Annual Financial Report

RNS Number : 1563I

abrdn Equity Income Trust plc

01 December 2022

ABRDN EQUITY INCOME TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2022

Legal Entity Identifier (LEI): 21380015XPT7BZISSQ74

Performance Highlights

Net asset value total return per Ordinary share^A		Share price total return per Ordinary share^A
Year ended 30 September 2022		Year ended 30 September 2022
-7.6%		-7.8%
Year ended 30 September 2021	+39.9%	Year ended 30 September 2021	+47.1%

Revenue return per Ordinary share		Discount to net asset value^A
Year ended 30 September 2022		As at 30 September 2022
25.51p		8.8%
Year ended 30 September 2021	20.06p	As at 30 September 2021	8.4%

Dividend per Ordinary share		Ongoing charges ratio^A
Year ended 30 September 2022		Year ended 30 September 2022
22.70p		0.91%
Year ended 30 September 2021	21.20p	Year ended 30 September 2021	0.93%
^A Considered to be an Alternative Performance Measure..

Financial Calendar, Dividends and Highlights

Pre-AGM Online Investor Event	20 January 2023
Annual General Meeting (London)	2 February 2023
Expected payment dates of interim dividends for year ending 30 September 2023	March 2023 June 2023 September 2023 January 2024
Half year end	31 March 2023
Expected announcement of results for the six months ending 31 March 2023	May 2023
Financial year end	30 September 2023
Expected announcement of results for year ending 30 September 2023	December 2023

Strategic Report

Chairman's Statement

Earnings

While markets have been very volatile, particularly since the start of 2022, the Board's consistent direction to our Portfolio Manager over the last couple of years has been to focus on the income account and this has borne fruit. The Company's revenue per share, or earnings per share, for the financial year to 30 September 2022 were 25.51p, an impressive increase of 27.2% from the previous year. This exceeds the Company's previous record earnings of 22.06p in 2018 and means that the dividend for the year is covered by the earnings for the first time in three years.

Furthermore, the Board has stressed that while the focus should be on returning to a covered dividend, this was not to be achieved by simply buying the highest yielding stocks in the market. Our Portfolio Manager has confirmed that he currently expects the income generated by the portfolio to grow, despite the macro environment. Please see the Portfolio Manager's Review for more detail on the sources of the performance and income.

Results

In the year to 30 September 2022, the Net Asset Value ("NAV") total return of the Company was -7.6% and the share price total return was -7.8%. The FTSE All-Share Index delivered a total return of -4.0% over the same period. The reasons for the somewhat disappointing NAV performance are detailed in the Portfolio Manager's Report.

The uncertainty of the outlook is probably about the only constant in Chairman's statements these days but the pace at which events have unfolded since the start of 2022 has been truly remarkable. The last quarter of 2021 was challenging for the Company. However, the market's rotation out of growth and into value at the start of the year was beneficial, and our Portfolio Manager remained focused on generating sustainable income despite the challenging geopolitical and economic environment.

Dividend

I am delighted that the strong recovery in earnings has permitted the Board to announce a substantial increase in the fourth interim dividend while also making a solid start in rebuilding the revenue reserves. Furthermore, the Portfolio Manager's forecasts imply that net income in 2023 should be sufficient to allow further growth in the dividend on a fully covered basis. The fourth interim dividend for 2022 will be 6.5 pence per share which will be paid on 9 January 2023 to shareholders on the Register on 9 December 2022 with an associated ex-dividend date of 8 December 2022. This takes the total dividend for the year to 22.70 pence per share which is a 7.1% increase on the previous year and the 22nd consecutive annual dividend increase declared by the Company. After the payment of the fourth interim dividend, 2.94 pence per share will be transferred to revenue reserves., increasing revenue reserves to 24.62 pence per share.

In setting the level of the fourth interim dividend the Board balanced the desire to pay a meaningful dividend increase with the need to ensure that revenue reserves were replenished. The situation has been made easier by the impressive income growth exhibited by the portfolio.

The Board is committed to its progressive dividend policy and to maintaining and extending its track record of 22 consecutive years of dividend growth. We therefore expect that, in the absence of any adverse circumstances, in the coming financial year we will pay a dividend of at least 22.80 pence per share. The first three interim dividends will be 5.7 pence per share, payable in March, June and September and the fourth interim will be at least 5.7 pence per share payable in January. We have not given guidance on the dividend for the coming year in the past.

We believe that it is important to do so now (a) because we recognise that shareholders are looking for certainty in their budgeting and (b) because we want to stress our confidence in the quality of the portfolio and its ability to deliver the income required. The Company is currently trading on a yield of over 7%, the highest in the AIC UK Equity Income sector, which we do not believe is reflective of the revenue earning capacity of the underlying portfolio.

Buybacks

The Company bought back 561,535 Ordinary shares or 1.17% of the issued share capital during the year. The buy backs increased the NAV per share by 0.42 pence. The Board monitors the discount of the share price to the cum-income NAV in both absolute terms and relative to the discount of other UK equity income investment trusts with a view to moderating discount volatility.

The Board

In the Half-Yearly Report to 31 March 2022 I stated that I would stand down from the Board at the completion of the Annual General Meeting (the "AGM") in February 2023 and that Sarika Patel would succeed me as Chair. We have therefore undertaken a search for Sarika's successor as Chair of the Audit Committee. I am delighted to welcome Mark Little to the Board. Mark is a qualified accountant and has a wealth of experience in the sector. I'm sure he will be a great addition to the Board. He will stand for election to the Board at the AGM in February 2023 and will take over as Audit Chair from that point.

Online Shareholder Presentation

In order to encourage as much interaction as possible with our shareholders, we will be hosting an Online Shareholder Presentation, which will be held at 11:00 am on Friday, 20 January 2023. At this event there will be a presentation from the Portfolio Manager followed by an opportunity to ask live questions to the Portfolio Manager and the Chairman. The online presentation is being held ahead of the AGM to allow shareholders sufficient time to submit their proxy votes after the presentation but prior to the AGM should they so wish. Full details on how to register for the online event can be found on the Company's website at www.abrdnequityincome.com .

Annual General Meeting ("AGM")

This year's Annual General Meeting ("AGM") will be held at wallacespace Spitalsfield, 15-25 Artillery Lane, London, E1 7HA on Thursday, 2 February 2023 at 11:30 am. The meeting will include a presentation by the Portfolio Manager and will be followed by lunch. This is a good opportunity for shareholders to meet the Board and the Manager and the Board encourages you to attend. The Notice of the Meeting is contained in the Annual Report.

Outlook

I will be retiring from the Board at the AGM after a relatively brief tenure as Chair but nine years as a director.

In his valedictory remarks, Richard Burns, my predecessor, hoped that I would have a better story to tell in terms of our performance when my turn to hand over came round. Despite the negative capital return in the last 12 months, I am delighted that we have been able to cover the dividend this year and resume making significant dividend increases while starting to replenish our revenue reserves. The capital performance of the portfolio needs to be set against the global economic backdrop which remains troubled. The latest UK budget sets out to raise an additional £25bn to address the budget deficit caused by the extensive support provided to households and businesses during the Covid and Ukraine crises.

While low valuations may indicate that this troubled economic outlook is at least partially priced in, the Board is aware that capital growth may be constrained in the near term. This makes the income component of the total return all the more important. The Board is maintaining its direction to the Portfolio Manager that the revenue account should cover a dividend greater than the 22.70 pence per share that we are paying for FY22. At the time of writing, the revenue forecasts indicate that this should be achieved in the coming year.

As the current share price discount to NAV shows, we also still have some work to do to persuade the market that we will be able to achieve real growth in our distributions in the face of a likely UK recession. However, I am very confident in the ability of my successor, Sarika Patel, to lead the Board and believe she will be able to report to you that we have achieved this despite the economic challenges to come. I wish her every success.

Mark White
Chairman
30 November 2022

Overview of Strategy

Business Model

The Company is an investment trust with a premium listing on the London Stock Exchange.

Investment Objective

The Company's objective is to provide shareholders with an above average income from their equity investment, while also providing real growth in capital and income.

Investment Policy

The Directors set the investment policy, which is to invest in a diversified portfolio consisting mainly of quoted UK equities which will normally comprise between 50 and 70 individual equity holdings.

In order to reduce risk in the Company without compromising flexibility:

- no holding within the portfolio should exceed 10% of total assets at the time of acquisition; and

- the top ten holdings within the portfolio will not exceed 50% of net assets.

The Company may invest in convertible preference shares, convertible loan stocks, gilts and corporate bonds.

The Directors set the gearing policy within which the portfolio is managed. The parameters are that the portfolio should operate between holding 5% net cash and 15% net gearing. The Directors have delegated responsibility to the Manager for the operation of the gearing level within the above parameters.

Delivering the Investment Objective

The Board delegates investment management services to abrdn. The team within abrdn managing the Company's portfolio of investments has been headed up by Thomas Moore since 2011.

The portfolio is invested on an index-agnostic basis. The process is based on a bottom-up stock-picking approach where sector allocations are a function of the sum of the stock selection decisions, constrained only by appropriate risk control parameters. The aim is to Focus on Change by evaluating changing corporate situations and identifying insights that are not fully recognised by the market.

Idea Generation and Research

The vast majority of the investment insights are generated from information and analysis from one-on-one company meetings. Collectively, more than 3,000 company meetings are conducted annually across abrdn. These meetings are used to ascertain the company's own views and expectations of its future prospects and the markets in which it operates. Through actively questioning the senior management and key decision makers of companies, the portfolio managers and analysts look to uncover the key changes affecting the business and the materiality of their impact on company fundamentals within the targeted investment time horizon.

Investment Process in Practice

The index-agnostic approach ensures that the weightings of holdings reflect the conviction levels of the investment team, based on an assessment of the management team, the strategy, the prospects and the valuation metrics. The process recognises that some of the best investment opportunities come from under-researched parts of the market, where the breadth and depth of the analyst coverage that the Portfolio Manager can access provides the scope to identify a range of investment opportunities.

The consequence of this is that the Company's portfolio often looks very different from other investment vehicles providing their investors with access to UK equity income. This is because the process focuses on conviction levels rather than index weightings. This means that the Company may provide a complementary portfolio to the existing portfolios of investors who prefer to make their own decisions and manage their ISAs, SIPPs and personal dealing accounts themselves. Currently 48.9% (2021: 58%) of the Company's portfolio is invested in companies outside the FTSE 100 Index.

The index-agnostic approach further differentiates the portfolio because it allows the Portfolio Manager to take a view at a thematic level, concentrate the portfolio's holdings in certain areas and avoid others completely. The effect of this approach is that the weightings of the portfolio can be expected to differ significantly from that of any index, and the returns generated by the portfolio may reflect this divergence, particularly in the short term.

The Investment Manager's Approach to ESG

Although environmental, social and governance ("ESG") factors are not the over-riding criteria in relation to the investment decisions taken by the Portfolio Manager, significant emphasis is placed on ESG and climate related factors throughout the Manager's investment process.

The Portfolio Manager considers ESG risks and opportunities for all investments. ESG considerations are inextricably embedded into the investment process in order to achieve successful and sustainable performance for the Company over the long term.

There is a broad understanding that a full and thorough assessment of ESG factors will for allow for better investment decisions to be made, which will lead to better outcomes for the Company's shareholders. ESG factors are considered alongside financial and other fundamental factors in order to make the best possible investment decisions at a stock picking and at a portfolio construction level.

The Portfolio Manager and his team have a very close relationship with the ESG specialists within abrdn and have an on-desk ESG analyst to assist in the research process and ESG engagements with companies. Through the utilisation of third party provided research including MSCI and abrdn's inhouse ESG rating tools the team is able to identify, where appropriate, leaders and laggards, areas of weakness and areas of strength.

However, the Company does not specifically exclude any sectors from its investment universe. All investments are required to pass a quality test and ESG issues are only part of the investment analysis.

The Company may invest in , and vigorously engage with, well-managed and well-capitalised companies which may not necessarily immediately be considered ESG leaders.

Please see the case study on Glencore below, the Spotlight on Thungela, and the Investment Case Studies on National Grid and the NatWest Group for specific examples of the Company's engagement with investee entities in the portfolio

Glencore Case Study

For example, the Company invests in Glencore, the diversified natural resources company. Engagement and fundamental research by the Portfolio Manager and ESG equity analyst before investment, and as part of ongoing monitoring, is critical in ensuring that the investee is a suitable investment for the Company, and its ESG credential are fully understood.

The Portfolio Manager has actively engaged with Glencore in order to deepen the understanding of its management of ESG-related risks and to encourage improvements.

During the financial year, the Investment Manager met with Glencore's Chairman and Senior Executives to discuss Glencore's responses to climate change challenges, health and safety challenges, and the progress to resolve regulatory misconduct investigations.

On climate change, in particular, the Investment Manager discussed Glencore's approach and noted its improved transparency on its climate change targets and strategy. However, the Investment Manager believes that there is scope for further improvement on strategy, such as with respect to integration into renumeration structures and granularity on the actions required to meet Glencore's emissions reductions targets. Following engagement, the Investment Manager elected to vote against a resolution to approve Glencore's Climate Progress Report at the latest AGM.

The Investment Manager has also continued to challenge Glencore on its strategy to run down its coal business, amid ongoing debate in the market as to whether Glencore should spin off its coal assets. While the Investment Manager continues its own assessment on the merits of Glencore's strategy, it has valued Glencore's engagement on the challenges to a successful spin off both from an environmental and financial perspective.

The Investment Manager is encouraging Glencore to enhance ESG practices and transparency at its coal business, including health and safety, as the Investment Manager believes this would strengthen the company's position that it is the most responsible owner of these assets.

Glencore is the fourth largest holding in the Company, making up 4% of the total portfolio.

Since the financial year end, Glencore announced that, following the votes against the Climate Progress Report and engagement with shareholders, it would improve disclosures around the planning and execution of its climate strategy, and provide investors with more details on the Board's and Management's governance of climate matters.

