14,009,000). These investments have been revalued over

time and until they were sold any unrealised gains/losses were included in the fair value of the investments.

During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss.

These have been expensed through capital and are included within losses on investments in the Statement of

Comprehensive Income. The total costs on purchases of investments in the year was £182,000 (2023 – £78,000). The total

costs on sales of investments in the year was £15,000 (2023 – £11,000). The above transaction costs are calculated in line with

the AIC SORP. The transaction costs in the Company’s Key Information Document are calculated on a different basis and in

line with the PRIIPs regulations.

At 31 March 2024 the Company held the following investments comprising more than 3% of the class of share capital held:

Class

Country of

Number of

Class of

held

Company

Incorporation

shares held

Ecclesiastical Insurance Office

England

4,490,000

8 5/8% Cum Pref

4.2

Royal & Sun Alliance

England

4,600,000

7 3/8% Cum Pref

3.7

General Accident

Scotland

3,548,000

7.875% Cum Pref

3.2

12.

Other receivables

2024

2023

£’000

Accrued income and prepayments

1,567

1,381

Option contract premium

–

1,567

1,383

None of the above amounts are overdue.

96 Shires Income PLC

13.

Current liabilities

2024

2023

£’000

Short-term bank loan

9,000

Amounts due to brokers relating to buyback of Ordinary shares for Treasury

101

–

Other creditors

390

350

9,491

9,350

Included above are the following amounts owed to aFML for management and savings scheme services and for the

promotion of the Company.

2024

2023

£’000

Other creditors

160

123

2024

2023

Non-current liabilities

£’000

Long-term bank loan

10,000

Loan arrangement fees

(37)

(49)

9,963

9,951

On 3 May 2022, the Company entered into a five year £20 million loan facility with The Royal Bank of Scotland International

Limited, London Branch. £10 million of the loan facility has been drawn down and fixed at an all-in interest rate of 3.903% until

30 April 2027. £9 million of the facility has been drawn down on a short-term basis at an all-in interest rate of 6.84%, maturing 5

April 2024. At the date this Report was approved £9,000,000 of the facility had been drawn down on a short-term basis at a

rate of 6.85%, maturing on 7 June 2024.

The terms of The Royal Bank of Scotland International Limited facility contain covenants that consolidated gross borrowings

do not exceed 33% of the adjusted portfolio value (“Securities at fair value” per the Balance Sheet adjusted for any ineligible

investments) at any time, the number of eligible investments shall not be less than 30 at any time and the portfolio value

shall at all times be equal to or more than £40 million. The Company met these covenants during the year and following the

year end.

The arrangement expenses incurred on the drawdown of the loan will be amortised over the term of the loan.

Notes to the Financial Statements

Continued

Shires Income PLC 97

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Overview

General Portfolio

Corporate

Information

Financial Statements

14.

Called up share capital

2024

2023

Number

£’000

Number

£’000

Allotted, called up and fully paid Ordinary shares of 50 pence each:

Balance brought forward

30,964,580

15,482

30,819,580

15,410

Ordinary shares issued

11,268,494

5,634

145,000

Ordinary shares bought back to Treasury in the year

(863,532)

(432)

–

Balance carried forward

41,369,542

20,684

30,964,580

15,482

Allotted, called up and fully paid 3.5% Cumulative Preference shares of

£1 each:

Balance brought forward and carried forward

50,000

20,734

15,532

Treasury shares:

Balance brought forward

–

Ordinary shares bought back to Treasury in the year

863,532

432

–

Balance carried forward

863,532

432

–

During the year 11,268,494 Ordinary shares were issued in exchange for £35,228,000 of net assets from abrdn Smaller

Companies Income Trust plc (note 22).

During the year 863,532 Ordinary shares were bought back into Treasury representing 2.1% of the Company’s total issued

share capital (2023 – nil) at a total cost of £1,939,000 (2023 – the Company issued 145,000 Ordinary shares of 50p each for

proceeds of £374,000).

Each Ordinary and Cumulative Preference share carries one vote at general meetings of the Company. The Cumulative

Preference shares are considered to be equity. They have no fixed redemption date, carry a right to receive a fixed rate of

dividend and, on a winding up of the Company, to the payment of such fixed cumulative preferential dividends to the date of

such winding up and to the repayment of the capital paid up on such shares in priority to any payment to the holders of the

Ordinary shares.

The Ordinary shares, excluding any treasury shares, carry a right to receive dividends and, on a winding up or other return of

capital, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to

their shareholdings.

There are no restrictions on the transfer of Ordinary or Cumulative Preference shares in the Company other than certain

restrictions which may from time to time be imposed by law.

98 Shires Income PLC

15.

Capital reserve

2024

2023

£’000

At 31 March 2023

35,930

42,545

Net (losses)/gains on sales of investments during year

(1,323)

2,190

Movement in fair value decreases of investments

(4,425)

(8,274)

Buyback of Ordinary shares for treasury

(1,939)

–

Management fees

(210)

(207)

Administrative expenses (24) –

Interest on bank loans

(502)

(363)

Currency (losses)/gains

(56)

At 31 March 2024

27,451

35,930

The capital reserve includes gains of £2,620,000 (31 March 2023 – gains of £7,045,000), which relate to the revaluation of

investments held at the reporting date.

16.

Net asset value per Ordinary share

The net asset value per share and the net assets attributable to the Ordinary shareholders at the year end were as follows:

2024

2023

Net assets per Balance Sheet

£105,957,000

£79,913,000

3.5% Cumulative Preference shares of £1 each

£50,000

Attributable net assets

£105,907,000

£79,863,000

Number of Ordinary shares in issue

41,369,542

30,964,580

Net asset value per share

256.00p

257.92p

Notes to the Financial Statements

Continued

Shires Income PLC 99

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Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

17.

Analysis of changes in financial liabilities during the year

31 March

Cash

Other

31 March

2023

flows

movements

2024

Financing activities

£’000

Debt due within one year

(9,000)

–

(9,000)

Debt due after more than one year

(9,951)

–

(12)

(9,963)

(18,951)

–

(12)

(18,963)

31 March Cash Other 31 March

2022

flows

movements

2023

Financing activities

£’000

Debt due within one year

(19,000)

10,000

–

(9,000)

Debt due after more than one year

–

(10,000)

(9,951)

(19,000)

–

(18,951)

The other movements column represents the amortisation of the loan arrangement fees.

18.

Financial instruments

Risk management. The Company’s investment activities expose it to various types of financial risk associated with the financial

instruments and markets in which it invests. The Company’s financial instruments comprise securities and other investments,

cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and

purchases awaiting settlement, and debtors for accrued income.

The Company may also, subject to Board approval, enter into derivative transactions, in the form of traded options, for the

purpose of enhancing income returns and portfolio management. The risks associated with these option contracts are

detailed on page 12. During the year, the Company entered into certain derivative contracts. As disclosed in note 3, the

premium received and fair value changes in respect of options written in the year were £34,000 (2023 – £73,000). Positions

closed during the year realised a loss of £133,000 (2023 – £20,000). The largest position in derivative contracts held during the

year at any given time was £35,000 (2023 – £40,000). The Company had no open positions in derivative contracts at 31 March

2024 (2023 – nil).

The Board has delegated the risk management function in relation to financial instruments to abrdn Fund Managers Limited

(“aFML”) under the terms of its management agreement with aFML (further details of which are included under note 4). The

Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types

of risk and the Manager’s approach to the management of each type of risk, are summarised below. Such approach has been

applied throughout the year and has not changed since the previous accounting period. The numerical disclosures exclude

short-term debtors and creditors given their relatively low value.

