Annual Financial Report
Summary by AI BETAClose X
Aberdeen Equity Income Trust plc
Annual Financial Report
for the year ended 30 September 2025
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: aberdeenequityincome.com
Performance Highlights
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Net asset value total return per Ordinary shareA |
Share price total return per Ordinary shareA |
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|
Year ended 30 September 2025 |
Year ended 30 September 2025 |
||||
|
+21.8% |
+25.7% |
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Year ended 30 September 2024 |
+13.3% |
Year ended 30 September 2024 |
+10.4% |
||
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Revenue return per Ordinary share |
Premium/(discount) to net asset valueA |
||||
|
Year ended 30 September 2025 |
As at 30 September 2025 |
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|
23.43p |
0.0% |
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Year ended 30 September 2024 |
23.05p |
As at 30 September 2024 |
(3.0) % |
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Dividend per Ordinary share |
Ongoing charges ratioA |
||||
|
Year ended 30 September 2025 |
Year ended 30 September 2025 |
||||
|
23.00p |
0.84% |
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|
Year ended 30 September 2024 |
22.90p |
Year ended 30 September 2024 |
0.86% |
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|
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Highlights
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30 September 2025 |
30 September 2024 |
% change |
|
|
Capital |
|||
|
Net asset value per Ordinary share |
377.8p |
331.5p |
14.0% |
|
Ordinary share price |
378.0p |
321.5p |
17.6% |
|
Reference Index capital returnC |
5,061.7 |
4,511.0 |
12.2% |
|
Premium/(discount) of Ordinary share price to net asset valueA |
0.0% |
(3.0) % |
|
|
Total assets |
£206.8m |
£180.9m |
14.3% |
|
Shareholders' funds |
£184.3m |
£158.4m |
16.4% |
|
Gearing |
|||
|
Net gearingA |
11.2% |
13.0% |
|
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Earnings and Dividends |
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Revenue return per Ordinary share |
23.43p |
23.05p |
1.6% |
|
Total dividends for the year |
23.00p |
22.90p |
0.4% |
|
Dividend yieldA |
6.1% |
7.1% |
|
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Expenses |
|||
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Ongoing charges ratioAB |
0.84% |
0.86% |
|
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A Considered to be an Alternative Performance Measure. |
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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. |
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C FTSE All-Share Index |
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For further information, please contact
Evan Bruce-Gardyne
abrdn Fund Managers Limited
Mobile: 07720 073216
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 is with great pleasure that I can report your Company has delivered a year of strong performance. The share price total return was 25.7%, and the net asset value (NAV) total return was 21.8%, both significantly ahead of the FTSE All-Share Index return of 16.2%. These results reflect the strength of the portfolio management approach and the benefits of our flexible investment mandate.
Despite a backdrop of geopolitical uncertainty and fiscal challenges, equity markets performed strongly. The Portfolio Manager's ability to navigate these conditions, balancing income generation with capital growth has been key to delivering strong results. The Board is particularly pleased with the Portfolio Manager's disciplined "Focus on Change" investment philosophy, which has delivered positive outcomes across a range of holdings. Further detail on market conditions and portfolio performance can be found in the Manager's Review.
Earnings and Dividends
Net revenue earnings rose by 2.1% to £11.24 million, supporting a 1.6% increase in earnings per share to
23.43 pence.
The Board is pleased to report another increase in the annual dividend, marking the 25th consecutive year of growth, by declaring a fourth interim dividend of 5.9 pence per share, taking the total dividend for the year to 23.0 pence per share. The dividend yield of the Company has averaged 6.8% over the year but it has reduced to around 6.1% at the year-end as a consequence of the share price performance. The yield remains among the highest in the AIC UK Equity Income sector.
We remain committed to sustaining and growing our dividend track record. In the absence of adverse circumstances, we expect to pay a dividend of at least 23.1 pence per share in the coming financial year.