Promoting the Success of the Company

The Board's statement below describes how the Directors have discharged their duties and responsibilities over the course of the financial year under section 172 (1) of the Companies Act 2006 and how they have promoted the success of the Company. That statement forms part of the Strategic Report.

Key Performance Indicators ("KPIs")

The Board assesses the performance of the Company against the range of KPIs shown below over a variety of time periods, but has particular focus on the long term, which the Board considers to be at least five years.

KPI	Description
Net Asset Value ("NAV") Total Return relative to the FTSE All-Share Index	While the Manager does not manage the portfolio with direct reference to any particular index, the Board does review the performance against that of the FTSE All-Share Index to provide context for the performance delivered. The Company's NAV Total Return relative to the FTSE All Share Index since 2012, the first full year after Thomas Moore took over the role of Portfolio Manager, is set out in the Annual Report.
Premium or discount to the NAV compared to the unweighted average of the discount of the peer group	The Board compares the discount of the Company's share price to its NAV when compared to the unweighted average discount of the other investment trusts in the UK Equity Income sector. The discount at the year end and at the end of the previous year, and the narrowest and widest discounts during the year, for the Company and the peer group, are shown in the Annual Report.
Dividend growth compared to the Retail Price Index ("RPI")	The Company's objective is to provide shareholders with an above average income from their equity investment, while also providing real growth in capital and income. Between 2012 and the outbreak of the Covid-19 pandemic, the dividend growth of the portfolio exceeded inflation, as measured by the RPI, indicating that shareholders had received real growth in the dividends paid by the Company. However, the income generated by the portfolio was significantly affected by dividend cuts made by investee companies during 2020. While dividend payments to shareholders did increase over the last two years they did not keep pace with RPI, despite the dividends being supplemented by drawing from revenue reserves. In setting the level of the dividend for the current financial year, the Board has balanced the need to deliver a meaningful increase to shareholders and its desire to start rebuilding the revenue reserves. After having paid the fourth interim dividend, 2.94 pence per share will be transferred to revenue reserves. The Company's dividend has grown at an annualised rate of 5.7% over the last 10 years, while RPI has increased at3.6% per annum over the same time. A breakdown of the Company's dividend growth compared with RPI since 2012 is shown in the Annual Report.
Ongoing charges ratio relative to comparator investment vehicles	The Board monitors the Company's ongoing charges ratio against prior years and other similar sized companies in the peer group. The Ongoing Charges Ratio for the year reduced to 0.91% based on average net assets over the year (2021: 0.93%).

Principal Risks and Uncertainties

The Board and Audit Committee carry out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks. The Board also identifies emerging risks which might affect the Company.

There are a number of principal risks and uncertainties which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board, through the Audit Committee has carried out a robust assessment of the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation.

The principal risks and uncertainties faced by the Company are reviewed by the Audit Committee in the form of a risk matrix and the Committee also gives consideration to the emerging risks facing the Company.

The Board has identified the implications for the Company's investment portfolio of a changing climate as an emerging risk which it considers is likely to become more relevant for the Company in the future. The Board continues to assess this emerging risk as it develops, including how investor sentiment is evolving towards climate risk within investment portfolios, and will consider how the Company may mitigate this risk and any other emerging risks. The Board receives regular reporting from the Manager on its approach to engagement with investees on climate change and other topics.

The principal risks currently facing the Company, together with a description of the mitigating actions the Board has taken, are set out in the table below.

The Board considers its risk appetite in relation to each principal risk and monitors this on an ongoing basis. Where a risk is approaching or is outside the tolerance level, the Board will consider taking action to manage the risk. Currently, the Board considers the risks to be managed within acceptable levels.

The principal risks associated with an investment in the Company's shares are published monthly in the Company's factsheet and they can be found in the pre-investment disclosure document ("PIDD") published by the Manager, both of which are available on the Company's website.

Risk	Mitigating Action
Strategy - the Company's objectives or the investment trust sector as a whole become unattractive to investors, leading to a fall in demand for the Company's shares. No Change during the Year	Through regular updates from the Manager, the Board monitors the discount/ premium at which the Company's shares trade relative to the net asset value. It also holds an annual strategy meeting and receives feedback from the Company's broker and updates from the Manager's investor relations team at Board meetings. The Board appreciates that shareholders overwhelmingly voted in favour of the continuation of the Company at the AGM in 2022.
Investment Performance - the Board recognises that market risk is significant in achieving performance and it reviews investment guidelines to ensure that they are appropriate. The Board regularly reviews the impact of geopolitical instability and change on market risk. Risk Increased during the Year	The Board meets the Manager on a regular basis and keeps investment performance under close review. The Board sets and monitors the investment restrictions and guidelines and regular reports are received from the Investment Manager on stock selection, asset allocation, gearing, revenue forecasts and the costs of running the Company. The Board determines the Company's dividend policy and approves the level of dividends payable to shareholders. Representatives of the Manager attend all Board meetings and a detailed formal appraisal of the Manager is carried out by the Management Engagement Committee on an annual basis to ensure that the continued appointment of the Manager remains in the best interests of the shareholders. The Board engages with shareholders at its AGM and Pre-AGM Online Event and with larger shareholders at least annually to listen to sentiment towards the Company and its performance directly.
Exogenous risks such as health, social, financial, economic and geopolitical - the effects of instability or change arising from these risks could have an adverse impact on stock markets and the value of the investment portfolio. Political risks include the political instability in the UK, the terms of the UK's exit from the European Union, any regulatory changes resulting from a different political environment, and wider geo-political issues. Risk Increased during the Year	The Board discusses current issues with the Manager. During the year under review, such issues have included political instability in the UK and impact on stock markets, inflation and the resulting volatility that it created in global stock markets, the Russian invasion of Ukraine and associated sanctions, the ongoing impact of the UK's exit from the European Union, and the steps that the Manager has taken or might take to limit their impact on the portfolio and the operations of the Company. The Portfolio Manager's Review summarises the purchases and sales activity during the Period as the Company considered the new set of opportunities arising from the meaningful change in market backdrop during the financial year. The Manager is in regular communication with investee entities, economists, and the wider market to determine the impact of the geopolitical and economic environment on the portfolio. The Board oversees the Manager's performance at each Board Meeting and formally considers whether the Company's strategy remains fit for purpose, in light of exogenous risk, at its annual strategy meeting which last took place in August 2022. The Board also regularly discusses the economic environment, geopolitical risks, industry trends and the potential impact on the Company with the Company's broker.
Operational Risk - in common with most investment trusts, the Board delegates the operation of the business to third parties, the principal delegate being the Manager. Failure of internal controls and poor performance of any service provider could lead to disruption, reputational damage or loss to the Company. No Change during the Year	The Audit Committee receives reports from the Manager on its internal controls and risk management (including an annual ISAE Report) and receives assurances from all its other significant service providers on at least an annual basis, including on matters relating to business continuity and cyber security. Written agreements are in place with all third party service providers. The Manager monitors closely the control environments and quality of services provided by third parties, including those of the Depositary, through service level agreements, regular meetings and key performance indicators. A formal appraisal of the Company's main third party service providers is carried out by the Management Engagement Committee on an annual basis. The Company's operations were severely tested during the Covid-19 pandemic. However, the increased use of online communication and out of office working have, to date, proved to be robust.
Governance Risk - the Directors recognise the impact that an ineffective board, unable to discuss, review and make decisions, could have on the Company and its shareholders. No Change during the Year	The Board is aware of the importance of effective leadership and board composition. The Board regularly reviews its own performance and, at least annually, formally reviews the performance of the Board and Chair through its performance evaluation process.
Discount / Premium to NAV - a significant share price discount or premium to net asset value per share could lead to high levels of uncertainty for shareholders. No Change during the Year	The Board keeps the level of the Company's discount / premium under review. During the financial year, shares have been bought back at a discount by the Company. Please see the Share Buy Backs section for more details on the Company's approach to discount control during the financial year. The Company participates in the Manager's investment trust promotional programme where the Manager has an annual programme of meetings with institutional shareholders and reports back to the Board on these meetings.
Financial obligations - inadequate controls over financial record keeping and forecasting, the setting of an inappropriate gearing strategy or the breaching of loan covenants could result in the Company being unable to meet its financial obligations, losses to the Company and its ability to continue trading as a going concern. No Change during the Year	At each Board meeting, the Board reviews management accounts and revenue forecasts. The Directors set the gearing policy within which the portfolio is managed. The parameters are that the portfolio should operate between holding 5% net cash and 15% net gearing. The Directors have delegated responsibility to the Manager for the operation of the gearing level within the above parameters. The Company's annual financial statements are audited by the independent auditor.
Legal and Regulatory Risks - the Company operates in a complex legal and regulatory environment. As a UK company with shares publicly quoted on the London Stock Exchange, as an alternative investment fund and an investment trust, there are several layers of risk of this nature. No Change during the Year	The actions the Board takes to mitigate these extensive risks are to ensure that there is breadth and depth of expertise within the Board and the organisations to which the Company has delegated. There are also authorities whereby the Board or individual Directors can take further advice by employing experts should that ever be considered necessary.

Risk

Mitigating Action

Strategy - the Company's objectives or the investment trust sector as a whole become unattractive to investors, leading to a fall in demand for the Company's shares.

No Change during the Year

Through regular updates from the Manager, the Board monitors the discount/ premium at which the Company's shares trade relative to the net asset value. It also holds an annual strategy meeting and receives feedback from the

Company's broker and updates from the Manager's investor relations team at Board meetings.

The Board appreciates that shareholders overwhelmingly voted in favour of the continuation of the Company at the AGM in 2022.

Investment Performance - the Board recognises that market risk is significant in achieving performance and it reviews investment guidelines to ensure that they are appropriate. The Board regularly reviews the impact of geopolitical instability and change on market risk.

Risk Increased during the Year

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

The Board sets and monitors the investment restrictions and guidelines and regular reports are received from the Investment Manager on stock selection, asset allocation, gearing, revenue forecasts and the costs of running the Company.

The Board determines the Company's dividend policy and approves the level of dividends payable to shareholders.

Representatives of the Manager attend all Board meetings and a detailed formal appraisal of the Manager is carried out by the Management Engagement Committee on an annual basis to ensure that the continued appointment of the Manager remains in the best interests of the shareholders.

The Board engages with shareholders at its AGM and Pre-AGM Online Event and with larger shareholders at least annually to listen to sentiment towards the Company and its performance directly.

Exogenous risks such as health, social, financial, economic and geopolitical - the effects of instability or change arising from these risks could have an adverse impact on stock markets and the value of the investment portfolio. Political risks include the political instability in the UK, the terms of the UK's exit from the European Union, any regulatory changes resulting from a different political environment, and wider geo-political issues.

Risk Increased during the Year

The Board discusses current issues with the Manager. During the year under review, such issues have included political instability in the UK and impact on stock markets, inflation and the resulting volatility that it created in global stock markets, the Russian invasion of Ukraine and associated sanctions, the ongoing impact of the UK's exit from the European Union, and the steps that the Manager has taken or might take to limit their impact on the portfolio and the operations of the Company.

The Portfolio Manager's Review summarises the purchases and sales activity during the Period as the Company considered the new set of opportunities arising from the meaningful change in market backdrop during the financial year. The Manager is in regular communication with investee entities, economists, and the wider market to determine the impact of the geopolitical and economic environment on the portfolio.

The Board oversees the Manager's performance at each Board Meeting and formally considers whether the Company's strategy remains fit for purpose, in light of exogenous risk, at its annual strategy meeting which last took place in August 2022. The Board also regularly discusses the economic environment, geopolitical risks, industry trends and the potential impact on the Company with the Company's broker.

Operational Risk - in common with most investment trusts, the Board delegates the operation of the business to third parties, the principal delegate being the Manager. Failure of internal controls and poor performance of any service provider could lead to disruption, reputational damage or loss to the Company.

No Change during the Year

The Audit Committee receives reports from the Manager on its internal controls and risk management (including an annual ISAE Report) and receives assurances from all its other significant service providers on at least an annual basis, including on matters relating to business continuity and cyber security. Written agreements are in place with all third party service providers.

The Manager monitors closely the control environments and quality of services provided by third parties, including those of the Depositary, through service level agreements, regular meetings and key performance indicators.

A formal appraisal of the Company's main third party service providers is carried out by the Management Engagement Committee on an annual basis.

The Company's operations were severely tested during the Covid-19 pandemic. However, the increased use of online communication and out of office working have, to date, proved to be robust.

Governance Risk - the Directors recognise the impact that an ineffective board, unable to discuss, review and make decisions, could have on the Company and its shareholders.

No Change during the Year

The Board is aware of the importance of effective leadership and board composition. The Board regularly reviews its own performance and, at least annually, formally reviews the performance of the Board and Chair through its performance evaluation process.

Discount / Premium to NAV - a significant share price discount or premium to net asset value per share could lead to high levels of uncertainty for shareholders.

No Change during the Year

The Board keeps the level of the Company's discount / premium under review. During the financial year, shares have been bought back at a discount by the Company. Please see the Share Buy Backs section for more details on the Company's approach to discount control during the financial year.

The Company participates in the Manager's investment trust promotional programme where the Manager has an annual programme of meetings with institutional shareholders and reports back to the Board on these meetings.

Financial obligations - inadequate controls over financial record keeping and forecasting, the setting of an inappropriate gearing strategy or the breaching of loan covenants could result in the Company being unable to meet its financial obligations, losses to the Company and its ability to continue trading as a going concern.

No Change during the Year

At each Board meeting, the Board reviews management accounts and revenue forecasts.

The Company's annual financial statements are audited by the independent auditor.

Legal and Regulatory Risks - the Company operates in a complex legal and regulatory environment. As a UK company with shares publicly quoted on the London Stock Exchange, as an alternative investment fund and an investment trust, there are several layers of risk of this nature.

No Change during the Year

The actions the Board takes to mitigate these extensive risks are to ensure that there is breadth and depth of expertise within the Board and the organisations to which the Company has delegated. There are also authorities whereby the Board or individual Directors can take further advice by employing experts should that ever be considered necessary.

