Aberforth Split Level Income Trust plc — Annual Report 2023

Aug 2, 2023

Aberforth Split Level Income Trust plc

Annual Report and Financial Statements
30 June 2023

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Contents

Strategic Report

Investment Objective	1
Financial Highlights	1
Chairman’s Statement	2
Investment Policy and Strategy	4
Principal Risks	5
Directors’ Duty to Promote the Success of the Company	6
Viability Statement	7
Key Performance Indicators	7
Hurdle Rates & Redemption Yields	7
Managers’ Report	8
Stewardship and Environmental, Social and Governance (ESG)	13
Thirty Largest Investments	16
Investment Portfolio	17
Other Portfolio Information	19
Other Business Information	20

Governance Report

Board of Directors	21
Directors’ Report	22
Corporate Governance Report	27
Audit Committee Report	31
Directors’ Remuneration Policy	34
Directors’ Remuneration Report	35
Directors’ Responsibility Statement	37

Financial Report

Independent Auditor’s Report	38
Income Statement	44
Reconciliation of Movements in Shareholders’ Funds	45
Balance Sheet	46
Cash Flow Statement	47
Notes to the Financial Statements	48

Shareholder Information

General Information	57
Glossary	59
Corporate Information	61

Annual General Meeting

Notice of the Annual General Meeting	62
Notes to the Notice of the Annual General Meeting	63

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take, you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended) 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 shares in Aberforth Split Level Income Trust plc please forward this document, together with the accompanying documents, immediately to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. If you have sold or otherwise transferred only part of your holding of shares, you should retain these documents.

Investor Disclosure Document

The Alternative Investment Fund Managers Directive (AIFMD) requires certain information to be made available to investors prior to their investment in the shares of a company. The Company’s Investor Disclosure Document is available to view at www.aberforth.co.uk and contains details of the Company’s investment objective, policy and strategy together with leverage and risk policies.

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Strategic Report

The Board is pleased to present the Strategic Report (pages 1 to 20), which incorporates the Chairman's Statement and Managers' Report.

Investment Objective

The investment objective of Aberforth Split Level Income Trust plc (ASLIT) is to provide Ordinary Shareholders with a high level of income, with the potential for income and capital growth, and to provide Zero Dividend Preference Shareholders with a pre-determined final capital entitlement of 127.25p on the planned winding-up date of 1 July 2024.

Financial Highlights

Total Return Performance¹

Periods to 30 June 2023	Total Assets²	Ordinary Share		ZDP Share
		NAV³	Share Price⁴	NAV³	Share Price⁴
1 year	9.7%	12.2%	20.0%	3.6%	3.0%
Annualised
3 years	14.8%	20.0%	22.1%	3.6%	4.1%
5 years	0.1%	-0.9%	-0.7%	3.6%	2.3%
Since inception⁵	0.9%	0.3%	-0.5%	3.5%	3.0%
Cumulative
3 years	51.1%	72.9%	82.2%	11.2%	12.7%
5 years	0.3%	-4.2%	-3.6%	19.3%	12.2%
Since inception⁵	5.8%	1.8%	-2.9%	22.8%	19.5%

The total return per Ordinary Share² for the year to 30 June 2023 was 8.87p (2022: (18.98)p).

Ordinary Share

	Net Asset Value per Share⁵	Share Price	Discount/ (Premium)⁶	Revenue Return per Share⁵	Ordinary Dividends per Share⁵	Special Dividends per Share	Ongoing Charges⁵	Gearing⁵
30 June 2023	77.2p	72.0p	6.7%	5.35p	5.00p	–	1.3%	39.8%
30 June 2022	73.0p	64.2p	12.1%	4.81p	4.30p	0.25p	1.2%	40.6%
30 June 2021	95.7p	87.2p	8.8%	2.90p	3.05p	–	1.2%	29.9%

At inception an Ordinary Share had a NAV of 100p and a gearing⁵ level of 25%.

Zero Dividend Preference Share (ZDP Share)

	Net Asset Value per Share⁵	Share Price	Discount/ (Premium)⁶	Return per Share⁵	Projected Final Cumulative Cover⁶	Redemption Yield⁶
30 June 2023	122.8p	119.5p	2.7%	4.3p	3.2x	6.4%
30 June 2022	118.6p	116.0p	2.2%	4.1p	3.0x	4.7%
30 June 2021	114.5p	114.0p	0.4%	4.0p	3.6x	3.7%

At inception a ZDP Share had a NAV of 100p, a Projected Final Cumulative Cover⁵ of 3.4x, and a Redemption Yield⁶ of 3.5%.

Source: Aberforth Partners LLP

¹ Alternative Performance Measure (refer to Glossary on page 59).
² UK GAAP Measure (refer to Glossary on page 59).
³ Defined in the Glossary on page 60.

The valuation statistics above consisting of Redemption Yields and Final Cumulative Cover are projected, illustrative and do not represent profit forecasts. There is no guarantee these returns will be achieved.

Strategic Report

Aberforth Split Level Income Trust plc

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Chairman's Statement

Introduction

This is the sixth annual report of Aberforth Split Level Income Trust ("ASLIT" or "the Company"), which covers the financial year to 30 June 2023.

Many of the significant challenges highlighted in my recent reports remain firmly in focus. Elevated geopolitical tensions, persistently high inflation, especially in the UK, and rising interest rates continue to influence the direction of stockmarkets. With consumer budgets and profit margins under pressure, recession is a realistic threat either in this or next year.

The financial year started well as the initial shock of Russia's invasion of Ukraine and the impact on energy prices eased. M&A activity also contributed to positive returns, but the UK's well documented Budget debacle in September 2022 led to weak share prices, higher bond yields and sterling approaching parity with the US dollar. Calm was restored towards ASLIT's half year with the change of Prime Minister and Chancellor. Share prices responded well to this development and further impetus was provided by the emergence of more benign inflation data in the US. However, enthusiasm about the prospects of lower interest rates in the US was interrupted by the rapid demise of Silicon Valley Bank and Credit Suisse, which provoked a sharp reappraisal of risk in March. Swift regulatory action reassured the markets that these bankruptcies were isolated cases and enabled stockmarkets to shift their focus back to subsiding rates of inflation. The exception was the UK, where stubbornly persistent inflation is requiring the Bank of England to continue to raise interest rates and, by extension, the risk of recession.

Given this 'wall of worry' it was pleasing to see positive index returns for UK equities during the period, albeit marginal ones for mid and small cap companies, who underperformed their large cap brethren. However, UK indices remain deeply unpopular from a global perspective, which is reflected in lower returns generated during the year compared to most international peers.

Performance

I appreciate that it doesn't really feel like it but in fact, over the financial year as a whole, UK equities generated positive returns. The Numis Smaller Companies Index (excluding Investment Companies) ("the Index" or "NSCI (XIC)"), which defines ASLIT's investment opportunity base, generated a positive total return of 4.4% over the twelve months to 30 June 2023. Larger companies in the UK, in the form of the FTSE All-Share Index, recorded a total return of 7.9%.

It is pleasing to report that ASLIT's total assets total return, which measures its ungeared portfolio performance, was up 9.7% during the year. When geared by the Zero Dividend Preference (ZDP) Shares, the net asset value total return of the Ordinary Shares was 12.2%. This reflects the return attributable to equity Shareholders of 8.87p per Ordinary Share together with the effect of the reinvestment of previously declared dividends. The Ordinary Share price total return of 20.0% was helped by a narrowing of the share price's discount to net asset value from 12.1% to 6.7%.

As the capital value of the portfolio has increased, the projected cumulative cover of the ZDP shares increased to 3.2 times at 30 June 2023 from 3.0 times twelve months earlier.

Turning to the longer-term perspective from ASLIT's inception in 2017 to 30 June 2023, the cumulative total assets total return and net asset value total return are 5.8% and 1.8% respectively. These modest returns are clearly not what the Board envisaged when ASLIT launched but in its short life, ASLIT has had to battle with the fraught aftermath of the EU referendum, the pandemic and the war in Ukraine, as well as the macro-economic headwinds of the past year. Any one of these events would have been challenging enough for a company with ASLIT's geared structure, let alone all four. Detail about the effect of these challenges on ASLIT's valuation opportunity is provided in the Managers' Report.

Earnings and Dividends

The twists and turns of share prices over the year to 30 June 2023 contrast with the steady progress of ASLIT's revenue stream. The upward trend from the pandemic lows has continued, which reflects positively on how well investee companies' boards stewarded capital during what was a very challenging period. ASLIT's dividend experience in the twelve months was enhanced by the receipt of seven special dividends.

ASLIT's revenue return per Ordinary Share was 5.35p in the year to 30 June 2023, which is 11% higher than the 4.81p earned in the year to 30 June 2022. Special dividends from investee companies represent 0.42p per Ordinary Share of the 5.35p of revenue generated for this financial year.

Strategic Report
Aberforth Split Level Income Trust plc

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Chairman's Statement

The Board is pleased to declare a second interim dividend of 3.30p per Ordinary Share for the year to 30 June 2023, which represents an increase of 18% compared to the 2.79p in respect of the previous year. Together with the first interim dividend of 1.70p paid on 8 March 2023, the total underlying ordinary dividend with respect to the year to 30 June 2023 is 5.00p per Ordinary Share. This is an increase of 16% compared to last year's ordinary underlying dividend of 4.30p, which represents the total dividend of 4.55p less the special dividend of 0.25p per Ordinary Share.

After accounting for the second interim dividend, retained revenue reserves were 1.32p per Ordinary Share at 30 June 2023. There are two reasons for the Board's decision to increase revenue reserves. First, notwithstanding the resilience of the investee companies, an economic downturn could affect the dividend performance of the portfolio. Second, prudent portfolio and liquidity management activities in the run-up to the end of ASLIT's planned life might affect dividend receipts. Retained revenue reserves give the Board scope to offset such factors and sustain dividends paid by ASLIT. Any revenue reserves not utilised will be distributed to Ordinary Shareholders before or at the end of ASLIT's planned life next year.

The second interim dividend of 3.30p per Ordinary Share will be paid on 31 August 2023 to Ordinary Shareholders on the register on 11 August 2023. The ex-dividend date is 10 August 2023. The Company operates a Dividend Reinvestment Plan. Details of the plan, including the Form of Election, are available from Aberforth Partners LLP or on the website, www.aberforth.co.uk.

Stewardship

As part of its stewardship responsibilities, the Board regularly reviews the Managers' approach to environmental, social and governance issues. Pages 13 to 15 describe the Board's and Managers' oversight and activities in the year to 30 June 2023. The Board endorses the Managers' stewardship policy, which is set out in their submission as a signatory to the UK Stewardship Code. This, together with examples relating to voting and engagement with investee companies, can be found in the "About Aberforth" section of the Managers' website.

Annual General Meeting ("AGM")

The AGM will be held at 14 Melville Street, Edinburgh EH3 7NS at 11.00 a.m. on 30 October 2023 and details of the resolutions to be considered by Shareholders are set out in the Notice of the Meeting on page 62. Shareholders are encouraged to submit their votes by proxy in advance of the meeting. An update on performance and the portfolio will be available on the Managers' website following the meeting.

Conclusion

The Board is conscious that ASLIT's capital performance over its life so far has not matched expectations at the time of launch. However, despite the various top-down challenges along the way, the investee companies have made underlying progress, as may be gauged from the growth in ASLIT's dividend over the six years. The upshot of muted capital returns and resilient profits is that the portfolio's valuations today appear even more attractive than was the case at inception. The consequent opportunity is addressed in detail in the Managers' Report and influences the Board's thinking as it contemplates the end of ASLIT's planned life.

That planned life ends on 1 July 2024, on which date or in the three months prior, the Board is obliged by the Company's Articles to convene a general meeting to propose that the Company be wound up. The spectre of recession and the general apathy towards UK assets mean that the upside in ASLIT's portfolio is unlikely to be fully realised by 1 July 2024. Therefore, before then, the Board intends to examine means whereby holders of both classes of Share will be given the opportunity to continue their investment in some form, alongside the option to realise their investment in cash.

The Board is working with the Managers and at this stage nothing has yet been decided or, indeed, ruled out. We shall seek specialist advice in due course and shall also take account of feedback received from Shareholders when developing proposals, which we would expect to finalise during the second calendar quarter of 2024.

My fellow directors and I would welcome the views of Shareholders about these or any other matters pertinent to the Company, to which end my email address is noted below.

Angus Gordon Lennox
Chairman
27 July 2023

Angus.GordonLennox@aberforth.co.uk

Strategic Report
Aberforth Split Level Income Trust plc

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Investment Policy and Strategy

Investment Policy

The Company aims to achieve its objective by investing in a diversified portfolio of securities issued by small UK quoted companies. Small UK quoted companies are those having a market capitalisation, at time of purchase, equal to or lower than the largest company in the bottom 10%, by market capitalisation, of the London Stock Exchange's Main Market for listed securities or companies in the Numis Smaller Companies Index (excluding investment companies) ("NSCI (XIC)"). As at 1 January 2023 (the date of the last annual NSCI (XIC) rebalancing), the NSCI (XIC) included 350 companies, with an aggregate market capitalisation of £140 billion. Its upper market capitalisation limit was £1.6 billion, although this limit changes owing to movements in the stockmarket. If any holding no longer satisfies this definition of a small UK quoted company its securities become candidates for sale unless the Managers determine that the Company's investment objective would be better served by their retention. Notwithstanding the above, the Managers would not normally expect more than 10% of the value of the Company's portfolio to be invested in a combination of: (i) securities issued by small UK quoted companies that are neither securities with equity rights, nor securities convertible to such; and/or (ii) holdings in companies that satisfied the definition of a small UK quoted company at the time of purchase but no longer do so and that are not categorised as candidates for sale.

The Company may, at the time of purchase, invest up to 15% of its assets in securities issued by any one company although, in practice, each exposure will typically be substantially less and, at market value, will generally represent less than 5% of the portfolio on an on-going basis. The Board expects that this approach will normally result in a portfolio comprising holdings in between 50 and 100 companies. The Company will not invest in securities issued by other UK listed closed-ended investment funds except where they are eligible to be included in the NSCI (XIC). In any event, the Company will invest no more than 15% of total assets in other listed closed-ended investment funds.

Investment will only be made in companies with securities traded on the Main Market or, in limited circumstances, in AIM listed investments. AIM listed investments will only be held in the Company's portfolio if they have given a formal commitment to move to the Main Market, or in the situation where an existing investee company has moved its listing from the Main Market to AIM.

The Company will aim to be near to fully invested at all times. There will normally be no attempt to engage in market timing by holding high levels of liquidity though due consideration will be given to liquidity requirements as the Company nears the end of its planned life. The Company does not intend to utilise any bank borrowings other than short term overdraft or working capital facilities. The Directors expect that, in normal market conditions, bank borrowings will not exceed 2.5% of Total Assets. The Articles limit the level of such bank borrowings to a maximum of 5% of Total Assets at the time of drawdown. The Company has a policy to maintain total gearing, including the ZDP Shares, below the total of: (i) the accrued capital entitlement of the ZDP Shares from time to time; plus (ii) 5% of its Total Assets at the time of drawdown. The Directors have delegated responsibility to the Managers for the operation of the Company's overdraft and working capital facilities within the above parameters.

Subject to the prior approval of the Board, the Managers may use derivative instruments, such as financial futures, exchange traded funds, and options, for the purpose of efficient portfolio management. The Board's current expectation is that derivatives will rarely be used, if at all.

Any material changes to the Company's investment objective and policy will be subject to Shareholder approval at a general meeting. In the event of a breach of the Company's investment policy, the Directors will announce through a Regulatory Information Service the actions that will be taken to rectify the breach.

Investment Strategy

The Managers adhere to a value investment philosophy. While there can be extended periods when the value investment style is out of favour, there is compelling evidence that the value approach within small UK quoted companies has resulted in superior returns to those of the NSCI (XIC) as a whole over the long term.

In valuing businesses, the Managers place emphasis on the ratio of total enterprise value (which is the market capitalisation of the small UK quoted company adjusted for the average debt or cash level of such company) to the earnings before interest, tax and amortisation that the company generates (in short, the EV/EBITA ratio). The Managers also utilise other valuation metrics, recognising that flexibility is required when assessing businesses in different industries and that buyers of these businesses may include other corporates as well as stockmarket investors. As a result of the value investment approach, the average valuation metrics of the Company's holdings will usually be more modest than those of the NSCI (XIC), the investment universe.

The Managers select companies for the Company's portfolio on the basis of fundamental or "bottom-up" analysis. The "bottom-up" analysis includes the Managers scrutinising prospective investee companies' financial statements and assessing their market positions within their sectors. An important part of the process is regular engagement with the board members and management of prospective and existing investments. In addition, a "top down" evaluation is undertaken regularly.

Opportunities are often found in businesses where short-term trading, broad macro economic concerns or the vagaries of stockmarket sentiment have caused valuations to fall to levels at which the Managers consider significant upside to be available. The closing of valuation gaps usually requires the passage of time but can be expedited by a change of strategy, a change of management or takeover.

In seeking to achieve the investment objective, the Managers believe that the portfolio must be adequately differentiated from the NSCI (XIC), the investment universe. Therefore, within the diversification parameters described in the Company's investment policy, the Managers will regularly review the level of differentiation, with the aim of achieving a meaningful active weight for each holding within the Company's portfolio. Holdings are expected to be sold when their valuations reach the targets determined by the Managers.

Strategic Report
Aberforth Split Level Income Trust plc

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Principal Risks

The Board carefully considers the risks faced by the Company and seeks to manage these risks through continual review, evaluation, mitigating controls and action as necessary. A risk matrix for the Company is maintained. It groups risks into the following categories: portfolio management; investor relations; regulatory and legal; and financial reporting. Further information regarding the Board's governance oversight of risk, its review process and the context for risks can be found in the Corporate Governance Report on page 30. The Audit Committee Report (pages 31 to 33) details matters considered and actions taken on internal controls and risks during the year. The Company outsources all the main operational activities to recognised, well-established firms and the Board receives internal control reports from these firms, where available, to review the effectiveness of their control frameworks.

Emerging risks are those that could have a future impact on the Company. The Board regularly reviews them and, during the year, it considered the effects of economic and political developments within the risk category of market risk. The Board regularly monitors how the Managers integrate such risks into the investment decision making.

Principal risks are those risks derived from the matrix that have the highest risk ratings based on likelihood and impact. They tend to be relatively consistent from year to year given the nature of the Company and its business. Monitoring by the Board did not give rise to any changes during the year to the risk ratings applied to each of the principal risks. On a forward looking basis, the principal risks faced by the Company, together with the approach taken by the Board towards them, are summarised below. To indicate the extent to which the principal risks change during the year and the level of monitoring required, each principal risk has been categorised as either dynamic risk, requiring detailed monitoring as it can change regularly, or stable risk.

| Investment policy/performance risk (a portfolio management risk)
The Company's investment policy and strategy expose the portfolio to share price movements. The performance of the investment portfolio will be influenced by stock selection, liquidity and market risk (see Market risk below and Note 19 for further details). Investment in small companies is generally perceived to carry more risk than investment in large companies. While this is reasonable when comparing individual companies, it is much less so when comparing the risks inherent in diversified portfolios of small and large companies. The Board's aim is to achieve the investment objective by ensuring the investment portfolio is managed in accordance with the policy and strategy. The Board has outsourced portfolio management to experienced investment managers with a clearly defined investment philosophy and investment process. The Board receives regular and detailed reports on investment performance including detailed portfolio and risk profile analysis. Senior representatives of Aberforth Partners attend each Board meeting. This remains a dynamic risk, with detailed consideration during the year. The Managers' Report contains information on portfolio investment performance and risk. |
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| Market risk (a portfolio management risk)
Investment performance is affected by a number of market risk factors, which cause uncertainty about future price movements of investments. The Board delegates consideration of market risk to the Managers to be carried out as part of the investment process. The Managers regularly assess the exposure to market risk when making investment decisions and the Board monitors the results via the Managers' reporting. The Board and Managers closely monitor economic and political developments. This remained a dynamic risk during the year, in which the Managers reported on market risks including inflation and supply-chain pressures and other geopolitical issues referred to in the Managers' Report. |
| Structural conflicts of interest (an investor relations risk)
The different rights and expectations of the holders of Ordinary Shares and the holders of ZDP Shares may give rise to conflicts of interest between them. While the Company's investment objective and policy seek to strike a balance between the interests of both classes of Shareholder, there can be no guarantee that such a balance will be achieved and maintained during the life of the Company. The Board acts in a manner that it considers fair, reasonable and equitable to both classes of Shareholder. This is a stable risk. |
| Significant fall in investment income (a portfolio management risk)
A significant fall in investment income could lead to the inability to provide a high level of income and income growth. The Board receives regular and detailed reports from the Managers on income performance together with income forecasts. The Board and Managers monitor investment income and it is considered a dynamic risk. |
| Loss of key investment personnel (a portfolio management risk)
The Board believes that a risk exists in the loss of key investment personnel at the Managers. The Board recognises that the collegiate approach employed by the Managers mitigates this risk. Board members are in regular contact with the partners and staff of the Managers and monitor personnel changes. This is a stable risk. |
| Regulatory risk (a regulatory and legal risk)
Breach of regulatory rules could lead to suspension of the Company's share price listings, financial penalties or a qualified audit report. Breach of Section 1158 of the Corporation Tax Act 2010 could lead to the Company losing investment trust status and, as a consequence, any capital gains would then be subject to capital gains tax. The Board reviews regular reports from the Secretaries to monitor compliance with regulations. This is a stable risk. |

Strategic Report

Aberforth Split Level Income Trust plc 5

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Directors' Duty to Promote the Success of the Company

The Directors have a duty to promote the success of the Company for the benefit of Shareholders as a whole and to describe how they have done so having regard to matters set out in section 172(1) of the Companies Act 2006. The Directors have fulfilled this duty and taken decisions during the year in relation to matters described below, having considered the likely consequences of their actions over the Company's planned life on Shareholders and on other stakeholders.

