Annual Financial Report

abrdn Equity Income Trust plc

28 November 2024

 

abrdn Equity Income Trust plc Annual Financial Report

for the year ended 30 September 2024

Legal Entity Identifier (LEI): 21380015XPT7BZISSQ74

Investment Objective

To provide shareholders with an above average income from their equity investment, while also providing real growth in capital and income

Website

Up to date information can be found on the Company's website: abrdnequityincome.com

Performance Highlights

Net asset value total return per Ordinary shareA ​			Share price total return per Ordinary shareA ​
Year ended 30 September 2024  ​			Year ended 30 September 2024
+13.3% ​			+10.4% ​
Year ended 30 September 2023	+1.8%		Year ended 30 September 2023	+11.4%
Revenue return per Ordinary share			Discount to net asset valueA
Year ended 30 September 2024			As at 30 September 2024
23.05p ​			3.0% ​
Year ended 30 September 2023	23.43p		As at 30 September 2023	0.2%
Dividend per Ordinary share			Ongoing charges ratioA
Year ended 30 September 2024			Year ended 30 September 2024
22.90p ​			0.86% ​
Year ended 30 September 2023	22.80p		Year ended 30 September 2023	0.94%

A Considered to be an Alternative Performance Measure.​ ​ ​ ​

Highlights

					30 September 2024	30 September 2023	% change
Capital
Net asset value per Ordinary share					331.5p	314.6p	5.4%
Ordinary share price					321.5p	314.0p	2.4%
Reference Index capital returnC					4,511.0	4,127.2	9.3%
Discount of Ordinary share price to net asset valueA					3.0%	0.2%
Total assets					£180.9m	£170.8m	5.9%
Shareholders' funds					£158.4m	£149.9m	5.7%
Gearing
Net gearingA					13.0%	11.3%
Earnings and Dividends
Revenue return per Ordinary share					23.05p	23.43p	-1.6%
Total dividends for the year					22.90p	22.80p	0.4%
Dividend yieldA					7.1%	7.3%
Expenses
Ongoing charges ratioAB					0.86%	0.94%
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 ​ ​ ​ ​ ​ ​ ​

For further information, please contact

Evan Bruce-Gardyne

abrdn Fund Managers Limited

Mobile: [phone]

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.  Investors may not get back the amount they originally invested.

Chair's Statement

It has been another eventful year for the financial markets, with a positive response to signs of a soft economic landing offsetting ongoing geopolitical volatility. The UK Retail Price Index ("RPI") fell from 8.9% in September 2023 to 2.7% in September 2024 allowing the Bank of England to cut the base rate for the first time since 2020.

Globally, a key theme for 2024 was that over half the world's population went to the polls, including the UK general election and the selection of the next US president. This inevitably increased the degree of reticence in equity markets as investors opted to wait for any resulting policy changes which could affect the outlook for the economy and equities, before committing capital. Geopolitical fears have been accentuated by ongoing conflicts, their impact on supply chains and the cost of goods.

A prolonged period of investor caution towards UK equities has resulted in a wide gap between the valuation of UK equities and their global peers. Within the UK equity market small and mid-cap companies have been particularly unloved, reflecting fears over the prolonged stagnation in the UK economy. As the year unfolded, investors began to respond to these low valuations, spurred on by hopes of interest rate cuts and the rise in corporate activity. This is reflected in the performance of the various UK Indices, the FTSE 250 and the FTSE Small Cap indices both outperformed the FTSE 100 Index over the 12 months to 30 September 2024, the first time that they have done so for three years. Despite this, globally, the allocation of funds to UK equities remains low.  

Against this backdrop the overall performance of your Company has been positive, and the Board is pleased to see the Portfolio Manager's investment thesis play out positively across a range of holdings, including an increase in mergers and acquisitions ("M&A"), reflecting the compelling valuations on offer. Thomas is focused on delivering income, while also looking to identify companies with positive change that can, over time, deliver capital growth for shareholders. The Portfolio Manager has maintained the investment approach by continuing to invest across the market, providing access to small and mid-cap shares trading on attractive valuations. For some time, this approach has been out of favour, constraining returns, but as market conditions gradually improve, it is encouraging to see that the Shareholders are now starting to be rewarded. Please see the Portfolio Manager's Review for more detail on the sources of the performance and income.

Earnings

Gross income generated by the Company's investments in the year ended 30 September 2024 was £12.6 million (2023: £12.5 million). The costs of managing the portfolio, including administration costs, were down over 12%, as a result of the change to the management fees which came into effect at the start of the financial year as well as a significant reduction in the auditor fee as a result of the move to Johnston Carmichael LLP.  Interest costs on the borrowings attributable to the revenue account were up from £401,000 to £454,000, largely driven by the increase in average cost of borrowing during the year. After tax, the income of the Company was £11.0 million, marginally down from £11.1 million last year.

This resulted in the Company's earnings per share being 23.05 pence which was 1.6% lower than last year. Despite this decline in challenging markets, the Board was encouraged that the dividend for the year is covered by the earnings once again and without losing focus on overall performance.

Dividends

As a result of the earnings performance, the Board is declaring a fourth interim dividend for 2024 of 5.8 pence per share which will be paid on 10 January 2025 to shareholders on the Register on 6 December 2024 with an associated ex-dividend date of 5 December 2024. This takes the total dividend for the year to 22.9 pence per share (2023: 22.8p), representing the 24th consecutive annual dividend increase declared by the Company. At the time of writing, the Company's shares are trading on a yield of 7%, which is among the highest in the AIC UK Equity Income sector.

After payment of the fourth interim dividend and based on the current number of shares in issue, 0.14 pence per share will be transferred to revenue reserves which will be increased to 15.76 pence per share.

The Board is committed to maintaining and extending the Company's track record of dividend growth.  We therefore expect that, in the absence of any adverse circumstances, in the coming financial year we will extend our track record to 25 consecutive years of dividend growth by paying a dividend of at least 23.0 pence per share. We believe that we are in a position to do this because the most recent analysis from the Portfolio Manager indicates that the portfolio will be able to cover this cost out of the current year earnings. We are also carrying revenue reserves of £10.3 million in the balance sheet which we could also utilise if needed. We expect that 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 5.9 pence per share payable in January 2026.

Performance

The overall performance of your Company has been encouraging. The Net Asset Value ("NAV") total return, with dividends reinvested at the ex-dividend date, was 13.3% (2023: 1.8%), a fraction shy of the Company's reference index total return (the FTSE All-Share Index) of 13.4%. The slight widening of the share price discount resulted in a share price total return of 10.4% (2023: 11.4%).  More detailed information on capital performance can be found in the Portfolio Manager's Review and outlines stock-specific drivers that have contributed to this performance.  The Company's performance against its Key Performance Indicators. 

Whilst the UK equity market remains undervalued, we believe that Thomas' portfolio construction provides an opportunity for re-rating that recognises the underlying value of our investments. The Board remains focused on improving performance and growing the dividend.

Premium & Discount

Over the last couple of years, the investment trust sector has been plagued by wider discounts.  The Company's share price ranged from trading at a premium to NAV in the first couple of months of the financial year to briefly trading at a discount to NAV of over 11% in March 2024 and then closing the financial year at a discount of 3%. This experience was not unique to the Company. Many trusts traded on a wider than usual discount, partially attributable to the run up to the end of the tax year as investors realised capital gains ahead of the reduction in Capital Gains Tax thresholds coming in on 6 April 2024. Once that deadline passed, we saw demand pick up and the Company's discount reverted to trading at around 5%. For all but about three weeks, in the year ended 30 September 2024, the Company's discount was trading at a narrower level than the average for the UK Equity Income investment trust sector.

While the Company was trading at a premium in the early months of the financial year, the Company issued 135,000 shares at a premium to NAV, raising just over £400,000. There were no shares bought back during the year. The Board monitors the level of the premium / discount and will step in should it believe that the impact of doing so would be in the best interests of shareholders.

Borrowing facility

At the year end, the Company had drawn down £22.5 million (2023: £21 million) of its £30 million Revolving Credit Facility which will expire in June 2026.  The Board and Manager weigh up the cost of borrowing, which has increased significantly over the last couple of years, versus the financial benefit of gearing the portfolio. The Board continues to believe in the long-term benefits of gearing and sees it as one of the potential benefits of closed-end investment companies.

Online Investor Presentation

In order to encourage as much interaction as possible with our shareholders, we will be hosting an online investor presentation, which will be held at 11: 30 am on Tuesday, 28 January 2025. 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 me. 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 abrdnequityincome.com.

Annual General Meeting

This year's Annual General Meeting ("AGM") will be held at abrdn's office, 18 Bishops Square, London, E1 6EG on Tuesday, 18 February 2025 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.

Outlook

The start of the current financial year can definitely be described as "interesting times" for an equity investor in the UK. In the first few weeks of the new financial year, we have seen Rachel Reeves deliver Labour's first budget statement for 14 years and the re-election of Donald Trump as the next President of the United States after a four-year interlude.  With those events behind us, there is less uncertainty as to the medium-term outlook. Conflicts in Ukraine and the Middle East have been ongoing for some time, but it remains to be seen whether any escalation in these conflicts further adversely affects the global stock markets.

The fiscal impact of the UK Government's intention to increase borrowing and raise taxes, in particular Employer's National Insurance, will undoubtedly have an impact on many UK companies. Whilst how this will manifest is not clear, it is evident that the Government will need the economy to grow to support much needed investment in infrastructure. Meanwhile Donald Trump's economic agenda - a push for growth accompanied by tariffs - is likely to be inflationary, both in the US and elsewhere. Consequently, the scale of interest rate cuts that are expected, on either side of the Atlantic, appears to be receding.

It is worth remembering that while we invest in companies listed in the UK, many operate internationally, so the National Insurance increase will only affect their UK payroll. The strengthening of the US Dollar that we have witnessed since the start of the period has reversed the weakness seen in August and September. A strengthening dollar negatively affects UK exporters but is beneficial to investors in companies with operations outside the UK generating sales in US Dollars and remitting the proceeds back to the UK. The Portfolio Manager is aware of the sensitivities of the portfolio to such macro variables. The resilient performance of the portfolio since the start of the new financial year, despite these macro changes, would support the manager's view that the portfolio has been structured on the basis of stock-specific insights which makes it more resilient and less likely to be affected by sharp changes in macro variables. 

Against this backdrop the Portfolio Manager will continue to position the portfolio in companies where we see the potential for a combination of dividend yield, dividend growth and valuation re-rating with the aim of delivering a further increase in the dividend in the coming year to extend the track record to 25 years and to deliver this from the revenue earnings in the year.