Promotional Activities

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by abrdn on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by abrdn. The Company also supports abrdn's investor relations programme which involves regional roadshows, promotional and public relations campaigns. abrdn's promotional and investor relations teams report to the Board on a quarterly basis giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make-up of that register.

The purpose of the promotional and investor relations programmes is both to communicate effectively with existing shareholders and to gain new shareholders, with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key. Part of the promotional programme includes commissioning independent paid for research on the Company, most recently from Kepler Trust Intelligence Research Limited. A copy of the latest research note is available from the Latest News section of the Company's website.

During the year, the Board was delighted, in January 2022, to host an online shareholder presentation where the Portfolio Manager provided an update on the portfolio. The Portfolio Manager and Chairman also answered questions from the audience. In August 2022, the Company also hosted an in-person meeting for large shareholders, the first since the outbreak of Covid-19, at which all members of the Board were present and at which the Portfolio Manager provided an update. Both these events gave the Directors the opportunity to hear the views of shareholders first hand.

Board Diversity

The Board's statement on diversity is set out in the Statement of Corporate Governance.

At 30 September 2022, there were three male and two female Directors on the Board.

Modern Slavery Act

Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Environmental, Social and Human
Rights Issues

The Company has no employees as the Board has delegated the day to day management and administrative functions to the Manager. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is set out below.

Active Engagement

Through engagement and exercising voting rights, the Manager actively works with companies to improve corporate standards, transparency and accountability. By making ESG central to its investment capabilities, the Manager looks to deliver robust outcomes as well as actively contributing to a fairer, more sustainable world.

The primary goal of the Manager is to generate the best long-term outcomes for the Company in order to fulfil fiduciary responsibilities to shareholders and this fits with one of the Manager's core principles as a business in how it evaluates investments. The Manager sees ESG factors as being financially material and impacting corporate performance. The Manager focuses on understanding the ESG risks and opportunities of investments alongside other financial metrics to make better investment decisions.

Responsible Investment

The Board is aware of its duty to act in the interests of the Company. The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and has noted the Manager's policy on social responsibility. The Manager considers social, environmental and ethical factors which may affect the performance or value of the Company's investments as part of its investment process. In particular, the Manager encourages companies in which investments are made to adhere to best practice in the areas of ESG stewardship. The Manager believes that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies.

The Company's objective is to deliver above average income, while also providing real growth in capital and income, on its investments for its shareholders which the Board and Manager believes will be produced on a sustainable basis by investments in companies which adhere to best practice in ESG. Accordingly, the Manager will seek to favour companies which pursue best practice.

Stewardship

The Company is committed to the UK's Stewardship Code, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. abrdn plc is a tier 1 signatory of the UK Stewardship Code which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment return to shareholders. While delivery of stewardship activities has been delegated to the Manager and its group, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company's behalf.

The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues.

Global Greenhouse Gas Emissions

All of the Company's activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

For the same reason as set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore is not required to disclose energy and carbon information.

Viability Statement

The Board considers that the Company is a long-term investment vehicle and, for the purposes of this statement, has decided that three years is an appropriate period over which to consider its viability. The Board considers this to be an appropriate period for an investment trust company with a portfolio of equity investments, and the financial position of the Company.

Taking into account the Company's current financial position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report.

In assessing the viability of the Company over the review period, the Directors have focused upon the following factors:

- The principal risks and uncertainties detailed in the Strategic Report and the steps taken to mitigate these risks.

- All of the Company's investments are traded on major stock exchanges and there is a spread of investments held.

- The Company is closed ended in nature and therefore it is not required to sell investments when shareholders wish to sell their shares.

- The Company's main liability is its bank loan of £25m (2021: £25m), which represents 15.0% (2021: 13.5%) of the Company's investment portfolio. This is a £30m (2021: £30m) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch, which is due to expire in June 2023. £25m was drawn at the end of the financial year. A replacement option will be sought in advance of the expiry of the facility, or should the Board decide not to renew this facility, any outstanding borrowing would be repaid through the proceeds of equity sales as required.

- The Company' s cash balance, including money market funds, at 30 September 2022 amounted to £3.6m (2021: £3.5m).

- The relatively low level of ongoing charges, which reduced to 0.91% (2021 0.93%).

- Shareholders' overwhelming voting in favour of the continuation of the Company at the AGM in February 2022. The next continuation vote is due to take place at the AGM to be held in 2027.

When considering the risks, the Board reviewed the impact of stress testing on the portfolio, including the effects of any substantial future falls in investment values. The Board has also had regard to matters such as a reduction in the income generated in the portfolio, a significant increase in interest rates, a substantial reduction in the liquidity of the portfolio or changes in investor sentiment, all of which could have an impact on the Company's prospects and viability in the future. The results of the stress tests have given the Board comfort over the viability of the Company.

Taking into account all of these factors, the Company's current position and the potential impact of the principal risks and uncertainties faced by the Company, the Board has concluded that it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period of this assessment to 30 September 2025.

In assessing the Company's future viability, the Board has assumed that investors will wish to continue to have exposure to the Company's activities, in the form of a closed ended entity, the Company's long-term performance is satisfactory, and the Company will continue to have access to sufficient capital.

Future Strategy

The Board intends to maintain the strategic policies set out in the Strategic Report for the year ending 30 September 2022 as it is believed that these are in the best interests of shareholders.

On behalf of the Board
Mark White
Chair
30 November 2022

Promoting the Success of the Company

How the Board Meets its Obligations under Section 172 of the Companies Act 2006

The Board is required to describe to the Company's shareholders how the Directors have discharged their duties and responsibilities over the course of the financial year under Section 172 (1) of the Companies Act 2006 (the "Section 172 Statement"). This statement provides an explanation of how the Directors have promoted the success of the Company for the benefit of its members as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with all stakeholders and the impact of the Company's operations on the environment.

The Board takes its role very seriously in representing the interests of the Company's shareholders. The Board which, at the year end, comprised five independent Non-Executive Directors has a broad range of skills and experience across all major functions that affect the Company. The Board is responsible for taking all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's service providers.

The Board ensures that the Company operates in a transparent culture where all parties are treated with respect and provided with the opportunity to offer practical challenge and participate in debate to achieve the expectations of shareholders and other stakeholders alike. The Board works very closely with the Manager in reviewing how issues are handled, ensuring good governance and responsibility in managing the Company's affairs, as well as visibility and openness in how the affairs are conducted.

Specific Examples of Stakeholder Consideration during the Year

The importance of giving due consideration to the Company's stakeholders is not a new requirement and is considered as part of every Board decision.

The Board considers its stakeholders at Board meetings and receives feedback on the Investment Manager's interactions with them.

The Directors were particularly mindful of stakeholder considerations when considering the following items during the year ended 30 September 2022:

Portfolio

The Portfolio Manager's Review details the key investment decisions taken during the year. The overall shape and structure of the investment portfolio is an important factor in delivering the Company's stated investment objective and is reviewed at every Board Meeting. At every Board Meeting, the Board discusses performance in detail with the Portfolio Manager. In addition, during the year, the Board considered in detail how the Investment Manager incorporates ESG issues into its research and analysis work that forms part of the investment decision process.

Dividend

The Board has determined the payment of a fourth interim dividend for the year of 6.5 pence per Ordinary share. Following payment of the fourth interim dividend, total dividends for the year will amount to 22.70 pence per Ordinary share, an increase of 7.1% compared to the previous year. In setting the level of the dividend, the Board has balanced the need to deliver a meaningful increase to shareholders and start the process of rebuilding the revenue reserves, which have been depleted in the last two years. 2.94 pence per share will be transferred to reserves.

Promoting the Company

In January 2022, the Board hosted an online shareholder presentation where the Portfolio Manager provided an update on the portfolio, and the Chairman and Portfolio Manager answered questions from the audience. Over 200 investors signed up to the event. In August 2022, the Company hosted a meeting for large shareholders at which all members of the Board were present and at which the Portfolio Manager provided an update. Both these events gave the Directors the opportunity to hear the views of shareholders first hand.

Pre-AGM Online Investment Event

In line with the Event held in January 2022, we will be hosting an Online Shareholder Presentation, which will be held at 11am on Friday, 20 January 2023. At this event there will be a presentation from the Portfolio Manager followed by an opportunity to ask live questions of the Portfolio Manager and Chair. The online presentation is being held ahead of the AGM to allow shareholders time to submit their proxy votes after the presentation but prior to the AGM should they so wish. Full details on how to register for the online event can be found on the Company's website at www.abrdnequityincome.com .

Share Buy Backs

During the year the Company bought back 561,535 Ordinary shares to be held in treasury, providing a small accretion of 0.38 pence per share to the NAV and a degree of liquidity to the market at times when the discount to the NAV per share has widened. The Company announced on 25 August 2022 its intention to publish details of its share buyback powers which it renews annually and that until the AGM, to be held on 2 February 2023, that it had the authority to repurchase a maximum of 7,200,217 ordinary shares.

The Board believes that the selective use of share buybacks is in the best interest of all shareholders.

Succession Planning

The Board has continued to consider its succession plans during the year, as it recognises the benefits of regular Board refreshment. As reported in the Chairman's Statement, Mark White will retire as Chairman and as a Director at the AGM on 2 February 2022.

During the financial year, it was agreed that Sarika Patel, having served on the Board since 1 November 2019 would succeed Mark White as Chairman. The Board, therefore, commenced the search for an additional non-executive director to succeed Sarika Patel as Chair of the Audit Committee. Mark Little was appointed on 1 August 2022 and will take over as Chair of the Audit Committee after that AGM. Mark brings a wealth of investment trust and audit committee experience to the Board.

How the Board Engages with Stakeholders

The Board's main stakeholders have been identified as its shareholders, the Investment and Portfolio Manager, service providers, investee companies, debt providers and the community at large and the environment.

A summary of the Board's approach to engagement with stakeholders is set out below.

Stakeholder	How We Engage
Shareholders	Shareholders are key stakeholders and the Board places great importance on communication with them. The Board welcomes all shareholders' views and aims to act fairly to all shareholders. The Manager and the Company's broker regularly meet with current and prospective shareholders to discuss performance and shareholder feedback is discussed by the Directors at Board meetings. In addition, Directors typically meet shareholders at the Annual General Meeting. The Company subscribes to abrdn's investor relations programme in order to maintain communication channels with the Company's shareholder base. Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, Company announcements, including daily net asset value announcements, and the Company's website. The Company's Annual General Meeting provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Manager. The Board encourages as many shareholders as possible to attend the Company's Annual General Meeting and to provide feedback on the Company.
Manager (and Investment Manager)	The Portfolio Manager's Review details the key investment decisions taken during the year. The Manager has continued to manage the Company's assets in accordance with the mandate provided by shareholders, with oversight provided by the Board. The Board regularly reviews the Company's performance against its investment objective and the Board undertakes an annual strategy review meeting to ensure that the Company is positioned well for the future delivery of its objective for its stakeholders. The Board receives presentations from the Manager at every Board meeting to help it to exercise effective oversight of the Manager and the Company's strategy. The Board, through the Remuneration & Management Engagement Committee, formally reviews the performance of the Manager at least annually.
Service Providers	The Board seeks to maintain constructive relationships with the Company's suppliers either directly or through the Manager with regular communications and meetings. The Remuneration & Management Engagement Committee conducts an annual review of the performance, terms and conditions of the Company's main service providers to ensure they are performing in line with Board expectations, carrying out their responsibilities and providing value for money.
Investee Companies	Responsibility for monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues. Through engagement and exercising voting rights, the Manager actively works with companies to improve corporate standards, transparency and accountability. The Board monitors investments made and divested and questions the rationale for investment and voting decisions made.
Debt Providers	On behalf of the Board, the Manager maintains a positive working relationship with The Royal Bank of Scotland International Limited, London Branch, the provider of the Company's loan facility, and provides regular updates on business activity and compliance with its loan covenants.
Environment and Community	The Board and Manager are committed to investing in a responsible manner and the Investment Manager embeds Environmental, Social and Governance ("ESG") considerations into the research and analysis as part of the investment decision-making process. Through the Investment Manager, the Board encourages improvements in ESG practices and disclosures.

Results

	30 September 2022	30 September 2021	% change
Capital
Net asset value per Ordinary share	331.8p	380.8p	-12.9%
Ordinary share price	302.5p	349.0p	-13.3%
Reference Index capital return^C	3,763.5	4,059.0	-7.3%
Discount of Ordinary share price to net asset value^A	8.8%	8.4%
Total assets	£182.5m	£207.9m	-12.2%
Shareholders' funds	£157.5m	£182.9m	-13.9%
Gearing
Net gearing^A	15.0%	13.5%
Earnings and Dividends
Revenue return per Ordinary share	25.51p	20.06p	27.2%
Total dividends for the year	22.70p	21.20p	7.1%
Dividend yield^A	7.5%	6.1%
Expenses
Ongoing charges ratio^AB	0.91%	0.93%
^A Considered to be an Alternative Performance Measure..
^B Calculated in accordance with AIC guidance issued in October 2020 to include the Company's share of costs of holdings in investment companies on a look-through basis.
^C FTSE All-Share Index

Performance (total return)

	1 year	3 years	5 years	10 years
30 September 2022	%	%	%	%
Net asset value^A	-7.6	-3.9	-10.5	66.5
Share price^A	-7.8	-4.2	-12.9	65.7
Reference Index^B	-4.0	2.4	11.3	79.5
^A Considered to be an Alternative Performance Measure..
^B FTSE All-Share Index.
Source: abrdn/Morningstar/Factset

Portfolio Manager's Review

Market Review

After showing some resilience in the early months of the financial year, the UK equity market succumbed to a range of headwinds including geopolitical tensions, supply chain issues, rising inflation and interest rate hikes. By far the most significant event of the period was the Russian invasion of Ukraine in February 2022. This caused global equity markets to drop sharply and acted to depress sentiment, as investors worked through the second-round effects on economies and markets.