Risk management framework. The directors of aFML collectively assume responsibility for aFML’s obligations under the AIFMD

including reviewing investment performance and monitoring the Company’s risk profile during the year.

100 Shires Income PLC

aFML is a fully integrated member of the abrdn Group (the “Group”), which provides a variety of services and support to aFML

in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The

AIFM has delegated the day to day administration of the investment policy to abrdn Limited, which is responsible for ensuring

that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment

disclosures to investors (details of which can be found on the Company’s website). The AIFM has retained responsibility for

monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.

The Group’s Internal Audit Department is independent of the Risk Division and reports directly to the Group’s CEO and to the

Audit Committee of the Group’s Board of Directors. The Internal Audit Department is responsible for providing an independent

assessment of the Group’s control environment.

The Manager conducts its risk oversight function through the operation of the Group’s risk management processes and

systems which are embedded within the Group’s operations. The Group’s Risk Division supports management in the

identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance,

Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group’s Chief Risk Officer, who reports to

the Group’s CEO. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the

organisation using the Group’s operational risk management system (“SHIELD”).

The Group’s corporate governance structure is supported by several committees to assist the board of directors of abrdn, its

subsidiaries and the Company to fulfil their roles and responsibilities. The Group’s Risk Division is represented on all committees,

with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the

functioning of those committees are described on the committees’ terms of reference.

Risk management. The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate

risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.

(i) Market risk

. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of

changes in market prices. This market risk comprises three elements – interest rate risk, currency risk and other price risk.

Interest rate risk. Interest rate movements may affect:

– the fair value of the investments in convertibles and preference shares;

– the level of income receivable on cash deposits; and

– interest payable on the Company’s variable rate borrowings.

Management of the risk. The possible effects on fair value and cash flows that could arise as a result of changes in interest

rates are taken into account when making investment and borrowing decisions.

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a

regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate facilities are used to

finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term.

Current bank covenants state that the gross borrowings will not exceed one-third of adjusted portfolio value.

The Board reviews the value of investments in preference shares on a regular basis.

Continued

Notes to the Financial Statements

Shires Income PLC 101

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Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Interest rate profile. The interest rate risk profile of the portfolio of financial assets and liabilities (excluding ordinary shares)

at the Balance Sheet date was as follows:

Weighted

average

period

Weighted

for which

average

rate is

interest

Fixed

Floating

fixed

rate

As at 31 March 2024

Years

£’000

Assets

UK preference shares

–

8.62

24,195

–

Cash and cash equivalents

–

5.35

–

1,675

Total assets

24,195

1,675

Liabilities

Short-term bank loans

0.01

6.84

(9,000)

–

Long-term bank loans

3.09

3.90

(9,963)

–

Total liabilities

(18,963)

–

Weighted

average

period

Weighted

for which

average

rate is

interest

Fixed

Floating

fixed

rate

As at 31 March 2023

Years

£’000

Assets

UK preference shares

–

8.49

20,895

–

Cash and cash equivalents

–

3.97

–

1,176

Total assets

20,895

1,176

Liabilities

Short-term bank loans

0.01

5.58

(9,000)

–

Long-term bank loans

4.01

3.90

(9,951)

–

Total liabilities

(18,951)

–

102 Shires Income PLC

The weighted average interest rate is based on the current yield of each asset, weighted by its market value.

The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value

of the loans.

The cash assets consist of cash deposits on call earning interest at prevailing market rates.

The UK preference shares assets have no maturity date.

Short-term debtors and creditors (with the exception of bank loans) have been excluded from the above tables.

Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates for

non-derivative instruments at the Balance Sheet date and the stipulated change taking place at the beginning of the

financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 200 basis points higher or lower and all other variables were held constant, the Company’s:

– profit before tax for the year ended 31 March 2024 would increase/decrease by £34,000 (2023 – £24,000). This is mainly

attributable to the Company’s exposure to interest rates on its floating rate cash balances. These figures have been

calculated based on cash positions at each year end.

– the capital return would decrease/increase by £3,300,000 (2023 – increase/decrease by £3,342,000) using VaR

(“Value at Risk”) analysis based on 100 observations of monthly VaR computations of fixed interest portfolio positions at

each year end.

Currency risk. A small proportion of the Company’s investment portfolio is invested in overseas securities whose values

are subject to fluctuation due to changes in exchange rates.

Management of the risk. The revenue account is subject to currency fluctuations arising on dividends received in foreign

currencies and, indirectly, due to the impact of foreign exchange rates upon the profits of investee companies. The

Company does not hedge this currency risk. The Company does not have any exposure to foreign currency liabilities.

No currency sensitivity analysis has been prepared as the Company considers any impact to be immaterial to the

financial statements.

Price risk. Price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect

the value of the quoted investments.

Management of the risk. It is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to

reduce the risk arising from factors specific to a particular sector. The allocation of assets to specific sectors and the stock

selection process both act to reduce market risk. The Manager actively monitors market prices throughout the year and

reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company

are listed on recognised stock exchanges.

Price sensitivity. If market prices at the Balance Sheet date had been 20% higher or lower while all other variables

remained constant, the profit before tax attributable to Ordinary shareholders for the year ended 31 March 2024 would

have increased/decreased by £19,595,000 (2023 – increase/decrease of £15,152,000). This is based on the Company’s

portfolio of Ordinary shares held at each year end.

(ii)

Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with

financial liabilities.

Management of the risk. 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.

Notes to the Financial Statements

Continued

Shires Income PLC 103

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Short-term flexibility is achieved through the use of loan facilities, details of which can be found in note 13. Under the terms

of the loan facility, the Manager provides the lender with loan covenant reports on a monthly basis, to provide the lender

with assurance that the terms of the facility are not being breached. The Manager will also review the credit rating of a

lender on a regular basis.

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a

regular basis. Borrowings comprise a revolving loan facility and a fixed term loan facility. The Board has imposed a

maximum equity gearing level of 35% which constrains the amount of gearing that can be invested in equities which, in

normal market conditions, are more volatile than the preference shares within the portfolio. Details of borrowings at

31 March 2024 are shown in note 13.

Maturity profile.

The maturity profile of the Company’s financial liabilities at the Balance Sheet date, with amounts

undiscounted and order by contractual maturity, was as follows:

Within

More than

1 year

1-5 years

5 years

At 31 March 2024

£’000

Trade and other payables

(491)

–

Short-term bank loans

(9,052)

–

Long-term bank loans

(389)

(10,873)

–

(9,932)

(10,873)

–

Within

More than

1 year

1-5 years

5 years

At 31 March 2023

£’000

Trade and other payables

(350)

–

Short-term bank loans

(9,044)

–

Long-term bank loans

(392)

(11,262)

–

(9,786)

(11,262)

–

(iii) 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.

Management of the risk

. The risk is managed as follows:

– where the Investment Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is

taken into account so as to minimise the risk to the Company of default;

– transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into

account so as to minimise the risk to the Company of default;

– 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 amount that may be due from any one broker;

104 Shires Income PLC

– the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed

trade reports on a daily basis. In addition, both stock and cash reconciliations to the Custodian’s records are performed

on a daily basis to ensure discrepancies are investigated on a timely basis. The Group’s Compliance carries out periodic

reviews of the Custodian’s operations and reports its findings to the abrdn Group’s Risk Management Committee and to

the Board of the Company. This review will also include checks on the maintenance and security of investments held;

– transactions involving derivatives and other arrangements wherein the creditworthiness of the entity acting as broker or

counterparty to the transaction is likely to be of sustained interest are subject to rigorous assessment by the Investment

Manager of the credit worthiness of that counterparty. The Company’s aggregate exposure to each such counterparty is

monitored regularly by the Board; and

– cash is held only with reputable banks with high quality external credit enhancements.