While we encourage the Manager to fund dividends from portfolio earnings, we retain revenue reserves of 15.68 pence per share and distributable capital reserves of 171.25 pence per share to support this objective if needed.
Performance
The Company delivered a strong set of results this year, underpinned by the Portfolio Manager's disciplined approach to stock selection and strategic positioning. His focus on identifying undervalued opportunities and anticipating market shifts has generated robust returns across a diverse range of holdings. Further details on the key drivers of performance can be found in the Manager's Review, along with a summary of the Company's progress against its Key Performance Indicators.
Premium and Share Issuance
For much of the year, the Company's shares traded at a premium to NAV, reflecting strong investor demand and confidence in our strategy. This is much better than the unweighted average of the trusts in the sector, where the average discount for the sector has been between 4% and 6% over the last six months.
As a result of the shares trading at a premium we were able to issue 1,005,000 shares from Treasury, enhancing NAV per share and raising over £3.6 million. The Board continues to monitor the premium/discount level closely and will act in shareholders' best interests as needed.
Borrowing facility
At the year end, the Company had drawn down £22.5 million of its £30 million Revolving Credit Facility, unchanged from the prior year. The Facility remains in place until June 2026. The Board's intention is to negotiate a new facility ahead of this date.
We continue to carefully weigh the cost of borrowing, which has risen significantly in recent years, against the potential benefits of using gearing to enhance portfolio returns. Despite the higher interest rate environment, the Board remains confident in the long-term advantages of gearing. As a structural feature of our closed-end model, it supports a long-term investment approach and potentially boosts shareholder returns.
Board Changes
Caroline Hitch will retire from the Board at the AGM in February 2026 after nine years of dedicated service. On behalf of the Board, I extend our sincere thanks for her wise counsel and contribution to Board deliberations over the years and wish her well for the future.
Following a comprehensive recruitment process, we are delighted to welcome Alice Ryder, who joined the Board on 1 October 2025. Alice will stand for election at the AGM. Alice brings extensive experience in investment management and investment trusts. We look forward to working with her.
Awards
During the year we were delighted that the Company was named "Best Overall Investment Trust for Income" while Aberdeen received the accolade of "Best Overall Investment Trust Group" at the Online Money Awards 2025. These awards celebrate the standout platforms, services and individuals shaping the future of trading, investing, and wealth management.
With over 200 nominated businesses across 23 different categories, these wins are especially meaningful as they were voted for by private investors and traders, with more than 9,000 votes cast. We are sincerely grateful to everyone who supported us.
Online Investor Presentation
In order to encourage as much interaction as possible with our shareholders, we will be hosting an Online Shareholder Presentation, which will be held at 11: 00 am on Tuesday, 27 January 2026. 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 aberdeenequityincome.com.
Annual General Meeting
This year's Annual General Meeting ("AGM") will be held at Aberdeen's office, 18 Bishops Square, London, E1 6EG on Tuesday, 17 February 2026 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 warmly encourages attendance.
Outlook
The UK equity market has defied expectations, with investors increasingly focused on the underlying strengths of UK corporates, rather than the uncertainties of global geopolitics or domestic fiscal pressures. The Portfolio Manager has positioned the portfolio to navigate these shifting conditions effectively, demonstrating resilience during a period of significant market change.
The geopolitical backdrop remains complex. The war in Ukraine continues, US trade policy remains unpredictable, and global bond markets are under growing pressure from elevated government borrowing. In the UK, this became evident ahead of the late-November Budget, when investors focused less on the political noise around pre-budget leaks and more on the underlying fiscal substance, namely the scale of prospective tax measures and spending commitments. It underscored that the key point of vulnerability in the current environment is the strength and sustainability of Government finances, rather than the household of corporate sectors which have reduced overall debt levels.
Looking ahead, we continue to see value in UK equities. The Portfolio Manager's flexible, valuation-led approach, focused on identifying opportunities and positioning for change, gives us confidence in the potential for further upside. Fiscal uncertainty may present attractive entry points among well-managed companies that are temporarily mispriced. The Manager's Review provides a detailed outlook and insight into how the portfolio is navigating change in a turbulent environment.