Sarika Patel
Chair
27 November 2024

Portfolio Manager's Review

Market Review

UK equities advanced over the 12 months to 30 September 2024 as investors responded positively to signs of a soft landing for the UK economy as the rate of inflation moderated, allowing the first-interest rate cut in four years. Investor sentiment improved as the financial year progressed, as the prospect of interest rate cuts helped reassure on the outlook for the global economy. As a result, market leadership gradually broadened out, as reflected in the outperformance of small and mid-cap companies over large caps, despite heightened geopolitical instability caused by ongoing wars in Ukraine and the Middle East.

After entering a mild recession in late 2023, the UK economy stabilised in the early months of 2024, helping to ease fears that a prolonged period of high interest rates would result in a major contraction in business activity and consumer spending. A steady decline in the rate of inflation, eventually falling into line with the official 2% target level in May 2024, prompted the Bank of England to cut the base rate by 0.25% in August 2024, its first cut since March 2020. Labour's landslide victory in the UK's general election in July initially helped to reassure markets on political stability, although the mood soured after the Government warned that tax rises would be necessary to address the budget deficit. This hit business and consumer confidence in the run-up to the Autumn Budget, constraining business investment and consumer spending. At the same time, nervousness among bond market investors about the new Government's fiscal discipline caused Gilt yields to increase, although not on the same scale as at the Truss mini-budget two years earlier.

In the US, the Federal Reserve cut interest rates by 0.5% in September 2024, marking the first cut in four years. This decision was taken against the backdrop of slowing inflation and weakening labour markets. Chinese economic growth continued to be held back by a slump in the real estate sector, although hopes of more assertive stimulus measures helped to improve sentiment towards the end of the period. Geopolitics remained febrile, with heightened tensions in the Middle East and the ongoing conflict in Ukraine continuing to weigh on sentiment.

The FTSE 100 Index rose 12.3% in total-return terms over the period, but lagged indices in Europe and the US, as larger cap sectors were hit by a strengthening in the value of Sterling against other major currencies, while a sustained fall in the oil price weighed on oil companies. Conversely, the more domestically focused FTSE 250 Index delivered a total return of 19.1% over the 12 months, buoyed by hopes that the Bank of England would make a number of interest rate cuts. The performance of mid and small-cap companies was also supported by a rise in merger and acquisition ("M&A") activity, underlining the low valuations on offer in this part of the UK equity market.

 

Revenue Account

Dividends distributed by the portfolio's holdings came in at £12.6 million, compared to £12.5 million received last year, representing a marginal increase of 0.8%. While the income was largely unchanged, over 80% came from UK-registered companies as compared to just over 19% coming from those UK-listed, but overseas registered, companies. It should be noted that the geographical source of the portfolio income is a function of the ideas identified by our investment process, rather than being a target per se.

Special dividends accounted for over 5% of total income, coming from five companies, as compared to less than 2% last year. While special dividends within the portfolio have increased in the past year, we have observed the continued preference for buybacks over special dividends among management teams, reflecting their view that valuations are too cheap. We note that 25 of the holdings, representing half the portfolio, conducted share buybacks during the financial year. As share prices recover, it is likely that special dividends will become more widespread.

The management and administration costs of running the Company were down over 12% in 2024 as compared to 2023. The management fee was renegotiated last year, and this has led to a reduction of over 16% year on year, while administration costs were down almost 10%, primarily driven by the reduction in the audit fee which was a result of the review of the provision of audit services in 2023. The cost savings of over £200,000 were offset by an increase in overseas withholding tax which rose from £278,000 to £560,000, meaning that the revenue return after taxation was £11.0 million, around £99,000 lower than in 2023.

We are forecasting that the portfolio is currently delivering a gross dividend yield, before costs, of 7%, based on the income expected to be generated over the Company's financial year divided by the portfolio value at the year end, representing a significant premium to the dividend yield of the FTSE All-Share Index ("Reference Index") of 3.6% as of 30 September 2024. Interest rates have started to decline with a further 0.25% rate cut in early November, setting the scene for an increase in the gap between the rate we pay on the Company's bank facility and the dividend yield we earn on the portfolio. The pace of rate cuts is uncertain, but at the time of writing, money markets are factoring in two rate cuts by September 2025.

Our focus on income, consistent with our investment process, allowed us to cover the dividend again for the third consecutive year. Management teams generally remained cautious on dividend payouts. This can be explained by the sluggish global economy, elevated interest rates and geopolitical uncertainty, as well as the continued preference for buybacks. The appreciation of Sterling against other major currencies has also been a headwind given the high percentage of sales investee companies generate overseas. The composition of dividend payouts within the UK equity market has continued to evolve, with weakness in mining payouts caused by lower commodity prices, offset by higher bank payouts supported by higher interest rates.

Our investment process allows us to generate the portfolio income required to cover the dividend while also seeking to achieve capital growth over time. This reflects the emphasis we place on seeking out companies whose cash flow and dividend potential is not effectively priced in by the market. Our experience is that the stock market tends to reward such companies with a higher valuation, providing shareholders with both income and capital growth. One of the best examples of this approach playing out during the financial year was Hargreaves Lansdown. Short term concerns over a prolonged period of subdued inflows, linked to high interest rates and geopolitical tensions, caused the shares to trade at an exceptionally low Price/Earnings multiple of 11x and a dividend yield of over 6%. We felt this was far too cheap for a market leader with a very sticky customer base, so we progressively added to the holding in 2022, 2023 and early 2024, building a sizeable holding. This turned out to be the right decision, as a private equity bidder spotted this valuation anomaly and took the company out at a steep premium.

We see this approach as highly repeatable, especially at a time when sentiment towards UK equities is at such a low ebb, as this creates a large number of "unrecognised change" situations with the potential to deliver both income and capital growth. While we are not dependent on falling interest rates or accelerating economic growth, we acknowledge that any improvement in the macro backdrop would help to broaden the number of companies paying attractive dividends, providing us with a greater range of income shares from which to build a diversified portfolio. Overall, we remain confident that we are well positioned to extend the Company's 24-year dividend growth track record in the year ahead.

Portfolio Performance

The Company's net asset value ("NAV") total return was 13.3% for the period. This was just behind of the total return of 13.4% for the Company's Reference Index. Performance during the period was largely the result of stock-specific drivers.

The portfolio saw a spike in M&A activity during the period, including bids for Hargreaves Lansdown, DS Smith, Tyman and Centamin. This underlines the benefits of our focus on valuation, as international bidders recognise the gap between share prices and intrinsic value. We observed that many UK-listed companies have struggled to close the gap with their global peers, and we had positioned the portfolio accordingly. This was the largest contributor to the performance of the Company. 

Careful stock selection within defensive mega-cap companies helped performance during the period. The holding in Imperial Brands surged by over 40% as investors recognised consistent cash flow delivery by a new management team whose strategy is to focus on their key brands in their most profitable markets. Avoiding Reckitt Benckiser was helpful, as the company warned on profits. Similarly, caution on Diageo and AstraZeneca paid off, although the portfolio would have benefited if it had held Unilever.

Financial holdings were a positive driver of performance during the period. The largest contributor to performance was CMC Markets which leapt by over 200% during the period on the publication of a string of positive trading updates revealing higher than expected revenues, including an increasing contribution from institutional clients, suggesting that recent heavy investment in this area is beginning to pay off. We added to the holding near the recent trough in the share price, amplifying the impact on performance as the share price took off. Elsewhere in Financials, performance benefited from holdings in Quilter, TP ICAP and Barclays, all of which responded positively to better-than-expected results. These offset the performance drag from the holding in Close Brothers which fell on concerns over the risk of a potential sizeable customer redress following the announcement of an FCA review into historic motor finance industry lending practices before 2021.

Among the detractors to performance, Energy holdings struggled against the backdrop of falling commodity prices, as energy demand softened as a result of a weakening global economy, while commodity markets became inured to geopolitical tensions. Diversified Energy declined as a collapse in the US natural gas price impacted cash flows. The need for balance sheet flexibility, allowing it to continue to focus on accretive acquisitions, ultimately led to its decision to cut the dividend. Thungela Resources declined in response to falling thermal coal prices, while Ithaca Energy fell on
the announcement of a rise in the North Sea Energy Profit Levy.

Finally, performance relative to the Reference Index was impacted by the strong performance of lower yielding large cap growth shares Rolls-Royce, RELX, 3i and Experian.

Activity

During the period we continued to identify investment opportunities that can help to deliver on each aspect of the investment objective, looking for companies that can exhibit a combination of dividend yield, dividend growth or valuation re-rating.

The largest purchases during the period can be categorised into the following groupings:

1.  Domestic UK shares whose valuations are low relative to their history: 

·  Assura: The Company last owned the primary healthcare property group in 2021, selling the stock at a large premium to its NAV. The share price has since slipped below its NAV as a result of higher interest rates. Operationally the business remains strong, with good tenant demand and a pipeline of new developments.

·  Barratt Redrow: The business is trading strongly, with an improving reservation rate. Barratt's acquisition of Redrow enabled significant cost savings and revenue synergies, providing a trigger for the valuation to re-rate from a very low multiple (below 1x NAV).

·  Berkeley Group: This is one of the best operators in the housebuilding sector, deploying its surplus cash into a new growth initiative, Build to Rent, alongside a special dividend. Strong forward sales enabled management to upgrade its guidance, with potential for further support from falling mortgage rates. The valuation is well below its historical average.

2. Financials shares whose improving momentum is
not yet priced in: 

·  M&G: M&G is using strong cash generation from its life business to invest in new sources of growth including an expansion into new international markets. The high dividend yield implies scepticism on the sustainability of the dividend, which we believe is misplaced in the context of the operational progress being made across all its divisions. 

·  Petershill Partners: We added to this holding, observing that the company's success in private markets fundraising is driving consistent growth in assets under management and earnings. The share price is trading around 35% below the NAV per share, which we see as a valuation opportunity given the consistency its growth.

·  Legal & General: We added to this holding, encouraged by ambitious targets set at its Capital Markets Day in May, harnessing the synergies between its divisions by growing its institutional retirement business and generating the permanent capital to grow its asset management business. 

3.            Defensive shares whose low valuations reflect low expectations: 

·  National Grid: We took part in the rights issue to fund a five-year £60 billion energy transition investment plan, accelerating the connections of renewable generation to the grid.

·  Drax: We started a new holding in Drax which generates a rising proportion of earnings from non-biomass areas, including hydro, pumped storage and natural gas generation. This reduces its vulnerability to policy decisions on biomass. The UK needs to maintain a high level of baseload electricity given the intermittency of renewables, so we see Drax as part of the solution for the UK government at a time of growing electricity demand.

·  Imperial Brands: We added to the existing position. Since the arrival of a new management team, the business has consistently delivered on the profits guidance it provides to the market, focusing on getting the operational basics right. Earnings growth is underpinned by a share buyback programme equating to nearly 8% of the shares in issue on an annualised basis, in addition to the 7% dividend yield.

·  British American Tobacco: We saw the potential for a turnaround in performance following a recent change in the management team. It is unusual for one of the leading companies globally to be trading at such a low valuation, with the dividend yield exceeding 10% at one point. Improving operating trends became more apparent with the interim results in August, sparking a positive share price response. 