It is the Investment Manager’s policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated)

counterparties.

None of the Company’s financial assets are secured by collateral or other guarantees or assurances.

Credit risk exposure.

In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at

31 March 2024 and 31 March 2023 was as follows:

2024

2023

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£’000

Non-current assets

Quoted preference shares at fair value through profit or loss

24,195

20,895

Current assets

Accrued income

1,567

1,363

Option contract premium

–

Cash and cash equivalents

1,675

1,176

27,437

23,436

None of the Company’s financial assets is past its due date.

Fair value of financial assets and liabilities. The fair value of the long–term loan has been calculated at £9,619,000 as at 31

March 2024 (2023 – £9,097,000) compared to an accounts value in the financial statements of £9,963,000 (2023 –

£9,951,000) (note 13). The fair value of each loan is determined by aggregating the expected future cash flows for that

loan discounted at a rate comprising the borrower’s margin plus an average of market rates applicable to loans of a

similar period of time and currency. The loan is considered to be classed as a Level 2 liability under IFRS 13. The carrying

values of fixed asset investments are stated at their fair values, which have been determined with reference to quoted

market prices. Traded options contracts are valued at fair value which have been determined with reference to quoted

market values of the contracts. The contracts are tradeable on a recognised exchange. For all other short-term debtors

and creditors, their book values approximate to fair values because of their short-term maturity.

Notes to the Financial Statements

Continued

Shires Income PLC 105

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

19.

Fair value hierarchy

IFRS 13 ‘Financial Value Measurement’ requires an entity to classify fair value measurements using a fair value hierarchy that

reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e.

as prices) or indirectly (i.e. derived from prices); and

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at 31

March 2024 as follows:

Level 1

Level 2

Level 3

Total

As at 31 March 2024

Note

£’000

Financial assets at fair value through profit or loss

Quoted investments

122,169

–

122,169

Net fair value

122,169

–

122,169

Level 1

Level 2

Level 3

Total

As at 31 March 2023

Note

£’000

Financial assets at fair value through profit or loss

Quoted investments

96,655

–

96,655

Net fair value

96,655

–

96,655

Quoted investments. The fair value of the Company’s quoted investments has been determined by reference to their

quoted bid prices at the reporting date. Quoted investments included in Fair Value Level 1 are actively traded on

recognised stock exchanges.

20.

Capital management policies and procedures

The Company’s capital management objectives are:

– to ensure that the Company will be able to continue as a going concern; and

– to maximise the return to its equity shareholders through an appropriate balance of equity capital and debt.

The capital of the Company consists of equity, comprising issued capital, reserves and retained earnings.

The Board monitors and reviews the broad structure of the Company’s capital. This review includes the nature and planned

level of gearing, which takes account of the Investment 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. The Company is not subject to any externally imposed

capital requirements.

106 Shires Income PLC

21.

Related party transactions

Directors’ fees and interests. Fees payable during the year to the Directors and their interests in shares of the Company are

disclosed within the Directors’ Remuneration Report on page 66.

Transactions with the Manager. The Company has an agreement with the abrdn Group for the provision of management,

secretarial, accounting and administration services and for the carrying out of promotional activities in relation to the

Company. Details of transactions during the year and balances outstanding at the year end are disclosed in notes 4 and 5.

22.

Transaction with abrdn Smaller Companies Investment Trust plc (“aSCIT”)

On 1 December 2023, the Company announced that it had acquired £35,228,000 of net assets from aSCIT in consideration for

the issue of 11,268,494 new Ordinary shares as part of a recommended s110 Scheme under the Insolvency Act. The scheme,

inter alia, involved the cancellation of the Company’s existing holding in the issued capital of aSCIT, and a formula asset value

(“FAV”) calculation to take account the costs of the transaction in computing the number and value of shares to be issued by

the Company and assets transferred under the Scheme, as well as the value of cash exit for aSCIT shareholders which was at

a discount to the FAV.

Net assets acquired

£’000

Investments

31,779

Cash

3,444

Debtors

Net assets

35,228

Satisfied by the value of new Ordinary shares issued

35,228

Notes to the Financial Statements

Continued

Shires Income PLC 107

Corporate Information

The Company’s Investment Manager

is a wholly-owned subsidiary of

abrdn plc. The abrdn Group’s

assets under management and

administration were £507.7 billion

as at 31 March 2024.

108 Shires Income PLC

abrdn Investments Limited

The Company’s Investment Manager is abrdn

Investments Limited which is a wholly-owned subsidiary of

abrdn plc. The abrdn Group’s assets under management

and administration were £507.7 billion as at 31 March

2024, managed for a range of clients including 15 UK-

listed closed-end investment companies.

The Investment Team Senior Managers

Iain Pyle

Senior Investment Director, UK Equities

Iain is a Senior Investment Director in the UK Equities team,

having joined abrdn in 2015. Prior to joining, he was an

analyst on the top-ranked Oil & Gas research team at

Sanford Bernstein. Iain graduated with a MEng degree

in Chemical Engineering from Imperial College and an

MSc (Hons) in Operational Research from Warwick

Business School. He is a Chartered Accountant and a

CFA Charterholder.

Charles Luke

Senior Investment Director, UK Equities

Charles is a Senior Investment Director in the UK Equities

team. He joined abrdn’s Pan European Equities team in

2000 and previously worked at Framlington Investment

Management. He has a BA in Economics and Japanese

Studies from Leeds University and an MSc in Business and

Economic History from the London School of Economics.

Information about the Investment Manager

Shires Income PLC 109

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

The Investment Process

Investment Philosophy and Style

The Investment Manager believes that company

fundamentals ultimately drive stock prices but are often

priced inefficiently. It believes that in-depth company

research delivers insights that can be used to exploit these

market inefficiencies. The Investment Manager focuses on

investing in high-quality companies, with the market often

underestimating the sustainability of their returns. Quality

companies tend to produce more resilient earnings

streams with fewer tail risks, allowing them to better

navigate challenging market conditions whilst also

capitalising on opportunities to create value. This makes

the approach well suited to identifying companies with

sustainable and growing income generation. Investment

insights are generated by the extensive equity research

platform at abrdn. Ideas are generated through frequent

direct company contact, deep fundamental analysis and

integrated ESG analysis with rigorous team debate

strengthening analytical conclusions. The Investment

Manager has a long-term approach, aiming to buy and

hold companies for a multi-year time horizon although it

has the ability to react quickly if necessary. The Investment

Manager is willing to take sizeable deviations to the

benchmark based on the companies where it finds the

highest quality and most attractive valuations.

Investment Process

The investment process has three stages:

1. Idea Generation and Research. Comprehensive

coverage of the UK equity market with a team of

analysts generating investment ideas from company

meetings, combined with corroborating evidence

from competitors, suppliers and customers. External

secondary research is also generated to gain insight

on the consensus view and supplement proprietary

research.

2. Stock Selection. Buy ideas are peer reviewed by the

whole UK Equity team, evaluating the level of

conviction and the materiality, corroboration and

correlation of those investment opportunities. For the

Company specifically, the Investment Manager aims

to select high-quality stocks. Quality is defined by

reference to management, business focus, balance

sheet and corporate governance.

3. Portfolio Construction and Risk Management. Portfolio

construction is undertaken in a disciplined way,

prioritising the taking of company specific risk with a

rigorous sell discipline. Non-proprietary and

proprietary quantitative tools are used to identify and

control risk factor exposures, including sector and

geographic weights.