The portfolio maintains a balanced allocation to internationally focused large-cap companies and domestically oriented mid and small-cap businesses. This diversified positioning supports our confidence in generating further positive outcomes for shareholders in the year ahead.
While we recognise the concerns surrounding a potential AI-related market bubble, we remain confident that our Portfolio Manager's disciplined bottom-up approach is well positioned to navigate these dynamics. The Board remains fully supportive of this strategy with an aim of delivering strong returns alongside continued dividend growth.
On behalf of the Board, I thank shareholders for their continued support.
Sarika Patel
Chair
8 December 2025
Portfolio Manager's Review
Market Review
UK equities rose strongly over the year to 30 September 2025 in response to signs of global economic resilience, a de-escalation in global trade tensions and a series of Bank of England base rate cuts.
After performing strongly in the first six months of the period, global equity markets reacted badly to President Trump's initial tariff announcement in April 2025 before staging a dramatic rebound when a 90-day pause and various sector exemptions were announced. This swift policy moderation led investors to reassess the permanence of trade disruption, boosting risk appetite. Global economic growth remained resilient throughout the period, allaying fears of recession.
Sentiment towards UK equities remained positive, supported by four Bank of England rate cuts during the 12 months. Despite the Government's attempts to revive economic growth, the data remained disappointing, with stubbornly high inflation and the threat of further tax hikes causing individuals and businesses to hoard cash. This in turn caused disappointing tax revenues, compounding bond market fears over the UK's fiscal situation.
Despite these headwinds, investors remained unfazed, with the FTSE 100 Index reaching successive record highs towards the end of the review period and posting a total return of 17.0% over the 12 months. Large-cap sectors such as Banks and Aerospace & Defence were supported by strong earnings growth thanks to benign conditions. In contrast, gains among mid and small-cap shares were more muted, as subdued consumer and business confidence strained the earnings of domestically orientated companies, with the FTSE 250 and FTSE small-cap indices posting total returns of 8.9% and 9.1% respectively.
Revenue Account
Key Highlights
|
Metric |
Value |
Change/Context |
|
Total Income |
£12.5 million |
↓ from £12.6m |
|
Net Revenue Earnings |
£11.2 million |
↑ 2.1% YoY |
|
Revenue EPS |
23.43p |
↑ 1.6% from 23.05p |
|
Full Year Dividend |
23.00p |
↑ 0.4% from 22.90p |
Revenue available for ordinary shareholders
Revenue available for ordinary shareholders grew by 2.1% to £11.24 million, driving a 1.6% increase in revenue return per ordinary share. This was the result of lower withholding tax charge offsetting marginally lower gross revenue.
Special dividends
The contribution from special dividends increased to 7.5% of the total cash dividend income (from 5.0% in FY24) as the holdings in Petershill Partners, Ithaca Energy and Sabre Insurance all paid special dividends. Across the wider market, special dividends have generally been supplanted by share buybacks. These have become management teams' preferred method of returning capital. We note that 31 of the portfolio's holdings, representing 57% of the portfolio, undertook a share buyback in the financial year.
Attractive dividend yield
The portfolio delivered a gross dividend yield of 6.1%, before costs, based on the portfolio value at period end. This compares favourably to the yield of the FTSE All-Share index (the Company's "reference index") of 3.3% as at 30 September 2025.
Benefit of lower base rates
During the period, the Bank of England cut the base rate by 0.25% on four occasions, bringing the rate down to 4.0%. This has helped to restore a cushion between the rate the Company pays on its bank loan facility (used to finance gearing) and the dividend yield earned on the portfolio. This is a positive development for the revenue account. Looking ahead, money markets are currently pricing in a further two rate cuts by Spring 2026.