The largest sales during the period can be categorised into the following groupings:

1.            Selling out of M&A bid targets at a significant premium

·  DS Smith: We sold out following a bidding war for the company between International Paper and Mondi, eventually won by International Paper.

·  Hargreaves Lansdown: We sold out following a bid for the company from a consortium of CVC Capital Partners, Nordic Capital and the Abu Dhabi Investment Authority.

·  Tyman: We sold out following a bid for the company from US building materials business Quanex.

·  Centamin: We sold out following a bid for the company from Anglogold.

2.  Moderating large positions sizes, notably in Financials and Resources:

·  CMC Markets: Having added to the holding in January, the stock's subsequent surge took the weighting to around 5% of the portfolio, at which point we took some profits.

·  NatWest/Barclays: We took some profits following a very sharp rally in the share prices, as higher interest rates helped drive upgrades to net interest income and return on equity forecasts.

·  Glencore/Shell: Conscious of the heavy weighting in the Resources sector, we scaled back the position sizes, attempting to diversify the portfolio's sources of income. 

·  SSE: SSE's strong performance had taken the weighting to around 5%, prompting us to take some profits.

3. Cutting back the number of shares by eliminating holdings that lack the catalysts necessary for a re-rating:

·  Anglo American: We sold out in the wake of the decision by BHP to walk away from its bid for the company, as the break-up plan appeared challenging.

·  Vodafone: We sold out after Vodafone had completed the disposals of their Italian and Spanish units. We expect industry pricing to remain difficult until industry consolidation is allowed to take place.

·  Hays: We sold out as the macro-economic backdrop was unhelpful, with a mismatch between candidate and employer confidence causing a slowdown in hiring activity.

Outlook

After bottoming out in mid-February, the NAV rose sharply in the following six months. The portfolio's improving NAV performance reflects a combination of a more benign macro backdrop and solid company results, providing the catalyst for the holdings to deliver the valuation re-rating that we have long been expecting. This has continued into the new financial year, strengthening our confidence that the portfolio is well diversified across a board range of macro drivers, allowing it to remain resilient through major events such as the UK Budget and the US Presidential election.

Looking ahead, the performance of UK equities will be driven by a number of factors, notably the prospects for interest rates and economic growth in the UK and globally. After a brief period of more positive sentiment towards the UK following Labour's landslide general election victory, the tone is once again more sceptical as investors scrutinise the new Government's policies, in particular the decision to increase taxes and borrowing in the budget. Investors recognise that there is little room for manoeuvre on fiscal policy given the state of government finances, but they would welcome any signs of policy that would help to reverse the UK's long history of under-investment and low productivity growth.

Trading at a Price/Earnings ratio of around 11.5x, UK equities are cheap relative to other equity markets and their own history, creating a low bar for share prices on the announcement of any positive news. Among developed markets, Europe trades at a Price/Earnings ratio of 13.5x, Asia and Japan trade at 14x and the US trades at over 20x. We see the valuation opportunity within the UK equity market as two-fold:

1.    The FTSE 100 Index generates 78% of its revenues outside the UK, meaning that these are internationally focused businesses that should, but often don't, trade at similar valuations to their global peers. We will continue to seek out these valuation anomalies among large caps, which represent 48.9% of the portfolio.

2.    The FTSE 250 and Small Cap indices are far more domestically focused, generating over 50% of their revenues in the UK, making them more dependent on the UK economy. Recent Goldman Sachs research observes a tight inverse correlation between the performance of the FTSE 250 Index (relative to the FTSE 100 Index) and UK 10-year Gilt yields, as well as a strong positive correlation between the FTSE 250's Price/Earnings ratio and current economic activity levels. It is therefore understandable that investors will be scrutinising government policies in the months ahead, seeking to establish whether they will help to deliver higher levels of investment and productivity growth, which could create the conditions for more sustainable economic growth.

Regardless of the macro situation, we will continue to search across the UK equity market for under-valued companies with the potential to deliver growth that surprises the market. We are encouraged that during this financial year we have uncovered a large number of companies that have delivered a significant valuation re-rating, either due to better-than-expected results or M&A. The identification of these companies can be extremely powerful for the portfolio's performance as share prices go up due to higher earnings or a higher Price/Earnings multiple. The higher NAV also provides an increased capital base from which to generate portfolio income.

This year has demonstrated our ability to deliver a rising NAV at the same time as delivering sufficient portfolio income to cover the dividend and maintain the Company's 24-year track record of dividend growth. Our focus on income is consistent with our investment process, as we believe that cash generative companies that use their cash flow to pay attractive dividends and buy back their own shares can also deliver excellent share price performance.  We continue to structure the portfolio in companies where we see the potential for a combination of dividend yield, dividend growth and valuation re-rating. The scale of the valuation re-rating opportunity can be seen from the gap between the valuations of the holdings in the portfolio and those of the wider market. At the time of writing, the portfolio has a median Price/Earnings ratio of 9.4x and a median Price/Book ratio of 1.2x which compares favourably with 12.5x and 1.7x respectively for the FTSE All-Share (ex-Investment Trusts) Index. In a portfolio of 50 companies, 25 have been buying back shares during this financial year. We have included individual case studies of two companies seeing their valuations re-rate as their successful cash flow delivery is reflected in their valuations.

Having engaged with shareholders, I have a clear understanding of what matters most. I have listened to shareholders who tell me how important the high level of income is for them at a time of an elevated cost of living. I have also listened to shareholders who tell me that they want to see a growing NAV. This year we delivered both, helped by careful portfolio construction and improving market conditions. This shows that income and capital growth can be delivered hand in hand. I am encouraged by the improving momentum of the portfolio, and I am determined to deliver for shareholders in the year ahead.

Thomas Moore
Portfolio Manager

27 November 2024

Overview of Strategy

Business Model

The Company is an investment trust, and its Ordinary shares are listed 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. As at 30 September 2024, 51.1% (2023: 52.6%) 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 Manager's Approach to ESG

There is a broad understanding on the Board that a full and thorough assessment of environmental, social and governance ("ESG") factors will allow for better investment decisions to be made.  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. It should be noted that the Company does not have a sustainability objective and does not promote any sustainability characteristics, nor does it specifically exclude any sectors from its investment universe.

By considering ESG factors, the Board believes that the Portfolio Manager has a more complete view of a company, including its risks and opportunities.  The analysts supporting the Portfolio Manager seek to determine which ESG factors are financially material to form a forward-looking view of how a business will manage risks and capture opportunities. The analysts focus on what they deem to be the most material ESG factors to understand their impact on a company's future business performance, financial position, and/or market perception.

To advance this analysis on behalf of the Company's shareholders, the Portfolio Manager has a very close relationship with the ESG specialists within abrdn and there is 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.

It should be noted that as part of the investment process to identify attractive investment opportunities, the Portfolio Manager must consider a diverse range of companies, spanning a broad-spectrum of practices.  An important feature of the investment process is therefore active and meaningful engagement to generate insights into underlying performance, with the Company's approach to engagement set out below.

Proactive Company Engagement

The Manager believes that proactive company engagement ensures the holdings in the portfolio remain or become better companies.

See the Case Studies for specific examples of the Company's engagement with investee companies.

The Manager's Approach to Engagement

Engagement is an important part of the Manager's investment process, the Manager sees engagement not only as a right but as an obligation of investors, in its role as owners of companies. The Manager engages actively and regularly with companies in which it is or may become an investor.

The Manager believes that informed and constructive engagement helps to foster better companies, enhancing the value of the Company's investments.

There are generally two core reasons for engagement:
to understand more about a company's strategy and performance or encourage best practice and drive change.

Active engagement involves regular, candid communication with management teams (or boards of directors) of portfolio companies to discuss a broad range of issues that are material to sustain long-term returns, either positively or negatively, including both risks and opportunities. The Manager's focus is on the factors which it believes to have the greatest potential to enhance or undermine the Company's investment case. Sometimes the Manager seeks more information, exchanges views on specific issues, encourages better disclosure: and at other times, encourages change (including either corporate strategy, capital allocation, or climate change strategy). On the Company's behalf, the Manager's engagements cover a range of issues, including but not limited to board composition, remuneration, audit, climate change, labour issues, human rights, bribery and corruption.

Promoting the Success of the Company

The Board's statement 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 2014.
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. A five-year chart showing the discount of the Company and for the UK Equity Income sector.
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, the first full year after Thomas Moore took over the role of Portfolio Manager, and the outbreak of the Covid-19 pandemic, the annual 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 have increased over the last three years, they have not kept pace with RPI. 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 continue rebuilding the revenue reserves. After payment of the fourth interim dividend, and based on current shares in issue, 0.14 pence per share will be transferred to revenue reserves.
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 decreased moderately to 0.86% based on average net assets over the year (2023: 0.94%).

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, and the increased use of artificial intelligence, as emerging risks which it considers are likely to become more relevant for the Company in the future.