The Investment Manager believes that good investment

decision-making requires clarity of responsibility for those

decisions. Every stock has a named analyst responsible for

its coverage, and every portfolio has a named fund

manager responsible for its management. They make

those decisions supported and challenged by the team,

but accountability for the final decision is clear.

The investment process also leverages a wealth of

knowledge, insight and expertise across asset classes and

regions within abrdn. This allows the fund manager to take

advantage of equity colleagues across the globe who are

meeting companies and conducting research and sharing

their insights using one common global research platform.

This is invaluable when investing in the UK equity market,

which is one of the most global markets in the world.

Corporate level insights are shared with the credit team

which enriches the equity view through an understanding

of the full capital structure of the businesses invested in.

Members of the Investment Manager’s multi-asset and

economics teams regularly attend the equity team’s daily

meeting to share macro level insights.

Approach to Income

The primary aim of the Company is to deliver a high level of

income with the capacity for growth of both income and

capital over time. Consideration of income therefore plays

an important part in the Investment Manager’s process.

Research analysts are required to consider the prospects

for dividend affordability and growth for each stock under

coverage within the research process. For stock selection,

the Investment Manager pays particular attention to

measures relevant for income such as: cash flow outlook,

balance sheet strength and intention to pay dividends. The

Investment Manager looks for investment cases that deliver

returns from income in a number of ways: high yielding

stocks with potential for yield compression; stable high yield

names to deliver resilient income; and growing companies

with the potential for capital and dividend growth over time.

Portfolio construction considers the required level of

income to fund and, over time, grow the Company’s

dividend and the overall risk profile required to achieve this.

Investment ideas and portfolio construction are reviewed

by a group of income portfolio managers with significant

experience in UK equity income.

110 Shires Income PLC

ESG Integration

ESG integration means identifying and including all of the

Investment Manager’s ESG analysis in each investment

decision and the Investment Manager is regarded as a

leader in this area. A central ESG team supports

investment teams across different asset classes with its

thematic work on areas such as remuneration and

climate change, as well as taking responsibility for voting

policies. The Investment Manager’s Approach to ESG is

included on pages 35 to 39.

Preference Shares

Given the importance of the Preference Share portfolio to

the Company, there is an additional process in place to

monitor these holdings. Regular meetings are held,

comprising analysts from the fixed income and equity

teams responsible for coverage of issuing companies,

along with the portfolio managers. The process ensures

that the holdings are monitored closely and that there is

timely visibility on any changes at issuing companies

which could potentially impact their ability or intention to

pay the dividends associated with the preference shares.

Risk Management

The Investment Manager utilises a number of quantitative

risk tools to ensure it is fully aware of, and understands, all

the risks prevalent in portfolios it manages. These risk

management systems monitor and analyse active risk, the

composition of portfolio positions, as well as contribution

to risk and marginal contribution to risk of the portfolio’s

holdings. The systems break down the risk within the

portfolio by industry and country factors, and highlight the

stocks with the highest marginal contribution to risk and

the largest diversification benefit. Sector, thematic and

geographical positions are a residual of stock selection

decisions, but are monitored to ensure excessive risk is not

taken in any one area. The Investment Manager also

makes use of pre-trade analytics to assess the impact of

any trades on the portfolio risk metrics.

The Investment Process – Accountability and Performance Evaluated at Each Stage of the Process

Continued

Information about the Investment Manager

Shires Income PLC 111

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

Alternative Investment Fund Managers

Directive (“AIFMD”) and Pre-Investment

Disclosure Document (“PIDD”)

The Company has appointed abrdn Fund Managers

Limited as its alternative investment fund manager and

BNP Paribas Trust Corporation UK Limited as its depositary

under the AIFMD.

The AIFMD requires abrdn Fund Managers Limited, as the

Company’s AIFM, to make available to investors certain

information prior to such investors’ investment in the

Company. Details of the leverage and risk policies which

the Company is required to have in place under the AIFMD

are published in the Company’s PIDD which can be found

on its website: shiresincome.co.uk. The periodic disclosures

required to be made by the AIFM under the AIFMD are set

out on page 119.

Investor Warning: Be alert to share fraud and

boiler room scams

abrdn has been contacted by investors informing it that it

has received telephone calls and emails from people who

have offered to buy their investment company shares,

purporting to work for abrdn or for third party firms. abrdn

has also been notified of emails claiming that certain

investment companies under its management have

issued claims in the courts against individuals. These may

be scams which attempt to gain your personal

information with which to commit identity fraud or could

be ‘boiler room’ scams where a payment from you is

required to release the supposed payment for your

shares. These callers/senders do not work for abrdn and

any third party making such offers/claims has no link with

abrdn.

abrdn does not ‘cold-call’ investors in this way. If you have

any doubt over the veracity of a caller, do not offer any

personal information and end the call.

The Financial Conduct Authority provides advice with

respect to share fraud and boiler room scams at:

fca.org.uk/consumers/scams

Shareholder Enquiries

For queries regarding shareholdings, lost certificates,

dividend payments, registered details and related

matters, shareholders holding their shares directly in the

Company are advised to contact the Registrar

(see Contact Addresses). Changes of address

must be notified to the Registrar in writing.

Any general queries about the Company should be

directed to the Company Secretary in writing

(see Contact Addresses) or by email to:

CEF.CoSec@abrdn.com

Closure of the abrdn Investment Trust

Savings Plans (the “Plans”)

In June 2023, abrdn notified investors in the abrdn

Investment Trust ISA, Share Plan and Investment Plan for

Children that these plans would be closing in December

2023. All investors with a holding or cash balance at that

time transferred to interactive investor (“ii”). ii

communicated with investors in November to set up

account security to ensure that investors could continue

to access their holdings via ii following the closure of

the Plans.

Please contact ii for any ongoing support with your

account on 0345 646 1366, or +44 113 346 2309 if you are

calling from outside the UK. Lines are open 8.00am to

5.00pm Monday to Friday. Alternatively, you can access

the ii website at: www.ii.co.uk/abrdn-welcome

How to Invest

Investors can buy and sell shares in the Company directly

through a stockbroker or indirectly through a lawyer,

accountant or other professional adviser. Alternatively, for

private investors, there are a number of online dealing

platforms that offer share dealing, ISAs and other means

to invest in the Company. Real-time execution-only

stockbroking services allow you to trade online, manage

your portfolio and buy UK listed shares. These sites do not

give advice. Some comparison websites also look at

dealing rates and terms.

Discretionary Private Client Stockbrokers

If you have a large sum to invest, you may wish to contact

a discretionary private client stockbroker. They can

manage your entire portfolio of shares and will advise you

on your investments. To find a private client stockbroker

visit The Personal Investment Management and Financial

Advice Association at: pimfa.co.uk

Financial Advisers

To find an adviser who recommends on investment trusts,

visit: unbiased.co.uk

Investor Information

112 Shires Income PLC

Regulation of Stockbrokers

Before approaching a stockbroker, always check that

they are regulated by the Financial Conduct Authority at:

fca.org.uk/firms/financial-services-register.

How to Attend and Vote at Company

Meetings

Investors who hold their shares through a platform or

share plan provider (for example Hargreaves Lansdown,

Interactive Investor or AJ Bell) and would like to attend and

vote at Company meetings (including AGMs) should

contact their platform or share plan provider directly to

make arrangements.