Dividend outlook
The dividend outlook for the broader UK equity market will depend on several factors. These include the preference of management teams for share buybacks over dividends, trends in UK and global economic growth and movements in the US dollar/sterling exchange rate. At a sector level, we continue to find plenty of attractive opportunities, most notably in the Financial sector.
Extending the Company's track record of dividend growth
Against an uncertain macro backdrop, we have continued to build a diversified portfolio of companies offering high dividend yield, dividend growth, and capital growth potential. This has supported the Board's decision to extend the Company's track record of dividend per share growth to 25 years. We are also convinced that our focus on income does not come at the cost of capital growth, as we demonstrate that UK companies generating sufficient cash flow to pay attractive dividends and buy back their own shares can also deliver good capital growth for shareholders. This reinforces our belief that the income and capital aspects of the investment objective can be achieved in tandem.
Portfolio Performance
The Company's net asset value ("NAV") total return was 21.8% for the period, significantly outperforming the total return of 16.2% for the Company's reference index. The share price total return was 25.7%.
Our strong performance relative to the reference index can be attributed to both positive sector allocation and successful stock selection. Approximately two thirds of the outperformance came from sector allocation, with the remaining third driven by stock selection. As we note in the Market Review section, the period under review saw the FTSE 100 Index significantly outperform the rest of the market, as investors favoured internationally-orientated large-cap shares over domestically orientated mid and small-cap shares. We were well prepared for this market backdrop, remaining highly selective on domestically-orientated companies given our concern that rising taxes and stubborn inflation would continue to constrain consumer and business confidence.
Our index-agnostic investment approach means that we size our positions according to our conviction in the idea, rather than anchoring off index weightings. While we are fully prepared for larger cap shares to continue outperforming while domestic macro conditions remain tough, we would typically expect a broadening out in share price performance to represent a more benign backdrop for our index-agnostic approach.
Turning to the sector and stock-specific drivers of performance, the largest contributors were:
- Consumer Staples: Our Top 10 holdings in Imperial Brands and British American Tobacco each surged over 50% as the market recognised their success in generating cash flow from their core businesses, underpinning attractive dividends, share buybacks and investment in new categories. We also benefited from not owning Diageo and Unilever whose share prices fell in response to weak trading announcements.
- Construction: Galliford Try was the single biggest contributor to performance at a stock level in response to stronger than expected results, highlighting a growing order book and continued progress towards their 4% operating margin target.
- Energy: The Ithaca Energy share price more than doubled in response to stronger than expected production, supporting one of the largest dividends in the market. The stock was also supported by speculation that the Government may reform the Energy Profit Levy in support North Sea employment and energy security.
- Financials: The Company's holding in Petershill Partners moved sharply upwards after a bid from Goldman Sachs at a 34% premium. International Personal Finance also rose on the announcement of a bid offer from private equity. OSB responded well to a series of positive trading updates and a plan to diversify into adjacent lending niches.
- Healthcare: We avoided the sector completely during a period of significant regulatory and political upheaval, seeing better opportunities elsewhere.
The largest detractors to performance were:
- Consumer Discretionary: The Company's holdings in Berkeley Group and Barratt Redrow detracted from performance as the market responded badly to evidence of slowing volumes due to the sluggish macro backdrop and the slow pace of regulatory and planning reform.
- Aerospace & Defence: Performance suffered from being underweight this sector at a time of severe geopolitical tensions. Not owning Rolls Royce hit relative performance by nearly 2 percentage points.
- Non-life insurance: The positive contribution from Financials was partially offset by Conduit which fell on news of larger than expected losses, in particular those relating to the Californian wildfires.
Activity
During the period we found a range of new investment opportunities that we expect to help deliver on each aspect of the investment objective - dividend yield, dividend growth, and valuation re-rating.
These opportunities span a variety of sectors and themes, reflecting our flexible and forward-looking investment approach. The following section outlines the most significant purchases made during the period, grouped by strategic rationale.