Stakeholders

As an externally managed investment company, the Company does not have employees. Its main stakeholders therefore comprise its Shareholders, who are also its customers, and a small number of suppliers. These suppliers are external firms engaged by the Board to provide, amongst others, investment management, secretarial, depositary, custodial and banking services. The principal relationship is with the Managers and page 22 contains further information. Their investment management services are fundamental to the success of the Company through the pursuit of the investment objective. The Board regularly monitors the Company's investment performance in relation to its objective and also to its investment policy and strategy. It seeks to maintain a constructive working relationship with the Managers and on an annual basis reviews their continuing appointment to ensure it is in the best interests of Shareholders. The Board receives and reviews detailed presentations and reports from the Managers and other suppliers to enable the Directors to exercise effective oversight of the Company's activities. Further information on the Board's review process is set out in the Corporate Governance Report. The Managers seek to maintain constructive relationships with other suppliers on behalf of the Company, typically through regular communications, provision of relevant information and update meetings.

Shareholder communications and engagement

To act fairly as between the members of the Company, the Board seeks to strike a balance between the interests of Ordinary Shareholders and ZDP Shareholders, undertaking a level of risk that is consistent with the Company's investment policy and investment objective. The Board acts in a manner that it considers fair, reasonable and equitable to both classes of Shareholder, having regard to the entitlements of each class of Shares under the Company's Articles of Association. To help the Board in its aim to act fairly as between the Company's members, it encourages communications with all Shareholders. The Annual and Interim reports are issued to Shareholders and are available on the Managers' website together with other relevant information including monthly factsheets. The Managers offer to meet the larger Shareholders twice a year to provide detailed reports on the progress of the Company and to receive feedback, which is provided to and considered by the Board. Directors are also available to meet Shareholders during the year and at the AGM. The Board decides on dividends payable to Ordinary Shareholders each year in accordance with the Company's dividend policy, based on the income received from the Company's investment portfolio.

Planned life

The Board's decisions are focused on the period of the Company's planned life lasting until 1 July 2024. However, before this date, as set out in the Prospectus at launch, the Board will examine means whereby holders of Ordinary Shares may effectively continue their investment, while allowing the ZDP Shareholders to realise their investment. The Board commenced working on this during the year. Further information relating to the duration of the Company is contained on page 24.

Corporate Governance

As described in more detail within the Corporate Governance Report, the Board is committed to maintaining and demonstrating high standards of corporate governance in relation to the Company's business conduct.

Stewardship matters

The Board also expects good standards at the companies in which the Company is invested. In this regard, it is satisfied that the Managers' investment process incorporates regular consideration of investee companies' governance structures and procedures. It is also encouraged that the Managers engage consistently and proactively with the boards of investee companies on governance and other matters that are material to the investment case. These activities are ultimately important to the long term success of the Company. Further information on Stewardship matters is provided on pages 13 to 15.

Summary

In summary, the Board's primary focus in promoting the success of the Company for the benefit of its Shareholders as a whole is to direct the Company with a view to achieving the investment objective in a manner consistent with its stated investment policy and strategy. In doing so, and as described above, it has due regard to the impact of its actions on other stakeholders and the wider community.

Strategic Report
Aberforth Split Level Income Trust plc

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Viability Statement

Shareholders will be required to vote on proposals from the Directors, relating to the Company's planned life, on or before 1 July 2024. The nature of these proposals and the outcome of the vote represent a material uncertainty in the context of assessing going concern and the prospects of the Company beyond 1 July 2024. The Directors assessment of going concern is set out on page 24. Notwithstanding the outcome of the vote the Directors have assessed the viability of the Company over the five year period to June 2028. The assessment took account of the Company's position, its investment strategy and the potential impact of the relevant principal risks described on page 5. Based on this assessment, the Directors have a reasonable expectation that the Company will meet its liabilities as they fall due and, subject to the outcome of the vote on the Company's planned life, will be able to continue in operation over the five year period to June 2028.

In making this assumption, the Directors took comfort from the results of a series of stress tests that considered the impact of a number of severe market downturn scenarios on the Company's financial position and, in particular, its ability to settle projected liabilities of the Company as they fall due. Portfolio liquidity modelling was conducted to identify values that could be liquidated within different time periods. The Company invests in companies listed and traded on the London Stock Exchange. These shares are actively traded and, whilst less liquid than larger quoted companies, the portfolio is well diversified by both number of holdings and industry sector. The Directors determined that a five year period to June 2028 is an appropriate period for which to provide this statement given the Company's investment objective, the simplicity of the business model, the resilience demonstrated by the stress testing and the relatively low working capital requirements.

Key Performance Indicators

The Board assesses the Company's performance in meeting its Investment Objective as set out on page 1 against the following key performance indicators.

• Total Assets total return
• Ordinary Share Net Asset Value total return
• Ordinary Share Net Asset Value
• Ordinary Share Price discount
• Dividend per Ordinary Share
• ZDP Share Net Asset Value
• ZDP Share Projected Final Cumulative Cover
• Hurdle Rates

A record of these measures is provided within Financial Highlights (page 1) and the Hurdle Rates and Redemption Yields below. Further analysis is provided within the Chairman's Statement (pages 2 to 3) and the Managers' Report (pages 8 to 12). The Managers' Report has been prepared by Aberforth Partners LLP and the Board endorses the analysis provided in respect of the key performance indicators. A glossary of UK GAAP measures and of Alternative Performance Measures can be found on page 59.

Hurdle Rates & Redemption Yields

Hurdle Rates²

At 30 June	Ordinary Shares			ZDP Shares
	Annualised Hurdle Rates to return			Annualised Hurdle Rates to return
	100p	Share Price	Zero Value	127.25p	Zero Value
2023	28.4%	1.3%	-68.6%	-68.6%	-99.7%
2022	16.2%	-0.7%	-42.6%	-42.6%	-94.8%
Inception³	1.5%	n/a	-17.0%	-17.0%	-57.2%

Redemption Yields² as at 30 June 2023 (Ordinary Shares)

Capital Growth (per annum)	Annualised Ordinary Share Redemption Yields¹ Dividend Growth (per annum)					Terminal NAV¹
	-20.0%	-10.0%	+0.0%	+10.0%	+20.0%
-20.0%	-23.8%	-22.6%	-21.3%	-19.9%	-18.4%	50.0p
-10.0%	-9.0%	-7.7%	-6.4%	-4.9%	-3.3%	60.3p
+0.0%	5.8%	7.1%	8.6%	10.1%	11.7%	70.7p
+10.0%	20.5%	22.0%	23.5%	25.1%	26.8%	81.0p
+20.0%	35.3%	36.8%	38.4%	40.0%	41.8%	91.3p

¹ The valuation statistics in the tables above are projected, illustrative and do not represent profit forecasts. There is no guarantee these returns will be achieved.
² Defined in the Glossary on page 60.

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Introduction

Equity returns over the twelve months to 30 June 2023 were positive. The FTSE All-Share index, which is representative of large UK companies, recorded a total return of +7.9%. The gain from smaller companies was more modest. The total return of the NSCI (XIC), which is ASLIT's investment universe, was +4.4%. ASLIT's total asset total return, which is a measure of the portfolio's ungeared performance, was +9.7%. This backdrop of rising share prices benefited both classes of shareholder: the Ordinary Shares' net asset value total return was +12.2%, while the final cumulative cover of the ZDP Shares rose from 3.0x to 3.2x.

The positive returns from equity markets around the world in the twelve months to 30 June 2023 contrast with the falling share prices that characterised ASLIT's previous financial year. Several factors contributed to the improved mood. The initial shock of Russia's war in Ukraine has subsided, while some of the worst fears about energy supplies and prices have so far proved misplaced. The reopening of China's economy, following strict pandemic lockdowns, should contribute to global economic activity and promises to ease pressure on supply chains. Related to these points, inflationary forces appear to be abating: in most major economies, the rate of change in consumer prices is declining, though it remains elevated in comparison with the period before the pandemic.

The response to inflation has been the large and rapid increases in interest rates over the past 18 months. These have complicated economic activity and asset valuations. They have also precipitated financial accidents, such as the UK's brief LDI crisis in the autumn followed by the spring's regional bank failures in the US. The markets' calculation is that subsiding inflation will soon allow the Federal Reserve to signal that the all-important US Fed Funds rate has peaked. In stockmarket terms, the main beneficiaries so far of this expectation of falling interest rates have been the large technology companies in the US: their valuations thrived in the low inflation and low interest rate environment preceding the pandemic and they are perceived as being best placed to exploit the emerging fascination with artificial intelligence.

The likelihood of the UK's monetary policy following suit seems more distant. Consumer price inflation is proving more persistent, forcing the Bank of England to raise interest rates to 5% and bringing recession closer as higher mortgage rates bite. Reawakened memories of a British problem with inflation have contributed to a pervasive and thorough pessimism about the UK's prospects. Domestic politics of recent years have not helped. A succession of prime ministers has struggled with the additional challenges that the country's departure from the EU has presented to economic activity. Ideology has too often won out over pragmatism, culminating only nine months ago in Liz Truss's extraordinary and short-lived premiership.

These concerns have affected investment in the UK. Open-ended equity funds have experienced persistent outflows for several years and institutional asset allocation decisions appear influenced more by what has been rather than what will be. Valuations attributed to UK assets languish. Against the dollar and euro, sterling remains 15% or so below its levels before the EU referendum. Gilt yields are on a wide premium to government bond yields in the US and Europe. And UK stockmarket valuations are towards their lowest in over 30 years when compared with global equity market averages.

Equity valuations are examined in greater detail later in this report, but the important point is that they contrast sharply with the recent performance of the underlying businesses. The majority of small UK quoted companies and of the portfolio's holdings increased profits and dividends over the past year, notwithstanding the slew of macro-economic challenges. Cost inflation was passed on successfully, which confounds a recurring concern that small companies lack pricing power. Balance sheets were strengthened and are as strong as they have been in Aberforth's 32 years history. This underlying progress and resilience have persisted through the first part of 2023.

Performance and portfolio analysis

The following paragraphs describe the main influences on ASLIT's performance over the twelve months to 30 June 2023, as well as some of the significant characteristics of the portfolio.

Style

The Managers' value investment style has often been a significant influence on ASLIT's returns, and that was again the case in the twelve months to 30 June 2023. Over this period, the value cohort of the NSCI (XIC) significantly out-performed the index's growth stocks, according to data from the London Business School. Continuing the trend since the pandemic recovery started, investment style was therefore beneficial to ASLIT's returns. It is notable that most of this benefit came in the earlier part of the twelve month period. Over recent months, the glamour of artificial intelligence has contributed to a strong rebound in the share prices of the American technology leviathans, which has been to the advantage of the growth style.

Size

The NSCI (XIC) is formed from companies in the bottom ten per cent by value of the entire UK stockmarket. This meant that the largest company in the index on its 1 January 2023 rebalancing had a market capitalisation of £1.6bn and that the index has a significant overlap with the FTSE 250. ASLIT's portfolio has a relatively low exposure to companies in this overlap. It has relatively high exposure to the NSCI (XIC)'s smaller constituents. This reflects these "smaller small" companies' much more attractive valuations, which are set out later in this report. Over the twelve months to 30 June 2023, the portfolio's size positioning was modestly unhelpful to investment performance, as can be gauged by the fact that the FTSE 250 out-performed the FTSE SmallCap by 3%.

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Balance sheets

The table below shows the balance sheet profile of the portfolio and of the Tracked Universe at 30 June 2023, which is the subset of the NSCI (XIC) that the Managers follow closely and which represents 98% by value of the total index.

Weight in companies with:	Net cash	Net debt/EBITDA < 2x	Net debt/EBITDA > 2x	Others*
Portfolio 2023	47%	42%	5%	5%
Tracked Universe 2023	34%	36%	23%	8%

*Includes loss-makers and lenders

The portfolio's balance sheet profile compares well with that of the index, having a relatively high exposure to companies with net cash and a relatively low exposure to those with higher leverage. This profile has emerged from the Managers' bottom-up stock selection – the stockmarket is not giving small companies credit in their valuations for balance sheet strength.

The other important point to make about small companies' balance sheets is that they have not been so strong since around 2014. Companies had entered the 2009 recession with too much leverage and spent the next five years repairing their balance sheets. Today, in contrast, companies would be entering a slowdown or recession with healthy balance sheets. Clearly, there are exceptions, but the broad-based balance sheet resilience is an under-appreciated feature of small companies at present.

Income

ASLIT's aim to generate income growth from its portfolio was impeded by the pandemic, which forced many small companies to pass their dividends and necessitated a cut in ASLIT's dividend two years ago. However, since the pandemic recovery started, smaller companies have displayed their resilience and their commitment to their shareholders by promptly resuming dividend payments. The rebound has been surprisingly and pleasingly quick, which has allowed ASLIT's revenue return attributable to Equity Shareholders in the twelve months to 30 June 2023 to exceed its pre-pandemic level.

The table below illustrates the dividend performance of the portfolio over the past year. It splits the 63 holdings into five categories, which are determined by each company's most recent dividend action.

Nil Payer	Cutter	Unchanged Payer	Increased Payer	New/Returner
4	8	8	40	3

The majority of the holdings increased their most recent dividends. A further boost to the income performance comes from the New / Returners category. Its constituents are companies that are paying dividends for the first time or that have resumed payments, having paid nothing through the pandemic. It is anticipated that three of the current Nil Payers will move into the New / Returner category over the next twelve months. ASLIT's income also benefited from seven special dividends announced by investee companies in the year to 30 June 2023.

The average historical yield of the portfolio's holdings at 30 June 2023 was 5.2%, while the average dividend cover was 2.4x. An economic downturn would threaten dividend forecasts, but its impact should be mitigated by the portfolio's high dividend cover and strong balance sheets.

Corporate Activity

There was a flurry of M&A activity in the first part of 2022, but this petered out as interest rates and the cost of corporate debt rose through the second half of the year. Entering 2023, the Managers believed that the volatility of debt markets would continue to discourage takeovers. In the event, however, six new bids were announced for constituents of the NSCI (XIC) in the six months to 30 June 2023, with ASLIT owning two of them. The average EV/EBITA of the six at their deal prices was 16.2x, while the average premium to the pre-announcement share prices was 67%.

More surprising than the rebound in M&A has been the nature of the bidders: in five of the six deals, the buyers have been private equity firms. The surprise reflects the fact that debt is the lifeblood of private equity and debt markets have not yet settled down amid on-going tightening of monetary policy. However, it would appear that the very low valuations of small UK quoted companies mean that private equity does not need debt at the outset to make their M&A models work. This is a stark illustration of the opportunity currently embedded in the valuations of small UK quoted companies.

ASLIT may benefit from further takeover premiums for its holdings as long as stockmarket valuations remain at their present low levels. However, in these circumstances, it remains important to guard against opportunism on the part of the buyers. Large takeover premiums may still not bring valuations to appropriate levels and the Managers are prepared to vote against deals where this is the case. The best M&A experiences are often those in which boards of directors consult shareholders well in advance. Such consultation reduces the risk of embarrassment, should shareholders find proposed terms unacceptable, and can lead to better outcomes, which may be that the company in question retains its independence. The Managers make it clear to the boards of the investee companies that they should be consulted in such situations and that they are willing to be insiders for extended periods.

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Active share

Active share is a measure of how different a portfolio is from an index. The ratio is calculated as half of the sum of the absolute differences between each stock's weighting in the index and its weighting in the portfolio. The higher a portfolio's active share, the higher its chance of performing differently from the index, for better or worse. The Managers target an active share ratio of at least 70%. At 30 June 2023, it stood at 78%.

Portfolio turnover

Portfolio turnover is defined as the lower of purchases and sales divided by average portfolio value. Over the twelve months to 30 June 2023, turnover was 18%. This relatively subdued rate of turnover is due to the low stockmarket valuations of the portfolio's holdings – discounts to the Managers' target prices have not generally narrowed, so the opportunity for "value roll" within the portfolio has been limited. "Value roll" is the term that the Managers use to describe the recycling of capital from companies with less upside to target prices into those with greater upside.

Some of the turnover in the period reflected investment in companies that entered the NSCI (XIC) on 1 January 2023. As described in the last Interim Report, this was the largest ever rebalancing of the index. The 29 companies that were injected into the index offered the Managers additional opportunity: the portfolio owned three of these so-called "fallen angels" at 30 June 2023.

Valuations

The table below sets out the forward valuations of the portfolio, the Tracked Universe and certain subdivisions of the Tracked Universe. The metric displayed is enterprise value to earnings before interest, tax and amortisation (EV/EBITA), which the Managers use most often in valuing companies. The forecasts underlying the ratios are the Managers'. The bullet points following the table summarise its main messages.

EV/EBITA	2022	2023	2024
ASLIT	6.7x	7.6x	6.0x
Tracked Universe (234 stocks)	9.4x	9.6x	8.7x
- 40 growth stocks	14.5x	13.6x	13.7x
- 194 other stocks	8.7x	9.0x	7.9x
- 78 stocks > £600m market cap	11.0x	10.8x	10.2x
- 156 stocks < £600m market cap	7.4x	7.9x	6.6x

• The average EV/EBITA multiples of the portfolio are much lower than those of the Tracked Universe. This has been a consistent feature over ASLIT's history and is consistent with the Managers' value investment style.
• The portfolio's 7.6x EV/EBITA ratio for 2023 is considerably lower than the average multiple of 16.2x at which this year's M&A deals in the NSCI (XIC) have been struck.
• The profit forecasts underlying the EV/EBITA multiples for 2023 and 2024 are subject to uncertainty about the timing and intensity of an economic downturn. It can be inferred from the progression of the multiple across the three years that the Managers presently expect a slowdown in 2023, followed by a recovery in 2024.
• The growth stocks within the Tracked Universe are on much higher multiples than both the portfolio and the rest of the Tracked Universe.
• The "smaller small" companies within the index – here illustrated by those with market capitalisations less than £600m – are on vast valuation discounts to their larger peers. The Managers identify no reason for this beyond a general concern about liquidity and so the portfolio has a relatively high exposure to these "smaller small" companies.

The table below set out some of the main characteristics of ASLIT's diversified portfolio of smaller companies. The point above about exposure to "smaller small" companies is reinforced in the weighted average market capitalisation row.

Portfolio Characteristics	30 June 2023		30 June 2022
	ASLIT	NSCI (XIC)	ASLIT	NSCI (XIC)
Number of companies	63	339	66	323
Weighted average market capitalisation	£630m	£945m	£622m	£795m
Price earnings (PE) ratio (historical)	8.0x	10.8x	8.3x	9.8x
Dividend yield (historical)	5.2%	3.5%	4.5%	3.1%
Dividend cover	2.4x	2.6x	2.7x	3.3x

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Alongside the 5.2% dividend yield, the portfolio's most notable feature of the table is average historical price earnings ratio (PE). It has fallen from 8.3x to 8.0x over the twelve months to 30 June 2023. Given ASLIT's positive total assets total return in this period, it can be inferred that the reduction in the PE was due to growth in the earnings per share of the portfolio's holdings. An advantage of historical valuation measures, particularly when a recession looms, is that they are not susceptible to forecast uncertainties. To give a longer term perspective than ASLIT's six years, the chart below plots the historical PE ratio for the Managers' longest standing portfolio, which shares many of ASLIT's holdings.

Historical PE ratio of Aberforth's longest standing portfolio

Source: Aberforth Partners

The messages from the chart are that PE ratios are unusually low at present and that they fall so low when recession threatens: the earlier low-points in the chart were the early 1990s recession, the global financial crisis and the pandemic. It is therefore possible that much of the risk of an economic downturn is already embedded within share prices. Taking this argument further, small company profits typically fall by around 30% in a recession. A repeat of this would take the historical PE ratio of ASLIT's portfolio of 8.0x to a forward ratio of 11.4x. This multiple of what can be thought of as trough profits would still be below the long term average PE multiple shown in the chart of 12.1x.

An influence on the portfolio's low valuation at present is its exposure to UK equities. These are out of favour with global investors for reasons previously set out in this report. Data from Panmure Gordon help quantify the scale of this disenchantment. The PE of the UK stockmarket is presently 27% lower than the PE of global equities, which is much more than the average discount of 15% over Aberforth's 32 year history. Comparing ASLIT's portfolio directly with global equities, the current PE discount is 46%, whereas the 32 year average for Aberforth's longest standing portfolio has been 24%. The valuation elastic is therefore extremely stretched at present, with ASLIT on a triple discount by virtue of its value investment style, its exposure to small companies and its Britishness. This appears incongruous given the resilience of the portfolio's investee companies and the fact 42% of their revenues on average are generated outside the UK. An easing of the tension in valuations, as one or more of these relationships returns towards the normal levels of the past 32 years, should bode well for ASLIT's returns.