Investors who hold their shares through platforms and

have their shares held through platform nominees, may

not necessarily receive notification of general meetings

and are advised to keep themselves informed of

Company business by referring to the Company’s

website. Where voting is required, and the Board

encourages shareholders to vote at all general meetings

of the Company, shareholders with their holdings in

nominees will need to instruct the nominee to vote on their

behalf and should do so in good time before the meetings.

Keeping You Informed

Information about the Company can be found on its

website: shiresincome.co.uk, including share price and

performance data as well as London Stock Exchange

announcements, current and historic Annual and Half-

Yearly Reports, and the latest monthly factsheet on the

Company issued by the Manager. Investors can receive

updates via email by registering on the home page of the

Company’s website.

Details are also available at: invtrusts.co.uk

Twitter:

@abrdnTrusts

LinkedIn:

abrdn Investment Trusts

Key Information Document (“KID”)

The KID relating to the Company and published by the

Manager can be found on the Company’s website.

Suitable for Retail/NMPI Status

The Company’s shares are intended for investors,

primarily in the UK, including retail investors, professionally-

advised private clients and institutional investors who are

seeking a high level of income, together with the potential

for growth of both income and capital from a diversified

portfolio substantially invested in UK equities but also in

preference shares, convertibles and other fixed income

securities, and who understand and are willing to accept

the risks of exposure to equities.

Investors should consider consulting a financial adviser

who specialises in advising on the acquisition of shares

and other securities before acquiring shares. Investors

should be capable of evaluating the risks and merits of

such an investment and should have sufficient resources

to bear any loss that may result.

The Company currently conducts its affairs so that its

securities can be recommended by a financial adviser to

ordinary retail investors in accordance with the Financial

Conduct Authority’s rules in relation to non-mainstream

pooled investments (“NMPIs”) and intends to continue to

do so for the foreseeable future. The Company’s securities

are excluded from the Financial Conduct Authority’s

restrictions which apply to NMPIs because they are

securities issued by an investment trust.

Note

Please remember that past performance is not a guide to

the future. Stock market and currency movements may

cause the value of shares and the income from them to

fall as well as rise and investors may not get back the

amount they originally invested.

As with all equity investments, the value of investment trust

shares purchased will immediately be reduced by the

difference between the buying and selling prices of the

shares, known as the market maker’s spread.

Investors should further bear in mind that the value of any

tax relief will depend on the individual circumstances of

the investor and that tax rates and reliefs, as well as the

tax treatment of ISAs, may be changed by future

legislation.

The information on pages 111 and 112 has been

approved for the purposes of Section 21 of the Financial

Services and Markets Act 2000 (as amended by the

Financial Services Act 2012) by abrdn Investments Limited

which is authorised and regulated by the Financial

Conduct Authority in the United Kingdom.

Investor Information

Continued

Shires Income PLC 113

Strategic Report

Governance

Overview

General Portfolio

Corporate

Information

Financial Statements

abrdn Group or abrdn

The abrdn plc group of companies.

Administrator

BNP Paribas Securities Services.

aSCIT

abrdn Smaller Companies Income Trust plc.

AIC

The Association of Investment Companies.

AIFMD

The UK version of the Alternative Investment Fund

Managers Directive and all implementing and delegating

legislation thereunder, as it forms part of UK law following

the UK’s departure from the EU. The AIFMD was originally

European legislation which created a European-wide

framework for regulating managers of ‘alternative

investment funds’ (“AIFs”). It is designed to regulate any

fund which is not a UCITS fund and which is managed

and/or marketed in the EU (and, now separately, the UK).

The Company has been designated as an AIF.

Alternative Performance Measure or APM

A financial measure of historic or future financial

performance, financial position, or cash flows, other than a

financial measure defined or specified in the applicable

financial reporting framework.

Benchmark

This is a measure against which an Investment Trust’s

performance is compared. The Company’s benchmark is

the FTSE All-Share Index. The index averages the

performance of a defined selection of listed companies

over specific time periods.

Call Option

An option contract which gives the buyer the right, but not

the obligation, to purchase a specified amount of an asset

at an agreed price by a future specified date.

Closed-End Fund

A collective investment scheme which has a fixed number

of shares which are not redeemable from the fund itself.

Unlike open-ended funds, new shares/units are not

created by managers to meet demand from investors;

instead, shares are purchased (or sold) only in the market.

Closed-end funds are normally listed on a recognised

stock exchange, such as the London Stock Exchange, and

shares can be bought and sold on that exchange.

Convertibles

Fixed income securities, which can be converted into

equity shares at a future date.

Discount

The amount by which the market price per share of an

Investment Trust is lower than the Net Asset Value per

share. The discount is normally expressed as a

percentage of the Net Asset Value per share.

Dividend Cover

Earnings per share divided by the dividend per share,

expressed as a ratio.

Dividend Yield

The annual dividend expressed as a percentage of the

share price.

ESG

Environmental, Social and Governance.

FCA

Financial Conduct Authority.

Gearing and Equity Gearing

Net gearing is calculated by dividing total borrowings, less

cash or cash equivalents, by shareholders’ funds

expressed as a percentage. Equity gearing is the sum of

the investments in ordinary shares, both listed and unlisted,

and convertibles, expressed as a proportion of

shareholders’ funds.

Glossary of Terms

114 Shires Income PLC

Investment Manager

abrdn Investments Limited is a wholly owned subsidiary of

abrdn plc and acts as the Company’s investment

manager. It is authorised and regulated by

the FCA.

Investment Trust

A type of Closed-End Fund which invests in other

securities, allowing shareholders to share the risks, and

returns, of collective investment.

Key Information Document or KID

The UK version of the Packaged Retail and Insurance-

based Investment Products (“PRIIPS”) Regulation (as it

forms part of UK law following the UK’s departure from the

EU) requires the Manager, as the Company’s PRIIP

‘manufacturer’, to prepare a Key Information Document

(“KID”) in respect of the Company. This KID must be made

available by the Manager to retail investors prior to them

making any investment decision and is available via the

Company’s website. The Company is not responsible for

the information contained in the KID and investors should

note that the procedures for calculating the risks, costs

and potential returns are prescribed by law. The figures in

the KID may not reflect the expected returns for the

Company and anticipated performance returns cannot

be guaranteed.

Leverage

For the purposes of the AIFMD, leverage is any method

which increases the Company’s exposure, including the

borrowing of cash and the use of derivatives. It is

expressed as a ratio between the Company’s exposure

and its Net Asset Value and can be calculated on a gross

and a commitment method. Under the gross method,

exposure represents the sum of the Company’s positions

after the deduction of sterling cash balances, without

taking into account any hedging and netting

arrangements. Under the commitment method, exposure

is calculated without the deduction of sterling cash

balances and after certain hedging and netting positions

are offset against each other.

Manager, AIFM or aFML

abrdn Fund Managers Limited is a wholly owned

subsidiary of abrdn plc and acts as the Alternative

Investment Fund Manager for the Company. It is

authorised and regulated by the FCA.

Net Asset Value or NAV

The value of total assets less liabilities. Liabilities for this

purpose include current and long-term liabilities. The Net

Asset Value divided by the number of shares in issue

produces the Net Asset Value per share.

Ongoing Charges

Ratio of expenses of an Investment Trust expressed as a

percentage of average daily shareholders’ funds

calculated annually per the AIC’s industry standard

method. More specifically, it is the annual percentage

reduction in shareholder returns as a result of recurring

operational expenses, assuming markets remain static

and the portfolio is not traded. Although the Ongoing

Charges figure is based on historical information, it

provides shareholders with an indication of the likely level

of costs that will be incurred in managing the Company in

the future. The Board uses the Ongoing Charges Ratio as a

Key Performance Indicator for the Company.