The largest purchases during the period can be categorised into the following groupings:
1. UK domestic companies whose low valuations do not capture their potential:
- MONY: Price comparison platform MONY is pursuing a strategy of shifting its customer base from transactional users to active members by launching SuperSaveClub. This has increased customer loyalty and reduced customer acquisition costs by curbing the need for marketing, which has historically dragged on margins. We see the P/E ratio of 10x and dividend yield of 7% as excellent value for this market-leading platform business.
- easyJet: Low-cost airline easyJet is progressing towards its medium-term targets, aiming to double its profit per seat through a combination of easyJet holidays, fleet upgrades (increasing the size and efficiency of their aircraft) and route optimisation (pushing into more lucrative longer haul routes). The stock trades at a P/E ratio of 7x and also trades at a discount to the value of its fleet despite having a very strong balance sheet and strong growth prospects.
2. Change situations where the potential for improvement has been ignored:
- Balfour Beatty: Construction business Balfour Beatty has strong earnings prospects, being exposed to growing infrastructure demand in the UK and US. We saw the potential for a valuation re-rating, with balance sheet support from its net cash position and its portfolio of infrastructure assets.
- Coats: Apparel and footwear components manufacturer Coats announced a placing that raised funds to acquire Ortholite, a global leader in insole technology. We took part in this placing, seeing the acquisition as helpful in accelerating growth and improving margins. We see the valuation of 10x PE as attractive for a global market leader.
- DCC: Distribution business DCC has conducted a strategic review, concluding that the group should break up, disposing of its Healthcare and Technology divisions, focusing on its Energy division which generates higher and less variable returns. With the shares trading at a P/E ratio of just 11x, we expect this action to drive a gradual valuation re-rating.
- Victrex: Speciality chemicals business Victrex has struggled due to a prolonged downturn in demand causing a build-up in inventory which is taking time to unwind. The key to its turnaround is its Medical division, which is the highest margin part of the business thanks to very high barriers to entry. We expect the stock to recover once evidence of a trough in earnings starts to emerge.
3. Defensive shares whose low valuations fail to price in their resilience:
- Endeavour Mining: We re-established a weighting in the precious metals sector, having previously owned Centamin which was taken over by Anglogold in 2024. Endeavour operates in West Africa, an area of significant exploration potential, with rich and relatively undeveloped geology. The mines are high quality, with a low cost of production. On a macro level, gold is a defensive asset, being a hedge against geopolitical chaos. The stock offers consistent dividend payouts and share buybacks, underlining the cash generative nature of the business, while it continues to invest in
new projects.
- Pennon: With the publication of the latest water industry regulatory framework (AMP 8), Pennon now has clarity on its returns outlook, allowing it to proceed with a rights issue. Trading at around 1x its regulatory asset base, the stock now looks attractively valued relative to the returns it is expected to make.
The largest sales during the period can be categorised into the following groupings:
1. Reducing exposure to Mining sector:
- BHP/Glencore: We reported in the FY24 report that we had reduced the portfolio's weighting in the Resources sector, and we continued this reduction in FY25. We observed the impact of a slower Chinese economy on commodity demand, as well as a general shift in capital allocation priorities towards M&A, away from distributions. Towards the end of the period, we started to rebuild the portfolio's weighting in the sector, adding to our favoured holding, Rio Tinto, where we see potential to grow the proportion of earnings it generates from copper and aluminium, reducing its dependence on the iron ore price.
2. Moderating some of the portfolio's largest positions in
Tobacco and Utilities:
- Imperial Brands: After a blistering rally that saw the shares double since 2021, the portfolio's weighting in Imperial Brands was almost 6% by the end of April 2025 and so we took some profits to provide the funds to diversify the portfolio.
- National Grid: We reduced the holding in National Grid, using it as a source of funds for new investments, having become a very large holding following its rights issue.
- SSE: We sold the Company's holding in SSE where we saw growing operational and political risk in their renewables business, shifting our preference towards other defensive shares.