Outlook

Stockmarkets' immediate obsession is US interest rates – each data release is scrutinised exhaustively for a hint of what the Federal Reserve might do next. The positive start to 2023 for equities indicates an expectation that US interest rates are close to their peak. However, there are important caveats. The speed and extent of the interest rate increases threaten further accidents – the financial world has grown used to more than a decade of almost costless money. Moreover, it is not clear that inflation will return conveniently and reliably to its pre-pandemic levels – the rate of increase will subside, but underlying inflationary pressures from labour markets and from forces such as de-globalisation linger.

While equity investors are presently enthused by the outlook for US monetary policy, they remain nervous about prospects for UK politics and economics over the next couple of years. On the political front, there will be a UK General Election within the next eighteen months. This will come at a time when the influence of the more extreme elements of both main political parties appears to be waning. However, a change of government looks likely, which brings incremental risk.

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Managers' Report

Meanwhile, the UK economy is blighted by more persistent inflation than are its peers. This threatens a more aggressive monetary response by the Bank of England and potentially a more severe downturn in economic activity. Recessions are unpleasant. They increase hardship faced by households and businesses. They reduce incomes and profits. But they are also inevitable and even necessary in order to address the effects of past policy mistakes and of unforeseeable developments such as the pandemic.

The near term risks are undeniable. But so is the attractiveness of the valuations attributed to the portfolio's holdings by the stockmarket. Importantly, the stress-testing of today's valuations described above suggests that much of the risk of a recession may already be embedded in share prices. Ironically, therefore, there is less uncertainty about the medium and long term outlook for returns from the companies in ASLIT's portfolio. History is rather convincing: when valuations have reached today's levels in the past, total returns over the next five years have been strong.

Conclusion

Herein lies the frustration for ASLIT. By virtue of its closed end structure and its gearing, it is well suited to take advantage of today's valuations, but it has just one year of its planned life left. It is not clear that the qualities of ASLIT's portfolio – its strong balance sheets, resilient income profile and very low valuations – will be recognised widely by investors within this time frame. Further takeover activity will help close value gaps, but more time is likely to be necessary to benefit fully from the opportunity in today's valuations. Therefore, the Managers are working with the Board to offer Shareholders the option, no later than 1 July 2024, either to realise their investment in cash or to continue their exposure to the Managers' investment approach in some form.

Aberforth Partners LLP
Managers
27 July 2023

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Stewardship and Environmental, Social and Governance (ESG)

Board oversight and activities

At the heart of the Board’s approach to stewardship is promoting the success of the Company for the benefit of Shareholders as a whole. The main gauge of success is the achievement of the Company’s investment objective in a manner consistent with its investment policy and strategy. In doing so, the Board considers its corporate governance obligations, and those relating to regulation, risk and market integrity. Both the investment objective and these factors are affected by environmental, social and governance matters.

In discharging its stewardship responsibilities, the Board benefits from a group of directors with deep and diverse expertise. Their main role is one of oversight since the Company’s day-to-day activities are undertaken by external firms. Monitoring is based on quarterly updates from the Managers and Secretaries. During the year, the Board reviewed the Managers’ stewardship and ESG related activity. This included the following.

• Enhancements to the Managers’ stewardship and ESG policies and practices. During the year, the Managers’ dedicated additional resource to support sustainability matters.
• Analysis and use of the data from an ESG survey of investee companies conducted in 2021, supporting active engagement during 2022 and 2023.
• The completion of a proprietary methodology in a database module for assessing investee companies’ ESG issues and for tracking related engagement activity.
• The Board reviewed and welcomed the publication of Aberforth Partners LLP’s second Governance and Corporate Responsibility statement. It provides information about Aberforth’s approach to ESG matters, including disclosures about greenhouse gas emissions for scope 1, 2 and 3.

Since the Company has no employees and the Board has engaged external firms to undertake its investment management, secretarial and custodial activities, the Company has no greenhouse gas emissions to report from its operations and does not have responsibility for any other emissions-producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. The Board considered the applicability to the Company of the Streamlined Energy & Carbon Reporting Statement ('SECR'), determining that the Managers’ voluntary detailed disclosures under SECR are most relevant.

The Managers, to whom the Board has delegated investment management responsibilities and discretion to exercise voting rights, play a crucial role in how the Company’s approach to stewardship is put into practice. Their investment decisions, engagement with companies and voting are conducted in a manner consistent with their own stewardship policy. This is designed to deliver the Company’s investment objective while taking into account broader responsibilities to the economy, environment and society. The Board has reviewed, and endorses, the Managers’ Stewardship approach and Policy, the details of which are set out below.

The Managers’ approach to Stewardship and ESG

Philosophy, policies, and practices

The Managers’ approach to Stewardship and ESG is available on the Aberforth website in the “About Aberforth” section. The policy framework is set out in the following documents.

• About Aberforth: the background and founding principles of the firm, its core strategic philosophy and nature of the business.
• Investment Philosophy: the Managers’ approach to investing as adopted for the Company, relevant extracts of which are included in the narrative that follows.
• Stewardship Policy: Aberforth’s approach to stewardship of clients’ capital, set out the format of the FRC’s UK Stewardship Code.
• Engagement and Voting Framework: how Aberforth engages and votes, along with what is expected from investee companies.
• Examples of Engagement and Voting: examples of how the Engagement and Voting framework is put into action.
• Governance and Corporate Responsibility: Aberforth Partners LLP’s approach to Stewardship, which is reported annually.

The Managers’ approach to stewardship and ESG is overseen by their Stewardship Committee, which is a sub-committee of the partnership committee, Aberforth’s ultimate governance body.

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Stewardship and Environmental, Social and Governance (ESG) Matters

The investment cases for many of the Company's holdings are influenced by environmental, social and governance matters, particularly as the increased profile of such issues affects the stockmarket's valuations of companies. The Managers do not exclude investments from the portfolio based on ESG considerations alone. Rather, analysis of ESG matters is integrated into the investment process and is considered alongside other factors in forming an investment case.

Where ESG or other matters impinge upon the investment case, the Managers engage with the investee company's board, which is responsible for the design and implementation of the company's environmental, social and governance policies. The Managers are well placed to undertake this activity, since engagement has always been a fully integrated element of their investment process and feeds through to the target valuations for companies. The Managers believe that their willingness to engage constructively with the boards of investee companies has benefited investment performance over time and is therefore important to the long term success of the Company.

To support the investment process, Aberforth has enhanced its proprietary investment database with a module to improve the analysis and tracking of important ESG issues. The module captures relevant metrics, such as greenhouse gas emissions, Task Force for Climate-related Financial Disclosures (TCFD) compliance and the setting of net zero and science based targets. It also evaluates investee companies on the basis of several ESG subfactors. The scoring methodology starts with a sector-driven risk score, which is determined by the Aberforth's Stewardship Committee and is influenced by inputs from several third parties such as the Sustainability Accounting Standards Board and other relevant external ESG analyses. From there, the investee company's actual score for each subfactor is determined, taking into account the risk score and company-specific considerations. This methodology allows the portfolio's ESG profile to be snapshotted and to be tracked through time, as well as helping to identify risks to investment cases and to focus engagement efforts.

Voting Policy and Activity

The Board has given discretion to the Managers to exercise voting rights on behalf of the Company. The Managers consider and vote on every resolution that is put to shareholders of the companies in which the Company is invested. The Board endorses the Managers' voting philosophy, which treats clients as part owners of the underlying companies. These voting principles are set out in the Managers' "Engagement and Voting Framework" document. The Managers vote against resolutions that they believe may damage shareholders' rights or economic interests, which specifically includes consideration of governance, environmental and social matters.

The Board receives quarterly reports from the Managers on governance and voting issues pertaining to investee companies. The annual voting activity for the Company is noted in the table below.

ASLIT's voting activity, 12 months to 30 June 2023
Shareholder meetings at which ASLIT's shares were voted	75
Shareholder meetings at which ASLIT's shares voted against or abstained	12
Number of resolutions voted	1,093
Number of resolutions voted against	5
Number of resolutions abstained	13

Voting is often the conclusion of engagement, which is undertaken directly and over time with the boards of investee company. Under normal circumstances, concerns would have been raised and discussed with an investee company's directors before the vote. Such engagement improves understanding of issues underlying controversial resolutions and can result in change that allows the Managers to vote in favour of the relevant resolutions.

Among small UK quoted companies, there are still few general meeting resolutions directly relevant to environmental and social issues, so much of the voting is focused on governance. During 2022/23, the Managers did not vote in favour of resolutions for the re-election of non-independent directors owing to potential conflicts of interest. Votes against were also prompted by concerns about remuneration and about the effectiveness of directors. Beyond resolutions put to annual general meetings, the Managers voted against the approval of the takeover of one of the investee companies since the terms of the deal under-valued the business in question.

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Stewardship and Environmental, Social and Governance (ESG) Matters

The Managers' submission to the UK Stewardship Code

The UK Stewardship Code, issued by the FRC, sets out the principles of effective stewardship by institutional investors. Aberforth, the Company's investment managers, are committed to effective stewardship and were early adopters of the UK Stewardship Code. They were again recognised as an approved signatory of the code in September 2022. The Managers publish their submission on their website, along with supporting documentation.

UN Principles For Responsible Investment ('UNPRI')

The Managers are a signatory to, and participate in, the annual UNPRI assessment. The results are available within the "About Aberforth" section of the Managers' website.

Aberforth Partners LLP's governance and corporate responsibility

The Managers' approach for their business to stewardship and ESG matters is governed by the Stewardship Committee. Details are set out in their Governance & Corporate Responsibility statement. This includes their policies and practices covering their approach to governance, risk and control, company culture, human resources and environmental matters. The document also sets out Aberforth's approach to emissions disclosures. It reported on scope 1 and 2 emission disclosures in 2022 and is enhanced for the inclusion of Scope 3 emissions in 2023. These are reported in the Governance and Corporate Responsibility section of the Managers' website. These voluntary disclosures are reported under the Streamlined Energy & Carbon Reporting Statement ('SECR').

Further details

Further details on the Managers' stewardship policy and supporting documentation are available within the "About Aberforth" section of their website at www.aberforth.co.uk.

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As at 30 June 2023

Thirty Largest Investments

No.	Company	£'000	% of Total Investments	Business Activity
1	Redde Northgate	7,025	3.5	Van rental
2	Rathbones Group	6,925	3.4	Private client fund manager
3	FirstGroup	6,842	3.4	Bus & rail operator
4	Morgan Advanced Materials	6,385	3.2	Manufacture of carbon & ceramic materials
5	Vesuvius	6,030	3.0	Metal flow engineering
6	Centamin	5,948	2.9	Gold miner
7	Lookers	5,757	2.8	Motor vehicle retailer
8	Wincanton	5,394	2.7	Logistics
9	Wilmington Group	5,131	2.5	Business publishing & training
10	Bloomsbury Publishing	5,089	2.5	Independent publishing house
	Top Ten Investments	60,526	29.9
11	International Personal Finance	5,020	2.5	Home credit provider
12	Conduit Holdings	4,610	2.3	Bermuda based (re)insurer
13	Close Brothers Group	4,386	2.2	Bank, stockbroker & private client fund manager
14	Moneysupermarket.com	4,060	2.0	Price comparison websites
15	Bakkavor Group	3,969	2.0	Food manufacturer
16	Kenmare Resources	3,883	2.0	Miner of titanium minerals
17	XPS Pensions Group	3,783	1.8	Pension consultancy
18	Ecora Resources	3,734	1.8	Natural resources royalties
19	Castings	3,646	1.8	Engineering - automotive castings
20	Robert Walters	3,642	1.8	Recruitment
	Top Twenty Investments	101,259	50.1
21	Galliford Try Holdings	3,575	1.8	Housebuilding & construction
22	Energean	3,562	1.8	Oil & gas exploration and production
23	C&C Group	3,560	1.8	Brewer and drinks distributor
24	Bodycote	3,252	1.6	Engineering - heat treatment
25	Paypoint	3,162	1.6	Alternative payment services
26	Headlam Group	3,148	1.6	Distributor of floor coverings
27	Crest Nicholson	3,107	1.5	Housebuilding
28	TI Fluid Systems	3,107	1.5	Automotive parts manufacturer
29	Hollywood Bowl	3,061	1.5	Operator of bowling centres
30	Sabre Insurance Group	3,035	1.5	Car insurance
	Top Thirty Investments	133,828	66.3
	Other Investments (33)	68,322	33.7
	Total Investments	202,150	100.0
	Net Liabilities	(55,350)
	Total Net Assets	146,800

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Investment Portfolio

Sector/Security	Business Activity	Value £'000	% of Total Investments
Software and Computer Services		4,060	2.0
Moneysupermarket.com	Price comparison websites	4,060	2.0
Technology Hardware and Equipment		1,799	0.9
TT Electronics	Sensors & other electronic components	1,799	0.9
Banks		4,386	2.2
Close Brothers Group	Bank, stockbroker & private client fund manager	4,386	2.2
Finance and Credit Services		6,721	3.3
International Personal Finance	Home credit provider	5,020	2.5
S & U	Personal credit provider	1,701	0.8
Investment Banking and Brokerage Services		17,674	8.7
City of London Investment Group	Asset manager	2,365	1.2
CMC Markets	Financial derivatives dealer	2,424	1.2
Jupiter Fund Management	Investment manager	2,177	1.1
Rathbones Group	Private client fund manager	6,925	3.4
XPS Pensions Group	Pension consultancy	3,783	1.8
Life Insurance		4,139	2.0
Chesnara	Life insurance	2,938	1.5
Hansard Global	Life assurance savings products	1,201	0.5
Non-life Insurance		7,645	3.8
Conduit Holding	Bermuda based (re)insurer	4,610	2.3
Sabre Insurance Group	Car insurance	3,035	1.5
Real Estate Investment and Services		992	0.5
Foxtons	Estate agent	992	0.5
Real Estate Investment Trusts		3,602	1.8
Empiric Student Property	Property - student accommodation	781	0.4
Workspace Group	Property - rental to small businesses	2,821	1.4
Automobiles and Parts		3,107	1.5
TI Fluid Systems	Automotive parts manufacturer	3,107	1.5
Consumer Services		1,425	0.7
RM	IT services for schools	1,425	0.7
Household Goods and Home Construction		9,282	4.6
Crest Nicholson	Housebuilding	3,107	1.5
Headlam Group	Distributor of floor coverings	3,148	1.6
Vistry Group	Housebuilding	3,027	1.5
Media		17,605	8.7
Bloomsbury Publishing	Independent publishing house	5,089	2.5
Centaur Media	B2B publishing	1,823	0.9
Reach	UK newspaper publisher	2,934	1.5
STV Group	Multi-channel digital media	2,628	1.3
Wilmington Group	Business publishing & training	5,131	2.5
Retailers		12,019	5.9
Card Factory	Retailing - greetings cards	2,022	1.0
DFS Furniture	Furniture retailer	1,785	0.9
Lookers	Motor vehicle retailer	5,757	2.8
Topps Tiles	Ceramic tile retailer	2,455	1.2
Travel and Leisure		14,161	7.0
FirstGroup	Bus & rail operator	6,842	3.4
Hollywood Bowl	Operator of bowling centres	3,061	1.5
Hostelworld Group	Hostel booking platform	2,038	1.0
Rank Group	Multi-channel gaming operator	2,220	1.1

Strategic Report

Aberforth Split Level Income Trust plc 17

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Investment Portfolio

As at 30 June 2023

Sector/Security	Business Activity	Value £'000	% of Total Investments
Beverages		3,560	1.8
C&C Group	Brewer and drinks distributor	3,560	1.8
Food Producers		3,969	2.0
Bakkavor Group	Food manufacturer	3,969	2.0
Construction and Materials		9,827	4.9
Eurocell	Manufacture of UPVC building products	2,321	1.1
Galliford Try Holdings	Housebuilding & construction	3,575	1.8
Keller	Ground engineering services	2,538	1.3
Severfield	Structural steel specialist	1,393	0.7
Aerospace and Defence		2,021	1.0
Senior	Aerospace & automotive engineering	2,021	1.0
Electronic and Electrical Equipment		6,385	3.2
Morgan Advanced Materials	Manufacture of carbon & ceramic materials	6,385	3.2
Industrial Engineering		15,722	7.8
Bodycote	Engineering - heat treatment	3,252	1.6
Castings	Engineering - automotive castings	3,646	1.8
Vesuvius	Metal flow engineering	6,030	3.0
Videndum	Photographic & broadcast accessories	2,794	1.4
Industrial Support Services		16,409	8.1
PageGroup	Recruitment	2,692	1.3
Paypoint	Alternative payment services	3,162	1.6
Robert Walters	Recruitment	3,642	1.8
SIG	Specialist building products distributor	1,915	0.9
Smiths News	Newspaper distribution	2,856	1.4
Speedy Hire	Plant hire	2,142	1.1
Industrial Transportation		13,569	6.7
Redde Northgate	Van rental	7,025	3.5
VP	Equipment rental	1,150	0.5
Wincanton	Logistics	5,394	2.7
Industrial Metals and Mining		7,617	3.8
Ecora Resources	Natural resources royalties	3,734	1.8
Kenmare Resources	Miner of titanium minerals	3,883	2.0
Precious Metals and Mining		5,948	2.9
Centamin	Gold miner	5,948	2.9
Chemicals		1,765	0.9
RHI Magnesita	Refractory products	1,765	0.9
Oil, Gas and Coal		4,630	2.3
Energean	Oil & gas exploration and production	3,562	1.8
Genel Energy	Oil & gas exploration and production	1,068	0.5
Electricity		2,111	1.0
Drax Group	Electricity generation	2,111	1.0
Total Investments		202,150	100.0

Strategic Report

Aberforth Split Level Income Trust plc

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Other Portfolio Information

Summary of Investment Transactions

For the year to 30 June 2023

Purchases	Cost £'000	Sales	Proceeds £'000
Close Brothers Group	4,795	Micro Focus	7,464
FirstGroup	4,696	RPS Group	7,415
Bodycote	2,700	Go-Ahead Group	6,481
Robert Walters	2,248	Devro	5,079
Workspace Group	1,893	Vanquis Banking Group	3,553
C&C Group	1,789	Brewin Dolphin Holdings	1,867
Hollywood Bowl	1,317	Forterra	1,491
XPS Pensions Group	1,287	Drax Group	1,282
Galliford Try Holdings	1,236	Industrials REIT	1,219
Morgan Advanced Materials	1,226	Rathbones Group	1,077
Vesuvius	1,197	Essentra	667
Headlam Group	1,175	Hostelworld Group	33
Severfield	1,161	CMC Markets	27
Moneysupermarket.com	1,151
Lookers	981
Industrials REIT	932
Speedy Hire	921
Empiric Student Property	780
Sabre Insurance Group	735
Wincanton	675
Other Purchases	4,109
Total Cost of Purchases¹	37,004	Total Proceeds of Sales¹	37,655

FTSE Industry Classification Exposure Analysis

Sector	30 June 2022		Net Purchases/ (Sales)¹ £'000	Net Appreciation/ (Depreciation)¹ £'000	30 June 2023
	Portfolio Weight %	Portfolio Valuation £'000			Portfolio Weight %	Portfolio Weight %
Technology	4	7,570	(6,313)	4,603	5,860	3
Telecommunications	–	–	–	–	–	–
Health care	–	–	–	–	–	–
Financials	20	39,529	1,022	12	40,563	20
Real Estate	1	2,044	2,387	163	4,594	2
Consumer Discretionary	27	53,006	2,653	1,940	57,599	28
Consumer Staples	5	10,241	(3,290)	577	7,528	4
Industrials	30	57,432	3,809	2,694	63,935	32
Basic Materials	8	14,555	363	411	15,329	8
Energy	3	5,274	–	(643)	4,631	2
Utilities	2	3,411	(1,282)	(18)	2,111	1
	100	193,062	(651)	9,739	202,150	100

¹ Includes transaction costs.

Strategic Report
Aberforth Split Level Income Trust plc 19

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Other Portfolio Information

FTSE Index Classification Exposure Analysis

Index Classification	Number of Companies	30 June 2022 Portfolio Valuation £'000	Weight %	Number of Companies	30 June 2022 Portfolio Valuation £'000	Weight %
FTSE 100	–	–	–	–	–	–
FTSE 250	21	73,337	38.0	24	90,515	44.8
FTSE SmallCap	34	92,783	48.1	29	85,526	42.3
FTSE Fledgling	4	6,752	3.5	3	4,449	2.2
Other	7	20,190	10.4	7	21,660	10.7
	66	193,062	100.0	63	202,150	100.0

Other Business Information

Company Status

The Company is a closed-ended investment trust listed on the London Stock Exchange and an Alternative Investment Fund under the Alternative Investment Fund Managers (AIFM) Directive. The Company has been approved by HM Revenue & Customs as an investment trust from 3 July 2017 subject to the Company continuing to meet the eligibility conditions. The Company will continue to conduct its affairs as an investment trust. Furthermore, the Company is an investment company as defined within the meaning of Section 833 of the Companies Act 2006.