The most important economic impact of the war was a surge in oil and natural gas prices, adding to existing inflationary pressures. The resultant cost of living squeeze drove down consumer confidence, raising fears of a recession in the UK and Continental Europe. The UK Consumer Price Index inflation rate hit 10.1% in September 2022, the highest level since 1982. Central Banks around the world responded to rising prices by tightening monetary policy. Having held the base rate at 0.1% since March 2020, the Bank of England made its first interest rate increase in December 2021 and followed up with six further hikes by the end of the period, reaching 2.25% in September 2022. The base rate has increased to 3.0% at the time of writing.

Domestic political uncertainty remained a key driver of markets throughout the period, with Prime Minister Boris Johnson's resignation in July followed by a prolonged leadership election process, culminating in the election of Liz Truss as his successor. Her tenure turned out to be short-lived, having spooked financial markets with a mini-budget aimed at delivering on tax cutting pledges she made during her leadership campaign. The market reaction to this mini-budget was sufficiently fierce as to require the Bank of England to intervene, carrying out purchases of long-dated government bonds in order to restore orderly market conditions. This market dysfunction also led to reports that the Bank of England would delay the start of its planned sale of government bonds.

Despite such tumultuous conditions, the UK equity market was relatively resilient over the 12 months to 30 September 2022, with the Company's reference Index, the FTSE All-Share Index, returning -4.0% over the period, performing less badly than other major indices globally. However, this masked significant variations in performance within the UK market. The FTSE 100 index produced a total return of 0.9%, with multi-national companies benefiting from the decline in sterling against the US dollar over the period. The more domestically-orientated FTSE 250 and Small Cap indices fell sharply, producing a total return of -23.5% and -18.7% respectively. This divergence can be largely explained by significant variations at the sector level, with investors gravitating towards large cap sectors such as Oil and Gas and Banks on expectations that they would benefit from rising inflation and interest rates, at the same time as they shunned domestically-orientated sectors such as Housebuilders and Travel & Leisure on fears over the impact of rising inflation and interest rates on consumer spending.

Portfolio Performance

The Company's net asset value ("NAV") total return was -7.6% for the period. This was behind the total return of -4.0% from the Company's reference index, but was in line with the AIC sector's weighted average NAV total return.

The drivers of our performance over the period can be summarised as follows:

- The main detractors from performance were Financials, in particular small and mid cap holdings. Close Brothers on fears of slowing activity, Premier Miton on weaker fund flows and R&Q Insurance on the narrow rejection of a bid for the company. Among large cap financials, the contribution from owning Standard Chartered and avoiding Prudential was offset by not holding HSBC. Overall, this sector detracted just over 7% of relative performance.

- The next biggest detractor was Consumer Discretionary, notably housebuilder Vistry and sofa retailer DFS , as fears grew over the cost of living impact of Russia's invasion of Ukraine, as well as Entain and 888 on slowing growth in online gaming revenues. This sector detracted just under 4% of relative performance.

- The gearing position, averaging 13.4% over the financial year, detracted around 0.7% of relative performance.

- On the positive side, the largest contributor to performance was the portfolio's heavy weighting to Energy at a time of rising concerns over energy security. Notable outperformers were Thungela Resources , Diversified Energy and BP . This sector alone contributed over 7% of relative performance.

- The next biggest contributor to performance was Basic Resources, most notably Glencore and BHP , as commodity prices supported strong cash generation. This sector contributed just under 3% of relative performance. We significantly increased our weightings in these sectors last year in anticipation of the strong cash flows and dividends that these stocks are now delivering.

- This was a busy period for M&A activity, with Go Ahead , ContourGlobal , River & Mercantile and Vivo Energy on the receiving end of bids all at meaningful share price premia. These four holdings generated just under 2% of relative performance.

As noted in the Market Review, the sharp out-performance of large-cap stocks was a key feature of the stock market during the financial year. Overall, this was a drag on performance given the portfolio's relatively heavy weightings in small and mid-cap stocks; itself a function of the index-agnostic approach that we use in constructing the portfolio. This approach involves sizing our positions according to our conviction levels, rather than anchoring around index weightings. While the constituents of the FTSE 100 Index typically account for around 80% of the total value of the Index, our portfolio's exposure to the FTSE 100 Index is typically around 60% and was 51% at the end of the financial year. We are aware that this approach can cause variations in the portfolio's return relative to its benchmark, particularly at times of heightened geopolitical nervousness when larger stocks tend to outperform. That said, we remain convinced that this approach can provide benefits over time, as it allows us to construct a differentiated portfolio with greater flexibility, enabling us to identify stocks that can help us to deliver on our objectives through the cycle and enables us to generate a diversified income stream.

Spotlight on Thungela Resources

Thungela Resources spun out of Anglo American in June 2021. Rather than selling this tiny position of only 6,572 shares, we concluded that this highly cash-generative business was deeply under-valued, so we bought an additional 579,281 shares between June 2021 and January 2022 in order to make the holding more meaningful. We paid an average of 187 pence. The shares ended the financial year at 1,666 pence, nearly nine times higher than our initial purchase price. The stock also paid 393 pence of dividends per share during the financial year, taking the total return to 11 times our initial investment in only 15 months, making it one of the most profitable investment decisions we have made for this portfolio. Consensus estimates expect that the company will distribute over 600 pence per share (at the current exchange rate) in its next financial year indicating that the dividend received can be seen as recurring. We believe that this is a good example of the returns that our investment process can generate.

We have engaged with the management of Thungela to understand better the company's approach to sustainability and then urge improvements where we see gaps. We have urged the company to set more ambitious goals, increase transparency and to commit to clearer timeframes for developing its sustainability roadmap, in particular on measures to reduce carbon emissions. We have provided Thungela with our recommendations on industry best practices as we seek to support the company's growth in this area. We have been encouraged by Thungela's development of an ESG framework, covering issues such as environmental stewardship and local community relations

Revenue Account

Dividends distributed by our portfolio in the period under review rose by 27.0% to £13.5 million, compared to the £10.6 million received last year. This compares favourably to the Index where dividends grew by 13% over the same timeframe. The contribution from special dividends remained low at 5.9% of the dividend income (2021: 5.7%), reflecting the continuing scarcity of special dividends in the wake of the pandemic.

Net revenue was £12.2 million, or 26.3% higher than last year. Management fees were 2.1% lower, but this is a function of the decrease in the value of the portfolio. Total expenditure before interest and tax was 9.0% higher than last year. This was largely due to the comparative year's professional fees being a rebate as a result of reversal of provisions in the year prior.

We are forecasting that the portfolio is currently delivering a gross dividend yield, before costs, of 8.1% based on the income expected to be generated by the portfolio over the financial year divided by the portfolio value at the year end, representing a significant premium to the effective monthly average dividend yield of the Index of 3.8% as at 30 September 2022.

Recent interest rate hikes are unhelpful for our investment return as they increase the cost of our overdraft facility. However, the gap between the interest rate we pay for this overdraft facility and the dividend yield we earn on the portfolio, while narrower than it was a year ago, remains very wide by historical standards at around four percentage points at the time of writing.

This sharp recovery in the revenue account is a result of our focus on achieving the priorities set out by the Board at the time of the Covid-19 crisis. The Board emphasised that our first priority should be to build a portfolio that could deliver sufficient income to cover the dividend. I welcomed this challenge as I could see that it was consistent with our investment process which favours companies whose strong cash flow and dividend potential are not priced in by the market. During the financial year we identified many examples of stocks that fit this description, enabling our dividend cover to exceed 1x sooner than might have been expected in the midst of the Covid-19 crisis.

For the wider UK equity market, the outlook for dividends has improved significantly since the pandemic, with dividend cover recovering to 2.5x (on a 12 month forward basis), suggesting some cushion for corporates in the event that macro conditions deteriorate. We also have the advantage of selecting from a broad palette of UK stocks, with many different earnings drivers. This helps to underpin our confidence in the continued progression of our dividend per share in FY23.

Activity

Purchases

The market backdrop has changed meaningfully in the past year, creating a new set of opportunities that we have attempted to seize upon. Inflation was already increasing prior to Russia's invasion of Ukraine. Two key drivers of higher inflation were supply disruptions linked to the shutdown of the economy during Covid-19 and rampant growth in money supply caused by the Bank of England's Quantitative Easing programme. The war in Ukraine only exacerbated existing inflationary trends, as natural gas and food supplies were disrupted. So it is against this backdrop that we have been carefully positioning the portfolio.

Our largest purchases are mostly companies whose cash flows have the potential to benefit from rising prices and interest rates, providing the portfolio with some inflation hedge characteristics:

- Oil & Gas: We increased our exposure to the Energy sector, adding to BP and starting a new holding in Harbour Energy , anticipating that tight upstream and downstream markets would persist, driving cash flows and dividends.

- Banks: We increased our weighting in Banks by starting a new holding in NatWest and adding to our holdings in Barclays and Standard Chartered , which we expect to be beneficiaries of rising base rates, as net interest income grows thanks to the stickiness of deposit pricing. Despite the sharp slowdown in economic growth, we expect bad debts to remain low, with significant impairment provisions already taken. If the banks navigate this downturn successfully, we should expect a substantial narrowing in the discount to NAV on which they trade.

- National Grid : We added to National Grid whose earnings are set to benefit from inflation-linked contracts in the UK, at the same time as their regulatory asset base starts to grow rapidly to deliver the infrastructure necessary for the transition to electric vehicles.

Sales

Our largest sales can be grouped into the following categories:

- Mergers & Acquisitions: This was a busy year for corporate activity in the portfolio. We sold our holdings in Go-Ahead , ContourGlobal and Vivo Energy after they received bids. We also received the proceeds from tender offers in River & Mercantile and Zegona Communications after they divested of their core divisions. We continue to see the high level of M&A activity as a sign of the intrinsic value in this portfolio.

- Online gaming: We took profits in Entain following the withdrawal of bid interest from DraftKings. While it was disappointing that the shares fell back following this announcement, we were still able to sell at over double the share price that we paid when we bought into the company in January 2017 (when it was called GVC Holdings). We also took profits in Playtech as the chances of a takeover approach diminished. The wider sector is seeing a slowdown in growth as regulation toughens and it becomes clearer that activity levels reached unsustainable levels during Covid-19 lockdowns.

- Iron ore: We reduced our weightings in BHP and Rio Tinto in the sector half of the financial year, as we become more concerned about the outlook for the Chinese construction sector. After years of rapid growth in floor space, inventories are rising and activity levels are falling. This is important for BHP and Rio Tinto because the iron ore they sell is mainly used in the production of Chinese steel.

Outlook

It is pleasing to report that the improvement in our portfolio income resulted in the dividend per share being amply covered by earnings per share in the 12 months to 30 September 2022. This has allowed the Board to resume meaningful dividend per share growth, while starting to rebuild our reserves after a hiatus of two years caused by the Covid-19 pandemic. It is a reflection of the benefits of the closed-end structure that we have come through such an exceptional period while maintaining our 22 year track record of consecutive dividend increases. It should be noted that this has been achieved without compromising the investment process, as market dislocation has created an abundance of stocks that fit our investment criteria. The result for shareholders is a high yield portfolio comprised of high conviction investment ideas.

The global economy is slowing as Central Banks try to control inflation leading to a high risk of recession in the UK and other major countries. This is a challenging backdrop, but we remain confident that we can navigate this environment successfully for the following reasons:

- Broad universe of stocks: As they are starting with high levels of dividend cover, we expect many UK stocks to deliver attractive dividend growth despite the uncertain economic situation. The UK equity market is highly diverse, allowing us to access a wide range of companies with different income drivers. Some companies will struggle in an inflationary environment, but others will thrive. Furthermore, the UK equity market provides exposure to different parts of the world. It seems likely that economic outturns will differ widely in the coming year. For example, the US will be far less affected by the Ukraine war than Germany, as a result of their radically different energy policies. In light of this, we can position our portfolio carefully through thoughtful analysis of how each company is likely to fare in the current environment.

- Tendency of share prices to price in recessions early: Recent research by Stifel has mapped the performance of the S&P 500 index to each US recession post-1945 and found that the stock market bottoms out 4 months before the end of the recession. While it is not possible to know in advance with any certainty when a recession will start or end, this is a reminder that recessions can provide opportunities to buy well-managed companies at attractive valuations.

- Style rotation: Rising interest rates are up-ending stock markets. Loose monetary policy was a boon for highly valued growth stocks, as falling interest rates mechanically drove up their discounted cash flow valuations. As we enter an inflationary era with higher rates, investors are shifting their focus to the cash-generative value stocks that our investment process favours. This is a more favourable environment for us as it enables the delivery of both income and capital growth.

- Style characteristics of the portfolio: We believe that the portfolio has a significant "margin of safety" as the relatively low valuations of our holdings do not appear to factor in their solid fundamentals. Our Matrix quant model indicates that the portfolio scores particularly highly on Valuation and Earnings Momentum factors, underlining our view that high yield need not come at the expense of high conviction. At the time of writing, the median PE (12 months forward) of our holdings is 8.9x. The median dividend cover (12 months forward) is 1.9x. We expect the valuations of our holdings to re-rate, as investors respond to the strength of their corporate fundamentals.

We are aware that the stock market is currently heavily affected by macro drivers and that it is difficult to know how the coming year will play out in that regard. For this reason we have segmented the portfolio into three discrete baskets, each of which can play a role in helping the portfolio to deliver our investment objective:

1. Inflation Protection: Stocks with inflation hedge characteristics; potentially benefiting from rising prices. We expect inflationary conditions to provide a tailwind to these companies, helping them to grow their cash flows and dividends. Examples include Shell , NatWest and National Grid . At the time of writing, this basket represented 37% of the portfolio. Objective: achieve real growth in income.

2. Mispriced Yield: Stocks whose high yields indicate that the market is pricing in bad news. We believe these stocks are more resilient than their valuation implies. Examples include Legal & General , Diversified Energy and Chesnara . At the time of writing, this basket represented 24% of the portfolio. Objective: achieve above average income.

3. Latent Growth: Stocks that are capable of delivering operational progress, driving growth on a medium-term view once the current period of uncertainty abates. This change is being overlooked by the market. Examples include OneSavings Bank , Hiscox and DFS . At the time of writing, this basket represented 29% of the portfolio. Objective: achieve real growth in capital.