Preference Shares

These entitle the holder to a fixed rate of dividend out of

the profits of a company, to be paid in priority to other

classes of shareholder.

Pre-Investment Disclosure Document

(“PIDD”)

The AIFM and the Company are required to make certain

disclosures available to investors in accordance with the

AIFMD. Those disclosures that are required to be made

pre-investment are included within a PIDD, which can be

found on the Company’s website.

Premium

The amount by which the market price per share of an

Investment Trust exceeds the Net Asset Value per share.

The premium is normally expressed as a percentage of

the Net Asset Value per share.

Price/Earnings Ratio

This is calculated by dividing the market price per share by

the earnings per share. The calculation assumes no

change in earnings but in practice the multiple reflects the

stock market’s view of a company’s prospects and profit

growth potential.

Glossary of Terms

Continued

Shires Income PLC 115

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Financial Statements

Prior Charges

The name given to all borrowings including debentures,

loans and overdrafts that are to be used for investment

purposes, reciprocal foreign currency loans, currency

facilities to the extent that they are drawn down,

index-linked securities, and all types of preference or

preferred capital.

Put Option

An option contract which gives the buyer the right, but not

the obligation, to sell a specified amount of an asset at an

agreed price by a future specified date.

Total Assets

Total Assets as per the balance sheet less current liabilities

(before deducting Prior Charges as defined above).

Total Return

Total Return involves reinvesting the net dividend in the

month that the share price goes ex-dividend. The NAV

Total Return involves investing the same net dividend in the

NAV of the Company on the date on which that dividend

was earned.

116 Shires Income PLC

Alternative performance measures are numerical measures of the Company’s current, historical or future performance, financial

position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company’s

applicable financial framework includes IAS and the AIC SORP. The Directors assess the Company’s performance against a range of

criteria which are viewed as particularly relevant for closed-end investment companies.

Discount to net asset value per Ordinary share

The difference between the share price and the net asset value per Ordinary share expressed as a percentage of the net asset value

per Ordinary share.

2024

2023

NAV per Ordinary share (p)

256.00

257.92

Share price (p)

222.00

250.00

Discount

(a-b)/a

13.3%

3.1%

Dividend Cover

Dividend cover measures the revenue return per share divided by total dividends per share, expressed as a ratio.

2024

2023

Revenue return per share

14.75p

14.83p

Dividends per share

14.40p

14.20p

Dividend cover

a/b

1.02x

1.04x

Dividend Yield

The annual dividend divided by the share price, expressed as a percentage.

2024

2023

Annual dividend per Ordinary share (p)

14.40p

14.20p

Share price (p)

256.00p

250.00p

Dividend yield

a/b

5.6%

5.7%

Alternative Performance Measures

Shires Income PLC 117

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Financial Statements

Net Gearing

Net gearing measures total borrowings less cash and cash equivalents divided by shareholders’ funds, expressed as a percentage.

Under AIC reporting guidance, cash and cash equivalents includes net amounts due to and from brokers at the period end as well as

cash and short-term deposits.

2024

2023

Borrowings (£’000)

18,963

18,951

Cash (£’000)

1,675

1,176

Amounts due to brokers (£’000)

101

–

Amounts due from brokers (£’000)

–

Shareholders’ funds (£’000)

105,957

79,913

Net gearing

(a-b+c-d)/e

16.4%

22.2%

Ongoing Charges Ratio

The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment

management fees and administrative expenses and expressed as a percentage of the average net asset values throughout the year.

2024

2023

Investment management fees (£’000)

420

414

Administrative expenses (£’000)

529

417

Less: non-recurring charges

(£’000)

(24)

–

Ongoing charges (£’000)

925

831

Average net assets (£’000)

85,134

80,617

Ongoing charges ratio (excluding look-through costs)

1.09%

1.03%

Look-through costs

0.01%

0.14%

Ongoing charges ratio (including look-through costs)

1.10%

1.17%

Comprises promotional acitivities fees not expected to recur.

Calculated in accordance with AIC guidance issued in October 2020 to include the Company’s share of costs of holdings in

investment companies on a look-through basis.

The ongoing charges ratio provided in the Company’s Key Information Document is calculated in line with the PRIIPs regulations which

amongst other things, includes the cost of borrowings and transaction costs.

118 Shires Income PLC

Total Return

NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking

into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-

ended and closed-ended competitors, and the Reference Index, respectively.

Year ended 31 March 2024

NAV

Price

Opening at 1 April 2023

250.00p

257.92p

Closing at 31 March 2024

222.00p

256.00p

Price movements

c=(b/a)-1

–11.2%

–0.7%

Dividend reinvestment

5.8%

5.5%

Total return

c+d

–5.4%

+4.8%

Year ended 31 March 2023

NAV

Price

Opening at 1 April 2022

278.29p

279.00p

Closing at 31 March 2023

257.92p

250.00p

Price movements

c=(b/a)-1

–7.3%

–10.4%

Dividend reinvestment

5.1%

4.9%

Total return

c+d

–2.2%

–5.5%

NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that

dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date

on which that dividend goes ex-dividend.

Alternative Performance Measures

Continued

Shires Income PLC 119

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Financial Statements

abrdn Fund Managers Limited (“aFML”) and the Company are required to make certain disclosures available to investors

in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”). Those disclosures that are required to

be made pre-investment are included within a pre-investment disclosure document (“PIDD”) which can be found on the

Company’s website.

There have been no material changes to the disclosures contained within the PIDD since its most recent update in

December 2023.

The periodic disclosures as required under the AIFMD to investors are made below:

· information on the investment strategy and sector investment focus and principal stock exposures is included in the

Strategic Report;

· none of the Company’s assets are subject to special arrangements arising from their illiquid nature;

· the Strategic Report, note 18 to the financial statements and the PIDD, together set out the risk profile and risk

management systems in place. There have been no changes to the risk management systems in place in the period

under review and no breaches of any of the risk limits set, with no breach expected;

· there are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity

management systems and procedures employed by aFML; and

· all authorised Alternative Investment Fund Managers are required to comply with the AIFMD Remuneration Code. In

accordance with the Remuneration Code, the AIFM’s remuneration policy is available from the Company Secretary,

abrdn Holdings Limited, on request and the remuneration disclosures in respect of the AIFM’s reporting period for the

year ended 31 December 2023 are available on the Company’s website.

Leverage

The table below sets out the current maximum permitted limit and actual level of leverage for the Company:

Gross Method

Commitment Method

Maximum level of leverage

2.50:1

2.00:1

Actual level at 31 March 2024

1.33:1

1.35:1

There have been no breaches of the maximum level during the period and no changes to the maximum level of

leverage employed by the Company. There have been no changes to the circumstances in which the Company may

be required to post assets as collateral and no guarantees granted under the leveraging arrangement. Changes to the

information contained either within this Annual Report or the PIDD in relation to any special arrangements in place, the

maximum level of leverage which aFML may employ on behalf of the Company, the right of use of collateral or any

guarantee granted under any leveraging arrangement, or any change to the position in relation to any discharge of

liability by the Depositary will be notified via a regulatory news service without undue delay in accordance with

the AIFMD.

The information on this page has been approved for the purposes of Section 21 of the Financial Services and Markets Act

2000 (as amended by the Financial Services Act 2012) by abrdn Fund Managers Limited which is authorised and

regulated by the Financial Conduct Authority in the United Kingdom.

AIFMD Disclosures (Unaudited)

120 Shires Income PLC

General

The Annual General Meeting will be held at 18 Bishops

Square, London E1 6EG on Friday 5 July 2024 at 12 noon.