3. Exiting shares that received M&A bids:
- Assura: This was another busy year of M&A for the portfolio, with bid announcements for 3 of the portfolio's holdings. We sold the holding in Assura after it received offers from two bidders, KKR and Primary Healthcare Properties. With the shares trading close to its net asset value, we exited the stock, switching into Segro at nearly 30% discount to net asset value. We see this M&A activity as a sign of the intrinsic value in this portfolio.
Outlook
How we are navigating change in a turbulent environment
Political and economic turbulence is creating a backdrop of constant change. Our investment philosophy, Focus on Change, has helped us to thrive in this environment, delivering strong capital growth as well as an above-average dividend yield and a growing income stream. We relish the opportunities that change creates.
Market conditions during this financial year were far from optimal for active investors, as reflected in performance data across the wider fund management industry, showing that only a small percentage of fund managers are managing to beat their benchmarks. The most obvious explanation for this is that a small number of very large companies are generating the highest returns. This is most apparent in the US equity market where the "Magnificent 7" technology shares continue to leave the rest of the market in the shade. The same phenomenon is occurring in many other equity markets around the world, including the UK where the FTSE 100 significantly outperformed the FTSE 250 and FTSE Smaller Companies indices during the period under review.
This raises an important question: how are we able to navigate these market conditions successfully? First, our differentiated investment process allows us to go anywhere, across all sectors, as well as up and down the market cap spectrum. This gives us the flexibility to adapt and respond to change. Second, the emphasis we place on scrutinising a company's valuation is a key aspect of our investment process. The importance of valuation comes to life when managing an income portfolio, as a company's share price must be assessed in relation to the stream of cash flows it generates and the dividends it pays out. This can shed light on what is being priced in, allowing a judgement to be made on whether the stock is attractively valued.
Many of the Company's most successful investments have been situations where the share price implies a fade in dividends that was far too pessimistic given the strength of the underlying franchise. If that makes us contrarian to own higher yield shares, then so be it. We do not immediately write off cheaply valued shares as value traps. At a time when many investors have confined themselves to quality/growth shares, we believe this open-mindedness gives us an edge over the Company's peers. Examples of sectors which we have embraced, and others have eschewed include Financials, Tobacco, and Energy, all of which were key contributors to the Company's performance during the financial year. We will keep scouring the market for shares whose share prices appear to be out of kilter with their cash flow and
dividend prospects.
Valuation Context
The UK equity market remains amongst the cheapest in the world, trading at 13x compared to the US equity market at 23x, Japan at 17x and Europe at 15x. Within the UK equity market, the more domestically orientated FTSE 250 index trades at 12x, one multiple point lower than the FTSE 100. This reflects investor concerns over the prospects for the UK economy.
While the Chancellor of the Exchequer, Rachel Reeves, may have inherited a bad hand, it has not helped her cause that she has abandoned spending cuts and has instead pursued growth-damaging tax hikes. We are currently cautiously positioned in relation to UK consumer discretionary shares given this challenging conjuncture, reflected in the rise in precautionary savings by consumers and households as they batten down the hatches. Our decision to exercise caution has served the portfolio well at a gloomy time for the UK economy. However, we recognise the low valuations on offer among UK domestic shares, and we will keep sifting through this part of the market in pursuit of compelling investment opportunities. Our experience is that it is often out of these moments of macro turmoil that provide the raw material for future outperformance.