We expect each of these baskets to perform best in different scenarios. Inflation Protection stocks should perform best in an inflationary environment, driven by high commodity prices and rising interest rates. The Mispriced Yield basket should perform best in a rotation out of growth stocks into value stocks. Latent Growth stocks should perform best on any easing in inflationary pressures, perhaps triggered by a resolution to the Ukraine war. We would see the most adverse scenario for the portfolio as a prolonged and synchronised global recession, as this could drive down large swathes of the market. For now we see this as a low probability scenario given the variations in economic conditions around the world.

The UK is a particularly unloved stock market due to a series of political crises since the 2016 Brexit referendum. The scale of the UK's furlough and energy bill support schemes have caused the UK's debt/GDP ratio to approach 100%, although it should be noted that this is still the second lowest in the G7. The arrival of Rishi Sunak as the third Prime Minister in as many months heralds an era of more conventional economic policies. This has already calmed the markets, helping to drive a reduction in Gilt yields and a recovery in sterling. Amongst all the political 'fear and loathing', it is worth keeping in mind that the UK has many enduring strengths that make it a highly attractive destination for international capital. As has been demonstrated by all the recent M&A activity in our own portfolio, some international investors are coming to the view that UK companies are now attractively priced. It would not take much for broader attitudes to the UK to improve dramatically. This would be helpful for our portfolio given that we have a heavy position in UK domestic companies relative to the broader index and peer group.

Through turbulent times, we will remain focused on achieving our objective to provide shareholders with an above average income, while also providing real growth in capital and income. With inflation at its highest level in 40 years, the resonance of this investment objective is greater than usual and I will do my utmost to deliver on it for shareholders.

Thomas Moore
Portfolio Manager
30 November 2022

Ten Largest Investments

As at 30 September 2022

BP		Thungela Resources
BP is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates renewable energy, and manufactures and markets chemicals.		Thungela is a leading pure-play producer and exporter of high quality, low-cost thermal coal in South Africa.

Shell		Glencore
Shell explores for, produces and refines petroleum. The Company produces fuels, chemicals, and lubricants, as well as operating gasoline filling stations and developing renewable energy.		Glencore is a diversified natural resources company, with production and marketing operations in three groups; metals and minerals, energy products and agricultural products.

BHP		Diversified Gas & Oil
BHP is a diversified resources group with a global portfolio of high quality assets, focusing on iron ore, petroleum and copper.		Diversified Gas & Oil is engaged in conventional natural gas and crude oil production in the Appalachian Basin of the United States.

SSE		Rio Tinto
SSE engages in the generation, transmission, distribution and supply of electricity and the production, storage, distribution and supply of gas.		Rio Tinto is a leading global mining group that focuses on finding, mining and processing mineral resources, with a focus on iron ore and aluminium.

British American Tobacco		Barclays
British American Tobacco sells combustible tobacco products in more than 50 countries around the world, as well as a growing portfolio of non-combustible products such as vapour and tobacco heating products.		Barclays is a global financial services provider engaged in retail banking, credit cards, wholesale banking, investment banking, wealth management and investment management services.

Investment Portfolio

As at 30 September 2022

		Valuation as at		Valuation as at
		30 September 2022	Weight	30 September 2021
Stock	Key Sector	£'000	%	£'000
BP	Oil Gas and Coal	10,244	5.7	6,834
Thungela Resources	Oil Gas and Coal	9,109	5.1	2,582
Shell (previously Royal Dutch Shell)	Oil Gas and Coal	8,712	4.9	7,038
Glencore	Industrial Metals and Mining	7,157	4.0	6,041
BHP	Industrial Metals and Mining	6,172	3.4	7,101
Diversified Energy	Oil Gas and Coal	6,154	3.4	5,311
SSE	Electricity	5,735	3.2	6,026
Rio Tinto	Industrial Metals and Mining	5,353	3.0	7,357
British American Tobacco	Tobacco	5,068	2.8	4,403
Barclays	Banks	4,921	2.7	3,266
Top ten investments		68,625	38.2
CMC Markets	Investment Banking and Brokerage Services	4,498	2.5	5,036
Close Brothers	Banks	4,445	2.5	7,405
Imperial Brands	Tobacco	4,217	2.3	3,285
Standard Chartered	Banks	4,015	2.2	919
Chesnara	Life Insurance	3,756	2.1	3,873
OSB Group	Finance and Credit Services	3,626	2.0	4,312
Natwest Group	Banks	3,504	2.0	-
Anglo American	Industrial Metals and Mining	3,488	1.9	2,651
Mondi	General Industrials	3,424	1.9	1,572
National Grid	Gas Water and Multi-utilities	3,180	1.8	1,574
Top twenty investments		106,778	59.4
Legal & General	Life Insurance	3,145	1.7	3,778
Playtech	Travel and Leisure	3,017	1.7	4,441
Vistry	Household Goods and Home Construction	2,995	1.7	6,646
DWF Group	Industrial Support Services	2,639	1.5	3,111
BAE Systems	Aerospace and Defense	2,623	1.5	3,554
Smith (DS)	General Industrials	2,503	1.4	2,129
Coca-Cola HBC	Beverages	2,470	1.4	1,325
Premier Miton	Investment Banking and Brokerage Services	2,411	1.3	5,556
Randall & Quilter	Non-life Insurance	2,337	1.3	4,300
Tyman	Construction and Materials	2,320	1.3	4,971
Top thirty investments		133,238	74.2
Real Estate Investors	Real Estate Investment Trusts	2,319	1.3	2,993
Diageo	Beverages	1,922	1.1	1,297
Vodafone	Telecommunications Service Providers	1,887	1.1	1,953
Speedy Hire	Industrial Transportation	1,865	1.0	2,726
AstraZeneca	Pharmaceuticals and Biotechnology	1,839	1.0	1,189
Hargreaves Lansdown	Investment Banking and Brokerage Services	1,737	1.0	1,840
Petershill Partners	Investment Banking and Brokerage Services	1,706	0.9	2,798
Centamin	Precious Metals and Mining	1,668	0.9	1,021
DFS Furniture	Retailers	1,667	0.9	4,080
Hiscox	Non-life Insurance	1,632	0.9	-
Top forty investments		151,480	84.3
Litigation Capital	Investment Banking and Brokerage Services	1,631	0.9	2,436
Phoenix	Life Insurance	1,606	0.9	2,171
TP ICAP	Investment Banking and Brokerage Services	1,602	0.9	601
Ashmore	Investment Banking and Brokerage Services	1,591	0.9	2,751
Conduit Holdings	Non-life Insurance	1,520	0.9	2,086
Galliford Try	Construction and Materials	1,517	0.8	1,878
Hays	Industrial Support Services	1,490	0.8	1,402
Direct Line Insurance	Non-life Insurance	1,437	0.8	2,680
International Personal Finance	Finance and Credit Services	1,326	0.7	2,307
Quilter	Investment Banking and Brokerage Services	1,281	0.7	2,323
Top fifty investments		166,481	92.6
CLS Holdings	Real Estate Investment and Services	1,266	0.7	1,410
Bellway	Household Goods and Home Construction	1,272	0.7	1,832
GSK (previously GlaxoSmithKline)	Pharmaceuticals and Biotechnology	1,257	0.7	1,926
LondonMetric	Real Estate Investment Trusts	1,222	0.7	1,129
Harbour Energy	Oil Gas and Coal	1,209	0.7	-
Bridgepoint	Investment Banking and Brokerage Services	981	0.6	1,176
Industrials REIT	Real Estate Investment Trusts	976	0.5	1,351
888 Holdings	Travel and Leisure	891	0.5	3,497
Energean	Oil Gas and Coal	865	0.5	-
Intermediate Capital Group	Investment Banking and Brokerage Services	799	0.4	1,369
Top sixty investments		177,219	98.6
Halfords	Retailers	753	0.4	-
AssetCo	Investment Banking and Brokerage Services	750	0.4	-
National Express	Travel and Leisure	705	0.4	-
Polar Capital	Investment Banking and Brokerage Services	303	0.2	1,544
Total Portfolio		179,730	100.0

All investments are equity investments.

Investment Case Studies

National Grid

Towards the end of the financial year, we increased our stake in National Grid, after the share price weakened. Prior to investment, we engaged with National Grid on a variety of topics including the potential impact of the UK government's plans to grow transmission by 2030, future investment requirements to deliver growth plans and skill-sets on the Board of directors. Our engagement continues.

We believe that National Grid is well positioned at the heart of the energy transition, poised to deliver the significant investment needed to upgrade electricity networks in the UK and US. We expect earnings to grow solidly in the coming years, with the UK regulated assets indexed to inflation and almost half of their earnings denominated in US dollars.

The shares can be subject to political worries, as utility companies are seen as vulnerable to windfall taxes. However, we see a windfall tax as far less likely for National Grid than other utility companies given the nature of its activities, with no excess profits being made as a direct result of high natural gas prices. The shares can also be subject to macro vicissitudes, with rising bond yields a negative driver for the share price. However, this is offset by the benefit of rising inflation which supports the dividend policy to grow the dividend per share at least in line with UK inflation.

All of this makes National Grid an appropriate holding for the Company.

Natwest Group

We initiated a new position in the NatWest Group during the financial year.

We see the NatWest Group as a beneficiary of rising interest rates, given its low loan to deposit ratio and significant current account deposit base. We believe that NatWest is well insulated from economic recession, as a result of the high quality of its loan book (over 90% of which is secured lending) and on the level of existing provisions against bad debts, which factor in a severe downside scenario.

The flip side of rising interest rates is that loan demand is likely to slow sharply, although this will not greatly impact the NatWest Group's profitability as the bulk of its lending is re-mortgages, rather than first time buyers. The competitive position of the larger banks improves when interest rates increase, as they have access to a range of funding sources, including current accounts. This tends to allow banks like the NatWest Group to gain market share at this point in the cycle. The net effect of these macro variables is that NatWest should comfortably achieve a Return on Equity in excess of 10%.

In this context, the stock looks very cheap, trading at a discount to Net Asset Value. Its strong earnings delivery and robust capital position should underpin a generous dividend, making this an attractive holding for the Company.

During our recent engagement meetings with NatWest Group, we have focused on climate, particularly its sustainability finance target, financed emissions and initiatives to green their mortgage book. We have encouraged Natwest Group to increase the frequency that climate is discussed at Board level from every six months to every Board meeting. We have engaged on social initiatives too and were impressed by NatWest's targets to support minority business owners with gender, ethnicity and social targets

Directors' Report

The Directors present their report and the financial statements of the Company for the year ended 30 September 2022.

Results and Dividends

The financial statements for the year ended 30 September 2022 are contained below. Interim dividends of 5.4 pence per share were paid in March, June and September 2022. The Board has declared that a fourth interim dividend for the year to 30 September 2022 of 6.5 pence per share is payable on 9 January 2023 to shareholders on the register on 9 December 2022. The ex-dividend date is 8 December 2022.

Principal Activity and Status

The Company is registered as a public limited company in England and Wales under company number 2648152. The Company is an investment company within the meaning of Section 833 of the Companies Act 2006, carries on business as an investment trust and is a member of the Association of Investment Companies.

The Company has applied for and has been accepted as an investment trust under Sections 1158 and 1159 of the Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory Instrument 2011/2999. This approval relates to accounting periods commencing on or after 1 October 2012. The Directors are of the opinion that the Company has conducted its affairs so as to be able to retain such approval.

The Company intends to manage its affairs so that its Ordinary shares continue to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account.

Capital Structure and Voting Rights

The Company's issued share capital at 30 September 2022 consisted of 47,471,939 Ordinary shares of 25 pence each (2021: 48,033,474) and there were 1,706,828 Ordinary shares held in treasury (2021: 1,145,293), representing 3.5% (2021: 2.4%) of the issued share capital as at that date.

During the year, 561,535 Ordinary shares were bought back into treasury (2021: 294,486). The Company did not issue any new shares, or shares from treasury, during the year.

There have been no changes to the Company's capital structure or voting rights since the year end.

Each Ordinary shareholder is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary share held.

Management Agreement

The Company has appointed abrdn Fund Managers Limited (previously known as Aberdeen Standard Fund Managers Limited) ("AFML"), a wholly-owned subsidiary of abrdn plc, as its alternative investment fund manager (the "Manager"). AFML has been appointed to provide investment management, risk management, administration and company secretarial services, and promotional activities to the Company. The Company's portfolio is managed by abrdn Investment Management Limited, (previously known as Standard Life Investments Limited) (the "Investment Manager") by way of a group delegation agreement in place between AFML and the Investment Manager.

In addition, AFML has sub-delegated administrative and secretarial services to Aberdeen Asset Management PLC since 6 September 2019. Subsequent to the financial year end, Aberdeen Asset Management PLC was renamed abrdn Holdings Limited on 25 November 2022.

The management fee is calculated as 0.65% per annum of net assets up to £175million and at a rate of 0.55% of net assets above this threshold. The Manager also receives a separate fee for the provision of promotional activities to the Company.

Further details of the fees payable to the Manager are shown in notes 3 and 4 to the financial statements.

The management agreement is terminable on not less than six months' notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

External Agencies

The Board has contractually delegated to external agencies, including the Manager and other service providers, certain services including: the management of the investment portfolio, the day-to-day accounting and company secretarial requirements, the depositary services (which include the custody and safeguarding of the Company's assets) and the share registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered in so far as they relate to the affairs of the Company. In addition, ad hoc reports and information are supplied to the Board as requested.

Substantial Interests

Information provided to the Company by major shareholders pursuant to the FCA's Disclosure, Guidance and Transparency Rules are published by the Company via a Regulatory Information Service.

The table below sets out the interests in 3% or more of the issued share capital of the Company, of which the Board was aware as at 30 September 2022.

Shareholder	Number of Ordinary shares	% held
Interactive Investor	9,366,832	19.7
Hargreaves Lansdown	9,238,384	19.4
Charles Stanley	4,945,565	10.4
AJ Bell	2,300,219	4.8
HSDL	2,005,704	4.2
Evelyn Partners	1,473,161	3.1

The Company has not been notified of any changes to these holdings as at the date of this Report.