Board Diversity

The Board's diversity policy and information on Board diversity, including in relation to FCA Listing Rules and targets, are set out on pages 28 and 29.

Environmental, Human Rights, Employee, Social Community Issues

The requirement to detail information about environmental matters, human rights, social and community issues does not apply to the Company as it has no employees, all Directors are non-executive and it has outsourced its functions to third party service providers. The Company's and the Managers' approach to environmental, social and governance matters is set out on pages 13 to 15.

The Strategic Report, contained on pages 1 to 20, has been prepared in accordance with Section 414 of the Companies Act 2006, as amended, and has been approved by the Board of Directors on 27 July 2023 and signed on its behalf by:

Angus Gordon Lennox

Chairman

Strategic Report

Aberforth Split Level Income Trust plc

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Governance Report
Aberforth Split Level Income Trust plc 21

Governance Report

Board of Directors

Angus Gordon Lennox (Chairman)

Appointed: 19 April 2017

Shareholding in the Company: 619,738 Ordinary Shares

Angus Gordon Lennox has an extensive knowledge of the investment industry with 23 years at Cazenove, latterly J.P. Morgan Cazenove, where he was a managing director and Head of the Investment Companies Department. He held this position until 2010 when he retired. Angus is also the executive chairman of two family businesses and chairman of The Mercantile Investment Trust plc.

Graeme Bissett

Appointed: 19 April 2017

Shareholding in the Company: 84,404 Ordinary Shares and 6,000 ZDP Shares

Graeme Bissett is chairman of the Audit Committee and is a chartered accountant. He was a senior partner of Arthur Andersen LLP, with responsibility for its corporate finance and audit practices in Scotland from 1990 to 1998. Graeme has previously served as non-executive chairman of Macfarlane Group plc. Graeme has also previously served as finance director of international groups and as a non executive director on a number of private and listed company boards. Graeme is a non-executive director with Smart Metering Systems plc, Calnex Solutions plc and Cruden Holdings Ltd. He is a trustee of the Scottish Association of Citizens Advice Bureaux, a trustee of the Entrepreneurial Scotland Foundation and a trustee of Pitlochry Festival Theatre.

Dominic Fisher OBE

Appointed: 19 April 2017

Shareholding in the Company: 298,328 Ordinary Shares

Dominic Fisher is a member of the Audit Committee. He was a director of Aberforth Geared Income Trust plc from 2010 to 2017. He is the founder of Thistledown Investment Management Ltd and has worked as an investment manager since 1989. From 1992 to 2001 he worked for Mercury Asset Management (subsequently Merrill Lynch Investment Managers), heading the charities division responsible for management of £2.4 billion of funds and was a member of the smaller companies team.

Lesley Jackson

Appointed: 24 April 2019

Shareholding in the Company: 36,676 Ordinary Shares

Lesley Jackson is a member of the Audit Committee and is a chartered accountant. She was the Group Chief Financial Officer ('CFO') for Stock Spirits PLC from 2011 to 2018. She has previously served as the Group CFO for William Grant & Sons, and as Group CFO of United Breweries (an Indian listed public company). She is a non-executive director of The Artisanal Spirits Company plc and also serves as a Governor on the Federation of Victoria School and Cherry Oak School, special needs schools in South Birmingham.

Graham Menzies

Appointed: 19 April 2017

Shareholding in the Company: 478,786 Ordinary Shares (Beneficial) and 62,835 (Non-beneficial)

Graham Menzies was a director of Aberforth Geared Income Trust plc from 2010 to 2017. He was group chief executive of Adwest Automotive plc until 1999 and group chief executive of Senior plc until 2008. He has been a non-executive director on several industrial company boards, including five public companies and four private companies.

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Directors' Report

The Directors present their Annual Report and the audited financial statements for the year to 30 June 2023.

Directors

The Directors of the Company during the year to 30 June 2023 are listed on page 21. Further information about the Board can be found in the Corporate Governance Report, which forms part of this Directors' Report. It is the responsibility of the Board to ensure that there is effective stewardship of the Company's affairs. In common with the majority of investment trusts, the Company has neither executive directors nor any employees. However, the Board has engaged external firms to undertake the investment management, secretarial, depositary and custodial activities of the Company.

Details of Directors' remuneration and shareholdings are shown within the Directors' Remuneration Report on pages 35 and 36.

Objective, Investment Policy, Investment Strategy, Risks and Dividend Policy

These are explained fully on pages 1, 4, 5 and 24.

Return and Dividends

The total return attributable to Ordinary Shareholders for the year to 30 June 2023 amounted to a profit of £16,866,000 (2022: loss of £36,112,000). As at 30 June 2023 the Net Asset Value per Ordinary Share was 77.16p (2022: 73.04p) and per ZDP Share was 122.82p (2022: 118.57p).

Your Board is pleased to declare a second interim dividend of 3.30p (total of £6,278,000), which produces total dividends for the year to 30 June 2023 of 5.00p (total of £9,513,000). The second interim dividend has an ex dividend date of 10 August 2023 and will be paid on 31 August 2023 to Ordinary Shareholders on the register at the close of business on 11 August 2023. The first interim dividend of 1.70p (total of £3,235,000) per Ordinary Share was paid on 8 March 2023.

Managers

Aberforth Partners LLP (the firm, Managers or Aberforth) act as Alternative Investment Fund Manager and Secretaries to the Company. The business was established in 1990 to provide institutional and wholesale investors with a high level of resources focused exclusively on small UK quoted companies and deployed in accordance with a value investment philosophy.

At 30 June 2023, funds under management were £1.9 billion, of which 79% was represented by investment trusts, 7% by a unit trust and 14% by segregated charity funds. All these funds are managed in line with the value philosophy applied to the Company's portfolio. The Managers believe that diseconomies of scale come with managing too much money within an asset class such as small UK quoted companies. Accordingly, they impose a ceiling on funds under management, which in normal circumstances would be equivalent to 1.5% of the total market capitalisation of the NSCI (XIC) investment universe. Consistent with this, current capacity is circa £250 million of funds under management.

The firm is wholly owned by six partners – five investment partners and an operations partner, who is responsible for the firm's administration. The investment team comprised the five investment partners and one other investment manager. Analytical responsibilities are divided by stockmarket sector among the investment managers, but investment decisions and portfolio management are undertaken on a collegiate basis by the full team. The investment managers are remunerated on the basis of the success of the firm and its funds as a whole. Alignment with Company's Shareholders is further enhanced by the team's meaningful personal investments in the Company's equity.

These investment management services can be terminated by either party at any time by giving six months' notice of termination. Compensation would be payable in respect of this six month period only if termination were to occur sooner. Aberforth receives a management fee, calculated and payable quarterly in advance, equal to 0.1875% of the Company's Total Assets at the end of the quarter preceding that to which the fee relates. Assuming a constant level of Total Assets, this would be equivalent to 0.75% of Total Assets over the course of a year. The management fee amounted to £1,477,000 (2022: £1,737,000) in the year to 30 June 2023.

The Board reviews the Company's investment management and secretarial arrangements on an on-going basis and formally at its July meeting, where each Director completes a Managers' Evaluation questionnaire. The Board then considers the results of the questionnaire and discusses the following matters, amongst others, in its review.

• Investment performance in relation to the investment objective, policy and strategy
• The continuity and quality of personnel managing the assets
• The level of the management fee
• The quality of reporting to the Board
• The administrative services provided by the Secretaries
• The frequency and quality of both verbal and written communications with Shareholders

Following the most recent review, the Board has formed the view that the continued appointment of Aberforth as Managers on the terms agreed is in the best interests of Shareholders.

Governance Report
Aberforth Split Level Income Trust plc

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Directors' Report

Consumer Duty

The Company is not subject to the FCA's new Consumer Duty Regulations (Consumer Duty). However, Aberforth must comply as ASLIT's product manufacturer and Alternative Investment Fund Manager. In this matter Aberforth provided regular compliance update reports as part of their consumer duty implementation project. The Board considered and is satisfied with Aberforth's value assessment report and supporting papers, provided under the regulations. Furthermore, relevant costs and services engaged directly by the Company were assessed. Overall, the Board continues to monitor consumer outcomes to ensure consistency with the Consumer Duty and is satisfied fair value is provided to retail investors in line with the Company's stated objectives and investment philosophy. On the Company's behalf, Aberforth communicates compliance with the Consumer Duty to product distributors via the European MiFID Template reporting standard (EMT).

Depositary

NatWest Trustee & Depositary Services Limited carries out the duties of Depositary as specified in the Alternative Investment Fund Managers (AIFM) Directive in relation to the Company, including:

• holding or controlling all assets of the Company that are entrusted to it for safekeeping;
• cash monitoring and verifying the Company's cash flows; and
• oversight of the Company and the Managers.

In carrying out such duties, the Depositary acts in the best interests of the Shareholders of the Company. The Depositary is contractually liable to the Company for the loss of any securities entrusted to it. The Depositary is also liable to the Company for all other losses suffered as a result of the Depositary's fraud, negligence and/or failure to fulfil its duties properly.

The Depositary receives an annual fee, payable quarterly in arrears, of 0.0085% of the net assets of the Company and its appointment may be terminated at any time by giving at least six months' notice. A Depositary may only be removed from office when a new Depositary is appointed by the Company.

Company Status

The Company is registered as a public limited company and is an investment company as defined by Section 833 of the Companies Act 2006. The Directors are of the opinion that the Company has conducted its affairs during the year to 30 June 2023 so as to maintain approval as an Investment Trust under section 1158 of the Corporation Tax Act 2010.

The Company has share capital consisting of Ordinary Shares and ZDP Shares. The Company is listed and its two share classes trade on the London Stock Exchange. Furthermore the Company is subject to the laws and regulations relating to UK listed companies. The Company is a member of the Association of Investment Companies (AIC).

Capital Structure

The Company has two classes of Shares. At 30 June 2023 the Company's share capital consisted of Ordinary Shares, of which 190,250,000 were issued, allotted and fully paid, and, ZDP Shares, of which 47,562,500 were issued, allotted and fully paid. The Ordinary Shares represent 80% of the Company's issued share capital and the ZDP Shares represent 20% of the Company's issued share capital. No Shares were held in treasury as at 30 June 2023 (2022: nil).

Ordinary Shares

Ordinary Shareholders are entitled to the net assets of the Company on a winding-up, after all liabilities of the Company have been settled and the entitlements of the ZDP Shares have been met. In addition, Ordinary Shareholders will be entitled on a winding-up to receive any undistributed revenue reserves of the Company, which will be paid in the form of a pre-liquidation dividend or during the course of the liquidation, subject to all creditors of the Company having been paid out in full and even if the cover on the ZDP Shares is at the time less than one. The Company's capital structure is such that the underlying value of assets attributable to the Ordinary Shares will be geared by the rising capital entitlements of the ZDP Shares. Accordingly, the Ordinary Shares should be regarded as carrying above average risk.

Zero Dividend Preference Shares

The ZDP Shares were issued with a targeted final capital entitlement of 127.25p per ZDP Share on the planned winding-up date of 1 July 2024. This represents a redemption yield of 3.5% per annum over the life of the ZDP Shares, based on the issue price of 100p at inception on 30 June 2017. Under current legislation, the increase from the issue price of 100p to 127.25p per ZDP Share will generally be treated as a capital gain for UK tax purposes. The holders of ZDP Shares are not entitled to receive dividend payments. ZDP Shares have been recorded as a liability in the Company's Balance Sheet.

Investment Trust Status

The Company is exempt from corporation tax on capital profits, provided it qualifies as an Investment Trust. In respect of the year to 30 June 2023, the main qualifying requirements included the following.

• The Company must invest in shares, land or other assets with the aim of spreading investment risk and giving members of the Company the benefit of the results of the management of its funds.
• The Company's Shares are listed on a regulated market such as the London Stock Exchange.
• The Company must not retain in respect of each accounting period more than 15% of its total income as defined for tax purposes.
• The Company must not be a close company.

The Company has been approved by HM Revenue & Customs as an Investment Trust for accounting periods commencing on or after 3 July 2017 subject to the Company continuing to meet the eligibility conditions. The Company intends to continue to conduct its affairs as an Investment Trust.

Governance Report
Aberforth Split Level Income Trust plc 23

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Directors' Report

Duration of the Company

The Company has a planned life lasting until 1 July 2024. The Directors are required by the Company's Articles of Association to convene a general meeting of the Company on, or within the three months prior to 1 July 2024, at which a special resolution will be proposed to wind up the Company voluntarily by not later than the planned winding-up date. As these arrangements are designed to ensure that the ZDP Shareholders will be entitled to realise their investment, weighted voting provisions shall apply so as to ensure that this resolution will be passed if any Shareholder votes in favour. However, before this date, the Directors will examine means whereby holders of Ordinary Shares may effectively continue their investment while allowing the ZDP Shareholders to realise their investment. The Directors may be released from the obligation to call a general meeting if a special resolution has been passed to that effect not later than 1 July 2024.

Overdraft facility

The Company has a £2 million overdraft facility with The Northern Trust Company, which is subject to an annual review. The interest rate applying to overdrawn balances is 1.5% over the UK Base Rate. In addition an annual arrangement fee of £2,500 is incurred in respect of the facility. During the year to 30 June 2023 the highest utilisation of the overdraft facility was £1.9 million.

Dividend Policy

The Company's dividend policy is to distribute a significant proportion of its net revenue (after payment of expenses and taxation) in the form of dividends to Ordinary Shareholders. As an investment trust the Company must not retain in respect of any accounting period an amount which is greater than 15 per cent of its income for such accounting period. Ordinary Shareholders are entitled to receive all such dividends. The holders of the ZDP Shares are not entitled to receive dividend payments. The Company's dividend policy is to pay two dividends in respect of each financial year: a first interim dividend is paid in February/March and a second interim dividend is paid in August/September. A second interim dividend is paid rather than a final dividend in order to expedite the disbursement for the benefit of Ordinary Shareholders.

Going Concern

The Audit Committee has undertaken and documented an assessment of whether it is appropriate for the Company to adopt the going concern basis of accounting.

The Company's business activities, capital structure and borrowing facility, together with the factors likely to affect its development and performance, are set out in the Strategic Report. In addition, the Annual Report includes the Company's objectives, policies and processes for managing its capital, its financial risk, details of its financial instruments and its exposures to credit risk and liquidity risk. The Company's assets comprise mainly readily realisable equity securities, which, if necessary, can be sold to meet any funding requirements, though funding flexibility can typically be achieved through the use of the bank overdraft facility. The Company has adequate financial resources to enable it to meet its day-to-day working capital requirements.

In particular the Directors considered the implications of the proximity to the planned winding-up date of 1 July 2024 and that Shareholders will have a vote on proposals relating to the Company's planned life, on or within the three months prior to 1 July 2024. The Directors may be released from the obligation to call a general meeting to wind up the Company if a special resolution has been passed to that effect not later than 1 July 2024. The Directors also considered the investment outlook, the objectives of both classes of Shareholder, potential sources of funding to finance the repayment of the entitlement due to the ZDP Shareholders and other future cash flows of the Company. The nature of any proposals that may be presented by the Directors relating to the Company's planned life on which the Shareholders will be required to vote and the outcome of the vote on any such proposals represent a material uncertainty in the context of assessing the prospects of the Company beyond 1 July 2024. This may cast significant doubt on the ability of the Company to continue preparing its financial statements on a going concern basis to the extent that they include, and Shareholders vote for, a winding-up of the Company. If at some point in the future the Directors conclude it is not appropriate to prepare the financial statements on a going concern basis then adjustments would be required to reclassify all assets as current, and a provision for further liabilities, including liquidation costs, would be made. Consideration would also be given to valuing the portfolio on a discounted bid basis to reflect the cost of liquidating the portfolio in a shorter time frame.

In summary and taking into consideration all currently available information, the Directors have concluded it is appropriate to prepare the financial statements on a going concern basis.

Voting Rights of Shareholders

Ordinary Shareholders have the right to receive notice of, to attend and to vote at general meetings of the Company. Each Ordinary Shareholder has one vote on a show of hands and, on a poll, one vote for every Ordinary Share held. The right of Ordinary Shareholders to vote on certain resolutions on the winding-up, reconstruction or reorganisation of the Company is subject to the restrictions set out in the Articles. Votes are required to be lodged with the Company's Registrar 48 hours before a meeting (excluding non-working days). The holders of ZDP Shares do not have the right to receive notice of any general meeting of the Company or to attend or vote at any such meeting except in respect of any resolution: (i) to vary the special rights or privileges attached to the ZDP Shares; (ii) to wind up the Company. Their separate approval as a class will be required for certain proposals that would be likely to affect their position materially. The Board is pleased to offer electronic proxy voting, including CREST voting capabilities. Further details can be found in the Notice of the AGM.

Governance Report
Aberforth Split Level Income Trust plc

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Governance Report
Aberforth Split Level Income Trust plc 25

Directors' Report

Notifiable Share Interests

The Board has received notifications of the following interests in 3% or more of the total voting rights of the Company as at 30 June 2023. The percentage calculation is based on the total voting rights of 190,250,000 Ordinary Shares.

Notified interests	Percentage of Voting Rights Held
1607 Capital Partners LLC	12.0%
Brompton Asset Management LLP	8.3%
Brooks Macdonald Asset Management Ltd	5.0%
James Walker (Leith) Limited	4.2%
Mr Alistair Whyte	4.0%
Mr David Ross	3.8%
Artemis Investment Management LLP	3.1%
Mr Euan Macdonald	3.0%

Annual General Meeting

The AGM will be held at 14 Melville Street, Edinburgh EH3 7NS at 11.00 a.m. on 30 October 2023. Shareholders are encouraged to submit their votes by proxy in advance of the meeting. The Notice of the Meeting and explanatory notes are set out on pages 62 to 64 of the Annual Report and Financial Statements.

The Directors consider each resolution being proposed at the AGM to be in the best interests of Shareholders as a whole and they unanimously recommend that all Shareholders vote in favour of them, as they intend to do in respect of their own beneficial shareholdings.

Additional information in respect of the Companies Act 2006

The following information is disclosed in accordance with Section 992 of the Companies Act 2006.

• The Company's capital structure and voting rights are summarised on pages 23 to 24.
• Details of the substantial Ordinary Shareholders in the Company are listed on page 25.
• The rules concerning the appointment and replacement of Directors are contained in the Company's Articles of Association and the Board's policy is set out on page 28.
• Amendment of the Company's Articles of Association and powers to issue on a non pre-emptive basis or buy back the Company's Shares require a special resolution to be passed by Shareholders.
• There are no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; and no agreements to which the Company is party that might affect its control following a takeover bid.
• There are no agreements between the Company and its Directors concerning compensation for loss of office.

Bribery Act 2010

The Company does not tolerate bribery and is committed to carrying out business fairly, honestly and openly. Aberforth, the Company's Managers, have confirmed that they have anti-bribery policies and procedures in place and they do not tolerate bribery.

Modern Slavery Statement

The Company is not within scope of the Modern Slavery Act 2015 and is not, therefore, obliged to make a human trafficking statement. The Company has no employees and its supply chain consists mainly of professional advisers so is considered to be low risk in relation to this matter.

Criminal Finances Act 2017

The Company does not tolerate the criminal facilitation of tax evasion.

Independent Auditor

Deloitte LLP has expressed its willingness to be re-appointed as Auditor and a resolution proposing its re-appointment will be put to the forthcoming Annual General Meeting.

Disclosure of Information to Auditor

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's Auditor is unaware; and each Director has taken all steps that they ought to have taken as a Director to make themselves aware of any relevant audit information, and to establish that the Company's Auditor is aware of that information.

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Directors' Report

Future Developments

The future success of the Company is dependent primarily on the performance of its investments. Although the Company invests in companies that are listed or quoted in the United Kingdom, the underlying businesses of those companies are affected by various economic factors, many of an international nature. The Board's intention is that the Company will continue to pursue its investment objective and the stated investment strategy and policy. As set out in the 'Duration of the Company' section, the Company has a planned life lasting until 1 July 2024.

Approved and authorised for issue by the Board of Directors

Angus Gordon Lennox
Chairman
27 July 2023

Governance Report
Aberforth Split Level Income Trust plc

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Corporate Governance Report

Introduction

The Board is committed to maintaining and demonstrating high standards of corporate governance. The Board has considered the principles and provisions of the AIC Code of Corporate Governance (the AIC Code). The AIC Code addresses all the principles and provisions set out in the UK Corporate Governance Code, as well as setting out additional provisions on issues that are of specific relevance to investment trusts. The Board considers that reporting in accordance with the principles and provisions of the AIC Code provides more relevant and comprehensive information to Shareholders. The AIC Code is available on the AIC website at www.theaic.co.uk. This report forms part of the Directors' Report on pages 22 to 26.

Compliance

Throughout the year to 30 June 2023 the Company complied with the recommendations of the AIC Code except, as explained below, where the Board does not believe it appropriate to comply.

• The Board, being small in size and composed entirely of independent non-executive directors, has not appointed a Remuneration or a Nomination Committee. Directors' fees and the appointment of new directors are considered by the Board as a whole.
• The Board has decided not to nominate a deputy chairman or a senior independent director, although the Chairman of the Audit Committee fulfils this role when necessary, for example in taking the lead in the annual evaluation of the Chairman.