The Board continues to assess these emerging risks and their impact on the portfolio as they develop, including how investor sentiment is evolving towards climate risk and how artificial intelligence may impact business models in the future, and will consider how the Company may mitigate these risks and any other emerging risks.  The Board receives regular reporting from the Manager on its approach to engagement with investees on a variety of different 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	Trend	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.	Risk Unchanged	Through regular updates from the Manager, the Board monitors the relevance of the Company's strategy, the performance of equity markets, the economic and political environment, risks to the delivery of the Company's strategy in light of the external environment and the discount/ premium at which the Company's shares trade relative to the net asset value and its peers.  The Board holds an annual strategy meeting and receives feedback from the Company's broker on the Investment Trust sector in general, and more specifically on the UK Equity Income sector, and the Company's relative performance against peers. The Board also receive regular updates from the Manager's investor relations team to help to better understand investor sentiment towards the Company and its strategy.
Investment Performance - Market risk arises from volatility in prices of the Company's investments and the potential loss the Company could suffer through realising investments following negative market movements. Changes in general economic or market conditions (such as interest rates, exchange rates and rates of inflation) as well as global political events and trends, could substantially and adversely affect the prices of securities and, as a consequence, the value of the Company's investment portfolio, its prospects and share price.	Risk Unchanged	The Board recognises that market risk is significant in achieving performance and it reviews and monitors the investment restrictions and guidelines it has set to ensure that they are appropriate.   The Board meets with the Manager on a regular basis and regularly receives reports to discuss and consider the diversification of the portfolio, asset allocation, stock selection and levels of gearing on a regular basis.  The Board also monitors the revenue forecasts, the costs of running the Company and the Company's relative performance as compared to peers and the Reference Index. The Board regularly reviews the impact of geopolitical instability and change on market risk. The Board determines the Company's dividend policy and approves the level of dividends payable to shareholders.  Shareholders are invited to vote on the Company's dividend policy to pay four interim dividends at each Annual General Meeting. Representatives of the Manager attend all Board meetings, and a detailed formal appraisal of the Manager is carried out by the Remuneration & Management Engagement Committee on an annual basis. The Board engages with shareholders at its Annual General Meeting and Pre-AGM Online Investor 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 performance of the investment portfolio and/or negatively impact the operations of the Company, Manager or key service providers.	Risk Rising	The Board discusses current geopolitical and macroeconomic issues with the Manager. During the year under review, such issues have included the UK's relationship within the European Union, investment risks arising from the impact of events such as the invasion of Ukraine and increased military tensions in the Middle East, investor attitudes towards equity markets, UK inflation, and the slowing of Chinese growth. More recently the Board has been engaging with the Manager on the impact of the UK Budget and the US Election results. The Board discusses with the Manager 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 at its annual strategy meeting in August, formally considers whether the Company's strategy remains fit for purpose, in the light of exogenous risks. 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 - 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.	Risk Unchanged	The Audit Committee receives, and reviews reports from the Manager on its internal controls and risk management (including an annual ISAE Report). It also receives and reviews reports 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 (Including cyber security), 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 conducted by the Remuneration & Management Engagement Committee on an annual basis.
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.	Risk Unchanged	The Board is aware of the importance of effective leadership and board composition.  The Board regularly reviews its composition and formally reviews the performance of the Board, Chair, and individual Directors through its performance evaluation process on an annual basis. At each Board Meeting, Directors are invited to disclose any interests or potential interests in business due to be discussed. All Directors are subject to annual shareholder re-election.
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.	Risk reducing	The Board keeps the level of the Company's discount/premium under review.  As explained in the Chair's Statement, the share price ranged from trading at a premium to NAV in the first couple of months of the financial year to briefly trading at over 11% discount to NAV in March 2024 and then closing the year end at discount of 3.0%. For all but about three weeks, the Company's discount was trading at a narrower level than the average for the UK Equity Income investment trust sector. The share price discount to NAV was 0.2% at 30 September 2023 and 3.0% at 30 September 2024. 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.	Risk Unchanged	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 independent Auditor audits the Company's annual financial statements.
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 extensive legal and regulatory requirements.	Risk Unchanged	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 through the appointment of reputable service providers to support the Company and its operations. The Board can instruct additional external professional support on behalf of the Company, or the Directors individually should that be considered necessary.

Promotional Activities

The Board recognises the importance of promoting the Company to current and 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 Key Documents section of the Company's website.

On 26 January 2024, the Board hosted an online shareholder presentation where the Portfolio Manager provided an update on the portfolio.  The Portfolio Manager and Chair also answered live questions from the audience. 

On 29 August 2024, the Board hosted an in-person meeting for large shareholders at which the Portfolio Manager provided an update on the portfolio. Both of 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 Directors' Report.

At 30 September 2024, there were two male and two female Directors on the Board.  The Chair and the Senior Independent Director positions are both held by women.

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.  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.

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.

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 provide shareholders with an above average income from their equity investment while also providing real growth in capital and income. The Board and Manager believes this will be produced on a sustainable basis by investments in companies which adhere to best practice. 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 to the Board 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.

Task Force for Climate-related Financial Disclosures ("TCFD")
Under UK Listing Rules, the Company, as a closed ended investment company, is exempt from complying with the Task Force on Climate-related Financial Disclosures ("TCFD").

Whilst TCFD is currently not applicable to the Company, the Manager, as the delegated Alternative Investment Fund Manager ("AIFM") is required to produce a product level report on the Company in accordance with the FCA's rules and guidance regarding the disclosure of climate-related financial information consistent with TCFD Recommendations and Recommended Disclosures. These disclosures are intended to help meet the information needs of market participants, including institutional clients and consumers of financial products, in relation to the climate-related impact and risks of the Manager's TCFD in-scope business. The product level report on the Company is available on the Manager's website at: invtrusts.co.uk.

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 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 performance of the Company's share price relative to its net asset value during the financial year.  The share price discount increased from 0.2% at 30 September 2023 to 3.0% at 30 September 2024, and the share price traded at a small premium to NAV during the year.

·  The Company's main liability is its bank loan of £22.5 million (2023: £21 million), which represents net gearing of 13.0% (2023: 11.3%).  This is drawn from a £30 million (2023: £30 million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch, which was refinanced in June 2023 and is due to expire in June 2026.

·  The Company' s cash balance, and money market funds, at 30 September 2024 amounted to £1.9 million (2023: £4.2 million).

·  The levels of ongoing charges of 0.86% (2023: 0.94%).

·  Shareholders' overwhelming voting in favour of the continuation of the Company at the Annual General Meeting in February 2022.  The next continuation vote is due to take place at the Annual General Meeting 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 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 material increase in interest rates, a 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 2027.

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 Company's strategy set out in the Strategic Report for the year ending 30 September 2025 as it is believed that these are in the best interests of shareholders.

On behalf of the Board
Sarika Patel
Chair
27 November 2024

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 four independent Non-Executive Directors collectively 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.

How the Board Engages with Stakeholders

The Board's main stakeholders have been identified as its shareholders, the Manager and the Investment 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 have an opportunity to 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 Company has appointed abrdn Fund Managers Limited ("AFML") as the Company's Manager, or AIFM, which sub-delegates investment management to abrdn Investment Management Limited, which is known as the Investment Manager. 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	The Board has delegated responsibility for monitoring the activities of portfolio companies 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 Manager includes 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.

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 2024:

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. The Board also discusses the performance in detail with the Portfolio Manager on a regular basis.

Dividend

The Board has determined the payment of a fourth interim dividend for the year of 5.8 pence per Ordinary share. Following payment of the fourth interim dividend, total dividends for the year will amount to 22.9 pence per Ordinary share, a small increase compared to the previous year. In setting the level of the dividend, the Board has balanced the need to deliver an increase to shareholders and continuing the process of rebuilding the revenue reserve, which was depleted during the height of Covid-19. Following payment of the fourth interim dividend, and based on current shares in issue, 0.14 pence per share will be transferred to revenue reserves.

Promoting the Company

On 26 January 2024, the Board hosted an online shareholder presentation where the Portfolio Manager provided an update on the portfolio, and the Chair and Portfolio Manager answered questions from the audience. Over 250 investors signed up to the event. On 29 August 2024, the Company hosted a meeting for large shareholders at which 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 Investor Event

The Board will be hosting an online investor presentation, which will be held at 11:30am on Tuesday, 28 January 2025.  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 the Chair. The online presentation is being held ahead of the Annual General Meeting to allow shareholders time to submit their proxy votes after the presentation but prior to the Annual General Meeting should they so wish. Full details on how to register for the online event can be found on the Company's website at abrdnequityincome.com.

Issuance and Buy-Back of Shares

During the year, the Company issued 135,000 Ordinary shares from treasury to meet investor demand, at a premium to the prevailing net asset value. The Company did not buy-back any shares in the year.

The Board believes that the selective use of issuing share and share buybacks from treasury, when circumstances dictate, is in the best interest of all shareholders.

On behalf of the Board
Sarika Patel
Chair
27 November 2024

Results

Performance (total return)

	1 year	3 years	5 years	10 years
30 September 2024	%	%	%	%
Net asset valueA	13.3	6.5	10.7	38.9
Share priceA	10.4	13.3	17.7	39.0
Reference IndexB	13.4	23.9	32.2	83.6
A Considered to be an Alternative Performance Measure. ​ ​ ​ ​
B FTSE All-Share Index.
Source: abrdn/Morningstar/Factset

Ten Year Financial Record

		Revenue
		available							Net	Equity
	Gross	for Ordinary	Revenue	Ordinary	Net asset	Share		Ongoing	gearing /	shareholders'	Revenue
Year ended	revenue	shareholders	return	dividends	valueA	price	DiscountAB	chargesBC	(cash)B	funds	reservesD
30 September	£'000	£'000	p	p	p	p	%	%	%	£m	(£m)
2015	6,107	5,361	17.18	14.70	440.7	439.0	0.4	0.94	7.7	195.6	6.88
2016	7,084	6,214	17.92	15.40	431.5	412.4	4.4	0.96	7.5	199.7	8.15
2017	7,957	7,044	19.23	17.10	478.6E	459.6	4.8	0.87	9.9	235.3E	9.41
2018	11,893	10,846	22.06	19.20	485.0	473.0	2.5	0.87	12.1	238.4	10.82
2019	11,791	10,687	21.74	20.50	411.8	381.5	7.4	0.91	13.7	201.5	11.58
2020	8,730	7,614	15.61	20.60	288.0	252.0	12.5	0.92	13.3	139.2	8.75
2021	10,642	9,693	20.06	21.20	380.8	349.0	8.4	0.93	13.5	182.9	8.49
2022	13,517	12,244	25.51	22.70	331.8	302.5	8.8	0.91	15.0	157.5	10.27
2023	12,598	11,109	23.43	22.80	314.6	314.0	0.2	0.94	11.3	149.9	10.18
2024	12,735	11,010	23.05	22.90	331.5	321.5	3.0	0.86	13.0	158.4	10.30
A Diluted for the effect of Subscription shares in issue for the year ended 30 September 2012 to 30 September 2016. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
B Considered to be an Alternative Performance Measure. ​ ​ ​ ​ ​ ​ ​ ​
C 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 figure for 30 September 2020 has been restated in accordance with this guidance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
D Revenue reserves are reported prior to paying the final dividend or fourth interim dividend in each year. For 2017 only, reserves are reported after having deducted the third interim dividend. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
E The 2017 Net Asset Value is calculated under Financial Reporting Standards, but includes an adjustment for the third interim dividend which had been declared, but not paid, at the year end. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment Portfolio