Directors

Biographies of the Directors of the Company are shown in the Annual Report.

Mark White is the Chair, Jeremy Tigue is the Senior Independent Director, Sarika Patel is Chair of the Audit Committee and Caroline Hitch is Chair of the Remuneration & Management Engagement Committee. Mark Little was appointed as an Independent Non-executive Director on 1 August 2022.

The Chair is responsible for providing effective leadership to the Board, by setting the tone of the Company, demonstrating objective judgement and promoting a culture of openness and debate. The Chair facilitates the effective contribution and encourages active engagement by each Director. In conjunction with the Company Secretary, the Chair ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chair acts upon the results of the Board evaluation process by recognising strengths and addressing any weaknesses and also ensures that the Board engages with major shareholders and that all Directors understand shareholder views.

The Senior Independent Director acts as a sounding board for the Chair and acts as an intermediary for other Directors, when necessary. Working closely with the Remuneration & Management Engagement Committees, the Senior Independent Director takes responsibility for an orderly succession process for the Chair, and leads the annual appraisal of the Chair's performance. The Senior Independent Director is also available to shareholders to discuss any concerns they may have.

The Directors attended scheduled Board and Committee meetings during the year ended 30 September 2022 as follows (with their eligibility to attend the relevant meetings in brackets):

	Board Meetings	Audit Committee Meetings	Remuneration & Management Engagement Committee Meetings
Mark White	4 (4)	2 (2)	1 (1)
Caroline Hitch	4 (4)	2 (2)	1 (1)
Mark Little ^A	1 (1)	0(0)	1 (1)
Sarika Patel	4 (4)	2 (2)	1 (1)
Jeremy Tigue	4 (4)	2 (2)	1 (1)
^A Appointed to the Board on 1 August 2022.

The Board meets more frequently when business needs require, and met additionally once during the financial year.

Caroline Hitch, Sarika Patel, and Jeremy Tigue will retire and, being eligible, will offer themselves for re-election at the Annual General Meeting. Mark Little will offer himself for election at the Annual General Meeting. As set out in the Chairman's Statement, Mark White will retire from the Board at the Annual General Meeting on 2 February 2023, having served on the Board for nine years.

The Board believes that all the Directors seeking election or re-election remain independent of the Manager and free from any relationship which could materially interfere with the exercise of their judgement on issues of strategy, performance, resources and standards of conduct. The biographies of each of the Directors are shown in the Annual Report, setting out their range of skills and experience as well as length of service and their contribution to the Board during the year. The Board believes that, collectively, it has the requisite high level and range of business, investment and financial experience to enable it to provide clear and effective leadership and proper governance of the Company. Following formal performance evaluations, each Director's performance continues to be effective and demonstrates commitment to the role, and their individual performances contribute to the long-term sustainable success of the Company. The Board therefore recommends the election or re-election of each of the Directors at the Annual General Meeting.

Board's Policy on Tenure

In normal circumstances, it is the Board's expectation that Directors will not serve beyond the Annual General Meeting following the ninth anniversary of their appointment. However, the Board takes the view that independence of individual Directors is not necessarily compromised by length of tenure on the Board and that continuity and experience can add significantly to the Board's strength. The Board believes that recommendation for re-election should be on an individual basis following a rigorous review which assesses the contribution made by the Director concerned, but also taking into account the need for regular refreshment and diversity.

Board Diversity Policy

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins, or disability in considering the appointment of its Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and the Board does not therefore consider it appropriate to set measurable objectives in relation to its diversity.

At 30 September 2022, there were three male and two female Directors on the Board. One of the female directors is Chair of the Audit Committee and the other is Chair of the Remuneration & Management Engagement Committee. One director has a non-white ethnic background.

Directors' and Officers' Liability Insurance

The Company's Articles of Association provide for each of the Directors to be indemnified out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

Management of Conflicts of Interest

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, each Director prepares a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his or her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential, or actual, conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

No Director has a service contract with the Company although all Directors are issued with letters of appointment. There were no contracts during, or at the end of the year, in which any Director was interested.

The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company's circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager's anti-bribery and corruption policies are available on its website.

In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.

Financial Instruments

The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 15 to the financial statements.

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code as published in July 2018 (the "UK Code"), which is available on the Financial Reporting Council's (the "FRC") website: frc.org.uk.

The Board has also considered the principles and provisions of the AIC Code of Corporate Governance as published in February 2019 (the "AIC Code"). The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company. The AIC Code is available on the AIC's website: theaic.co.uk. It includes an explanation of how the AIC Code adapts the principles and provisions set out in the UK Code to make them relevant for investment companies.

The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the FRC, provides more relevant information to shareholders.

The Board confirms that, during the year, the Company complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to:

- interaction with the workforce (provisions 2, 5 and 6);

- the role and responsibility of the chief executive (provisions 9 and 14);

- requirement to establish a nomination committee and describe the work of the nomination committee (provisions 17 and 23);

- the chair shall not be a member of the audit committee (provision 24);

- previous experience of the chairman of a remuneration committee (provision 32); and

executive directors' remuneration (provisions 33 and 36 to 40).

The Board considers that these provisions, with the exception of the requirement to establish a nomination committee and describe the work of the nomination committee, are not relevant to the position of the Company, being 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.

During the financial year to 30 September 2021, the Board determined that there was no need for the Company to have a standalone Nomination Committee given the number of Directors on the Board. The Nomination Committee was therefore wound up and the Board fulfils the role of the Nomination Committee.

The full text of the Company's Corporate Governance Statement can be found on its website.

Board Committees

The Board has appointed two committees, as set out below. Copies of their terms of reference, which clearly define the responsibilities and duties of each committee, are available on the Company's website, or upon request from the Company. The terms of reference of each of the committees are reviewed and re-assessed by the Board for their adequacy on an ongoing basis.

Audit Committee

The Audit Committee's Report is contained in the Annual Report.

Remuneration & Management Engagement Committee

The Remuneration & Management Engagement Committee comprises the full Board and is chaired by Caroline Hitch. The main responsibilities of the Committee include:

- monitoring and evaluating the performance of the Manager;

- reviewing at least annually the continued retention of the Manager;

- reviewing, at least annually, the terms of appointment of the Manager including, but not limited to, the level and method of remuneration and the notice period of the Manager;

- reviewing the performance and remuneration of the other key service providers to the Company; and

determining the Directors' remuneration policy and level of remuneration.

The Committee met once during the year to 30 September 2022 and undertook a review of the management of the Company and its performance. Following the conclusion of the review, the Committee recommended to the Board that the continuing appointment of the Manager and other key service providers was in the best interests of the shareholders and the Company as a whole.

Going Concern

The Company's assets consist mainly of equity shares in companies listed on recognised stock exchanges and are considered by the Board to be realisable within a short timescale under normal market conditions. The Board has set overall limits for borrowing and reviews regularly the Company's level of gearing, cash flow projections and compliance with banking covenants, when applicable. The Board has also performed stress testing and liquidity analysis.

The Company's Articles require that at every fifth AGM, the Directors shall propose an Ordinary Resolution to effect that the Company continues as an investment trust. An Ordinary Resolution approving the continuation of the Company for the next five years was passed at the AGM on 4 February 2022. The next continuation vote will take place at the AGM to be held in 2027.

As at 30 September 2022, the Company had a £30 million (2021: £30 million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch. £25 million was drawn at the end of the financial year (2021: £25 million). The revolving credit facility matures on 25 June 2023. A replacement option will be sought in advance of the expiry of the facility, or should the Board decide not to renew this facility, any outstanding borrowing would be repaid through the proceeds of equity sales as required.

The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report and they believe that the Company has adequate financial resources to continue its operational existence for a period of not less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that the Company's diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term funding requirements were they to arise. They have also reviewed the revenue and ongoing expenses forecasts for the coming year, and expect to secure a replacement facility upon expiry of the current facility. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Accountability and Audit

The respective responsibilities of the Directors and the Auditor in connection with the financial statements appear in the Annual Report.

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 the steps that he/ she ought to have taken as a Director to make himself/ herself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Independent Auditor

Shareholders approved the re-appointment of KPMG LLP as the Company's Independent Auditor at the AGM on 4 February 2022. Resolutions to approve the re-appointment of KPMG LLP for the year to 30 September 2023 and to authorise the Directors to determine the remuneration of the Auditor will be proposed at the AGM on 2 February 2023.

Relations with Shareholders

The Directors place a great deal of importance on communications with shareholders. Shareholders and investors may obtain up to date information on the Company through its website and the Manager's Customer Services Department.

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (including the Company Secretary or the Manager) in situations where direct communication is required, and representatives from the Manager meet with major shareholders on at least an annual basis in order to gauge their views, and report back to the Board on these meetings. In addition, the Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chair responds personally as appropriate.

The Company's Annual General Meeting provides a forum for communication primarily with private shareholders and is attended by the Board. The Manager normally makes a presentation to the meeting and all shareholders have the opportunity to put questions to both the Board and the Manager at the meeting. The Board will also be hosting an Online Pre-AGM Investor Session to engage directly with shareholders, regardless of their location. Details on how to register for the Online Pre-AGM Investor Session are set out in the Chairman's Statement.

Prior to the Covid-19 pandemic, the Manager hosted an annual Meet the Manager session at which members of the Board were present and to which all shareholders were invited. Although this programme has been interrupted due to Covid-19, Thomas Moore has continued to provide updates to shareholders by video conference.

The notice of the Annual General Meeting is sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Manager at the meeting.

Additional Information

Where not provided elsewhere in the Directors' Report, the following provides the additional information required to be disclosed by Part 15 of the Companies Act 2006.

There are no restrictions on the transfer of Ordinary shares in the Company issued by the Company other than certain restrictions which may from time to time be imposed by law (for example, the Market Abuse Regulation). The Company is not aware of any agreements between shareholders that may result in a transfer of securities and/or voting rights.

The rules governing the appointment of Directors are set out in the Directors' Remuneration Report. The Company's Articles of Association may only be amended by a special resolution passed at a general meeting of shareholders.

The Company is not aware of any significant agreements to which it is a party that take effect, alter or terminate upon a change of control of the Company following a takeover. Other than the management agreement with the Manager, further details of which are set out in the notes to the financial statements below, the Company is not aware of any contractual or other agreements which are essential to its business which could reasonably be expected to be disclosed in the Directors' Report.

Annual General Meeting

The Notice of the Annual General Meeting, which will be held on 2 February 2023, and related notes, may be found in the Annual Report.

Resolutions including the following business will be proposed.

Dividend Policy

As a result of the timing of the payment of the Company's quarterly dividends, the Company's shareholders are unable to approve a final dividend each year. In line with good corporate governance, the Board therefore proposes to put the Company's dividend policy to shareholders for approval at the Annual General Meeting and on an annual basis thereafter.

The Company's dividend policy is that interim dividends on the Ordinary shares are payable quarterly in March, June, September and January each year. Resolution 4 will seek shareholder approval for the dividend policy.

Aggregate fees payable to Directors

The Board carried out a review of the level of Directors' fees during the financial year. The resulting increases, which took effect from 1 October 2022, are detailed in the Directors' Remuneration Report in the Annual Report.

As a result of these increases in fees, and in order to ensure that the Board has ongoing flexibility to manage succession planning and potentially appoint additional directors, Resolution 5, an ordinary resolution, will be put to shareholders at the 2023 AGM seeking approval to increase the maximum aggregate limit of remuneration of the directors each year in respect of their ordinary services as Directors from £150,000 to £250,000. Whilst the directors do not intend to rely on this increase, they believe that it gives the Board additional flexibility to manage succession plans and recruit additional directors if necessary.

Issue of Ordinary Shares

Resolution 12, which is an ordinary resolution, will, if passed, renew the Directors' authority to allot new Ordinary shares up to an aggregate nominal amount of £1,184,288, being 10% of the issued share capital of the Company (excluding treasury shares) as at 29 November 2022.

Resolution 13, which is a special resolution, will, if passed, renew the Directors' existing authority to allot new Ordinary shares or sell treasury shares for cash without the new Ordinary shares first being offered to existing shareholders in proportion to their existing holdings. This will give the Directors authority to allot Ordinary shares or sell shares from treasury on a non pre-emptive basis for cash up to an aggregate nominal amount of £1,184,288 (representing 10% of the issued ordinary share capital of the Company (excluding treasury shares) as at 29 November 2022).

New Ordinary shares, issued under this authority, will only be issued at prices representing a premium to the last published net asset value per share.

The authorities being sought under Resolutions 12 and 13 shall expire at the conclusion of the Company's next AGM in 2024 or, if earlier, on the expiry of 15 months from the date of the passing of the resolutions, unless such authorities are renewed, varied or extended prior to such time. The Directors have no current intention to exercise these authorities and will only do so if they believe it is advantageous and in the best interests of shareholders as a whole.

Purchase of the Company's Ordinary Shares

Resolution 14, which is a special resolution, seeks to renew the Board's authority to make market purchases of the Company's Ordinary shares in accordance with the provisions contained in the Companies Act 2006 and the FCA's Listing Rules. Accordingly, the Company will seek authority to purchase up to a maximum of 14.99% of the issued share capital (excluding treasury shares) at the date of passing of the resolution at a minimum price of 25 pence per share (being the nominal value). Under the Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of: (i) 105% of the average of the middle market quotations (as derived from the Daily Official List of the London Stock Exchange) for the shares over the five business days immediately preceding the date of purchase; and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue on which the purchase is carried out.

The Board does not intend to use this authority to purchase the Company's Ordinary shares, unless to do so would result in an increase in the net asset value per Ordinary share and would be in the best interests of shareholders as a whole. Any Ordinary shares purchased shall either be cancelled or held in treasury. The authority being sought shall expire at the conclusion of the AGM in 2024 or, if earlier, on the expiry of 15 months from the date of the passing of the resolution unless such authority is renewed, varied or extended prior to such time.