The UK Corporate Governance Code includes provisions relating to the role of the chief executive, executive Directors' remuneration and the need for an internal audit function. For reasons set out in the AIC Code, the Board considers these provisions are not relevant to the Company as it is an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

The Board

The Board is responsible for the effective stewardship of the Company's affairs. Strategic issues and all operational matters of a material nature are considered at its meetings. The Board comprises five non-executive Directors, of whom Angus Gordon Lennox is Chairman. The Board has engaged external firms to provide investment management, secretarial, depositary and custodial services. Contractual arrangements are in place between the Company and these firms.

The Board carefully considers the various guidelines for determining the independence of non-executive directors, placing particular weight on the view that independence is evidenced by an individual being independent of mind, character and judgement. An individual may therefore be considered to be independent even though the length of service may exceed nine years. No limit on the overall length of service of any of the Directors, including the Chairman, has therefore been imposed, but the Company has a planned life of less than nine years. All Directors are presently considered to be independent. All Directors retire at the AGM each year and, if appropriate, seek re-election. Each Director has signed a letter of appointment to formalise the terms of their engagement as a non-executive Director, copies of which are available on request.

Meetings

The Board meets at least quarterly to review the overall business of the Company and to consider the matters specifically reserved for it. Detailed information is provided by the Managers and Secretaries for these meetings and additionally at regular intervals to enable the Directors to monitor compliance with the investment objective and the Company's investment performance, and to review its investment universe. Other matters reviewed by the Directors include:

• the stockmarket environment;
• the Company's investment activity over the quarter relative to its investment policy;
• performance in relation to comparable investment trusts;
• the revenue account, balance sheet and gearing position;
• share price discount;
• Shareholder register (including significant changes);
• regulatory matters; and
• relevant industry issues.

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Corporate Governance Report

Annual Plan

The following highlights various additional matters considered by the Board during the reporting period.

The following table sets out the Directors of the Company during the financial period, together with the number of Board and Committee meetings held and the number of meetings attended by each Director (whilst a Director or Committee member). Directors who are not members of the Audit Committee are invited to be present at meetings of the Audit Committee. There has been no change to Directors between 30 June 2023 and 27 July 2023.

Director	Board Eligible to attend		Audit Committee Eligible to attend
	Attended		Attended
Angus Gordon Lennox, Chairman	4	4	–	–
Graeme Bissett	4	4	3	3
Dominic Fisher	4	4	3	3
Lesley Jackson	4	4	3	3
Graham Menzies	4	3	–	–

Appointments to the Board

The Board regularly reviews its composition, having regard to the Board's structure and to the present and future needs of the Company. The Board takes into account its diversity, the balance of expertise and skills brought by individual Directors, and length of service, where continuity and experience can add significantly to the strength of the Board.

Board Diversity Policy and Information

The Board's diversity policy recognises the importance of diversity in its broadest sense (including skills, experience, gender, tenure and other diversity characteristics) in enabling it to fulfil the present and future needs of the Company. The policy is always to seek to appoint the best person for the job. In pursuing this policy, the Board actively promotes equality and fairness and does not discriminate. The overriding aim of the policy is to seek to ensure that the Board and its committees are composed of the best combination of people to promote the success of the Company for Shareholders over the life of the Company. The current Directors have a range of relevant business, financial and other skills and experience. Brief biographical details of the members of the Board are shown on page 21.

The Board recognises the new diversity targets set out in the FCA's Listing Rule 9.8.6R (9) and reports against these targets in the diversity information provided below. In respect of gender representation, the FCA's Listing Rule targets that at least 40% of individuals on its board are women and at least one of the senior board positions is held by a woman. The FCA's Listing Rule also targets that at least one individual on a board is from a minority ethnic background. The Company has not met these FCA diversity targets as at 30 June 2023, which apply on a comply or explain basis, and there have been no changes since that date that have affected the Company's ability to meet them. The Board believes that it operates effectively and, whilst recognising the importance of diversity as described above, does not consider it appropriate to change its composition to meet the targets given the Company has a planned life lasting only until 1 July 2024.

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Corporate Governance Report

Board Gender as at 30 June 2023	Number of Board members	Percentage of the Board	Number of senior positions on the Board (CEO, CFO, SID, Chair)
Men	3	60%	Not applicable– see explanation below
Women	1	20%
Not specified/prefer not to say	1	20%
Board Ethnic Background as at 30 June 2023	Number of Board members	Percentage of the Board	Number of senior positions on the Board (CEO, CFO, SID, Chair)
---	---	---	---
White British or other White (including minority White groups)	5	100%	Not applicable– see explanation below
Minority Ethnic (see below)	–	–

The column in the tables above relating to senior positions is inapplicable as the Company is externally managed and does not have executive functions, specifically it does not have a CEO or CFO. The chair of the Board is a man. However, the Company considers that the chair of the Audit Committee, which also fulfils the role of Senior Independent Director where necessary, is a senior role in an investment trust context. The position of chair of the Audit Committee is held by a man. As the Company has no executive directors or management, it has not provided diversity information on executive management. Minority Ethnic includes categories for: Asian/Asian British; Black/African/Caribbean/Black British; Mixed/Multiple Ethnic Groups; and Other Ethnic Groups, including Arab.

The diversity data included above were obtained from individual Directors using a survey tool.

Board performance and election of Directors

The Board undertakes a formal annual assessment of Directors and their collective performance on a range of issues including the Board's role, processes and interaction with the Managers. This review of the Board and the Audit Committee was conducted by way of evaluation questionnaires, the results of which were summarised and discussed in July 2023, providing valuable feedback for improving Board effectiveness and highlighting areas for further development. The appraisal of the Chairman was led by the Chairman of the Audit Committee. The Board keeps under review the need for the use of external facilitators to conduct the annual evaluation of the Board.

In line with the Board's policy, all Directors, being eligible, offer themselves for election at the forthcoming AGM. The Board believes that each Director continues to be effective, bringing a wealth of knowledge and experience to the Board, and the Chairman recommends their election to Shareholders. The Board has no plans to change its composition up to the Company's planned winding up date of 1 July 2024.

Directors' and Officers' Liability Insurance

The Company maintains appropriate insurance cover in respect of legal action against its Directors. The Company has also entered into qualifying third party deeds of indemnity with each Director to cover any liabilities that may arise to a third party, other than the Company, for negligence, default or breach of trust or duty. The deeds were in force during the year to 30 June 2023 and up to the date of approval of this report. The Directors are not indemnified in respect of liabilities to the Company or costs incurred in connection with criminal proceedings in which the Director is convicted or required to pay any regulatory or criminal fines.

Training and Advice

New Directors are provided with an induction programme that is tailored to the particular requirements of the appointee. Thereafter regular briefings are provided on regulatory developments that affect the Company. Directors are also encouraged to attend industry and other seminars. Directors, in the furtherance of their duties, may also seek independent professional advice at the expense of the Company. No Director took such advice during the financial year under review.

All Directors have access to the advice and services of the Company's Secretaries, Aberforth Partners LLP, who are responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Secretaries are also responsible for advising the Board through the Chairman on all governance matters.

Conflicts of Interest

Company directors have a statutory obligation to avoid a situation in which they (and connected persons) have, or can have, a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company. The Board has in place procedures for managing any actual or potential conflicts of interest. No interests conflicting with those of the Company arose during the year under review.

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Corporate Governance Report

Risk Management and Internal Control

The Board has overall responsibility for the Company's risk management and internal control systems and for reviewing their effectiveness. The Company applies the guidance published by the Financial Reporting Council on internal controls. Internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve the business objective and can provide only reasonable and not absolute assurance against material misstatement or loss. These controls aim to ensure that the assets of the Company are safeguarded, that proper accounting records are maintained and that the Company's financial information is reliable. The Directors have a robust process for identifying, evaluating and managing the significant risks faced by the Company, which are recorded in a risk matrix. As part of its risk process, the Board seeks to identify emerging risks to ensure that they are effectively managed as they develop and are recorded in the risk matrix. The Board considers each risk as well as reviewing the mitigating controls in place. Each risk is rated for its "likelihood" and "impact" and the resultant numerical rating determines its ranking into High, Medium or Low Risk. The principal risks faced by the Company and the Board's approach to managing these are set on page 5. This process was in operation during the reporting period and continues in place up to the date of this report. It principally involves the Audit Committee receiving and examining regular reports from the main service providers. The Board then receives a detailed report from the Audit Committee on its findings. Further information on internal control and risks is contained in the Audit Committee Report on page 33. The Directors have not identified any significant failures or weaknesses in respect of the Company's internal control systems.

Communications with Shareholders

The Board places great importance on communication with Shareholders. Directors of the Company are available to meet any Shareholder on request. The Managers meet the larger Shareholders twice a year to provide them with a detailed report on the progress of the Company and to receive feedback. The Board receives reports from the Managers on these Shareholder meetings. The Directors may be contacted via the Secretaries whose details are shown on the Corporate Information page 61 or through the Chairman's email address, Angus.GordonLennox@aberforth.co.uk.

Shareholders have the opportunity to attend the AGM where the Directors and Managers are available to discuss important issues affecting the Company. Proxy voting figures are available at the AGM and via the Managers' website shortly thereafter. In addition to the annual and half yearly reports, daily Net Asset Values, monthly factsheets and other relevant information are published at www.aberforth.co.uk.

By Order of the Board
Angus Gordon Lennox
Chairman
27 July 2023

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Audit Committee Report

The Committee members are all independent non-executive directors who have been selected by the Board to fulfil the Committee's duties based upon their range of financial and commercial expertise. They are Graeme Bissett (Chairman), Dominic Fisher and Lesley Jackson. The members' biographies can be found on page 21.

Objective

The main objective of the Committee is to provide assurance to the Board as to the effectiveness of the Company's internal controls and the integrity of its financial records and externally published results. In doing so, the Committee operates within terms of reference that have been agreed by the Board. These are reviewed annually and are available upon request.

Principal Responsibilities

The Committee has been given the following principal responsibilities.

• Reviewing the Company's financial statements, the accounting policies adopted and judgemental areas.
• Ensuring that the Annual Report, taken as a whole, is fair, balanced and understandable.
• Agreeing the external Auditor's terms of appointment, determining the independence and objectivity of the Auditor and assessing the effectiveness of the audit.
• Considering whether it is appropriate for certain non-audit services to be carried out by the Auditor.
• Reviewing the effectiveness of the Company's internal control and risk management systems and monitoring the mitigating controls that have been established.
• Monitoring compliance with the relevant statutory, regulatory and taxation requirements for a UK based investment trust that is listed on the London Stock Exchange.

The Chairman reports formally to the Board on the Committee's proceedings after each meeting.

Audit Committee Annual Plan

To assist with the various duties of the Committee, a Meeting Plan has been adopted and is reviewed annually.

Meetings

Three meetings are usually held each year. Representatives of Aberforth, who provide the Company with secretarial services, attend all of the meetings. Deloitte LLP (Deloitte), the external Auditor, attends the meetings in January and July.

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Audit Committee Report

During the last reporting period the Committee focused on the areas described below.

Matter Considered and Action taken by the Committee
Financial Reporting
The Committee’s business in January 2023 was focused on the preparation and content of the Half Yearly Report and Interim Accounts, together with other aspects such as going concern, including supporting documentation from the Secretaries. Preparation of the Interim Accounts to 31 December 2022 was required under the Companies Act 2006 to support the payment of the first interim dividend. The Half Yearly Report to 31 December 2022 was published on 26 January 2023 and was unaudited, as is customary for half yearly reports of investment trusts.

In July 2023, the Committee received a report and supporting presentation from the external Auditor on its audit of the Annual Report and Financial Statements for the year to 30 June 2023. This included details of the steps taken by the Auditor to confirm the valuation and ownership of the investment portfolio and recognition of income. In addition, the Secretaries reported on the preparation of the financial results and other relevant matters. The Committee considered these reports in detail and its conclusions were further supported by the risk and controls reviews discussed below. The Chairman of the Committee discussed the outcome of the audit process and the Annual Report with the audit partner without representatives of the Managers being present. As part of its review of the financial statements, the Committee considered the following significant issues. | |
| Significant Issue | How the issue was addressed |
| Ownership and valuation of the investment portfolio as at 30 June 2023 | The Committee reviewed the Managers’ control framework, which includes controls over valuation and ownership of investments. The appointed Depositary is responsible for holding and controlling all assets of the Company entrusted for safekeeping. Ownership of investments is verified through reconciliations by the Managers to Custodian records. The Committee reviewed internal control reports from the Company’s Custodian. The valuation of the portfolio is undertaken in accordance with the accounting policy for investments as stated in Note 1 to the financial statements. |
| Revenue recognition including dividend completeness and the accounting treatment of special dividends | The Committee reviewed the Managers’ control framework, which includes controls over revenue recognition. The Committee reviewed actual and forecast revenue entitlement at each meeting. The accounting treatment of all special dividends was reviewed by the Committee and the external Auditor. |
| Investment Trust Status | The Committee confirmed the position of the Company in respect of compliance with investment trust status at each meeting with reference to a checklist prepared by the Secretaries. The position was also confirmed by the external Auditor as part of the audit process. |
| Calculation of management fees | The Committee reviewed the Managers’ internal control framework, which includes controls over expenses, including management fees. The Committee reviewed management fees payable to the Managers. The external Auditor independently recalculated the management fees as part of the audit and no exceptions were reported. |
| Impact of planned winding-up date | The Committee considered the impact of the planned winding-up date of 1 July 2024 on the Company’s financial statements and the references in the Annual Report, including those contained in the ‘Going Concern’ and ‘Viability Statement’ sections. |
| The Committee read and discussed this Annual Report and concluded that, taken as a whole, it is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s performance, investment objective and strategy. As a result, the Committee recommended to the Board that the Annual Report be approved for publication. | |
| Going Concern and Viability Statement
The Committee received reports on going concern from the Secretaries in January and July, reflecting the guidance published by the Financial Reporting Council. These reports included assessment of the impact of the planned winding-up date on the financial statements. As noted on page 24, the Directors’ assessment of the basis of going concern includes reference to a material uncertainty regarding the prospects of the Company beyond its planned winding-up date of 1 July 2024. The content of the investment portfolio, trading activity and portfolio diversification were also discussed. After due consideration, the Committee concluded it was appropriate to prepare the Company’s accounts on a going concern basis and made this recommendation to the Board. The relatively low working capital requirements and the levels of liquidity of the portfolio were the main factors that led to this conclusion.

The Committee also assessed the viability of the Company including, in July 2023, a series of stress tests that considered the impact of severe market downturn scenarios on Shareholders’ funds and investment income, and the impact of losing investment trust status. The Committee concluded that it was appropriate to provide a Viability Statement for a five year period for the reasons set out in the Statement on page 7 and recommended adoption of the Viability Statement to the Board. | |

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Audit Committee Report

Matter Considered and Action taken by the Committee

Principal Risks and Controls, together with Cyber Security

The Committee carefully considered a matrix of the Company's principal risks and the mitigating controls at each meeting. In October 2022 the risks and controls were addressed in more detail. The Committee enhanced the content of the matrix during the reporting period. This included updating risk ratings where appropriate, considering the effects of economic and political developments in the market risks category and adding more detail on external assurance over third party providers on which the Company is reliant. The Committee also considered identification and inclusion of emerging risks and assessed the Company's risks using an alternative risk lens to review and validate the matrix. The Committee believes that the matrix continues to reflect accurately the Company's principal risks. These risks, which are detailed on page 5 of this Report, evolved during the reporting period and the Committee's scrutiny of the response to the risks has adapted accordingly.

In October 2022 the Committee received the Managers' report on internal controls, including an assurance report issued by PricewaterhouseCoopers LLP (PwC) on the nature and effectiveness of the control framework that has been established by the Managers. A representative of PwC attended the meeting. In addition, the Committee received internal control reports from the custodian, Northern Trust, and the registrar, Link Group. The Committee reviewed these reports, including the independent audit opinions thereon, and concluded that there were no significant control weaknesses or other issues that needed to be brought to the Board's attention.

The Committee continues to monitor closely the increasing risk arising from cyber threats. In October 2022, the Committee received a report from Aberforth on cyber security, covering the measures that are in place to protect the Managers' systems and the Company information that these systems contain. In April 2023, the Managers changed their technology and cyber security provider to enhance services. The Committee noted the assurances that have been given about the effectiveness of control measures. It concluded that, although cyber-attack represents an increasing threat to companies and public bodies worldwide, the Company has taken all reasonable steps to ensure that appropriate protection measures are in place. Nevertheless, this threat will continue to be monitored closely.

The Committee also discussed whether there was a need for a dedicated internal audit function. It concluded that, as the Company has no employees and sub-contracts its principal operations to third party suppliers who are able to demonstrate the effectiveness of their own internal control procedures, an internal audit function is not necessary.

External Audit, Audit Planning and Audit Fees

Deloitte was appointed as the Company's auditor upon launch of the Company following a tender process. Based upon existing legislation, another tender process would not be required until 2027; however, under the Company's Articles, the Company's planned winding-up date is 1 July 2024. The Company is therefore in compliance with the provisions of "The Statutory Audit Services for Large Companies Market Investigation" (Mandatory use of competitive tender processes and audit committee responsibilities) Order 2014 as issued by the Competition & Markets Authority.

The external audit partner from Deloitte presented the detailed audit plan to the Committee in January in advance of the audit of the 2023 Annual Report. The plan set out the scope of the audit, the principal risks that would be addressed (as detailed in the Independent Auditor's Report), the timetable and the proposed fees. These amounted to £43,200, including VAT, in respect of the Annual Report (2022: £40,380). The Committee considered the increase to be in line with general audit market trends. There were no non-audit activities carried out by Deloitte.

Evaluation of the Auditor

Following the completion of the audit in July 2023, the Committee reviewed the Auditor's effectiveness, including independence. The Committee acknowledged that the audit team comprised staff with appropriate levels of knowledge and experience. The Committee noted positive feedback from the Secretaries on Deloitte's performance of the audit. To ensure auditor independence, the external audit partner changed for the 2022/2023 financial year, in accordance with Deloitte's five-year rotation policy.

Taking these factors into account, the Committee was satisfied that the external audit was carried out effectively. It has therefore recommended the re-appointment of Deloitte as the Company's auditor for the 2023/2024 financial year. The Board has given its support and a proposal will be put to Shareholders at the forthcoming AGM.

Committee Evaluation

A formal internal review of the Committee's effectiveness, using an online evaluation questionnaire, was undertaken during the year. The outcome was positive with no significant concerns expressed.

Graeme Bissett
Audit Committee Chairman
27 July 2023

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Directors' Remuneration Policy

This section provides details of the remuneration policy applying to the Directors of the Company. All Directors are non-executive, appointed under the terms of letters of appointment and none has a service contract. The Company has no employees. The Board has prepared this report in accordance with the requirements of the Companies Act 2006.

This policy was approved by Shareholders at the AGM held in October 2021. The policy provisions continue to apply until they are next put to Shareholders for approval, which must be at intervals not exceeding three years. This Policy, together with the Directors' letters of appointment, may be inspected at the Company's registered office.

The Board considers and determines all matters relating to the Directors' remuneration at the beginning of each financial year. A Remuneration Committee has not been formed as all of the Directors are non-executive and considered independent.

Company's Policy on Directors' Remuneration

The Company's policy is that the remuneration of the Directors should be commensurate with the duties and responsibilities of the role and consistent with the requirement to attract and retain Directors of appropriate quality and experience. No Shareholder has expressed any views to the Company in respect of Directors' remuneration. Remuneration Policy is not subject to employee consultation as the Company has no employees. It is intended that this policy will remain in place for the following financial year and subsequent periods.

The Board, at its discretion, will determine Directors' remuneration subject to the aggregate annual fee limit set out in the Company's Articles of Association. The present limit is £200,000 per annum and this may not be changed without seeking Shareholder approval. Such remuneration solely comprised Directors' fees as set out below and Directors are not eligible for any other remuneration.

The table below sets out the annual fees paid to Directors in respect of the year to 30 June 2023 and the fees payable in respect of the year to 30 June 2024. The fees payable to Directors in subsequent financial periods will be determined following an annual review.

| | Annual Fees
Year to
30 June 2023
£ | Annual Fees
Year to
30 June 2024
£ |
| --- | --- | --- |
| Chairman of the Company | 32,900 | 34,550 |
| Director and Chairman of the Audit Committee | 30,300 | 31,800 |
| Director and Member of the Audit Committee | 27,100 | 28,500 |
| Director | 25,700 | 27,000 |

Loss of Office

A Director may be removed without notice and no compensation will be due on loss of office.

Expenses

All Directors are entitled to the reimbursement of expenses paid by them in order to perform their duties as a Director of the Company.

Review of the Remuneration Policy

The Board has agreed to review the above policy at least annually to ensure that it remains appropriate.

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Directors' Remuneration Report

Introduction

The Board presents the Directors' Remuneration Report for the year to 30 June 2023, which has been prepared in accordance with the requirements of the Companies Act 2006. An ordinary resolution for the approval of this report will be put to Shareholders at the forthcoming Annual General Meeting. The remuneration policy, which is subject to a triennial vote by Shareholders, is set out on page 34. The law requires the Company's Auditor to audit certain elements of this report and these elements are described below as "Audited". The Auditor's opinion is included in the Independent Auditor's Report on page 38.