As at 30 September 2024 ​ ​ ​ ​
		Valuation as at		Valuation as at
		30 September 2024	Weight	30 September 2023
Stock	Key Sector	£'000	%	£'000
Imperial Brands	Tobacco	8,462	4.8	4,945
National Grid	Gas, Water and Multi-utilities	7,376	4.1	6,160
BHP	Industrial Metals and Mining	7,239	4.1	4,612
British American Tobacco	Tobacco	6,900	3.9	3,127
Berkeley Group	Household Goods and Home Construction	6,812	3.8	-
BP	Oil, Gas and Coal	6,515	3.7	8,862
Rio Tinto	Industrial Metals and Mining	6,136	3.5	3,686
Conduit Holdings	Non-life Insurance	5,778	3.2	4,267
SSE	Electricity	5,575	3.1	7,294
Legal & General	Life Insurance	5,551	3.1	3,051
Top ten investments		66,344	37.3
Petershill Partners	Investment Banking and Brokerage Services	5,125	2.9	1,999
M&G	Investment Banking and Brokerage Services	5,022	2.8	-
CMC Markets	Investment Banking and Brokerage Services	4,852	2.7	2,146
Barclays	Banks	4,430	2.5	5,420
HSBC	Banks	4,347	2.4	4,400
OSB Group	Finance and Credit Services	4,128	2.3	3,476
Shell	Oil, Gas and Coal	4,056	2.3	8,771
TP ICAP	Investment Banking and Brokerage Services	3,975	2.2	1,987
Assura	Real Estate Investment Trusts	3,910	2.2	-
Galliford Try	Construction and Materials	3,823	2.2	2,532
Top twenty investments		110,012	61.8
Chesnara	Life Insurance	3,490	2.0	3,763
Drax	Electricity	2,986	1.7	-
Ithaca Energy	Oil, Gas and Coal	2,947	1.6	2,776
Quilter	Investment Banking and Brokerage Services	2,940	1.6	1,898
Glencore	Industrial Metals and Mining	2,924	1.6	6,210
Diversified Energy	Oil, Gas and Coal	2,811	1.6	5,373
International Personal Finance	Finance and Credit Services	2,801	1.6	2,368
BAE Systems	Aerospace and Defence	2,702	1.5	3,102
Thungela Resources	Oil, Gas and Coal	2,601	1.5	4,122
Harbour Energy	Oil, Gas and Coal	2,459	1.4	1,366
Top thirty investments		138,673	77.9
NatWest Group	Banks	2,450	1.4	5,194
Close Brothers	Banks	2,448	1.4	5,604
Real Estate Investors	Real Estate Investment Trusts	2,394	1.4	2,020
Speedy Hire	Industrial Transportation	2,388	1.4	1,615
Barratt Redrow	Household Goods and Home Construction	2,380	1.3	-
Energean	Oil, Gas and Coal	2,375	1.3	-
DFS Furniture	Retailers	2,248	1.3	2,014
Johnson Matthey	Chemicals	2,210	1.2	-
Sabre Insurance	Non-life Insurance	2,194	1.2	-
Inchcape	Industrial Support Services	2,021	1.1	-
Top forty investments		161,781	90.9
Crest Nicholson	Household Goods and Home Construction	1,992	1.1	-
Standard Chartered	Banks	1,922	1.1	2,555
LondonMetric	Real Estate Investment Trusts	1,889	1.1	2,849
Litigation Capital	Investment Banking and Brokerage Services	1,844	1.0	2,268
Phoenix	Life Insurance	1,705	1.0	1,471
Sirius Real Estate	Real Estate Investment Trusts	1,638	0.9	-
CLS Holdings	Real Estate Investment and Services	1,391	0.8	1,085
Ashmore	Investment Banking and Brokerage Services	1,338	0.8	1,517
Man Group	Investment Banking and Brokerage Services	1,334	0.7	-
Smurfit Kappa	General Industrials	1,144	0.6	-
Top fifty investments		177,978	100.0
Total Portfolio		177,978	100.0
All investments are equity investments. ​ ​ ​ ​

Sector Distribution

As at 30 September 2024

Portfolio Weightings	%
Financials	37.9
Energy	13.4
Basic Materials	10.4
Utilities	8.9
Consumer Staples	8.7
Consumer Discretionary	7.5
Industrials	6.8
Real Estate	6.4

As at 30 September 2023

Portfolio Weightings	%
Financials	36.6
Energy	18.9
Basic Materials	11.0
Industrials	10.1
Utilities	8.1
Consumer Staples	5.7
Consumer Discretionary	4.5
Real Estate	3.6
Healthcare	0.8
Telecommunications	0.7

Investment Case Studies

Berkeley Group (3.8% of the portfolio)

Berkeley Group is a UK housebuilder that was founded in 1976. The management team is regarded as one of the best in the entire UK stock market. The current CEO, Rob Perrins, joined Berkeley in 1994 and took over from the founder, Tony Pidgley, in 2009. Berkeley is focused on London and the South-East of England, having sold its regional business in 2003. It is currently developing 36 sites in London and 34 sites outside London. The superior returns generated by Berkeley in the past two decades can be attributed to its long-term approach to its housing developments, having a very large land-bank and excellent order book visibility. Berkeley is unusual in having expertise in developing large brownfield regeneration sites. As one of the only housebuilders prepared to take on these projects, this puts it in a strong position to acquire the land at low cost, with an average plot cost of just £49,000 compared with typical selling prices well over £500,000, supporting Return on Equity of around 15% through the cycle.

Berkeley has particularly good visibility on its order book thanks to the global appeal of its high-end London homes. Berkeley has developed strong distribution in Asia where buyers are often willing to place orders for its homes off-plan. The company's focus on London and the South-East reflects the management team's view that this part of the UK will continue to see the greatest upward pressure on house prices due to the mismatch between rising demand for new homes and constrained supply. At the time of the 2024 results, the CEO commented on the collapse in recent years caused by a combination of factors including geopolitical disruption, political uncertainty and planning policy complexities. His view is that, without focused policy intervention, the UK could be heading towards just 100,000 new homes by 2026, compared with the stated ambition of the UK Government to achieve 300,000 new homes.  

Berkeley's strong balance sheet and high returns allows the company to announce significant capital returns, including regular special dividends. This has continued in recent years despite the tougher economic backdrop. The CEO takes the view that Berkeley should retain the flexibility to pursue growth or increase shareholder returns, depending on the stage of the cycle. In its most recent results, management announced a large special dividend of £283 million, as well as investing in medium term projects such as a new Build to Rent initiative that will deliver the first new homes in 2027. Analysts are forecasting that Berkeley will return over a quarter of its market capitalisation in the three years to April 2027, underlining the reliable, cash generative nature of the business. The share price valuation appears attractive, trading at 1.4x NAV, towards the bottom of its 15-year range of 1.2x to 2.7x NAV. The catalyst for a re-rating is likely to be a pick-up in demand, as the economy improves, or an improvement in the planning system. The Portfolio Manager bought a new holding in Berkeley Group in the second half of the financial year, attracted by the visibility of its cash flows and the potential to deliver positive surprises in the years to come as activity levels pick up.  

Galliford Try (2.2% of the portfolio)

Galliford Try is a leading UK construction business focused on three areas - Building, Infrastructure and Specialist Services. The business became a stand-alone construction group in 2020 when it de-merged its housebuilding business, Linden Homes to Bovis Homes, to create Vistry. At the time of the de-merger, Galliford Try received a £300 million cash payment from Vistry and also transferred its debt to Vistry. This was important as it left Galliford Try as a well-capitalised business, regarded by its customers as a reliable counterparty and therefore putting it in a strong position to win positions on long-term frameworks within the public sector and regulated industries. These frameworks provide excellent revenue visibility, with 92% of FY25 revenues and 70% of FY26 revenues already secured at the time of its FY24 results in mid-2024. The strong balance sheet also allowed the company to become an industry leader on the treatment of its suppliers, making a commitment to prompt payment of invoices, thereby underlining its commitment to ESG.

Galliford Try originally set ambitious targets in 2021, seeking to grow revenues from £1.1 billion to £1.6 billion and operating margin from 2.0% to 3.0% by 2026. Having achieved these targets two years early, the company announced new targets at its Capital Markets Day in May 2024.  The CEO set out upgraded revenue and operating margin targets - £2.2 billion revenues and 4.0% operating margin. The Portfolio Manager's confidence that Galliford Try can achieve these targets is based on a number of factors. The market backdrop has improved in recent years, with the entire industry shifting towards greater pricing discipline, after a series of high-profile company failures in the previous decade caused by over-indebted balance sheets and over-aggressive assumptions when bidding on contracts. Galliford Try has taken a conservative approach to risk management, ensuring appropriate terms and conditions when bidding on contracts, sticking carefully to minimum margin thresholds and requiring board approval for larger bids. The growing need to upgrade the UK's deteriorating infrastructure has created a large number of bidding opportunities, meaning that Galliford Try can be extremely selective when choosing which contracts it will accept. This has driven its focus on low-risk contracts in the public sector, with a focus on sectors such as Water where there is a huge runway for growth. Galliford Try is also moving up the value chain, using its incumbent position in Building and Infrastructure to grow in Specialist Services such as fire protection.  It has also re-established itself in Affordable Homes, which is a division where it has historic expertise, having operated in this area before selling the division to Bovis at the time of the de-merger. 

The Portfolio Manager considers Galliford Try to be a good example of how it can deliver for our shareholders on both income and capital growth. The dividend outlook is supported by the strong balance sheet and high revenue visibility. This has allowed the management team to announce special dividends and buybacks, alongside an attractive ordinary dividend (dividend yield around 5%).  The share price is supported by the strong earnings growth outlook, while the Portfolio Manager also sees potential for valuation re-rating, as the low-teens Price/Earnings ratio does not reflect the growth potential. The new 2030 targets would imply mid-high teens earnings and dividend growth by 2030. The share price is also supported by cash and infrastructure investments of 208p/share. The Portfolio Manager added to the holding in February 2020, shortly after the de-merger of Linden Homes, and purchased more shares in October/November 2023 as it gained conviction in the delivery of the strategic plan.

Directors' Report (extract)

The Directors present their report and the audited financial statements of the Company for the year ended

30 September 2024.

Results and Dividends

Interim dividends of 5.7 pence per share were paid in March, June and September 2024.  The Board has declared that a fourth interim dividend for the year to 30 September 2024 of 5.8 pence per share is payable on 10 January 2025 to shareholders on the register on 6 December 2024. The ex-dividend date is 5 December 2024.

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 2024 consisted of 47,781,522 Ordinary shares of 25 pence each (2023: 47,646,522) and there were 1,397,245 Ordinary shares held in treasury (2023: 1,532,245), representing 2.8% (2023: 3.1%) of the issued share capital as at that date.

During the year, no Ordinary shares were bought back into treasury (2023: 100,417) and 135,000 Ordinary shares were issued from treasury (2023: 275,000). 

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

At a general meeting of the Company, 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 ("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 (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 abrdn Holdings Limited.

With effect from 1 October 2023, the Company's management fee is calculated as 0.55% of net assets (previously the Company's management fee was calculated as 0.65% per annum of net assets up to £175 million 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 2024.

Shareholder	Number of Ordinary shares	% held
Hargreaves Lansdown	11,995,187	25.1
Interactive Investor	11,962,449	25.0
A J Bell	3,091,579	6.5
Charles Stanley	2,916,174	6.1
HSDL	2,712,616	5.7

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

Directors

Sarika Patel is the Chair, Caroline Hitch is the Senior Independent Director, Mark Little is Chair of the Audit Committee and Nick Timberlake is Chair of the Remuneration & Management Engagement Committee. 

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 effective contribution from each Director and encourages active engagement. 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 Committee, 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 2024 as follows (with their eligibility to attend the relevant meetings in brackets):

	Board Meetings	Audit Committee Meetings	Remuneration & Management Engagement Committee Meetings
Sarika Patel	4 (4)	2 (2)	1 (1)
Caroline Hitch	4 (4)	2 (2)	1 (1)
Mark Little	4 (4)	2 (2)	1 (1)
Nick Timberlake	4 (4)	2 (2)	1 (1)
Jeremy Tigue A	2 (2)	1 (1)	0 (0)
A Retired from the Board on 20 February 2024.