Notice of General Meetings

Under the Companies Act 2006, the notice period for the holding of general meetings of the Company is 21 clear days unless shareholders agree to a shorter notice period and certain other conditions are met. Resolution 15, which is a special resolution, will seek to authorise the Directors to call general meetings of the Company (other than Annual General Meetings) on not less than 14 clear days' notice, as permitted by the Companies Act 2006 amended by the Companies (Shareholders' Rights) Regulations 2009.

It is currently intended that this flexibility to call general meetings on shorter notice will only be used for non-routine business and where it is considered to be in the interests of all shareholders. If Resolution 15 is passed, the authority to convene general meetings on not less than 14 clear days' notice will remain effective until the conclusion of the AGM in 2024 or, if earlier, on the expiry of 15 months from the date of the passing of the resolution, unless renewed prior to such time.

Recommendation

The Board considers that the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company's shareholders as a whole, and most likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Board recommends that shareholders vote in favour of the resolutions as they intend to do in respect of their own beneficial shareholdings, amounting to 138,786 Ordinary shares, representing 2.9% of the issued share capital.

By order of the Board
abrdn Holdings Limited
Company Secretary
1 George Street
Edinburgh EH2 2LL
30 November 2022

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 'The Financial Reporting Standard Applicable in the UK and Republic of Ireland'.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that to the best of their knowledge:

- the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

- the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.

We consider the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board
Mark White
Chair
30 November 2022

Statement of Comprehensive Income

		2022			2021
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Net (losses)/gains on investments at fair value	9	-	(24,281)	(24,281)	-	46,078	46,078
Currency gains/(losses)		-	1	1	-	(2)	(2)
Income	2	13,517	-	13,517	10,642	-	10,642
Investment management fee	3	(335)	(782)	(1,117)	(342)	(799)	(1,141)
Administrative expenses	4	(464)	-	(464)	(373)	-	(373)
Net return before finance costs and taxation		12,718	(25,062)	(12,344)	9,927	45,277	55,204

Finance costs	5	(149)	(347)	(496)	(109)	(253)	(362)
Return before taxation		12,569	(25,409)	(12,840)	9,818	45,024	54,842

Taxation	6	(325)	-	(325)	(125)	-	(125)
Return after taxation		12,244	(25,409)	(13,165)	9,693	45,024	54,717

Return per Ordinary share	8	25.51p	(52.93p)	(27.42p)	20.06p	93.18p	113.24p

The total column of this statement represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the financial statements.

Statement of Financial Position

		2022	2021
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	9	179,730	207,418

Current assets
Debtors	10	2,343	1,322
Money-market funds		2,503	3,408
Cash and short-term deposits		1,054	45
		5,900	4,775

Current liabilities
Creditors: amounts falling due within one year
Bank loan	11	(24,979)	(24,951)
Other creditors	11	(3,152)	(4,311)
		(28,131)	(29,262)
Net current liabilities		(22,231)	(24,487)
Net assets		157,499	182,931

Capital and reserves
Called-up share capital	12	12,295	12,295
Share premium account		52,043	52,043
Capital redemption reserve		12,616	12,616
Capital reserve	13	70,276	97,491
Revenue reserve		10,269	8,486
Equity shareholders' funds		157,499	182,931

Net asset value per Ordinary share	4	331.77p	380.84p

The financial statements were approved by the Board of Directors and authorised for issue on 30 November 2022 and were signed on its behalf by:
Mark White
Chairman
The accompanying notes are an integral part of the financial statements.

Statement of Changes in Equity

For the year ended 30 September 2022
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2021		12,295	52,043	12,616	97,491	8,486	182,931
Return after taxation		-	-	-	(25,409)	12,244	(13,165)
Purchase of own shares for treasury		-	-	-	(1,806)	-	(1,806)
Dividends paid	7	-	-	-	-	(10,461)	(10,461)
Balance at 30 September 2022		12,295	52,043	12,616	70,276	10,269	157,499


For the year ended 30 September 2021
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2020		12,295	52,043	12,616	53,494	8,748	139,196
Return after taxation		-	-	-	45,024	9,693	54,717
Purchase of own shares for treasury		-	-	-	(1,027)	-	(1,027)
Dividends paid	7	-	-	-	-	(9,955)	(9,955)
Balance at 30 September 2021		12,295	52,043	12,616	97,491	8,486	182,931

The capital reserve at 30 September 2022 is split between realised gains of £85,606,000 and unrealised losses of £15,330,000 (30 September 2021: realised gains of £81,939,000 and unrealised gains of £15,552,000).
The revenue and capital reserves represent the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements

For the year ended 30 September 2022

1.	Accounting policies
	(a)	Basis of accounting and going concern. The Financial Statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in July 2022. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The Financial Statements have been prepared on a going concern basis.
		The Company had net current liabilities at the year end. The Company's assets consist mainly of equity shares in companies listed on recognised stock exchanges and are considered by the Board to be realisable within a short timescale under normal market conditions. The Board has set overall limits for borrowing and reviews regularly the Company's level of gearing, cash flow projections and compliance with banking covenants, when applicable. The Board has also performed stress testing and liquidity analysis.
		The Company's Articles require that at every fifth AGM, the Directors shall propose an Ordinary Resolution to effect that the Company continues as an investment trust. An Ordinary Resolution approving the continuation of the Company for the next five years was passed at the AGM on 4 February 2022. The next continuation vote will take place at the AGM to be held in 2027.
		As at 30 September 2022, the Company had a £30 million (2021 - £30 million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch. £25 million was drawn at the end of the financial year (2021 - £25 million). The revolving credit facility matures on 25 June 2023. A replacement option will be sought in advance of the expiry of the facility, or should the Board decide not to renew this facility, any outstanding borrowing would be repaid through the proceeds of equity sales as required
		The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report and they believe that the Company has adequate financial resources to continue its operational existence for a period of not less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that the Company's diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term funding requirements were they to arise. They have also reviewed the revenue and ongoing expenses forecasts for the coming year, and expect to secure a replacement facility upon expiry of the current facility. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements
		As an investment fund the Company has the option, which it has taken, not to present a cash flow statement. A cash flow statement is not required when an investment fund meets all the following conditions: substantially all of the entity's investments are highly liquid, substantially all of the entity's investments are carried at market value, and the entity provides a Statement of Changes in Equity. The Directors have assessed that the Company meets all of these conditions.
		The accounting policies applied are unchanged from the prior year and have been applied consistently.
		All values are rounded to the nearest thousand pounds (£'000) except where indicated otherwise.
	(b)	I nvestments . Investments have been designated upon initial recognition as fair value through profit or loss in accordance with IAS 39. As permitted by FRS 102, the Company has elected to apply the recognition and measurement provisions of IAS 39 Financial Instruments. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis.
		Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery to be made within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all the FTSE All-Share and the most liquid AIM constituents.
		Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
	(c)	Money market funds investments . Money market funds are used by the Company to provide additional short term liquidity. As they are not listed on a recognised exchange and due to their short term nature, they are recognised in the financial statements as a current asset and are included at fair value through profit or loss.
		The Company invests in a AAA-rated money-market fund, Aberdeen Standard Liquidity Fund, which is managed by abrdn Investments Limited. The share class of the money market fund in which the Company invests does not charge a management fee.
	(d)	Income. Income from equity investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are credited to revenue or capital according to the circumstances. Foreign income is converted at the exchange rate applicable at the time of receipt. Interest receivable on cash at bank and in hand and on the money market fund is accounted for on an accruals basis.
	(e)	Expenses and interest payable. Expenses are accounted for on an accruals basis. Expenses are charged to capital when they are incurred in connection with the maintenance or enhancement of the value of investments. In this respect, the investment management fee and relevant finance costs are allocated between revenue and capital in line with the Board's expectation of returns from the Company's investments over the long term in the form of revenue and capital respectively (see notes 3 and 5).
		Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement of Comprehensive Income.
	(f)	Dividends payable. Interim dividends are accounted for when they are paid. Final dividends are accounted on the date that they are approved by shareholders.

	(g)	Capital and reserves
		Called-up share capital. Share capital represents the nominal value of Ordinary shares issued. This reserve is not distributable.
		Share premium account. The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs. This reserve is not distributable.
		Capital redemption reserve. The capital redemption reserve represents the nominal value of Ordinary shares repurchased and cancelled. This reserve is not distributable.
		Capital reserve. Gains or losses on realisation of investments and changes in fair values of investments are included within the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The part of this reserve represented by realised capital gains is available for distribution by way of a dividend and for the purpose of funding share buybacks.
		Revenue reserve. The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to shareholders as a dividend.

	(h)	Taxation . The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
		Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the accounts.
		Owing to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	(i)	Cash and cash equivalents . Cash comprises bank balances and cash held by the Company. Cash equivalents are short-term, highly liquid investments including money-market funds that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
	(j)	Bank borrowings . Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds received, net of direct issue costs. They are subsequently measured at amortised cost. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
	(k)	Treasury shares . When the Company purchases its Ordinary shares to be held in treasury, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction from the capital reserve. When these shares are sold subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is transferred to the share premium account and any resulting deficit is transferred from the capital reserve.
	(l)	Judgements and key sources of estimation uncertainty . Disclosure is required of judgements and estimates made by management in applying the accounting policies that have a significant effect on the Financial Statements. There are no significant estimates or judgements which impact these Financial Statements.

2.	Income
		2022	2021
		£'000	£'000
	Income from investments
	UK investment income
	Ordinary dividends	8,460	8,286
	Special dividends	800	600
		9,260	8,886

	Overseas and Property Income Distribution investment income
	Ordinary dividends	4,243	1,748
	Special dividends	-	5
		4,243	1,753
		13,503	10,639

	Other income
	Money-market interest	14	2
	Underwriting commission	-	1
		14	3
	Total income	13,517	10,642

3.	Investment management fee
		2022	2021
		£'000	£'000
	Charged to revenue reserve	335	342
	Charged to capital reserve	782	799
		1,117	1,141

	The Company has an agreement with abrdn Fund Managers Limited ("aFML") for the provision of management services, under which investment management services have been delegated to abrdn Investment Management Limited. The contract is terminable by either party on not less than six months' notice.
	The fee payable to aFML was calculated at a rate of 0.65% per annum of net assets up to £175 million and at a rate of 0.55% per annum of net assets thereafter. The fee is payable quarterly in arrears and is chargeable 30% to revenue and 70% to capital (see note 1(e) for further detail). The balance of fees due at the year end was £530,000 (2021 - £298,000).

4.	Administrative expenses
		2022	2021
		£'000	£'000
	Directors' fees	105	104
	Employers' National Insurance	4	6
	Fees payable to the Company's Auditor (excluding VAT):
	- for the audit of the annual financial statements	40	32
	Professional fees	52	(3)
	Depositary fees	22	25
	Other expenses	241	209
		464	373

	The Company has an agreement with aFML for the provision of promotional activities. Fees paid under the agreement during the year were £103,000 (2021 - £95,000). At 30 September 2022, £166,000 was due to aFML (2021 - £63,000).
	With the exception of fees payable to the Company's auditor, irrecoverable VAT has been included under the relevant expense line above. Irrecoverable VAT on fees payable to the Company's auditor is included within other expenses.
	The Company has no employees.

5.	Finance costs
		2022	2021
		£'000	£'000
	On bank loans and overdrafts:
	Charged to revenue reserve	149	109
	Charged to capital reserve	347	253
		496	362

	Finance costs are chargeable 30% to revenue and 70% to capital (see note 1(e)).

6.	Taxation
			2022			2021
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Overseas withholding tax	325	-	325	125	-	125

	(b)	Factors affecting total tax charge for the year . The corporation tax rate was 19% (2021 - 19%). The total tax assessed for the year is higher (2021 - lower) than that resulting from applying the standard rate of corporation tax in the UK.
		A reconciliation of the Company's total tax charge is set out below:

			2022			2021
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Return before taxation	12,569	(25,409)	(12,840)	9,818	45,024	54,842

		Corporation tax at a rate of 19% (2021 - 19%)	2,388	(4,828)	(2,440)	1,865	8,555	10,420
		Effects of:
		Non-taxable UK dividends	(1,770)	-	(1,770)	(1,686)	-	(1,686)
		Non-taxable overseas dividends	(744)	-	(744)	(273)	-	(273)
		(Gains)/losses on investments not relievable	-	4,613	4,613	-	(8,755)	(8,755)
		Excess management expenses and loan relationship losses	126	215	341	94	200	294
		Irrecoverable overseas withholding tax	325	-	325	125	-	125
		Total taxation	325	1	325	125	-	125

		At 30 September 2022, the Company had unutilised management expenses and loan relationship losses of £31,971,000 (2021 - £30,202,000). No deferred tax asset has been recognised on the unutilised management expenses and loan relationship losses as it is unlikely that the Company will generate suitable taxable profits in the future that these tax losses could be deducted against.

7.	Dividends on Ordinary shares
		2022	2021
		£'000	£'000
	Amounts recognised as distributions to equity holders in the year:
	Fourth interim dividend for 2021 of 5.60p per share (2020 - 5.00p)	2,690	2,416
	First interim dividend for 2022 of 5.40p per share (2021 - 5.20p)	2,594	2,513
	Second interim dividend for 2022 of 5.40p per share (2021 - 5.20p)	2,594	2,513
	Third interim dividend for 2022 of 5.40p per share (2021 - 5.20p)	2,583	2,513
		10,461	9,955

	The fourth interim dividend of 6.50p per Ordinary share, payable on 9 January 2023 to shareholders on the register on 9 December 2022 has not been included as a liability in the financial statements.
	The total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered, are set out below.

		2022	2021
		£'000	£'000
	First interim dividend for 2022 of 5.40p per share (2021 - 5.20p)	2,594	2,513
	Second interim dividend for 2022 of 5.40p per share (2021 - 5.20p)	2,594	2,513
	Third interim dividend for 2022 of 5.40p per share (2021 - 5.20p)	2,583	2,513
	Fourth interim dividend for 2022 of 6.50p per share (2021 - 5.60p)	3,079	2,690
		10,850	10,229

8.	Return per Ordinary share
		2022		2021
		£'000	p	£'000	p
	Basic
	Revenue return	12,244	25.51	9,693	20.06
	Capital return	(25,409)	(52.93)	45,024	93.18
	Total return	(13,165)	(27.42)	54,717	113.24

	Weighted average number of Ordinary shares in issue^A		48,004,224		48,320,851
	^A Calculated excluding shares held in Treasury where applicable.