The Company will also be hosting an online shareholder

presentation, which will be held at 10.00am on Tuesday 25

June 2024. Full details on how to register for the online

event can be found at: https://bit.ly/Shires-Income

Shires Income PLC 121

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NOTICE IS HEREBY GIVEN that the ninety sixth Annual General Meeting of Shires Income PLC (the “Company”) will be

held at 18 Bishops Square, London E1 6EG on Friday 5 July 2024 at 12 noon to transact the following business:

To consider and, if thought fit, pass the following as Ordinary Resolutions:

1. To receive and adopt the Directors’ Report and audited financial statements of the Company for the year ended

31 March 2024 together with the Auditor’s Report thereon.

2. To receive and adopt the Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy) for the

year ended 31 March 2024.

3. To approve the Directors’ Remuneration Policy.

4. To approve a final dividend of 4.80p per Ordinary share in respect of the year ended 31 March 2024.

5. To appoint Mr Simon White as a Director of the Company.

6. To re-appoint Ms Helen Sinclair as a Director of the Company.

7. To re-appoint Ms Jane Pearce as a Director of the Company.

8. To re-appoint Mr Robin Archibald as a Director of the Company.

9. To re-appoint Ernst & Young LLP as Auditor of the Company.

10. To authorise the Directors to determine the remuneration of the Auditor for the year to 31 March 2025.

11. That, in substitution for any pre-existing power to allot or grant rights to subscribe for or to convert any security into

shares in the Company, but without prejudice to the exercise of any such authority prior to the date of this resolution,

the Directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the

Companies Act 2006 to exercise all the powers of the Company to allot shares in the Company (“relevant

securities”) up to an aggregate nominal amount of £2,068,477 or, if less, the number representing 10% of the issued

Ordinary share capital of the Company as at the date of the passing of this resolution provided that such

authorisation expires on 30 September 2025 or, if earlier, at the conclusion of the next Annual General Meeting of the

Company to be held after the passing of this resolution, unless previously revoked, varied or extended by the

Company in general meeting, save that the Company may, at any time prior to the expiry of such authority, make

an offer or enter into an agreement which would or might require relevant securities to be allotted after the expiry of

such authority, and the Directors may allot relevant securities in pursuance of such an offer or agreement as if such

authority had not expired.

12. To increase the limit on the Directors' aggregate ordinary remuneration, in accordance with Article 80 of the

Company's Articles of Association, to £200,000 per annum.

13. That the proposed investment policy set out in the appendix to this notice on page 127 of the Annual Report for the

year ended 31 March 2024, a copy of which has been produced to the meeting and signed by the Chairman for the

purposes of identification, be and is hereby adopted as the investment policy of the Company to the exclusion of the

existing investment policy of the Company.

Notice of Annual General Meeting

122 Shires Income PLC

To consider and, if thought fit, pass the following as Special Resolutions:

14. That, subject to the passing of Resolution 11 in the notice convening the meeting at which this resolution is to be

proposed (the “Notice of Meeting”) and in substitution for all existing powers, the Directors be and are hereby

generally empowered pursuant to Section 570 of the Companies Act 2006 (the “Act”) to allot equity securities (as

defined in Section 560 (1) of the Act) for cash pursuant to the authority under Section 551 of the Act conferred by

Resolution 11 in the Notice of Meeting as if Section 561 of the Act did not apply to any such allotment, provided that

this power:

i. expires on 30 September 2025 or, if earlier, at the conclusion of the next Annual General Meeting of the

Company to be held after the passing of this resolution, but the Company may make an offer or agreement

which would or might require equity securities to be allotted after expiry of this power and the Directors may

allot equity securities in pursuance of that offer or agreement as if that power had not expired; and

ii. shall be limited to the allotment of equity securities for cash up to an aggregate nominal amount of £2,068,477

or, if less, the number representing 10% of the issued Ordinary share capital of the Company as at the date of

the passing of this resolution.

This power applies in relation to the sale of shares which is an allotment of equity securities that immediately before

the allotment are held by the Company as treasury shares as if in the opening paragraph of this resolution the words

“subject to the passing of Resolution 11 in the notice convening the meeting at which this resolution is to be proposed

(the “Notice of Meeting”) and” and “pursuant to the authority under Section 551 of the Act conferred by Resolution 11

in the Notice of Meeting” were omitted.

15. That, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the

date hereof, the Company be generally and unconditionally authorised, in accordance with Section 701 of the

Companies Act 2006 (the “Act”), to make market purchases (within the meaning of Section 693(4) of the Act) of fully

paid Ordinary shares of 50p each in the capital of the Company (“shares”), and to cancel or hold in treasury such

shares, provided that:

i. the maximum aggregate nominal value of the Ordinary shares hereby authorised to be purchased shall be

limited to £3,100,647 or, if less, the number representing 14.99% of the issued Ordinary share capital of the

Company as at the date of the passing of this resolution;

ii. the minimum price which may be paid for a share shall be 50p (exclusive of expenses);

iii. the maximum price (exclusive of expenses) which may be paid for a share shall be an amount being not more

than the higher of:

a) 105% of the average of the middle market quotations (as derived from the Daily Official List of the London

Stock Exchange) for the shares for the five business days immediately preceding the date of purchase; or

b) the higher of the price of the last independent trade and the highest current independent bid relating to a

share on the trading venue where the purchase is carried out; and

iv. unless previously varied, revoked or renewed, the authority hereby conferred shall expire on 30 September 2025

or, if earlier, at the conclusion of the next Annual General Meeting of the Company to be held after the passing

of this resolution, save that the Company may, at any time prior to such expiry, enter into a contract or contracts

to purchase shares under such authority which would or might be completed or executed wholly or partly after

the expiration of such authority and may make a purchase of shares pursuant to any such contract or contracts

as if the authority conferred hereby had not expired.

Continued

Notice of Annual General Meeting

Shires Income PLC 123

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16. That subject to approval by the High Court of Justice, the amount standing to the credit of the share premium

account of the Company, at the date an order is made confirming such cancellation by the Court, is cancelled.

17. 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 to be held after the passing of this resolution.

By order of the Board Registered Office:

abrdn Holdings Limited 280 Bishopsgate

Company Secretary London EC2M 4AG

1 George Street

Edinburgh EH2 2LL

22 May 2024

124 Shires Income PLC

Notes

i. A member is entitled to appoint a proxy or proxies to exercise all or any of their rights to attend, speak and vote on

their behalf. A proxy need not be a member of the Company. A member may appoint more than one proxy

provided each proxy is appointed to exercise rights attached to different shares. A member may not appoint

more than one proxy to exercise rights attached to any one share. If a member wishes to appoint more than one

proxy, they should contact the Company’s Registrars, Equiniti Limited, on +44 (0)371 384 2508 (charges for calling

this number are determined by the caller’s service provider. Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday

excluding bank holidays in England and Wales). If calling from outside the UK, please ensure the country code

is used.

ii. A form of proxy for use by members is enclosed with the Annual Report. Completion and return of the form of

proxy will not prevent any member from attending the meeting and voting in person. To be valid, the form of proxy

should be lodged, together with any power of attorney or other authority (if any) under which it is signed or a

notarially certified copy of such power or authority, at the address stated thereon, so as to be received not less

than 48 hours (excluding non-working days) before the time of the meeting.

iii. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, to have the right to attend and

vote at the meeting a member must first have his or her name entered in the Company’s register of members at

6.30 p.m. on 3 July 2024 (or, in the event that the meeting is adjourned, at 6.30 p.m. on the day which is two

business days before the time of the adjourned meeting). Changes to entries on that register after that time shall

be disregarded in determining the rights of any member to attend and vote at the meeting.

iv. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service

may do so by using the procedures described in the CREST Manual and by logging on to the website:

euroclear.com. CREST personal members or other CREST sponsored members, and those CREST members who

have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who

will be able to take the appropriate action on their behalf.

v. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST

message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland

Limited’s specifications, and must contain the information required for such instruction, as described in the CREST

Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the

instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by

the Company’s Registrar (ID RA19) not less than 48 hours (excluding non-working days) before the time of the

meeting or any adjournment. For this purpose, the time of receipt will be taken to be the time (as determined by

the timestamp applied to the message by the CREST Application Host) from which the Company’s Registrar is

able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change

of instructions to proxies appointed through CREST should be communicated to the appointee through

other means.

vi. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that

Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message.

Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is

the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal

member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor

or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by

means of the CREST system by any particular time. In this connection, CREST members and, where applicable,

their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual

concerning practical limitations of the CREST system and timings.

Continued

Notice of Annual General Meeting

Shires Income PLC 125

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vii. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a)

of the Uncertificated Securities Regulations 2001.

viii. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a

process which has been agreed by the Company and approved by the Registrar. For further information

regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12 noon on 3 July 2024 in

order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to

Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by

them and they will govern the electronic appointment of your proxy.

ix. The 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 member 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.

The statement of the rights of members in relation to the appointment of proxies in notes (i) and (ii) above does

not apply to Nominated Persons. The rights described in these notes can only be exercised by members of

the Company.

x. No Director has a service contract with the Company but copies of Directors’ letters of appointment will be

available for inspection at the registered office of the Company during normal business hours on any weekday

(Saturdays, Sundays and public holidays excepted) from the date of this notice and for at least 15 minutes prior to

the meeting and during the meeting.

xi. As at close of business on 22 May 2024 (being the latest practicable date prior to publication of this document),

the Company’s issued share capital comprised 41,369,542 Ordinary shares of 50p each and 50,000 Cumulative

Preference shares of £1 each. Accordingly, the total number of voting rights in the Company as at 22 May 2024

is 41,419,542.

xii. Any person holding 3% of the total voting rights in the Company who appoints a person other than the Chairman

as his proxy will need to ensure that both he and such third party complies with their respective disclosure

obligations under the UK Disclosure Guidance and Transparency Rules.

xiii. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on

its behalf all of its powers as a shareholder provided that they do not do so in relation to the same shares.

xiv. The members of the Company may require the Company to publish, on its website, a statement setting out any

matter relating to the audit of the Company’s accounts, including the Auditor’s Report and the conduct of the

audit, which they intend to raise at the next meeting of the Company. The Company will be required to do so once

it has received such requests from either (i) members representing at least 5% of the total voting rights of the

Company or (ii) at least 100 members who have a relevant right to vote and hold shares in the Company on

which there has been paid up an average sum per member of at least £100. Such requests must be made in

writing and must state your full name and address, and be sent to: the Company Secretary, Shires Income PLC, 1

George Street, Edinburgh EH2 2LL.

xv. Information regarding the meeting, including information required by Section 311A of the Companies Act 2006, is

available from the Company’s website: www.shiresincome.co.uk.

126 Shires Income PLC

xvi. Under Section 319A of the Companies Act 2006, the Company must answer any question relating to the business

being dealt with at the meeting put by a member attending the meeting unless:

(a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure

of confidential information;

(b) the answer has already been given on a website in the form of an answer to a question; or

xvii. Shareholders are advised that, unless otherwise stated, any telephone number, website or e-mail address which

may be set out in this notice of Annual General Meeting or in any related documents (including the proxy form) is

not to be used for the purposes of serving information or documents on, or otherwise communicating with, the

Company for any purposes other than those expressly stated.

Notice of Annual General Meeting

Continued

Shires Income PLC 127

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Proposed Changes to Investment Policy to be put to Shareholders at the Annual General

Meeting on 5 July 2024

Investment Policy

The Company’s investment policy is to invest principally in the ordinary shares of UK quoted companies, and in

preference shares, convertibles and other fixed income securities with above average yields. The Company generates

income primarily from ordinary shares, preference shares, convertibles and other fixed income securities. It may also use

derivatives to enhance income generation generates income by writing call and put options on shares owned, or shares

the Company would like to own. By doing so, the Company generates premium income.

Gearing

The Directors are responsible for determining the gearing strategy of the Company. Gearing is used with the intention of

enhancing long-term returns. It is subject to a maximum equity gearing level of 35% of net assets at the time of

drawdown. Any borrowing except in relation to short-term liquidity requirements is used for investment purposes.

Diversification of Risk and Investment Restrictions

In order to ensure adequate diversification, limits are set within the investment policy which the AIFM and Investment

Manager must operate. All of these limits are measured at the point of acquisition of investments, unless otherwise

stated, as follows:

General Investment Limits

· a maximum of 10% 20% of total assets may be invested in the equity securities of overseas companies;

· a maximum of 7.5% of total assets may be invested in the securities of one company (historically excluding abrdn

Smaller Companies Income Trust plc);

· any investment must not represent more than 5% of a quoted investee company’s ordinary shares (historically

excluding abrdn Smaller Companies Income Trust plc); and

· a maximum of 10% of total assets may be invested directly in AIM holdings.

Limits in Relation to Preference Shares

· a maximum of 7.5% of total assets may be invested in the preference shares of any one company; and

· the Company may not hold more than 10% of any investee company’s preference shares.

Limits in Relation to Traded Option Contracts

There are principal guidelines put in place to manage the risks associated with these contracts, including:

· call options written are to be covered by stock;

· put options written are to be covered by net current assets/borrowing facilities;

· call options are not to be written on more than 10% of the equity portfolio; and

· put options are not to be written on more than 10% of the equity portfolio.

Appendix to Notice of Annual General Meeting

128 Shires Income PLC

Shires Income PLC 129

Directors

Robert Talbut (Chairman)

Robin Archibald

Jane Pearce

Helen Sinclair

Simon White

Registered Office

280 Bishopsgate

London EC2M 4AG

Company Secretary

abrdn Holdings Limited

1 George Street

Edinburgh EH2 2LL

Email: CEF.CoSec@abrdn.com

Alternative Investment Fund Manager

abrdn Fund Managers Limited

280 Bishopsgate

London EC2M 4AG

Investment Manager

abrdn Investments Limited

1 George Street

Edinburgh EH2 2LL

Company Registration Number

00386561 (England & Wales)

Legal Entity Identifier (“LEI”)

549300HVCIHNQNZAYA89

Website

shiresincome.co.uk

Registrar

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex BN99 6DA

Shareholder help can be found at shareview.co.uk.

Alternatively, you can contact the Shareholder Helpline:

+44 (0)371 384 2508*

(*Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday

excluding public holidays in England and Wales. Charges

for calling telephone numbers starting with ‘03’ are

determined by the caller’s service provider.)

If calling from outside the UK, please ensure the country

code is used.

Depositary

BNP Paribas Trust Corporation UK Limited

10 Harewood Avenue

London NW1 6AA

Stockbroker

JPMorgan Cazenove

25 Bank Street

London E14 5JP

Auditor

Ernst & Young LLP

Atria One

144 Morrison Street

Edinburgh EH3 8EX

Solicitors

Dentons UK and Middle East LLP

One Fleet Place

London EC4M 7WS

Contact Addresses

For more information visit shiresincome.co.uk

abrdn.com