Directors' Letters of Appointment

In accordance with the Board's policy, all Directors retire at the Annual General Meeting (AGM) each year and, if appropriate, seek re-election. Accordingly, each Director has entered into a letter of appointment with the Company for an initial period to the date of the first AGM following appointment. Subject to election/re-election by Shareholders at the AGM and agreement by the Board, the appointment is renewed for a further period to the date of the subsequent AGM. The terms also provide that a Director may be removed without notice and that no compensation will be due on loss of office. The terms and conditions of appointment of Directors are available for inspection on request at the office of Aberforth Partners LLP during normal business hours and at the registered office of the Company.

The following Directors held office during the year.

Director	Date of Appointment	Date of re-election
Angus Gordon Lennox, Chairman	19 April 2017	AGM 2023
Graeme Bissett	19 April 2017	AGM 2023
Dominic Fisher	19 April 2017	AGM 2023
Graham Menzies	19 April 2017	AGM 2023
Lesley Jackson	24 April 2019	AGM 2023

Directors' Fees (Audited)

The emoluments of the Directors who served in the year from 1 July 2022 to 30 June 2023 were as follows.

Director	Fees 2023 £	Fees 2022 £
Angus Gordon Lennox, Chairman	32,900	31,350
Graeme Bissett, Chairman of the Audit Committee	30,300	28,850
Dominic Fisher	27,100	25,800
Graham Menzies	25,700	24,500
Lesley Jackson	27,100	25,800
	143,100	136,300

Directors are remunerated exclusively by fixed fees and do not receive bonuses, share options, pension contributions or other benefits apart from the reimbursement of allowable expenses.

The following table shows the remuneration of the Directors in relation to distributions to Shareholders by way of dividends.

	2023 £'000	2022 £'000	Absolute Change £'000
Total Directors' remuneration	143	136	7
Total dividends in respect of the year	9,513	8,656	857

The annual percentage change in Directors' remuneration is provided in the table below.

	2023	2022	2021	2020
Chairman of the Company	5.0%	0.0%	0.0%	2.1%
Director and Chair of the Audit Committee	5.0%	0.0%	0.0%	2.1%
Director and Member of the Audit Committee	5.0%	0.0%	0.0%	2.1%
Director	5.0%	0.0%	0.0%	2.1%

The Company does not have any employees and hence no comparisons are given between Directors' and employees' pay increases.

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Directors' Remuneration Report

Statement of Directors' Shareholdings and Share Interests (Audited)

The Directors who held office at any time during the year to 30 June 2023 and their interests (in respect of which transactions are notifiable to the Company) in the Shares of the Company as at 30 June 2023 were as follows.

Directors	Nature of Interest	Share Class	30 June 2023	30 June 2022
Angus Gordon Lennox	Beneficial	Ordinary Shares	619,738	619,738
Graeme Bissett	Beneficial	Ordinary Shares	84,404	84,404
	Beneficial	ZDP Shares	6,000	6,000
Dominic Fisher	Beneficial	Ordinary Shares	298,328	298,328
Lesley Jackson	Beneficial	Ordinary Shares	36,676	34,305
Graham Menzies	Beneficial	Ordinary Shares	478,786	478,786
	Non-beneficial	Ordinary Shares	62,835	62,835

There has been no change in the beneficial or non-beneficial holdings of the Directors between 30 June 2023 and 27 July 2023. The Company has no share options or share schemes. Directors are not required to own Shares in the Company.

Consideration of Shareholders' Views and Statement of Voting

An ordinary resolution to approve the Directors' Remuneration Report is put to members at each Annual General Meeting. At the Annual General Meeting held on 31 October 2022, Shareholders, on a show of hands, passed the resolution to approve the Directors' Remuneration Report: of the 74,521,144 proxy votes, 73,050,062 were cast in favour, 112,950 were cast against, 1,354,316 were discretionary and 3,816 were withheld. At the Annual General Meeting held on 28 October 2021, Shareholders, on a show of hands, passed the resolution to approve the Directors' Remuneration Policy: of the 70,364,882 proxy votes, 69,394,816 were cast in favour 136,592 were cast against, 815,481 were discretionary and 17,993 were withheld. To date, no Shareholders have commented in respect of the Directors' Remuneration Report or Policy.

Performance Graph

The adjacent graph compares the performance of the Ordinary Share price with the Numis Smaller Companies Index (excluding investment companies) on a total return basis (assuming all dividends reinvested). The index has been selected since it represents the universe of companies in which the Company may invest. However, the more important influence on the share price performance of the Ordinary Shares over the Company's lifetime is likely to be its success in meeting the investment objective, as described on page 1. Specifically, the portfolio must generate a high level of income and sufficient capital growth to pay the final entitlement of the ZDP Shareholders and the costs incurred by the Company. The main influences on performance over the year are described in the Managers' Report.

Annual Statement

On behalf of the Board, I confirm that the above Directors' Remuneration Report summarises, as appropriate, for the year to 30 June 2023:

(a) the major decisions on Directors' remuneration;
(b) any substantial changes relating to Directors' remuneration made during the year; and
(c) the context in which those changes occurred and decisions have been taken.

On behalf of the Board,

Angus Gordon Lennox

27 July 2023

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Directors' Responsibility Statement

The Directors are required to prepare financial statements for each financial period in accordance with applicable law and regulations. The Directors are also required to prepare a Strategic Report, Directors' Report, Corporate Governance Statement and Directors' Remuneration Report.

The Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (Financial Reporting Standard 102 and applicable law). Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, that disclose with reasonable accuracy at any time the financial position of the Company and that enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Annual Report is published on www.aberforth.co.uk. This website is maintained by Aberforth and its integrity is, so far as it relates to the Company, the responsibility of Aberforth. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Declaration

The Directors who were in office at the date of approving these financial statements, and who are listed on page 21, confirm to the best of their knowledge that:

• the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit/loss of the Company;
• the Strategic Report includes a fair review of the development and performance of the business and financial position of the Company, together with a description of the principal risks and uncertainties that it faces; and
• the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

On behalf of the Board

Angus Gordon Lennox

Chairman

27 July 2023

Governance Report

Aberforth Split Level Income Trust plc 37

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Independent Auditor’s Report
To the Members of Aberforth Split Level Income Trust plc

Report on the audit of the financial statements

1. Opinion

In our opinion the financial statements of Aberforth Split Level Income Trust plc (the ‘company’):

• give a true and fair view of the state of the company’s affairs as at 30 June 2023 and of its gains for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and the Statement of Recommended Practice issued by the Association of Investment Companies in 2022 “Financial Statements of Investment Trust Companies and Venture Capital Trusts”; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

• the income statement;
• the reconciliation of movement in shareholders’ funds;
• the balance sheet;
• the cash flow statement; and
• the related notes 1 to 23.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice) and the Statement of Recommended Practice issued by the Association of Investment Companies (‘SORP’) in 2022 “Financial Statements of Investment Trust Companies and Venture Capital Trusts”.

1. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

1. Material uncertainty related to going concern

We draw attention to note 1(a) in the financial statements, which indicates that shareholders will be required to vote on proposals from the Directors, relating to the company’s planned life, on or before 1 July 2024. Whilst the Directors are required by the Articles to convene a general meeting, on or within three months prior to 1 July 2024, at which a resolution shall be proposed requiring the company to be wound up they can be released from this obligation if a special resolution has been passed to that effect no later than 1 July 2024. This special resolution may propose a restructuring of the company and/or repayment of the ZDP shareholders as an alternative to a liquidation.

As stated in note 1(a), these events or conditions, along with the other matters as set forth in note 1(a), indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included:

• Assessing the financial viability and headroom of the company in the 12 months from date of signing.
• Reviewing the financial statement disclosures in respect of the ability to continue to adopt the going concern basis of accounting.
• Reviewing Board minutes to identify if any irrevocable decisions had been made in respect of the future of the company.

In relation to the reporting on how the company has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to:

• the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting; and
• the directors’ identification in the financial statements of the material uncertainty related to the company’s ability to continue as a going concern over a period of at least twelve months from the date of approval of the financial statements.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

38 Financial Report
Aberforth Split Level Income Trust plc

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Independent Auditor's Report

4. Summary of our audit approach

Key audit matters	The key audit matters that we identified in the current year were: • Going concern (see material uncertainty related to going concern section) • valuation and ownership of quoted investments and going concern, see the material uncertainty related to going concern.
Materiality	The materiality that we used in the current year was £1.468m which was determined as 1% of net assets.
Scoping	Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.
Significant changes in our approach	Per the Viability Statement, the planned life of the company ends on 1 July 2024, on which date or in the three months prior, the Board is obliged by the Company's Articles to convene a general meeting to propose that the Company be wound up. The Board is working with the Managers and at this stage nothing has yet been decided or, indeed, ruled out. We have considered the appropriateness of the going concern basis in this context

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5.1. Valuation and Ownership of Quoted Investments

Key audit matter description	The quoted investments of the company of £202.2m (2022: £193.1m) are key to its performance and account for the majority of the total assets, at 30 June 2023 98.5% (2022: 98.8%). Quoted investments are valued at their fair value, which is represented by the market bid price. Please see Accounting Policy 1(b) and note 11. Investments listed on recognised exchanges are valued at fair value represented by the closing bid price at the year end. There is a risk that investments may not be valued correctly or may not represent the property of the company. Given the nature and size of the balance and its importance to the entity, we have considered that there is a potential risk of fraud in this area. The description of this key audit matter should be read in conjunction with the significant issues considered by the Audit Committee on page 32.
How the scope of our audit responded to the key audit matter	We have performed the following procedures to test the valuation and ownership of quoted investments at 30 June 2023: • Tested relevant controls at Aberforth over valuation and ownership of quoted investments; • Agreed 100% of the company's investment portfolio at the year-end to confirmations received directly from the depositary; • Independently agreed 100% of the bid prices of quoted investments on the investment ledger at year end to closing bid prices published by an independent pricing source; and • Inspected the internal controls report over the custodian to obtain an understanding of relevant controls In addition to the above, we also tested the recording of a sample of purchases and sales of listed investments and reviewed the appropriateness of relevant disclosures.
Key observations	Based on the work performed we concluded that the valuation and ownership of quoted investments is appropriate.

Financial Report

Aberforth Split Level Income Trust plc 39

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Independent Auditor's Report

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Materiality	£1.468m (2022: £1.38m)
Basis of determining materiality	1% (2022: 1%) of net assets
Rationale for the benchmark applied	Net assets has been chosen as the benchmark as it is the main focus for investors and is a key driver of shareholder value. Additionally, it is the standard industry benchmark for materiality for investment trusts.

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at 70% of materiality for the 2023 audit (2022: 70%). In determining performance materiality, we considered the following factors:

a. the quality of the control environment over financial reporting; and
b. there have been low level of uncorrected misstatements noted in audits during prior years.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £73,400 (2022: £69,500), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

7. An overview of the scope of our audit

7.1. Scoping

Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control and assessing the risks of material misstatement through quantitative and qualitative factors relating to each account balance, class of transactions and disclosure. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.

7.2. Our consideration of the control environment

As part of our risk assessment, we assessed the control environment in place at Aberforth Partners LLP (Managers and Secretaries) to the extent relevant to our audit. This was achieved through review of the Aberforth Partners LLP controls report. As part of this we relied upon the controls report and adopted a controls reliance approach with respect to valuation and existence of investments.

7.3. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact of climate change on the business and its financial statements. The company continues to develop its assessment of the potential impacts of environmental, social and governance ("ESG") related risks, including climate change, as outlined on page 6. As a part of our audit, we held discussions to understand the process of identifying climate-related risks, the impact on the company's financial statements. We have read the annual report to consider whether they are materially consistent with the financial statements note 1 and our knowledge obtained in the audit.

Financial Report

Aberforth Split Level Income Trust plc

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Independent Auditor’s Report

8. Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

10. Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance including the design of the company’s remuneration policies, key drivers for directors’ and the Managers remuneration and performance targets;
• results of our enquiries of the Managers and the audit committee about their own identification and assessment of the risks of irregularities, including those that are specific to the company’s sector;
• any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the valuation and ownership of quoted investments. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and UK tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. This included the requirements of the United Kingdom’s Financial Conduct Authority (FCA).

Financial Report
Aberforth Split Level Income Trust plc

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Independent Auditor's Report

11.2. Audit response to risks identified

As a result of performing the above, we identified valuation and ownership of quoted investments as the key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management and the audit committee concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC and the FCA; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion, the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

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

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors' report.

13. Corporate Governance Statement

The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the company's compliance with the provisions of the UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:

• the directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 24;
• the directors' explanation as to its assessment of the company's prospects, the period this assessment covers and why the period is appropriate set out on page 24;
• the directors' statement on fair, balanced and understandable set out on page 37;
• the board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 30;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 30; and
• the section describing the work of the audit committee set out on page 31.

Financial Report

Aberforth Split Level Income Trust plc

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Independent Auditor’s Report

14. Matters on which we are required to report by exception

14.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

15. Other matters which we are required to address

15.1. Auditor tenure

Following the recommendation of the audit committee, we were appointed by the board of directors on 8 December 2017 to audit the financial statements for the period ending 30 June 2018 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 6 years, covering the periods ending 30 June 2018 to 30 June 2023.

15.2. Consistency of the audit report with the additional report to the audit committee

Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).

16. Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Chris Hunter CA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
27 July 2023

(a) The maintenance and integrity of the Aberforth Partners LLP web site is the responsibility of the partners of Aberforth Partners LLP; the work carried out by the auditor of Aberforth Split Level Income Trust plc does not involve consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Financial Report
Aberforth Split Level Income Trust plc 43

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Income Statement

Year to 30 June 2023

	Note	Year to 30 June 2023			Year to 30 June 2022
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Net gains/(losses) on investments	11	–	10,052	10,052	–	(41,748)	(41,748)
Investment income	3	10,985	20	11,005	10,024	–	10,024
Other income	3	14	–	14	–	–	–
Investment management fee	4	(443)	(1,034)	(1,477)	(521)	(1,216)	(1,737)
Portfolio transaction costs	6	–	(313)	(313)	–	(329)	(329)
Other expenses	5	(357)	–	(357)	(335)	–	(335)
Net return before finance costs and tax		10,199	8,725	18,924	9,168	(43,293)	(34,125)
Finance costs:
Appropriation to ZDP Shares	7	–	(2,024)	(2,024)	–	(1,956)	(1,956)
Interest expense and overdraft fee	7	(3)	(7)	(10)	(3)	(6)	(9)
Return on ordinary activities before tax		10,196	6,694	16,890	9,165	(45,255)	(36,090)
Tax on ordinary activities	8	(24)	–	(24)	(22)	–	(22)
Return attributable to Equity Shareholders		10,172	6,694	16,866	9,143	(45,255)	(36,112)
Returns per Ordinary Share	10	5.35p	3.52p	8.87p	4.81p	(23.79)p	(18.98)p

The Board declared on 27 July 2023 a second interim dividend of 3.30p per Ordinary Share. The Board also declared on 26 January 2023 an interim dividend of 1.70p per Ordinary Share.

The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

The accompanying notes form an integral part of this statement.

Financial Report

Aberforth Split Level Income Trust plc

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Reconciliation of Movements in Shareholders' Funds

Year to 30 June 2023

	Note	Share capital £'000	Special reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance as at 30 June 2022		1,902	187,035	(57,620)	7,635	138,952
Return on ordinary activities after tax		–	–	6,694	10,172	16,866
Equity dividends paid	9	–	–	–	(9,018)	(9,018)
Balance as at 30 June 2023		1,902	187,035	(50,926)	8,789	146,800

Year to 30 June 2022

	Note	Share capital £'000	Special reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance as at 30 June 2021		1,902	187,035	(12,365)	5,417	181,989
Return on ordinary activities after tax		–	–	(45,255)	9,143	(36,112)
Equity dividends paid	9	–	–	–	(6,925)	(6,925)
Balance as at 30 June 2022		1,902	187,035	(57,620)	7,635	138,952

The accompanying notes form part of this statement.

Financial Report

Aberforth Split Level Income Trust plc 45

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Balance Sheet
As at 30 June 2023

	Note	30 June 2023 £'000	30 June 2022 £'000
Fixed assets
Investments at fair value through profit or loss	11	202,150	193,062
Current assets
Debtors	12	782	755
Cash at bank	18	2,949	1,590
		3,731	2,345
Creditors (amounts falling due within one year)	13	(664)	(62)
Net current assets		3,067	2,283
TOTAL ASSETS LESS CURRENT LIABILITIES		205,217	195,345
Creditors (amounts falling due after more than one year)
ZDP Shares	14	(58,417)	(56,393)
TOTAL NET ASSETS		146,800	138,952
CAPITAL AND RESERVES: EQUITY INTERESTS
Share capital:
Ordinary Shares	15	1,902	1,902
Reserves:
Special reserve	17	187,035	187,035
Capital reserve	17	(50,926)	(57,620)
Revenue reserve	17	8,789	7,635
TOTAL SHAREHOLDERS' FUNDS		146,800	138,952
Net Asset Value per Ordinary Share	16	77.16p	73.04p
Net Asset Value per ZDP Share	16	122.82p	118.57p

Approved and authorised for issue by the Board of Directors on 27 July 2023 and signed on its behalf by:

Angus Gordon Lennox
Chairman

Company Number: 10730910.
Registered in England and Wales.

The accompanying notes form an integral part of this statement.

Financial Report
Aberforth Split Level Income Trust plc

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Cash Flow Statement

For the year to 30 June 2023

	Note	Year to 30 June 2023 £'000	Year to 30 June 2022 £'000
Operating activities
Net revenue before finance costs and tax		10,199	9,168
Receipt of special dividend taken to capital	3	20	–
Tax (withheld) from income		(24)	(20)
Investment management fee charged to capital	4	(1,034)	(1,216)
(Increase) in debtors		(27)	(421)
(Decrease)/increase in creditors		(7)	9
Cash inflow from operating activities		9,127	7,520
Investing activities
Purchases of investments excluding transaction costs		(36,395)	(41,203)
Sales of investments excluding transaction costs		37,655	41,007
Cash inflow/(outflow) from investing activities		1,260	(196)
Financing activities
Equity dividends paid	9	(9,018)	(6,925)
Interest and fees paid	7	(10)	(9)
Cash outflow from financing activities		(9,028)	(6,934)
Change in cash during the period		1,359	390
Cash at the start of the period		1,590	1,200
Cash at the end of the period		2,949	1,590

The accompanying notes form an integral part of this statement.

Financial Report

Aberforth Split Level Income Trust plc 47

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Notes to the Financial Statements

1 Significant Accounting Policies

A summary of the principal accounting policies adopted, all of which have been applied consistently throughout the period, is set out below.

(a) Basis of accounting

The financial statements have been presented under Financial Reporting Standard 102 (FRS 102) and the AIC’s Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (SORP).

The financial statements have been prepared on a going concern basis under the historical cost convention, modified to include the revaluation of the Company’s investments as described below. The Directors’ assessment of the basis of going concern is described on page 24. In particular the Directors considered the implications of the proximity to the planned winding-up date of 1 July 2024 and that Shareholders will have a vote on proposals relating to the Company’s planned life, on or within the three months prior to 1 July 2024. The Directors may be released from the obligation to call a general meeting to wind up the Company if a special resolution has been passed to that effect not later than 1 July 2024. The Directors also considered the investment outlook, the objectives of both classes of Shareholder, potential sources of funding to finance the repayment of the entitlement due to the ZDP Shareholders and other future cash flows of the Company. The nature of any proposals that may be presented by the Directors relating to the Company’s planned life on which the Shareholders will be required to vote and the outcome of the vote on any such proposals represent a material uncertainty in the context of assessing the prospects of the Company beyond 1 July 2024. This may cast significant doubt on the ability of the Company to continue preparing its financial statements on a going concern basis to the extent that they include, and Shareholders vote for, a winding-up of the Company. If at some point in the future the Directors conclude it is not appropriate to prepare the financial statements on a going concern basis then adjustments would be required to reclassify all assets as current, and a provision for further liabilities, including liquidation costs, would be made. Consideration would also be given to valuing the portfolio on a discounted bid basis to reflect the cost of liquidating the portfolio in a shorter time frame.

The functional and presentation currency is pounds sterling, which is the currency of the environment in which the Company operates. The Board confirms that no significant accounting judgements or estimates have been applied to the financial statements and therefore there is not a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Given the nature of the Company, the Board does not consider climate change material to the presentation of the financial statements.

(b) Investments

The Company’s investments have been categorised as “financial assets at fair value through profit or loss” as the Company’s business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income. Quoted investments are valued at their fair value, which is represented by the bid price. Where trading in the securities of an investee company is suspended, the investment is valued at the Board’s estimate of its fair value. Purchases and sales of investments are accounted for on trade date. Gains and losses arising from changes in fair value are included in the capital return for the period and transaction costs on acquisition or disposal of a security are expensed to the capital reserve.

(c) Income

Dividends receivable on quoted equity shares are accounted for on the ex dividend date as revenue, except where, in the opinion of the Board, the dividend is capital in nature, in which case it is treated as a return of capital. Where the Company has received its dividends in the form of additional shares rather than in cash, an amount equivalent to the cash dividend is recognised as income. Any surplus or deficit in the value of the shares received compared with the cash dividend forgone is recognised as capital. Other income is accounted for on an accruals basis.