The Board meets more frequently when business needs require and met an additional four times during the financial year.

All Directors will retire and being eligible, will offer themselves for re-election at the Annual General Meeting.

The Board believes that all the Directors 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 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 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 and experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, socio-economic background, religion, ethnic or national origins or disability in considering the appointment of its Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. In doing so, the Board will take account of the targets set out in the FCA's Listing Rules, which are set out in the tables below.

The Board has resolved that the Company's year-end date is the most appropriate date for disclosure purposes. The following information has been provided by each Director through the completion of questionnaires.  There have been no changes since the year end.

Board Gender as at 30 September 2024

	Number of Board members	Percentage of the Board	Number of senior positions on the Board	Number in executive management	Percentage of executive management
Men	2	50%	n/a (note 3)	n/a (note 3)	n/a (note 3)
Women	2	50% (note 1)

Board Ethnic Background as at 30 September 2024

	Number of Board members	Percentage of the Board	Number of senior positions on the Board	Number in executive management	Percentage of executive management
White British or other White (including minority-white groups)	3	75%	n/a (note 3)	n/a (note 3)	n/a (note 3)
Asian	1 (note 2)	25%

Notes:

1.   Meets the target that at least 40% of Directors are women as set out in UKLR6.6.6(9)(a)(i)

2.  Meets the target that at least one individual on the Board is from a minority ethnic background as set out in UKLR6.6.6(9)(a)(iii)

3.   This column is not applicable as the Company is externally managed and does not have any Executive staff. Specifically, it does not have a CEO or CFO.  The Company considers that the roles of Chairman of the Board, Senior Independent Director and Chairs of the Audit Committee and Remuneration & Management Engagement Committee are senior Board positions and, accordingly, that the Company meets the requirements that at least one of the senior Board positions is held by a woman as set out in LR.6.6.6(9)(a)(ii)

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.

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).

·  the need for an internal audit function (provision 25).

·  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 Board has determined that there is no need for the Company to have a standalone Nomination Committee given the number of Directors on the Board.  The functions traditionally undertaken by a nomination committee are fulfilled by the Board. 

The Company has therefore not reported further in respect of these provisions.

Full details of the Company's compliance with the AIC Code of Corporate Governance 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 role and function of the Audit Committee is covered in the Audit Committee Report.

Remuneration & Management Engagement Committee

The Remuneration & Management Engagement Committee comprises the full Board and is chaired by Nick Timberlake. 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 2024 and undertook a review of the management of the Company and its performance.  Following 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 of Association require that at every fifth Annual General Meeting, 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 five years was passed at the Annual General Meeting on 4 February 2022.  The next continuation vote will take place at the Annual General Meeting to be held in 2027.

As at 30 September 2024, the Company had a £30 million (2023: £30 million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch.  £22.5 million was drawn at the end of the financial year (2023: £21 million).  The revolving credit facility matures on 23 June 2026. 

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.  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 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

As explained in the Audit Committee's Report, Johnston Carmichael LLP was appointed as the Company's Auditor by shareholders at the Annual General Meeting on 20 February 2024. 

The Board will propose resolutions at the Annual General Meeting to re-appoint Johnston Carmichael LLP as the Company's Auditor for the ensuing year and to authorise the Directors to determine its remuneration.

Relations with Shareholders

The Directors place a great deal of importance on communications with shareholders. Shareholders and investors may obtain up to date information on the Company through its website and from the Manager by emailing [e-mail].

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 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 event are set out in the Chair's Statement.

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, 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.

Audit Committee's Report

The Audit Committee presents its Report for the year ended 30 September 2024.

Committee Composition

During the financial year the Committee was chaired by Mark Little.  Mark Little is a Chartered Accountant and has recent and relevant financial experience.

The Committee comprises all Non-Executive Directors. Given the size of the Board, and the skillset and continued independence of Sarika Patel, the Board believes that it is appropriate for all the independent Directors, including the Chair of the Board, to constitute the Audit Committee.  The Board is satisfied that the Committee as a whole has competence relevant to the investment trust sector.

Functions of the Audit Committee

The principal role of the Audit Committee is to assist the Board in relation to the reporting of financial information, the review of financial controls and the management of risk.

The Committee has defined terms of reference which are reviewed and re-assessed for their adequacy on at least an annual basis. Copies of the terms of reference are published on the Company's website and are available from the Company on request.

The Committee's main functions are listed below:

·  to review and monitor the internal control systems and risk management systems (including review of non-financial risks) on which the Company is reliant (the Directors' statement on the Company's internal controls and risk management is set out below).

·  to consider whether there is a need for the Company to have its own internal audit function.

·  to monitor the integrity of the half-yearly and annual financial statements of the Company and any formal announcements relating to the Company's financial performance, by reviewing, and challenging where necessary, the actions and judgements of the Manager.

·  to review, and report to the Board on, the significant financial reporting issues and judgements made in connection with the preparation of the Company's financial statements, half-yearly financial reports, any formal announcements relating to the Company's financial performance.

·  to review the content of the Annual Report and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

·  to meet with the Auditor to review the proposed audit programme of work and the findings of the Auditor. The Committee shall also use this as an opportunity to assess the effectiveness of the audit process.

·  to develop and implement policy on the engagement of the Auditor to supply non-audit services. Non-audit fees paid to the Auditor during the year under review amounted to £nil (2023 £nil). All non-audit services must be approved in advance by the Audit Committee and will be reviewed in the light of relevant guidance and statutory requirements regarding the provision of non-audit services by the external audit firm, and the need to maintain the Auditor's independence.

·  to review a statement from the Manager detailing the arrangements in place within the Manager whereby staff may, in confidence, escalate concerns about possible improprieties in matters of financial reporting or other matters.

·  to make recommendations to the Board in relation to the appointment of the Auditor and to approve the remuneration and terms of engagement of the Auditor; and

·  to monitor and review the Auditor's independence, objectivity, effectiveness, resources and qualification, taking into consideration relevant UK professional and regulatory requirements.

Activities During the Year

The Audit Committee met twice during the year when, amongst other things, it considered the Annual Report and the Half-Yearly Financial Report in detail.

Representatives of the Manager's internal audit, risk and compliance departments reported to the Committee at these meetings on matters such as internal control systems, risk management and the conduct of the business in the context of its regulatory environment. No significant weaknesses in the control environment were identified. The Committee, therefore, concluded that there were no significant issues which required to be reported to the Board.

The Financial Reporting Council (the "FRC") Audit Quality Review ("AQR") team completed an inspection of the audit of the financial statements for the year ended 30 September 2023. It is the FRC's usual practice to carry out such reviews on annual reports of a selection of companies each year. This was a limited inspection covering only certain aspects of the audit. We have considered the report, and the result of the review raised no issues which cause doubt on the quality of abrdn Equity Trust Income plc's external audit.

Internal Controls and Risk Management

The Board confirms that there is an ongoing process for identifying, evaluating and managing the Company's significant business and operational risks, that has been in place for the year ended 30 September 2024 and up to the date of approval of the Annual Report, is regularly reviewed by the Board and accords with the FRC's guidance on internal controls.

The Board has overall responsibility for ensuring that there is a system of internal controls and risk management in place and a process for reviewing its effectiveness. Day-to-day measures have been delegated to the Manager with an effective process of reporting to the Board for supervision and control. The system of internal controls and risk management is designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the system of internal control and risk management is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and, by its nature, can only provide reasonable and not absolute assurance against material misstatement or loss.

The design, implementation and maintenance of controls and procedures to safeguard the assets of the Company and to manage its affairs properly extends to operational and compliance controls and risk management. The Board, through the Audit Committee, has prepared its own risk register which lists potential risks including those set out in the Strategic Report. The Board considers the potential cause and possible effect of these risks as well as reviewing the controls in place to mitigate them.

Clear lines of accountability have been established between the Board and the Manager. The Board receives regular reports covering key performance and risk indicators and considers control and compliance issues brought to its attention. In carrying out its review, the Board has had regard to the activities of the Manager, including its internal audit and compliance functions.

The Board has reviewed the Manager's process for identifying and evaluating the significant risks faced by the Company and the policies and procedures by which these risks are managed. The Board has also reviewed the effectiveness of the Manager's system of internal control including its annual internal controls report prepared in accordance with the International Auditing and Assurance Standards Board's International Standard on Assurances Engagements ("ISAE") 3402, "Assurance Reports on Controls at a Service Organisation". Any weaknesses identified are reported to the Audit Committee and timetables are agreed for implementing improvements to systems. The implementation of any remedial action required is monitored and feedback provided to the Audit Committee.

The key components designed to provide effective internal control are outlined below:

·  written agreements are in place which specifically define the roles and responsibilities of the Manager and other third-party service providers.  These agreements are reviewed periodically by the Board.

·  the Board and Manager have agreed clearly defined investment criteria, specified levels of authority and exposure limits. Reports on these issues, including performance statistics and investment valuations, are regularly submitted to the Board.

·  the Manager prepares forecasts and management accounts which allow the Board to assess the Company's activities and review its performance.

·  as a matter of course the Manager's internal audit and compliance departments continually review its operations.

·  bi-annually, the Audit Committee carries out an assessment of internal controls by considering documentation from the Manager, including the internal audit and compliance functions and reports to the Board on its conclusions; and

·  the Audit Committee reviews internal control reports from its third-party service providers including the Depositary, BNP Paribas S.A., London Branch and the Registrar, Computershare Investor Services PLC.

The Board has considered the need for an internal audit function. The Company has no employees, and the day-to-day management of the Company's assets has been delegated to abrdn which has its own compliance and internal control systems. The Board has therefore decided to place reliance on those systems and internal audit procedures and has concluded that it is not necessary for the Company to have its own internal audit function.

Financial Statements and Significant Issues

During its review of the Company's financial statements for the year ended 30 September 2024, the Audit Committee considered the following significant issues, in particular those communicated by the Auditor during its planning and reporting of the year-end audit:

Valuation, Existence and Ownership of Investments

How the issue was addressed - The Company uses the services of an independent depositary (BNP Paribas S.A., London Branch) (the "Depositary") to hold the assets of the Company. An annual internal control report is received from the Depositary and reviewed by the Audit Committee. This provides details of the Depositary's control environment. The investment portfolio is reconciled regularly by the Manager. The portfolio is reviewed and verified by the Manager on a regular basis and management accounts, including a full portfolio listing, are prepared quarterly and are considered at the quarterly meetings of the Board. The valuation of investments is undertaken in accordance with the accounting policies disclosed in notes 1(b) and 1(c) to the financial statements.

The Committee satisfied itself that there were no issues associated with the valuation, existence and ownership of the investments which required to be addressed.