9.	Investments
		2022	2021
		£'000	£'000
	Fair value through profit or loss
	Opening book cost	191,866	188,007
	Opening fair value gains / (losses) on investments held	15,552	(30,208)
	Opening fair value	207,418	157,799
	Movements in the year:
	Purchases at cost	40,986	59,701
	Sales - proceeds	(44,393)	(56,160)
	(Losses)/gains on investments	(24,281)	46,078
	Closing fair value	179,730	207,418

	Closing book cost	195,060	191,866
	Closing fair value (losses)/gains on investments held	(15,330)	15,552
	Closing fair value	179,730	207,418

	The Company received £44,393,000 (2021 - £56,160,000) from investments sold in the year. The book cost of these investments when they were purchased was £37,797,000 (2021 - £55,842,000). 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.
	Transaction cost s. During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Statement of Comprehensive Income. The total costs were as follows:

		2022	2021
		£'000	£'000
	Purchases	201	261
	Sales	30	44
	Total	231	305

10.	Debtors: amounts falling due within one year
		2022	2021
		£'000	£'000
	Amounts due from brokers	9	670
	Net dividends and interest receivable	2,056	611
	Other debtors	278	41
		2,343	1,322

11.	Creditors: amounts falling due within one year
		2022	2021
		£'000	£'000
	Bank loan	25,000	25,000
	Unamortised loan arrangement expenses	(21)	(49)
		24,979	24,951

	Other creditors
	Amounts due to brokers	2,247	3,823
	Investment management fee payable	530	298
	Sundry creditors	375	190
		3,152	4,311

	On 28 June 2021, the Company agreed a new two year £30 million revolving credit facility with the Royal Bank of Scotland International Limited, which has a maturity date of 25 June 2023.
	The facility agreement contains the following covenants:
	- The Company's gross assets will not be less than £120 million (2021 - £120 million) at any time.
	- The Company's total net debt will not exceed 25% (2021 - 25%) of net asset value at any time.
	All covenants were complied with throughout the year.
	At 30 September 2022, and the date of signing this Report, £25 million had been drawn down, at a SONIA rate of 2.791%. This is due to mature on 30 November 2022.

12.	Called-up share capital
		2022	2021
		£'000	£'000
	Issued and fully paid:
	Ordinary shares of 25p each
	Opening balance of 48,033,474 (2021 - 48,327,960) Ordinary shares	12,009	12,083
	Buyback of 561,535 (2021 - 294,486) Ordinary shares	(141)	(74)
	Closing balance of 47,471,939 (2021 - 48,033,474) Ordinary shares	11,868	12,009

	Treasury shares
	Opening balance of 1,145,293 (2021 - 850,807) Treasury shares	286	212
	Buyback of 561,535 (2021 - 294,486) Ordinary shares to Treasury	141	74
	Closing balance of 1,706,828 (2021 - 1,145,293) treasury shares	427	286

		12,295	12,295

	During the year, 561,535 Ordinary shares (2021 - 294,486) were repurchased for a consideration of £1,806,000 (2021 - £1,027,000). The total shares held in Treasury is 1,706,828 (2021 - 1,145,293).
	Subsequent to the year end, a further 100,417 Ordinary shares were repurchased to be held in Treasury for a consideration of £315,000.

13.	Capital reserve
		2022	2021
		£'000	£'000
	Opening balance	97,491	53,494
	Unrealised (losses)/gains on investment holdings	(30,877)	45,760
	Gains on realisation of investments at fair value	6,596	318
	Currency gains/(losses)	1	(2)
	Investment management fee charged to capital	(782)	(799)
	Finance costs charged to capital	(347)	(253)
	Buyback of Ordinary shares into treasury	(1,806)	(1,027)
	Closing balance	70,276	97,491

	The capital reserve includes investment holding losses amounting to £15,330,000 (2021 - gains of £15,552,000) as disclosed in note 9.

14.	Net asset value per share
	The net asset value per share and the net assets attributable to Ordinary shares at the end of the year calculated in accordance with the Articles of Association were as follows:

		2022	2021
	Basic
	Total shareholders' funds (£'000)	157,499	182,931
	Number of Ordinary shares in issue at year end^A	47,471,939	48,033,474
	Net asset value per share	331.77p	380.84p
	^A Excludes shares in issue held in treasury where applicable.

15.	Financial instruments
	Risk management. The Company's financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions for the purpose of managing currency and market risks arising from the Company's activities.
	The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.
	The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year.
	(i)	Market risk. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices.
		This market risk comprises three elements - interest rate risk, currency risk and other price risk.
		Interest rate risk
		Interest rate movements may affect:
		- the level of income receivable on cash deposits;
		- interest payable on the Company's variable rate borrowings.
		The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		It is the Company's policy to increase its exposure to equity market price risk through the judicious use of borrowings. When borrowed funds are invested in equities, the effect is to magnify the impact on Shareholders' funds of changes - both positive and negative - of revenue and capital returns.

Interest rate profile
The interest rate risk profile of the portfolio of financial assets and liabilities at the Statement of Financial Position date was as follows:
	Weighted
	average	Weighted
	period for	average
	which	interest	Fixed	Floating
	rate is fixed	rate	rate	rate
As at 30 September 2022	Years	%	£'000	£'000
Assets
Money market funds	-	6.67	-	2,503
Cash deposits	-	-	-	1,054
Total assets	-	6.67	-	3,557
Liabilities
Bank loans	-	2.79	24,979	-
Total liabilities	-	2.79	24,979	-

	Weighted
	average	Weighted
	period for	average
	which	interest	Fixed	Floating
	rate is fixed	rate	rate	rate
As at 30 September 2021	Years	%	£'000	£'000
Assets
Money market funds	-	0.08	-	3,408
Cash deposits	-	-	-	45
Total assets	-	0.08	-	3,453
Liabilities
Bank loans	-	1.15	24,951	-
Total liabilities	-	1.15	24,951	-

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans.
The floating rate assets consist of money market funds and cash deposits on call earning interest at prevailing market rates.
All financial liabilities are measured at amortised cost.

		Maturity profile. The Company did not hold any assets at 30 September 2022 or 30 September 2021 that had a maturity date. The £25 million (2021 - £25 million) loan drawn down had a maturity date of 30 November 2022 (2021 - 30 December 2021) at the Statement of Financial Position date.
		Interest rate sensitivity. The sensitivity analysis below have been determined based on the exposure to interest rates at the Statement of Financial Position date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
		If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Company's :
		- profit for the year ended 30 September 2022 would decrease/increase by £214,000 (2021 - decrease/increase by £215,000). This is mainly attributable to the Company's exposure to interest rates on its fixed rate borrowings and floating rate cash balances.
		Currency risk. All of the Company's investments are in Sterling. The Company can be exposed to currency risk when it receives dividends in currencies other than Sterling. The current policy is not to hedge this risk but this policy is kept under constant review by the Board.
		Other price risk. Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The Manager actively monitors market prices throughout the year and reports to the Board. The investments held by the Company are listed on the London Stock Exchange.
		Other price risk sensitivity . If market prices at the Statement of Financial Position date had been 10% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders and equity for the year ended 30 September 2022 would have increased/decreased by £17,973,000 (2021 - increase/decrease of £20,742,000). This is based on the Company's equity portfolio held at each year end.
	(ii)	Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
		Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdraft facilities (note 11).

(iii)	Credit risk . This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
	The risk is not significant, and is managed as follows:
	- where the investment manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default;
	- investment transactions are carried out with a large number of brokers, whose credit-standing and credit rating is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker;
	- cash and money invested in AAA money market funds are held only with reputable institutions.
	None of the Company's financial assets are secured by collateral or other credit enhancements.
	Credit risk exposure . In summary, compared to the amount in the Statement of Financial Position, the maximum exposure to credit risk at 30 September was as follows:

		2022		2021
		Statement of		Statement of
		Financial Position	Maximum exposure	Financial Position	Maximum exposure
		£'000	£'000	£'000	£'000
	Current assets
	Debtors	2,343	2,343	1,322	1,322
	Money market funds (indirect exposure)	2,503	2,503	3,408	3,408
	Cash and short term deposits	1,054	1,054	45	45
		5,900	5,900	4,775	4,775

	None of the Company's financial assets is past due or impaired.
	Fair values of financial assets and financial liabilities. The fair value of borrowings is not materially different to the accounts value in the financial statements of £24,979,000 (note 11).

16.	Fair value hierarchy
	FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following classifications:
	Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
	Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market date) for the asset or liability, either directly or indirectly.
	Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
	All of the Company's investments are in quoted equities (2021 - same) that are actively traded on recognised stock exchanges, with their fair value being determined by reference to their quoted bid prices at the reporting date. The total value of the investments (2022 - £179,730,000; 2021 - £207,418,000) have therefore been deemed as Level 1.

17.	Capital management policies and procedures
	The Company's capital management objectives are:
	-	to ensure that the Company will be able to continue as a going concern; and
	-	to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board normally seeks to limit gearing to 15% of net assets. At the year end the Company had gearing of 15.0% of net assets (2021 - 13.5%).
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market and the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. Any year end positions are presented in the Statement of Financial Position.
	The Company does not have any externally imposed capital requirements.

18.	Contingent liabilities
	As at 30 September 2022 there were no contingent liabilities (2021 - none).

19.	Segmental Information
	The Company is engaged in a single segment of business, which is to invest in equity securities. All of the Company's activities are interrelated and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

20.	Related party transactions and transactions with the Manager
	Related party transactions. Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration Report in the Annual Report. The balance of fees due to Directors at the year end was £30,000 (2021 - £nil).
	Transactions with the Manager . abrdn Fund Managers Limited received fees for its services as Manager. Further details are provided in notes 3 and 4.

Alternative Performance Measures

Alternative performance measures ('APM') are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP.
The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-ended investment companies. Where the calculation of an APM is not detailed within the financial statements, an explanation of the methodology employed is provided below:
Discount & premium
A discount is the percentage by which the market price of an investment trust is lower than the Net Asset Value ("NAV") per share. A premium is the percentage by which the market price per share of an investment trust exceeds the NAV per share.

		30 September 2022	30 September 2021
Share price		302.50p	349.00p
Net asset value per share		331.77p	380.84p
Discount		8.8%	8.4%

Dividend yield
Dividend yield measures the dividend per share as a percentage of the share price per share.

		30 September 2022	30 September 2021
Share price		302.50p	349.00p
Dividend per share		22.70p	21.20p
Dividend yield		7.5%	6.1%

Net gearing
Net gearing measures the total borrowings less cash and cash equivalents divided by Shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due from and to brokers at the period end as well as cash and short-term deposits.

		30 September 2022	30 September 2021
		£'000	£'000
Total borrowings	a	24,979	24,951
Cash and short-term deposits		1,054	45
Investments in AAA-rated money-market funds		2,503	3,408
Amounts due from brokers		9	670
Amounts payable to brokers		(2,247)	(3,823)
Total cash and cash equivalents	b	1,319	300
Gearing (borrowings less cash & cash equivalents)	c=(a-b)	23,660	24,651
Shareholders' funds	d	157,499	182,931
Net gearing	e=(c/d)	15.0%	13.5%

Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC, which is defined as the total of investment management fees and recurring administrative expenses and expressed as a percentage of the average daily net asset values published throughout the period.

		30 September 2022	30 September 2021
		£'000	£'000
Investment management fees		1,117	1,141
Administrative expenses		464	373
Less: non-recurring charges^A		(42)	(2)
Ongoing charges	a	1,539	1,512
Average net assets	b	178,283	173,473
Ongoing charges ratio (excluding look-through costs)	c=(a/b)	0.86%	0.87%
Look-through costs^B	d	0.05%	0.06%
Ongoing charges ratio (including look-through costs)	e=c+d	0.91%	0.93%
^A Comprises professional fees not expected to recur.
^B Calculated in accordance with AIC guidance issued in October 2020 to include the Company's share of costs of holdings in investment companies on a look-through basis.

The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes financing and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-ended and closed-ended competitors, and the Reference Index, respectively.

			Share
Year ended 30 September 2022		NAV	Price
Opening at 1 October 2021	a	380.8p	349.0p
Closing at 30 September 2022	b	331.8p	302.5p
Price movements	c=(b/a)-1	(12.9%)	(13.3%)
Dividend reinvestment^A	d	5.3%	5.5%
Total return	c+d	(7.6%)	(7.8%)

			Share
Year ended 30 September 2021		NAV	Price
Opening at 1 October 2020	a	288.0p	252.0p
Closing at 30 September 2021	b	380.8p	349.0p
Price movements	c=(b/a)-1	32.2%	38.5%
Dividend reinvestment^A	d	7.7%	8.6%
Total return	c+d	39.9%	47.1%
^A NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.

For abrdn Equity Income Trust plc

abrdn Holdings Limited, Company Secretary

Additional Notes to the Annual Financial Report

The Annual General Meeting will be held at Wallacespace, 15 Artillery Lane, London E1 7HA on Thursday 2 February 2023 at 11:30 am.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 September 2022 have been agreed with the auditor and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2021 and 2022 statutory accounts received unqualified reports from the Company's auditor and did not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006. The financial information for 2021 is derived from the statutory accounts for 2021 which have been delivered to the Registrar of Companies. The 2022 accounts will be filed with the Registrar of Companies in due course.

The Annual Report and Accounts will be posted to shareholders in December 2022. Copies will be available during normal business hours from the Secretary, abrdn Holdings Limited, 1 George Street, Edinburgh EH2 2LL or from the Company's website, www.aberdeenstandardequityincometrust.com.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

By order of the Board

abrdn Holdings Limited

Company Secretary

30 November 2022

For further information please contact:

Evan Bruce-Gardyne

Client Director, Investment Trusts, abrdn

Tel: 07720 073216

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