(d) Expenses

All expenses are accounted for on an accruals basis. Expenses are charged to revenue except as follows:

• expenses that are incidental to the acquisition and disposal of an investment are charged to capital; and
• expenses are charged to the capital reserve where a connection with the maintenance or enhancement of the value of the investments can be demonstrated, in which respect the investment management fee and finance costs incurred in connection with the overdraft facility have been allocated 70% to capital reserve and 30% to revenue reserve.

(e) Finance costs

The ZDP Shares are designed to provide a pre-determined capital growth from their original issue price of 100p on 30 June 2017 to a final capital entitlement of 127.25p on 1 July 2024, on which date the Company is planned to be wound up. The final capital entitlement of 127.25p per ZDP Share represents a gross redemption yield of 3.5% per annum over the life of the ZDP Shares, based on the issue price of 100p. No dividends are payable on the ZDP Shares. The provision for the capital growth entitlement of the ZDP Shares is included as a finance cost and charged to capital within the Income Statement. Finance costs incurred in connection with the overdraft facility are accounted for on an accruals basis.

Financial Report

Aberforth Split Level Income Trust plc

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Notes to the Financial Statements

(f) Capital reserve

The following are accounted for in this reserve:

• gains and losses on the realisation of investments;
• increases and decreases in the valuation of investments held at the period end;
• gains on the return of capital by way of investee companies paying dividends that are capital in nature; and
• expenses, together with the related taxation effect, charged in accordance with the above policies.

(g) Special reserve

This reserve may be treated as distributable profits for all purposes, including the payment of dividends to Ordinary Shareholders and the buy-back of shares, provided, in both cases, that the final cumulative cover of the ZDP Shares does not fall below 3.3 times immediately following any distribution to the Ordinary Shareholders from this reserve.

(h) Revenue reserve

Dividends can be funded from this reserve.

(i) Taxation

UK corporation tax payable is provided on taxable profits, where applicable, at the current rate. Deferred tax assets, using substantially enacted tax rates, are only recognised if it is considered more likely than not that there will be suitable taxable profits from which the future reversal of deferred tax assets may be deducted.

2 Alternative Performance Measures

Alternative Performance Measures (APMs) are measures that are not defined under the requirements of FRS 102 and are unaudited. The Company believes that APMs, referred to within "Financial Highlights" on page 1, provide Shareholders with important information on the Company and are appropriate for an investment trust company. These APMs are also a component of the reporting to the Board. A glossary of the APMs can be found on page 59.

3 Income

	Year to 30 June 2023			Year to 30 June 2022
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Income from investments
UK dividends	9,491	20	9,511	8,917	–	8,917
Overseas dividends	1,407	–	1,407	1,107	–	1,107
Property income distributions	87	–	87	–	–	–
	10,985	20	11,005	10,024	–	10,024
Other income
Interest income	14	–	14	–	–	–
Total Income	10,999	20	11,019	10,024	–	10,024

During the year to 30 June 2023 the Company received eight (2022: seven) special dividends totalling £811,000 (2022: £973,000). Of these a total of £791,000 (2022: £973,000) was recorded as revenue and £20,000 (2022: £nil) was recorded as capital, in accordance with the Company's accounting policy for income.

4 Investment Management Fee

	Year to 30 June 2023			Year to 30 June 2022
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment management fee	443	1,034	1,477	521	1,216	1,737
Total	443	1,034	1,477	521	1,216	1,737

Details of the investment management contract can be found on page 22.

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Aberforth Split Level Income Trust plc 49

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Notes to the Financial Statements

5 Other Expenses

	Year to 30 June 2023 £'000	Year to 30 June 2022 £'000
The following expenses (including VAT, where applicable) have been charged to revenue.
Directors’ fees (refer to Directors’ Remuneration Report on page 35)	143	136
Auditor’s fee – year end audit	43	40
Registrar fee	32	39
FCA and LSE listing fees	21	18
Depositary fee	14	18
Printing	14	11
AIC fees	12	10
Custody and other bank charges	10	11
Directors’ and Officers’ liability insurance	9	8
Media listings	8	8
Legal fees	2	1
Other expenses	49	35
Total	357	335

6 Portfolio Transaction costs

Expenses incurred in acquiring or disposing of investments classified at fair value through profit or loss are charged to capital and are analysed below.

	Year to 30 June 2023 £'000	Year to 30 June 2022 £'000
Analysis of total purchases
Purchase consideration before expenses	36,734	40,342
Commissions	85	84
Taxes	185	192
Total purchase expenses (a)	270	276
Total purchase consideration	37,004	40,618
Analysis of total sales
Sales consideration before expenses	37,698	40,980
Commissions (b)	(43)	(53)
Total sale proceeds net of expenses	37,655	40,927
Total transaction costs (a+b)	313	329

7 Finance Costs

	Year to 30 June 2023			Year to 30 June 2022
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Appropriation to ZDP Shares	-	2,024	2,024	-	1,956	1,956
Overdraft facility – fee and interest	3	7	10	3	6	9
Total	3	2,031	2,034	3	1,962	1,965

Financial Report

Aberforth Split Level Income Trust plc

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Notes to the Financial Statements

8 Taxation

Analysis of tax charged on return on ordinary activities

	Year to 30 June 2023			Year to 30 June 2022
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
UK corporation tax charge for the period	–	–	–	–	–	–

The tax assessed for the period is lower than the standard rate of corporation tax in the UK for a large company. The differences are explained below.

Factors affecting current tax charge for the period

Returns on ordinary activities before tax	10,196	6,694	16,890	9,165	(45,255)	(36,090)
Notional corporation tax at 20.5% (2022: 19%)	2,090	1,372	3,462	1,741	(8,598)	(6,857)
Adjusted for the effects of:
Non-taxable UK dividend income	(1,946)	(4)	(1,950)	(1,694)	–	(1,694)
Non-taxable overseas dividend income	(288)	–	(288)	(210)	–	(210)
Non-taxable capital (gains)/losses	–	(2,061)	(2,061)	–	7,932	7,932
Expenses not deductible for tax purposes	–	64	64	–	63	63
Excess expenses for which no relief has been taken	144	629	773	163	603	766
UK corporation tax charge for the year	–	–	–	–	–	–
Overseas taxation suffered	24	–	24	22	–	22
Total tax charge for the year	24	–	24	22	–	22

The Company has not recognised a potential asset for deferred tax of £2,099,000 (2022: £1,664,000) in respect of unutilised management expenses because it is unlikely that there will be suitable taxable profits from which the future reversal of a deferred tax asset may be deducted. The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2022: 19%).

9 Dividends paid

	Year to 30 June 2023 £'000	Year to 30 June 2022 £'000
Amounts recognised as distributions to equity holders in the period:
Second interim dividend for the year ended 30 June 2021 of 2.13p (paid 27 August 2021)	–	4,052
First interim dividend for year ended 30 June 2022 of 1.51p (paid 8 March 2022)	–	2,873
Second interim dividend for the year ended 30 June 2022 of 2.79p (paid 26 August 2022)	5,308	–
Special dividend for the year ended 30 June 2022 of 0.25p (paid 26 August 2022)	475	–
First interim dividend for year ended 30 June 2023 of 1.70p (paid 8 March 2023)	3,235	–
Total	9,018	6,925

The second interim dividend for the year ended 30 June 2023 of 3.30p (2022: 2.79p) per Ordinary Share is payable on 31 August 2023 and has not been recognised in the financial statements as at 30 June 2023. Deducting the second interim dividend from the Company's revenue reserves at 30 June 2023 leaves revenue reserves equivalent to 1.32p per Ordinary Share.

10 Returns per Share

	Year to 30 June 2023	Year to 30 June 2022
Net return for the period	£16,866,000	£(36,112,000)
Weighted average Ordinary Shares in issue during the period	190,250,000	190,250,000
Return per Ordinary Share	8.87p	(18.98)p
Appropriation to ZDP Shares for the period	£2,024,000	£1,956,000
Weighted average ZDP Shares in issue during the period	47,562,500	47,562,500
Return per ZDP Share	4.26p	4.11p

There are no dilutive or potentially dilutive shares in issue.

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Aberforth Split Level Income Trust plc 51

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Notes to the Financial Statements

11 Investments held at fair value through profit or loss

	Year to 30 June 2023 £'000	Year to 30 June 2022 £'000
Investments at fair value through profit or loss
Opening fair value	193,062	235,448
Opening fair value adjustment	38,832	(9,102)
Opening book cost	231,894	226,346
Purchases at cost	36,734	40,342
Sale proceeds	(37,698)	(40,980)
Realised gains on sales	3,543	6,186
Closing book cost	234,473	231,894
Closing fair value adjustment	(32,323)	(38,832)
Closing fair value	202,150	193,062

All investments are in ordinary shares listed on the London Stock Exchange.

Gains/(losses) on investments:

Net realised gains on sales	3,543	6,186
Movement in fair value adjustment	6,509	(47,934)
Net gains/(losses) on investments	10,052	(41,748)

The company received £37,698,000 (2022: £40,980,000) from investments sold in the year. The book cost of these investments was £34,155,000 (2022: £34,794,000). 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.

In accordance with FRS 102, fair value measurements have been classified using the fair value hierarchy.

Level 1 - using unadjusted quoted prices for identical instruments in an active market.

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data).

Level 3 - using inputs that are unobservable (for which market data is unavailable).

All investments are held at fair value through profit or loss, have been classified as Level 1 and are traded on a recognised stock exchange.

12 Debtors

	30 June 2023	30 June 2022
	£'000	£'000
Investment income receivable	773	747
Other debtors	9	8
Total	782	755

13 Creditors

	30 June 2023	30 June 2022
	£'000	£'000
Amounts due to brokers	609	–
Other creditors	55	62
Total	664	62

Financial Report

Aberforth Split Level Income Trust plc

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Notes to the Financial Statements

14 Zero Dividend Preference Shares

	Year to 30 June 2023 £'000	Year to 30 June 2022 £'000
Opening balance	56,393	54,437
Issue costs amortised during the period	48	46
Capital growth of ZDP Shares	1,976	1,910
Closing balance	58,417	56,393

Expenses of £312,000 associated with the issue of the ZDP Shares have been capitalised. These are being amortised over the expected life of the ZDP Shares and charged to capital as a finance cost within the Income Statement.

15 Share Capital

	30 June 2023		30 June 2022
	No. of Shares	£'000	No. of Shares	£'000
Issued and Allotted:
Ordinary Shares of 1p each	190,250,000	1,902	190,250,000	1,902
ZDP Shares of 1p each	47,562,500	476	47,562,500	476
Total issued and allotted	237,812,500	2,378	237,812,500	2,378

16 Net Asset Value ("NAV") per Share

The Net Assets and the Net Asset Value per share attributable to the Ordinary Shares and ZDP Shares are as follows.

	30 June 2023			30 June 2022
	Ordinary Shares	ZDP Shares	Total	Ordinary Shares	ZDP Shares	Total
Net Assets attributable	£146,800,000	£58,417,000	£205,217,000	£138,952,000	£56,393,000	£195,345,000
Number of Shares at the reporting date	190,250,000	47,562,500	237,812,500	190,250,000	47,562,500	237,812,500
NAV per Share (a)	77.16p	122.82p	86.29p	73.04p	118.57p	82.14p
Dividend reinvestment factor¹ (b)	1.319066	-	1.226413	1.242432	-	1.174303
NAV per Share on a total return basis at the end of the period (c) = (a) x (b)	101.78p	122.82p	105.83p	90.75p	118.57p	96.46p
NAV per Share on a total return basis at the start of the period (d)	90.75p	118.57p	96.46p	114.43p	114.46p	113.40p
Total Return performance (c) ÷ (d) -1	12.2%	3.6%	9.7%	-20.7%	3.6%	-14.9%

¹ Defined in the Glossary on page 60.

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Aberforth Split Level Income Trust plc 53

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Notes to the Financial Statements

17 Capital and Reserves

| | Share capital
£'000 | Special reserve
£'000 | Capital reserve
£'000 | Revenue reserve
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- | --- |
| At 30 June 2022 | 1,902 | 187,035 | (57,620) | 7,635 | 138,952 |
| Net gain on sales of investments | – | – | 3,543 | – | 3,543 |
| Movement in fair value adjustment | – | – | 6,509 | – | 6,509 |
| Investment income taken to capital | – | – | 20 | – | 20 |
| Cost of investment transactions | – | – | (313) | – | (313) |
| Investment management fee charged to capital | – | – | (1,034) | – | (1,034) |
| Interest charged to capital | – | – | (7) | – | (7) |
| ZDP Shares - Appropriation | – | – | (1,976) | – | (1,976) |
| ZDP Shares - Amortised issue costs | – | – | (48) | – | (48) |
| Revenue return attributable to Equity Shareholders | – | – | – | 10,172 | 10,172 |
| Equity dividends paid | – | – | – | (9,018) | (9,018) |
| At 30 June 2023 | 1,902 | 187,035 | (50,926) | 8,789 | 146,800 |
| | Share capital
£'000 | Special reserve
£'000 | Capital reserve
£'000 | Revenue reserve
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- | --- |
| At 30 June 2021 | 1,902 | 187,035 | (12,365) | 5,417 | 181,989 |
| Net gain on sales of investments | – | – | 6,186 | – | 6,186 |
| Movement in fair value adjustment | – | – | (47,934) | – | (47,934) |
| Cost of investment transactions | – | – | (329) | – | (329) |
| Investment management fee charged to capital | – | – | (1,216) | – | (1,216) |
| Interest charged to capital | – | – | (6) | – | (6) |
| ZDP Shares - Appropriation | – | – | (1,910) | – | (1,910) |
| ZDP Shares - Amortised issue costs | – | – | (46) | – | (46) |
| Revenue return attributable to Equity Shareholders | – | – | – | 9,143 | 9,143 |
| Equity dividends paid | – | – | – | (6,925) | (6,925) |
| At 30 June 2022 | 1,902 | 187,035 | (57,620) | 7,635 | 138,952 |

Subsequent to the issue of the Ordinary Shares, the Court of Session confirmed, in November 2017, the cancellation of the entire amount standing to the credit of the Share Premium account and the creation of the Special Reserve.

18 Cash and cash equivalents

| | 30 June 2023
£'000 | 30 June 2022
£'000 |
| --- | --- | --- |
| Handelsbanken | 8 | 22 |
| The Northern Trust Company | 2,941 | 1,568 |
| Total cash and cash equivalents | 2,949 | 1,590 |

Financial Report

Aberforth Split Level Income Trust plc

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Notes to the Financial Statements

19 Financial instruments

The Company's financial instruments comprise its investment portfolio, cash balances, ZDP Shares, debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement, and investment income receivable. Note 1 sets out the significant accounting policies, including criteria for recognition and the basis of measurement applied for significant financial instruments excluding cash at bank, which is carried at fair value. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities is recognised and measured.

The main risks that the Company faces arising from its financial instruments are as follows.

(i) Market price risk is the risk that the market value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency rate movement.

(ii) Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.

(iii) Liquidity risk is the risk that the Company will encounter difficulty raising funds to meet its cash commitments as they fall due. Liquidity risk may result either from the inability to sell financial instruments quickly at their fair values or from the inability to generate cash inflows as required.

(iv) Interest rate risk is the risk that the interest receivable/payable and the market value of investment holdings may fluctuate because of changes in market interest rates. The Company's investment portfolio is currently not directly exposed to interest rate risk. The Company's policy is to hold cash in variable rate bank accounts.

The Company's financial instruments are all denominated in sterling and therefore the Company is not directly exposed to significant currency risk. However, it is recognised that most investee companies, whilst listed in the UK, will be exposed to global economic conditions and currency fluctuations.

Market price risk

The Company's investment portfolio is exposed to market price fluctuations, which are monitored by the Managers in pursuance of the investment objective. It is not the Managers' policy to use derivatives or hedging instruments to manage market price risk.

If the investment portfolio valuation fell by 10% at 30 June 2023, the impact on the profit or loss and therefore Shareholders' funds would have been negative £20.2m (2022: negative £19.3m). If the investment portfolio valuation rose by 10% at 30 June 2023, the impact on the profit or loss and therefore Shareholders' funds would have been positive £20.2m (2022: positive £19.3m). The calculations are based on the portfolio valuation as at the balance sheet, are not representative of the period as a whole and assume all other variables remain constant. The level of change is used as a reasonable illustration for Shareholders to assess stockmarket volatility on the investment portfolio.

As at 30 June 2023, all of the Company's financial instruments were included in the balance sheet at fair value. The investment portfolio consisted of investments valued at their bid price, which represents fair value. Any cash balances, which are held in variable rate bank accounts, can be withdrawn on demand with no penalty.

Credit risk

The Company invests in UK equities traded on the London Stock Exchange. Investment transactions are carried out with a number of Financial Conduct Authority ('FCA') regulated brokers, with trades typically undertaken on a delivery versus payment basis and on a short settlement period.

The Depositary, NatWest Trustee & Depositary Services Limited, is responsible for overseeing the assets of the Company and has strict liability in certain circumstances should assets of the Company be lost.

The investment portfolio assets of the Company are held by The Northern Trust Company, the Company's Custodian, in a segregated account. In the event of the bankruptcy or insolvency of Northern Trust the Company's rights with respect to the securities held by the Custodian may be delayed or limited. Cash balances are held at Northern Trust or Handelsbanken. The Secretaries monitor the Company's risk by reviewing the credit ratings of Northern Trust and Handelsbanken. Where provided, the Secretaries also review internal control reports from these organisations. As at 27 July 2023 credit ratings for Northern Trust and Handelsbanken were considered acceptable. Outstanding investment income is reconciled to receipts on payment date.

The exposure to credit risk on the Company's financial instruments was as follows.

	30 June 2023	30 June 2022
	£'000	£'000
Investment income receivable (representing dividends from investee companies)	773	747
Other receivables	9	8
Cash and cash equivalents	2,949	1,590
Total	3,731	2,345

All of the above financial assets are current, their fair values are considered to be the same as the values shown, and the likelihood of a material credit default is considered to be low.

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Aberforth Split Level Income Trust plc 55

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Notes to the Financial Statements

19 Financial instruments (continued)

Liquidity risk

The Company's assets comprise mainly readily realisable equity securities, which, if necessary, can be sold to meet funding requirements, though short-term funding flexibility can typically be achieved through the use of the bank overdraft facility. These securities are all Level 1 assets and actively traded, and, whilst less liquid than larger quoted companies, the portfolio is well diversified by both numbers of holdings and industry sector. The Company's current liabilities all have a remaining contractual maturity of less than three months. The ZDP Shares have a planned repayment date of 1 July 2024. The remaining contractual maturities were as follows.

| Maturity profile of the Company's financial liabilities | | 30 June 2023
£'000 | 30 June 2022
£'000 |
| --- | --- | --- | --- |
| Due within 1 month: | Accrued expenses | 55 | 62 |
| | Amounts due to brokers | 609 | – |
| Due in 1 to 2 years: | ZDP Shares | 60,523 | 60,523 |
| Total liabilities | | 61,187 | 60,585 |

Interest rate risk

If the bank base rate had increased by 1% point, or decreased by 1% point, the impact on the profit or loss and Total Equity Shareholders' Funds would be de minimis. There would be no direct impact on the portfolio valuation. The calculations are based on the cash balances as at the Balance Sheet date, are not representative of the financial period as a whole and assume all other variables remain constant. The level of change is a reasonable illustration based on current market conditions. Cash deposit balances are held in variable rate bank accounts.

Capital Management Policies and Procedures

The Company's capital management policies and procedures are to support the Company's investment objective and to ensure that the Company will be able to continue as a going concern. To achieve the investment objective the Board has a responsibility to ensure the Company is able to continue as a going concern and details of the principal risks and how they are managed are set out on page 5. The capital of the Company comprises its share capital and reserves as set out in notes 15 and 17 together with any borrowings. The Board monitors and reviews the structure of the Company's capital including the extent to which revenue in excess of that which is required to be distributed should be retained. The Companies Act 2006 and Corporation Tax Act 2010 impose capital requirements on the respective ability and obligation to pay dividends. The Board monitors, and has complied with, the externally imposed capital requirements. The Company's investment objective, capital management policies and monitoring processes are unchanged during the period.

20 Contingencies, guarantees, financial commitments and contingent assets

The Company had no contingencies, guarantees, financial commitments or contingent assets as at 30 June 2023 (2022: nil).

21 Post Balance Sheet Events

Since 30 June 2023 there are no post balance sheet events that would require adjustment of or disclosure in the financial statements.

22 Related party transactions

The Directors have been identified as related parties and their fees and interests have been disclosed in the Directors' Remuneration Report on pages 35 and 36. During the year no Director or entity controlled by a Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006.

23 Company information

Aberforth Split Level Income Trust plc is a closed-ended investment company, registered in England No. 10730910, with its Ordinary Shares and ZDP Shares listed on the London Stock Exchange. The address of the registered office is Level 4, Dashwood House, 69 Old Broad Street, London, EC2M 1QS.