Recognition of Dividend Income

How the issue was addressed - The recognition of dividend income is undertaken in accordance with accounting policy note 1(d) to the financial statements. Special dividends are allocated to the capital or revenue accounts according to the nature of the payment and the specific circumstances. Management accounts are reviewed by the Board on a quarterly basis and discussions take place with the Manager regarding the allocation of any special dividends that have been received.

The Committee concluded that there were no issues associated with the recognition of dividend income which required to be addressed.

Review of Financial Reporting

The Committee, when considering the draft Annual Report and financial statements for the year ended 30 September 2024, concluded that taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy. In reaching this conclusion, the Committee has assumed that the reader of the Annual Report and financial statements would have a reasonable knowledge of the investment industry in general and of investments trusts in particular.

Review of Independent Auditor

The Audit Committee has reviewed the effectiveness of the independent Auditor, Johnston Carmichael LLP ("Johnston Carmichael"), including:

·  Independence - the Auditor discusses with the Audit Committee, at least annually, the steps it takes to ensure its independence and objectivity and makes the Committee aware of any potential issues, explaining all relevant safeguards.

·  Quality of audit work - including the ability to resolve issues in a timely manner (identified issues are satisfactorily and promptly resolved), its communications/presentation of outputs (the explanation of the audit plan, any deviations from it and the subsequent audit findings are comprehensive and comprehensible) and working relationship with management (the Auditor has a constructive working relationship with the Manager).

·  Quality of people and service - including continuity and succession plans (the audit team is made up of sufficient, suitably experienced staff with provision made for knowledge of the investment trust sector and retention on rotation of the senior statutory auditor).

·  Fees - including current and proposed fees for future years.

Details of the amounts paid to Johnston Carmichael LLP during the year for audit services are set out in note 4 to the financial statements.

Tenure of the Independent Auditor

Johnston Carmichael LLP was appointed as the Company's independent Auditor and approved by shareholders at the Annual General Meeting on 20 February 2024. In accordance with present professional guidelines the senior statutory auditor is rotated after no more than five years.  The year ended 30 September 2024 is the first year during which the present senior statutory auditor has served.

The next compulsory audit tender of the Company is due to take place by 2034 in compliance with the FRC Guidance on audit tenders.

The Committee is satisfied with the quality of the work and service carried out by Johnston Carmichael LLP and with the level of fees. The Committee is also satisfied that Johnston Carmichael LLP is independent and therefore supports the recommendation to the Board that the re-appointment of Johnston Carmichael LLP be put to shareholders for approval at the Annual General Meeting.

On behalf of the Audit Committee
Mark Little
Chair of the Audit Committee
27 November 2024

Statement of Directors' Responsibilities in Respect of the Annual Report and the Financial Statements

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.

The Board considers 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
Sarika Patel
Chair
27 November 2024

Statement of Comprehensive Income

		2024  ​ ​			2023  ​ ​
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Net gains/(losses) on investments at fair value	9	-	9,452	9,452	-	(6,443)	(6,443)
Currency losses		-	-	-	-	(1)	(1)
Income	2	12,735	219	12,954	12,598	-	12,598
Investment management fee	3	(252)	(588)	(840)	(302)	(704)	(1,006)
Administrative expenses	4	(459)	-	(459)	(508)	-	(508)
Net return before finance costs and taxation		12,024	9,083	21,107	11,788	(7,148)	4,640
Finance costs	5	(454)	(1,060)	(1,514)	(401)	(936)	(1,337)
Return before taxation		11,570	8,023	19,593	11,387	(8,084)	3,303
Taxation	6	(560)	-	(560)	(278)	-	(278)
Return after taxation		11,010	8,023	19,033	11,109	(8,084)	3,025
Return per Ordinary share	8	23.05p	16.80p	39.85p	23.43p	(17.05p)	6.38p
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

		2024	2023
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	9	177,978	165,734
Current assets
Debtors	10	1,411	1,611
Investments in AAA-rated money market funds		1,311	3,027
Cash and short-term deposits		591	1,196
		3,313	5,834
Current liabilities
Creditors: amounts falling due within one year
Bank loan	11	(22,462)	(20,941)
Other creditors	11	(414)	(754)
		(22,876)	(21,695)
Net current liabilities		(19,563)	(15,861)
Net assets		158,415	149,873
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	71,161	62,735
Revenue reserve		10,300	10,184
Equity shareholders' funds		158,415	149,873
Net asset value per Ordinary share	14	331.54p	314.55p
The financial statements were approved by the Board of Directors and authorised for issue on 27 November 2024 and were signed on its behalf by: ​ ​ ​
Sarika Patel ​ ​ ​
Chair ​ ​ ​
The accompanying notes are an integral part of the financial statements. ​ ​ ​

Statement of Changes in Equity

For the year ended 30 September 2024 ​ ​ ​ ​ ​ ​ ​
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2023		12,295	52,043	12,616	62,735	10,184	149,873
Return after taxationA		-	-	-	8,023	11,010	19,033
Sale of own shares from treasury		-	-	-	403	-	403
Dividends paid during the year	7	-	-	-	-	(10,894)	(10,894)
Balance at 30 September 2024		12,295	52,043	12,616	71,161	10,300	158,415
For the year ended 30 September 2023 ​ ​ ​ ​ ​ ​ ​
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2022		12,295	52,043	12,616	70,276	10,269	157,499
Return after taxationA		-	-	-	(8,084)	11,109	3,025
Purchase of own shares for treasury		-	-	-	(315)	-	(315)
Sale of own shares from treasury		-	-	-	858	-	858
Dividends paid during the year	7	-	-	-	-	(11,194)	(11,194)
Balance at 30 September 2023		12,295	52,043	12,616	62,735	10,184	149,873
A per the Statement of Comprehensive Income. ​ ​ ​ ​ ​ ​ ​
The capital reserve at 30 September 2024 is split between realised gains of £78,223,000 and unrealised losses of £7,062,000 (30 September 2023: realised gains of £80,674,000 and unrealised losses of £17,939,000). ​ ​ ​ ​ ​ ​ ​
The Company's reserves available to be distributed by way of dividends or buybacks which includes the revenue reserve and the realised element of the capital reserve amount to £88,523,000 (30 September 2023 : £90,858,000). ​ ​ ​ ​ ​ ​ ​
The accompanying notes are an integral part of the financial statements. ​ ​ ​ ​ ​ ​ ​

Notes to the Financial Statements

For the year ended 30 September 2024

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 2024, the Company had a £30 million (2023: £30 million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch. £22.5 million was drawn at the end of the financial year (2023: £21 million). The revolving credit facility matures on 23 June 2026. 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 under FRS 102, 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)	Investments. 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)	Investments in AAA-rated money market funds. Money market funds investments are used by the Company to provide additional short-term liquidity. 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 and 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. The Company carries out special cum-dividend and special ex-dividend trades as a portfolio management tool to both enhance income and manage long-term positions. The income generated from such trades is allocated to the revenue column of the Statement of Comprehensive Income and recognised on the date of the transaction. This has the effect of increasing income and is offset by a decrease in unrealised gains/(losses) on investments. 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 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. Special dividends are assessed and credited to capital or revenue according to their circumstances and are considered to require significant judgement. The Directors do not consider there to be any significant estimates within the financial statements.

2.	Income	​	​
		2024	2023
		£'000	£'000
	Income from investments
	UK investment income
	Ordinary dividends	9,283	8,191
	Special dividends	644	101
	Special dividends - capital	219	-
	Stock dividends	255	101
		10,401	8,393
	Overseas and Property Income Distribution investment income
	Ordinary dividends	2,321	3,998
	Special dividends	-	85
	Stock dividends	131	52
		2,452	4,135
		12,853	12,528
	Other income
	Money-market interest	96	67
	Bank interest	5	3
		101	70
	Total income	12,954	12,598
	Included in income from investments is £1,161,000 (2023: £195,000) relating to income from special cum-dividend and special ex-dividend trades. This has an equal and opposite effect on unrealised gains/(losses) on investments. ​ ​

3.	Investment management fee	​	​
		2024	2023
		£'000	£'000
	Charged to revenue reserve	252	302
	Charged to capital reserve	588	704
		840	1,006
	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. ​ ​
	With effect from 01 October 2023, the management fee is charged at 0.55% of the Company's net assets (previously 0.65% on the first £175 million of the Company's net assets, reduced to 0.55% above £175 million). 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 £219,000 (2023: £245,000). ​ ​

4.	Administrative expenses	​	​
		2024	2023
		£'000	£'000
	Directors' fees	136	127
	Employers' National Insurance	8	7
	Fees payable to the Company's Auditor (excluding VAT):
	- for the audit of the annual financial statementsA	37	65
	Professional fees	3	14
	Depositary fees	19	19
	Promotional activitiesAB	109	109
	Other expenses	147	167
		459	508
	A Johnston Carmichael LLP was appointed as the Company's independent Auditor by shareholders at the Annual General Meeting on 20 February 2024. In 2023, KPMG LLP was the Company's independent Auditor. A The Company has an agreement with AFML for the provision of promotional activities. Fees paid under the agreement during the year were £109,000 (2023: £109,000). At 30 September 2024, £55,000 was due to AFML (2023: £27,000). ​ ​
	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	​	​
		2024	2023
		£'000	£'000
	On bank loans and overdrafts:
	Charged to revenue reserve	454	401
	Charged to capital reserve	1,060	936
		1,514	1,337
	Finance costs are chargeable 30% to revenue and 70% to capital (see note 1(e)). ​ ​

6.	Taxation ​ ​ ​ ​ ​ ​ ​
			2024 ​ ​			2023 ​ ​
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Overseas withholding tax	560	-	560	278	-	278
	(b)	Factors affecting total tax charge for the year. The corporation tax rate was 25% (2023: 22%). The total tax assessed for the year is lower (2023: 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: ​ ​ ​ ​ ​ ​
			2024 ​ ​			2023 ​ ​
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Return before taxation	11,570	8,023	19,593	11,387	(8,084)	3,303
		Corporation tax at a rate of 25% (2023: 22%)	2,892	2,006	4,898	2,505	(1,778)	727
		Effects of:
		Non-taxable UK dividends	(2,563)	-	(2,563)	(1,891)	-	(1,891)
		Non-taxable overseas dividends	(475)	-	(475)	(826)	-	(826)
		Expenses not deductible for tax purposes	2	-	2	2	-	2
		(Gains)/losses on investments not relievable	-	(2,418)	(2,418)	-	1,417	1,417
		Excess management expenses and loan relationship losses	144	412	556	210	361	571
		Irrecoverable overseas withholding tax	560	-	560	278	-	278
		Total taxation	560	-	560	278	-	278
		At 30 September 2024, the Company had unutilised management expenses and loan relationship losses of £36,810,000 (2023: £34,587,000). 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	​	​
		2024	2023
		£'000	£'000
	Amounts recognised as distributions to equity holders in the year:
	Fourth interim dividend for 2023 of 5.70p per share (2022: 6.50p)	2,724	3,079
	First interim dividend for 2024 of 5.70p per share (2023: 5.70p)	2,723	2,700
	Second interim dividend for 2024 of 5.70p per share (2023: 5.70p)	2,724	2,700
	Third interim dividend for 2024 of 5.70p per share (2023: 5.70p)	2,723	2,715
		10,894	11,194
	The fourth interim dividend of 5.80p per Ordinary share, payable on 10 January 2025 to shareholders on the register on 6 December 2024 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. ​ ​
		2024	2023
		£'000	£'000
	First interim dividend for 2024 of 5.70p per share (2023: 5.70p)	2,723	2,700
	Second interim dividend for 2024 of 5.70p per share (2023: 5.70p)	2,724	2,700
	Third interim dividend for 2024 of 5.70p per share (2023: 5.70p)	2,723	2,715
	Fourth interim dividend for 2024 of 5.80p per share (2023: 5.70p)	2,771	2,724
		10,941	10,839

8.	Return per Ordinary share ​ ​ ​ ​
		2024 ​		2023 ​
		£'000	p	£'000	p
	Basic
	Revenue return	11,010	23.05	11,109	23.43
	Capital return	8,023	16.80	(8,084)	(17.05)
	Total return	19,033	39.85	3,025	6.38
	Weighted average number of Ordinary shares in issueA		47,766,631		47,415,968
	A Calculated excluding shares held in Treasury where applicable. ​ ​ ​ ​

9.	Investments	​	​
		2024	2023
		£'000	£'000
	Fair value through profit or loss
	Opening book cost	183,673	195,060
	Opening fair value losses on investments held	(17,939)	(15,330)
	Opening fair value	165,734	179,730
	Movements in the year:
	Purchases at cost	80,819	46,738
	Sales - proceeds	(78,027)	(54,291)
	Gains/(losses) on investments	9,452	(6,443)
	Closing fair value	177,978	165,734
	Closing book cost	185,259	183,673
	Closing fair value losses on investments held	(7,281)	(17,939)
	Closing fair value	177,978	165,734
	The Company received £78,027,000 (2023: £54,291,000) from investments sold in the year. The book cost of these investments when they were purchased was £79,452,000 (2023: £58,125,000). 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 costs. During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within losses on investments in the Statement of Comprehensive Income. The total costs were as follows: ​ ​
		2024	2023
		£'000	£'000
	Purchases	408	206
	Sales	48	37
	Total	456	243

10.	Debtors: amounts falling due within one year	​	​
		2024	2023
		£'000	£'000
	Amounts due from brokers	-	148
	Net dividends and interest receivable	1,377	1,078
	Other debtors	34	385
		1,411	1,611

11.	Creditors: amounts falling due within one year	​	​
		2024	2023
		£'000	£'000
	Bank loan	22,500	21,000
	Unamortised loan arrangement expenses	(38)	(59)
		22,462	20,941
	Other creditors
	Amounts due to brokers	-	305
	Investment management fee payable	219	245
	Sundry creditors	195	204
		414	754
	On 23 June 2023, the Company agreed a new three-year £30 million revolving credit facility with the Royal Bank of Scotland International Limited, which expires on 23 June 2026.  ​ ​
	The facility agreement contains the following covenants:
	- The Company's gross assets will not be less than £120 million at any time. ​ ​
	- The Company's total net debt will not exceed 25% of net asset value at any time. ​ ​
	- The Company should hold a minimum of 45 eligible investments. ​ ​
	All covenants were complied with throughout the year. ​ ​
	At 30 September 2024 and at the date of signing this Report, £22.5 million had been drawn down from the facility, at a SONIA rate of 6.45%. This is due to mature on 23 December 2024. ​ ​

12.	Called-up share capital	​	​
		2024	2023
		£'000	£'000
	Issued and fully paid:
	Ordinary shares of 25p each
	Opening balance of 47,646,522 (2023: 47,471,939) Ordinary shares	11,912	11,868
	Buyback of nil (2023: 100,417) Ordinary shares	-	(25)
	Issue of 135,000 (2023: 275,000) Ordinary shares	34	69
	Closing balance of 47,781,522 (2023: 47,646,522) Ordinary shares	11,946	11,912
	Treasury shares
	Opening balance of 1,532,245 (2023: 1,706,828) Treasury shares	383	427
	Buyback of nil (2023: 100,417) Ordinary shares to Treasury	-	25
	Issue of 135,000 (2023: 275,000) Ordinary shares from Treasury	(34)	(69)
	Closing balance of 1,397,245 (2023:  1,532,245) treasury shares	349	383
		12,295	12,295
	During the year, nil Ordinary shares (2023: 100,417) were repurchased for a consideration of £nil (2023:  £315,000), and 135,000 Ordinary shares (2023: 275,000) were issued from Treasury for a consideration of £403,000 (2023: £858,000). At the year end the number of shares held in Treasury was 1,397,245 (2023: 1,532,245). ​ ​

13.	Capital reserve	​	​
		2024	2023
		£'000	£'000
	Opening balance	62,735	70,276
	Unrealised gains/(losses) on investment holdings	10,877	(2,612)
	Losses on realisation of investments at fair value	(1,206)	(3,831)
	Currency losses	-	(1)
	Investment management fee charged to capital	(588)	(704)
	Finance costs charged to capital	(1,060)	(936)
	Buyback of Ordinary shares into treasury	-	(315)
	Issue of Ordinary shares from treasury	403	858
	Closing balance	71,161	62,735
	The capital reserve includes investment holding losses amounting to £7,281,000 (2023: losses of £17,939,000) 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: ​ ​
		2024	2023
	Basic
	Total shareholders' funds (£'000)	158,415	149,873
	Number of Ordinary shares in issue at year endA	47,781,522	47,646,522
	Net asset value per share	331.54p	314.55p
	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 2024	Years	%	£'000	£'000
		Assets
		Investments in AAA-rated money-market funds	-	5.11	-	1,311
		Cash deposits	-	3.45	-	591
		Total assets	-	-	-	1,902
		Liabilities
		Bank loans	0.25	6.45	22,462	-
		Total liabilities	-	-	22,462	-
			Weighted
			average	Weighted
			period for	average
			which	interest	Fixed	Floating
			rate is fixed	rate	rate	rate
		As at 30 September 2023	Years	%	£'000	£'000
		Assets
		Investments in AAA-rated money-market funds	-	5.38	-	3,027
		Cash deposits	-	3.69	-	1,196
		Total assets	-	-	-	4,223
		Liabilities
		Bank loans	0.22	6.68	20,941	-
		Total liabilities	-	-	20,941	-
		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 investments in AAA-rated 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 2024 or 30 September 2023 that had a maturity date. The £22.5 million (2023: £21 million) loan drawn down had a maturity date of 23 December 2024 (2023:  21 December 2023) at the Statement of Financial Position date.
		Interest rate sensitivity. The sensitivity analysis below has been determined based on the exposure to interest rates at the Statement of Financial Position date and 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 2024 would decrease/increase by £206,000 (2023: decrease/increase by £168,000). 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 (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector.  The 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 2024 would have increased/decreased by £17,798,000 (2023:  increase/decrease of £16,573,000). 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: ​ ​ ​ ​

			2024 ​		2023 ​
			Statement of		Statement of
			Financial Position	Maximum exposure	Financial Position	Maximum exposure
			£'000	£'000	£'000	£'000
		Current assets
		Debtors	1,411	1,411	1,611	1,611
		Investments in AAA-rated money market funds	1,311	1,311	3,027	3,027
		Cash and short-term deposits	591	591	1,196	1,196
			3,313	3,313	5,834	5,834
		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 £22,462,000 (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 (i.e. developed using market data) for the asset or liability, either directly or indirectly.
	Level 3: inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
	All of the Company's investments are in quoted equities (2023:  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 (2024: £177,978,000; 2023: £165,734,000) have therefore been deemed as Level 1. The investment in AAA rated money market funds of £1,311,000 (2023: £3,027,000) is considered to be Level 2 under the fair value hierarchy of FRS 102 due to not trading in an active market.

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 13.0% of net assets (2023: 11.3%).
	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 2024 there were no contingent liabilities (2023: 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. The balance of fees due to Directors at the year-end was £31,000 (2023: £33,000).
	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 2024	30 September 2023
Share price		321.50p	314.00p
Net asset value per share		331.54p	314.55p
Discount		3.0%	0.2%
Dividend yield ​ ​ ​
Dividend yield measures the dividend per share as a percentage of the share price per share. ​ ​ ​
		30 September 2024	30 September 2023
Share price		321.50p	314.00p
Dividend per share		22.90p	22.80p
Dividend yield		7.1%	7.3%
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 2024	30 September 2023
		£'000	£'000
Total borrowings	a	22,462	20,941
Cash and short-term deposits		591	1,196
Investments in AAA-rated money-market funds		1,311	3,027
Amounts due from brokers		-	148
Amounts payable to brokers		-	(305)
Total cash and investments in AAA-rated money-market funds	b	1,902	4,066
Gearing (borrowings less cash & investments in AAA-rated money-market funds)	c=(a-b)	20,560	16,875
Shareholders' funds	d	158,415	149,873
Net gearing	e=(c/d)	13.0%	11.3%
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 2024	30 September 2023
		£'000	£'000
Investment management fees		840	1,006
Administrative expenses		459	508
Less: non-recurring chargesA		(1)	(27)
Ongoing charges	a	1,298	1,487
Average net assets	b	150,930	158,676
Ongoing charges ratio	c=(a/b)	0.86%	0.94%
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 2024		NAV	Price
Opening at 1 October 2023	a	314.6p	314.0p
Closing at 30 September 2024	b	331.5p	321.5p
Price movements	c=(b/a)-1	5.4%	2.4%
Dividend reinvestmentA	d	7.9%	8.0%
Total return	c+d	13.3%	10.4%
			Share
Year ended 30 September 2023		NAV	Price
Opening at 1 October 2022	a	331.8p	302.5p
Closing at 30 September 2023	b	314.6p	314.0p
Price movements	c=(b/a)-1	(5.2%)	3.8%
Dividend reinvestmentA	d	7.0%	7.6%
Total return	c+d	1.8%	11.4%
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.  ​ ​ ​

Additional Notes to the Annual Financial Report

The Annual General Meeting will be held at abrdn's offices, 18 Bishops Square, London, E1 6EG on Tuesday, 18 February 2025 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 2024 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 2023 and 2024 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 2023 is derived from the statutory accounts for 2022 which have been delivered to the Registrar of Companies. The 2024 accounts will be filed with the Registrar of Companies in due course.

The Annual Report and Accounts will be posted to shareholders in December 2024. 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, abrdnequityincome.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
27 November 2024

* Neither the Company's website nor the content of any website accessible from hyperlinks on it (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

 

END