Financial Report
Aberforth Split Level Income Trust plc

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Shareholder Information

General Information

Financial Calendar

Dividends in respect of the year to 30 June 2023
	1st Interim	2nd Interim
Rate per Ordinary Share:	1.70p	3.30p
Ex dividend date:	9 February 2023	10 August 2023
Record date:	10 February 2023	11 August 2023
Pay date:	8 March 2023	31 August 2023
Half Yearly Report	Published in late January/early February
Annual Report and Financial Statements	Published in late July/early August
Annual General Meeting	30 October 2023
Publication of Net Asset Values	Daily (via a Primary Information Provider and the Managers’ website)

Shareholder register enquiries

All administrative enquiries relating to Shareholders – such as queries concerning holdings, dividend payments, notification of change of address, loss of certificate or an addition to a mailing list – should be directed to the Company’s Registrar, Link Group (contact details on page 61).

Payment of dividends

Dividends can be received more quickly by instructing Link Group (contact details on page 61) to pay them directly into a bank account; tax vouchers are then mailed to Shareholders separately. This method avoids the risk of dividend cheques being delayed or lost in the post.

Dividend Reinvestment Plan (DRIP)

The Company operates a Dividend Reinvestment Plan to allow Shareholders to use their cash dividends to buy shares easily and at a low cost via the Company’s Registrar from whom the necessary forms are available. For further information contact Link Group (contact details on page 61).

Electronic Communications and Voting

Shareholders can choose to receive communications (including the Annual and Interim reports) from the Company in electronic format. This method may be more convenient and secure for many Shareholders, reduces costs and has environmental benefits. To use this service, Shareholders can register and provide their email address on the Registrar’s share portal at www.signalshares.com. Thereafter, Shareholders will receive an email providing the website address link to the relevant document(s). After registering, Shareholders will be able to request paper copies in the future.

Shareholders can return proxy votes electronically by logging onto the Registrar’s share portal at www.signalshares.com and following the instructions. Shareholders do not need to register for electronic communications to use electronic proxy voting.

If Shareholders have any queries about this electronic service contact the Registrars, Link Group (contact details on page 61).

Sources of further information

The price of the Ordinary Shares is quoted daily in the Financial Times under the abbreviation of “Abf Spl Inc”. The price is listed in the “Conventional (Ex Private Equity)” section. Prices of the Ordinary Shares and ZDP Shares together with the Net Asset Values and other financial data, can be found on the TrustNet website at www.trustnet.com. Other websites containing useful information on the Company are www.ft.com, www.theaic.co.uk and www.morningstar.co.uk. Company performance and other information, including the Investor Disclosure Document, are available on the Aberforth Partners LLP website at www.aberforth.co.uk.

How to invest

The Company’s Ordinary Shares and ZDP Shares are traded on the London Stock Exchange. They can be bought or sold by placing an order with a stockbroker or asking a professional advisor. The Company’s Managers, Aberforth Partners LLP, do not offer any packaged products such as ISAs, Savings Schemes or Pension Plans. Each of the Company’s listed securities is eligible for inclusion in the “Stocks and Shares” component of an Individual Savings Account (ISA).

Retail Distribution/NMPI Status

The Company’s shares are intended for UK investors including retail investors, professionally advised private clients and institutional investors who are seeking exposure to smaller companies in the UK, and who understand and are willing to accept the risks of exposure to equities. The Company currently conducts its affairs, and intends to continue to conduct its affairs, so that its Ordinary Shares and ZDP Shares can be recommended by Independent Financial Advisers (IFAs) to ordinary retail investors in accordance with the rules of the Financial Conduct Authority (FCA) in relation to non-

Shareholder Information

Aberforth Split Level Income Trust plc 57

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General Information

mainstream pooled investment (NMPI) products. The Company's Ordinary Shares and ZDP Shares are excluded from the FCA's restrictions that apply to NMPI products because they are shares in an Investment Trust. Please note that past performance is not a guide to the future. Your investment may be at risk as the value of investments may go down as well as up and is not guaranteed. Therefore you may not get back the amount originally invested.

Alternative Investment Fund Managers Directive (AIFMD)

The Company has appointed Aberforth Partners as its Alternative Investment Fund Manager (AIFM). In accordance with the AIFMD, information in relation to the Company's leverage is required to be made available to Shareholders. The Company's maximum and actual leverage levels as at 30 June 2023 are shown below. There have been no changes to or breaches of the maximum level of leverage employed by the Company.

Leverage Exposure	30 June 2023		30 June 2022
	Commitment Method	Gross Method	Commitment Method	Gross Method
Maximum limit	1.05:1	1.05:1	1.05:1	1.05:1
Actual Level	1.00:1	1.00.1	1.00:1	1.00:1

Leverage, for the purposes of the AIFM Directive, is any method which increases the Company's exposure to stock markets whether through borrowings, derivatives or any other means. It is expressed as a ratio of the Company's exposure to its total net asset value. In summary, the Gross method measures the Company's exposure before applying hedging or netting arrangements. The Commitment method allows certain hedging or netting arrangements to be offset. ASLIT has no hedging or netting arrangements. The ZDP Shares are part of the share capital of the Company and are not considered as borrowings under the AIFM Directive.

In accordance with the AIFMD, the AIFM's remuneration policy and the numerical disclosures in respect of the AIFM's relevant reporting period (year to 30 April 2023) are available from Aberforth Partners' website (www.aberforth.co.uk).

The Company's capital structure is such that the underlying value of assets attributable to the Ordinary Shares will be geared by the rising capital entitlements of the ZDP Shares. Accordingly, the Ordinary Shares should be regarded as carrying above average risk.

Security Codes

	ISIN	SEDOL	Bloomberg/Reuters
Ordinary Shares	GB00BYPBD394	BYPBD39	ASIT LN
ZDP Shares	GB00BYPBD519	BYPBD51	ASIZ LN

Company Identification Numbers

Global Intermediary Identification Number (GIIN) JM0CLZ.99999.SL.826

Legal Entity Identifier (LEI) 21380013QYWO82NZV529

Association of Investment Companies (AIC)

The Company is a member of the AIC, which produces a detailed Monthly Information Service on the majority of investment trusts. This is available at www.theaic.co.uk.

The Common Reporting Standard

The OECD Common Reporting Standard for Automatic Exchange of Financial Account Information (Common Reporting Standard) requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly the Company provides information annually to HMRC on the tax residences of non-UK based certificated Shareholders and corporate entities. All new Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purpose of collecting this information. See HMRC's Quick Guide – information for account holders at the address below.

https://www.gov.uk/government/publications/exchange-of-information-account-holders

Beware of Share Fraud

Investment scams are designed to look like genuine investment opportunities. You might have been contacted by fraudsters if you have been approached out of the blue, promised tempting returns and told the investment is safe, called repeatedly, or told the offer is only available for a limited time. Shareholders may receive unsolicited phone calls or correspondence concerning investment matters that imply a connection to the Company. These may be from overseas based 'brokers' who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares. Shareholders may also be advised that there is an imminent offer for the Company, and the caller may offer to buy shares at significantly above the market price if an administration fee is paid. Shareholders should treat all such approaches with caution.

You can find more information about investment scams at the Financial Conduct Authority (FCA) website: www.fca.org.uk/consumers/protect-yourself-scams. You can also call the FCA Consumer Helpline on 0800 111 6768.

Data Protection

The Company is committed to ensuring the privacy of any personal data provided to it. Further details can be found in the privacy policy set out on the Aberforth website at www.aberforth.co.uk.

Shareholder Information

Aberforth Split Level Income Trust plc

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Glossary

Glossary of UK GAAP Measures

Net Asset Value – also described as Shareholders’ Funds, is the value of total assets less all liabilities. The Net Asset Value or NAV per Ordinary Share is calculated by dividing this amount by the total number of Ordinary Shares in issue.

Net Asset Value (ZDP Share) – is the value of the entitlement to the ZDP Shareholders. The Net Asset Value or NAV per ZDP Share is calculated by dividing this amount by the total number of ZDP Shares in issue.

Glossary of Alternative Performance Measures

Total Assets Total Return represents the theoretical return of the combined funds of the Ordinary Shareholders and ZDP Shareholders assuming that dividends paid to Ordinary Shareholders were reinvested at the NAV per Ordinary Share at the close of business on the day the Ordinary Shares were quoted ex dividend. Total Assets less current liabilities as at 30 June 2023 was £205,217,000 (2022: £195,345,000) and the total number of shares in issue (Ordinary Shares plus ZDP Shares) was 237,812,500 (2022: 237,812,500) producing a Total Assets per Share of 86.29p (2022: 82.14p). Multiplying by the dividend reinvestment factor of 1.226413 (2022: 1.174303) results in a Total Assets per Share on a Total Return basis of 105.83p (2022: 96.46p). The Total Assets Total Return was therefore 9.7% (2022: -14.9%), being the sum of the Total Assets per Share at the end of the period, multiplied by the dividend reinvestment factor divided by the Total Assets per Share calculated on a total return basis at the start of the period, expressed as a percentage (see note 16 on page 53).

Ordinary Share NAV Total Return represents the theoretical return on the NAV per Ordinary Share, assuming that dividends paid to Ordinary Shareholders were reinvested at the NAV per Ordinary Share at the close of business on the day the shares were quoted ex dividend. The NAV per Ordinary Share as at 30 June 2023 was 77.16p (2022: 73.04p) and the dividend reinvestment factor was 1.319066 (2022: 1.242432). The Ordinary Share NAV Total Return was therefore 12.2% (2022: -20.7%), being the Ordinary Share NAV at the end of the period, multiplied by the dividend reinvestment factor divided by the Ordinary Share NAV calculated on a total return basis at the start of the period, expressed as a percentage (see note 16 on page 53).

ZDP Share NAV Total Return represents the return on the entitlement value of a ZDP Share. The ZDP Share NAV as at 30 June 2023 was 122.82p (2022: 118.57p). The ZDP Share NAV Total Return was therefore 3.6% (2022: 3.6%), being the ZDP Share NAV at the end of the period divided by the ZDP Share NAV at the start of the period, expressed as a percentage (see note 16 on page 53).

Ordinary Share Price Total Return represents the theoretical return to an Ordinary Shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the Ordinary Shares of the Company at the close of business on the day the shares were quoted ex dividend. The Ordinary Share price as at 30 June 2023 was 72.0p (2022: 64.2p) and the dividend reinvestment factor was 1.348413. The Ordinary Share Price Total Return was therefore 20.0% (2022: -23.2%), being the Ordinary Share price at the end of the period, multiplied by the dividend reinvestment factor divided by the Ordinary Share price calculated on a total return basis at the start of the period, expressed as a percentage.

ZDP Share Price Total Return represents the theoretical return to a ZDP Shareholder, on a closing market price basis. The ZDP Share price as at 30 June 2023 was 119.50p (2022: 116.00p). The ZDP Share Price Total Return was therefore 3.0%, being the ZDP Share price at the end of the period divided by the ZDP Share price at the start of the period.

Discount is the amount by which the stockmarket price per Share is lower than the NAV per Share. The discount is normally expressed as a percentage of the NAV per Share.

Premium is the amount by which the stockmarket price per Share exceeds the NAV per Share. The premium is normally expressed as a percentage of the NAV per Share.

Shareholder Information
Aberforth Split Level Income Trust plc 59

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Glossary

Other Glossary Terms

Active Share Ratio is the sum of the absolute differences between a portfolio's weight in a stock and an index's weight in a stock for all stocks in the portfolio or index. The total is then divided by two to give a ratio between 0% and 100%. Active Share is addressed in "How Active is Your Fund Manager?" (Antti Petajisto and Martijn Cremers, Yale School of Management, 2009).

Dividend Reinvestment Factor is calculated on the assumption that dividends paid by the Company were reinvested into Ordinary Shares of the Company at the NAV per Ordinary Share or the share price, as appropriate, on the day the Ordinary Shares were quoted ex dividend.

Gearing is calculated by dividing the asset value attributable to the ZDP Shares by the asset value attributable to the Ordinary Shares.

Hurdle Rate is the rate of capital growth per annum in the Company's investment portfolio to return a stated amount per Share at the planned winding-up date.

Important Dates

Company Incorporation Date	19 April 2017
Inception Date	30 June 2017
Launch/Listing Date	3 July 2017
Planned Winding-Up Date	1 July 2024

Ongoing Charges represents the percentage per annum of investment management fees and other operating expenses to the average published Ordinary Shareholders' NAV over the period.

Portfolio Turnover is calculated by summing the lesser of purchases and sales over a one year period and dividing that sum by the average portfolio value for that period.

Projected Final Cumulative Cover is the ratio of the total assets of the Company as at the calculation date, to the sum of the assets required to pay the final capital entitlement of 127.25p per ZDP Share on the planned winding-up date, the future estimated investment management fees charged to capital, and estimated winding-up costs.

Redemption Yield (Ordinary Share) is the annualised rate at which projected future income and capital cash flows (based on assumed future capital and dividend growth rates) is discounted to produce an amount equal to the share price at the date of calculation.

Redemption Yield (ZDP Share) is the annualised rate at which the total discounted value of the planned future payment of capital equates to its share price at the date of calculation.

Retained Revenue per Share is a cumulative figure of revenue earned but not distributed and is calculated after accounting for dividends, including those not yet recognised in the financial statements.

Terminal NAV (Ordinary Share) is the projected NAV per Ordinary Share at the planned winding-up date at a stated rate of capital growth in the Company's investment portfolio after taking into account the final capital entitlement of the ZDP Shares, future estimated costs charged to capital and estimated winding-up costs.

Shareholder Information
Aberforth Split Level Income Trust plc

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Shareholder Information
Aberforth Split Level Income Trust plc 61

Corporate Information

Directors

Angus Gordon Lennox (Chairman)
Graeme Bissett
Dominic Fisher, OBE
Lesley Jackson
Graham Menzies

Managers and Secretaries

Aberforth Partners LLP
14 Melville Street
Edinburgh EH3 7NS
Tel: 0131 220 0733
enquiries@aberforth.co.uk
www.aberforth.co.uk

Registered Office and Company Number

Level 4
Dashwood House
69 Old Broad Street
London EC2M 1QS
Registered in England and Wales
Number 10730910

Depositary

NatWest Trustee & Depositary Services Limited
House A, Floor 0
Gogarburn
175 Glasgow Road
Edinburgh EH12 1HQ

Custodian

The Northern Trust Company
50 Bank Street
Canary Wharf
London E14 5NT

Bankers

Handelsbanken
2nd Floor, Apex 3
95 Haymarket Terrace
Edinburgh EH12 5HB

Registrars

Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL

Shareholder enquiries:

Tel: 0871 664 0300 (Calls cost 12p per minute
plus network extras)
enquiries@linkgroup.com
www.linkassetservices.com

Shareholder Portal:

www.signalshares.com

Independent Auditor

Deloitte LLP
Saltire Court
20 Castle Terrace
Edinburgh EH2 2DB

Solicitors

Dickson Minto W.S.
16 Charlotte Square
Edinburgh EH2 4DF

Sponsors

J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP

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Notice of the Annual General Meeting

Notice is hereby given that the Annual General Meeting of Aberforth Split Level Income Trust plc will be held at 14 Melville Street, Edinburgh EH3 7NS on 30 October 2023 at 11.00 a.m. for the following purposes.

Ordinary Business

To consider and, if thought fit, pass the following Ordinary Resolutions.

1. That the Report and Financial Statements for the year to 30 June 2023 be adopted.
2. That the Directors' Remuneration Report be approved.
3. That Graeme Bissett be re-elected as a Director.
4. That Dominic Fisher be re-elected as a Director.
5. That Angus Gordon Lennox be re-elected as a Director.
6. That Graham Menzies be re-elected as a Director.
7. That Lesley Jackson be re-elected as a Director.
8. That Deloitte LLP be re-appointed as Auditor.
9. That the Audit Committee be authorised to determine the remuneration of the Auditor for the year to 30 June 2024.

By Order of the Board

Aberforth Partners LLP, Secretaries

27 July 2023

Annual General Meeting

Aberforth Split Level Income Trust plc

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Notes to the Notice of the Annual General Meeting

1. Attending the Annual General Meeting in person

A member who is entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend, speak and vote on their behalf. Such a proxy need not also be a member of the Company. Shareholders are encouraged to submit their votes by proxy in advance of the meeting.

To be entitled to attend and vote at the Annual General Meeting (and for the purpose of determining the votes they may cast), members must be registered in the Company's register of members at 11.00 a.m. on 26 October 2023 (or, if the Annual General Meeting is adjourned, 11:00 a.m. on the day two days (excluding non working days) prior to the adjourned meeting). Changes to the register of members after the relevant deadline will be disregarded in determining the rights of any person to attend and vote at the Annual General Meeting.

2. Appointment of Proxy

A Form of Proxy for use by Shareholders is enclosed. Completion of the Form of Proxy will not prevent a Shareholder from attending the meeting and voting in person. To register your vote electronically, log on to the Registrars' website at www.signalshares.com and follow the instructions on screen.

You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different Shares. You may not appoint more than one proxy to exercise rights attached to any one Share. To appoint more than one proxy, please contact the Registrars of the Company. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

To be valid the proxy form must be completed and lodged, together with the power of attorney or any authority under which it is signed, or a notarially certified copy of such power of authority, with the Registrars of the Company no later than 48 hours (excluding non-working days) before the time set for the meeting, or any adjourned meeting.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting to be held on 30 October 2023 and any adjournment(s) thereof by using the procedures described in the CREST Manual. The message must be transmitted so as to be received by the Company's agent, Link Group (CREST Participant ID: RA10), no later than 48 hours (excluding non-working days) before the time appointed for the meeting.

3. Questions and Answers

The Board continues to welcome questions from Shareholders at the AGM. It asks Shareholders to submit any questions to the Board by email at enquiries@aberforth.co.uk before 11.00 a.m. on 26 October 2023 in case attendance at the AGM is restricted. In the event the AGM proceeds in its usual format as currently anticipated, pursuant to section 319A of the Companies Act 2006, the Company must provide an answer to any question that is put by a member attending the Annual General Meeting relating to the business being considered, except if a response would not be in the interest of the Company or for the good order of the meeting or if to do so would involve the disclosure of confidential information. The Company may elect to provide an answer to a question within a reasonable period of days after the conclusion of the Annual General Meeting.

4. Total Voting Rights

As at 27 July 2023, the latest practicable date prior to publication of this document, the Company had 190,250,000 Ordinary Shares and 47,562,500 ZDP Shares in issue. The holders of ZDP Shares will not normally be entitled to vote at general meetings of the Company. In respect of the resolutions the Ordinary Shareholders have a total of 190,250,000 voting rights.

5. Information on the Company's website

In accordance with section 311A of the Companies Act 2006, the contents of this notice of meeting, details of the total number of Shares in respect of which members are entitled to exercise voting rights at the AGM and, if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this notice will be available on the Managers' website at www.aberforth.co.uk.

6. Nominated Persons

Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a Nominated Person) may, under an agreement between such person and the Shareholder nominating such person, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise such right, the Nominated Person may, under any such agreement, have a right to give instructions to the registered Shareholder as to the exercise of voting rights.

7. Audit concerns

The members of the Company may require the Company (without payment) to publish, on its website, a statement (which is also to be passed to the Auditor) setting out any matter relating to the audit of the Company's Financial Statements, including the Auditor's report and the conduct of the audit. The Company will be required to do so once it has received such requests from either members representing at least 5% of the total voting rights of the Company or 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, state full names and addresses, and be sent to the registered address of the Company.

Annual General Meeting
Aberforth Split Level Income Trust plc 63

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Notes to the Notice of the Annual General Meeting

8. Rights of members to circulate resolutions and include other matters of business

Under section 338 of the Companies Act 2006, a member or members meeting the qualification criteria set out below may, subject to certain conditions, require the Company to circulate to members notice of a resolution which may properly be moved and is intended to be moved at that meeting. The conditions are that: (i) the resolution must not, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise); (ii) the resolution must not be defamatory of any person, frivolous or vexatious; and (iii) the request: (a) may be in hard copy form or in electronic form; (b) must identify the resolution of which notice is to be given by either setting out the resolution in full or, if supporting a resolution sent by another member, clearly identifying the resolution which is being supported; (c) must be authenticated by the person or persons making it; and (d) must be received by the Company not later than six weeks before the meeting to which the requests relate.

Under section 338A of the Companies Act 2006, a member or members meeting the qualification criteria set out below may, subject to certain conditions, require the Company to include in the business to be dealt with at the meeting a matter (other than a proposed resolution) which may properly be included in the business (a "matter of business"). The conditions are that: (i) the matter of business must not be defamatory of any person, frivolous or vexatious; and (ii) the request: (a) may be in hard copy form or in electronic form; (b) must identify the matter of business by either setting it out in full or, if supporting a statement sent by another member, clearly identify the matter of business which is being supported; (c) must be accompanied by a statement setting out the grounds for the request; (d) must be authenticated by the person or persons making it; and (e) must be received by the Company not later than six weeks before the meeting to which the requests relate.

In order to be able to exercise the members' right to require: (i) circulation of a resolution to be proposed at the meeting; or (ii) a matter of business to be dealt with at the meeting, the relevant request must be made by: (a) a member or members having a right to vote at the meeting and holding at least 5% of total voting rights of the Company; or (b) at least 100 members have a right to vote at the meeting and holding, on average, at least £100 of paid up share capital.

Annual General Meeting
Aberforth Split Level Income Trust plc

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J. Thomson Colour Printers Glasgow 215969

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