Portfolio of undervalued shares with catalysts to perform
The Company's portfolio remains significantly cheaper than the wider market. At the time of writing, the portfolio has a median P/E ratio of 10.0x, a median Free Cash Flow yield of 9.9% and a median Price/Book ratio of 1.4x which compares favourably with 12.2x, 5.3% and 1.7x respectively for the FTSE All-Share (ex-Investment Trusts) Index. We recognise that low valuations, in isolation, are not always enough to drive share prices. Therefore, we aim to identify catalysts that can unlock this latent value. Later in this report we provide two examples of our investment process in action - Johnson Matthey and Petershill Partners. Both are examples of shares where M&A activity provided the catalyst for their share prices. The portfolio also benefited from bids for two other companies - Assura and International Personal Finance. At the same time, share buybacks continue apace, with 31 out of 54 holdings undertaking share buybacks during the financial year. We also see earnings upgrades as a catalyst for share price performance, and we therefore use our in-house quant model to monitor the earnings revisions of the Company's holdings and the wider market. Taken together, we see low valuations, M&A activity, share buybacks and earnings upgrades as a very powerful combination for the portfolio in the years ahead.
Delivering for Shareholders
We remain focused on what matters to the Company's shareholders - dividend yield, dividend growth, and capital growth. We have demonstrated that our focus on high yield is entirely consistent with our determination to deliver strong capital growth for shareholders. We have covered the dividend, as we have done in 11 of the last 13 years, and have added to the Company's reserves and delivered a 25th consecutive year of dividend per share growth. We are also delighted the Company has been able to issue new shares, as the share price has regularly traded above its net asset value. The portfolio is differentiated and diversified, with an investment process that is designed to uncover shares trading at low valuations with specific catalysts for outperformance. With these strong foundations in place, we see the portfolio as well placed to deliver again for shareholders in the year ahead.
Thomas Moore
Portfolio Manager
8 December 2025
Overview of Strategy
Business Model
The Company is an investment trust, and its Ordinary shares are listed on the London Stock Exchange.
Benefits of the Company's Business Model
The Company's business model offers a number of advantages to shareholders:
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Provides investors with access to a professionally and actively managed portfolio of assets. |
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Enables investors to spread the risk of investing through a diversified portfolio. |
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25-year history of dividend growth and payment of four interim dividends each year. |
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No capital gains tax paid by the Company on the realisation of the investments held in the portfolio. |
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Closed end structure enables the Portfolio Manager to take a longer-term view on investments and remain |
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If required, Company has ability to draw on revenue and capital reserves to support the payment of dividends. |
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Ability to use leverage to increase potential returns to investors; and |
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Oversight by an independent Board of Directors who represent shareholders' interests. |
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
Diversification and Asset Allocation Parameters
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.
Gearing
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 Aberdeen. The team within Aberdeen 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 Aberdeen. 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 2025, 54.8% (2024: 51.1%) 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 always 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 Aberdeen 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 Aberdeen's in-house ESG rating tools, the team is able to identify, where appropriate, leaders and laggards, areas of weakness and areas of strength.
During the reporting period the Portfolio Manager conducted a review of the physical climate risks faced by companies held within the portfolio. This assessment drew insights from company reporting, Aberdeen's climate scenario analysis tool, and third-party climate risk assessments.
Based on this analysis, the Portfolio Manager identified companies and industries potentially most at risk from physical climate impacts. As part of ongoing monitoring of these risks, the Portfolio Manager intends to engage with specific portfolio companies to enhance understanding of their resilience to such impacts.
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.
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 under section 172 (1) of the Companies Act 2006 describes 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 |
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. |
|
Premium or discount to the NAV compared to the unweighted average of the discount of the peer group |
The Board compares the premium or 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. |
|
Dividend growth compared to the |
The Company's objective is to provide shareholders with an above average income, 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 In setting the level of the dividend for the current financial year, the Board has balanced the need to deliver an 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, 0.29 pence per share will be transferred to revenue reserves. |
|
Ongoing charges ratio relative to |
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 0.84% based on average net assets over the year (2024: 0.86%). |
Principal Risks and Uncertainties
The Board and the Audit and Risk Committee carry out a regular review of the risk environment in which the Company operates, to identify changes in the operating environment and assess individual risks.
Risk Management Framework
There are a number of principal risks and uncertainties which, if realised, could materially impact the
Company's business model, performance, solvency, liquidity, or reputation.
The Board, through the Audit and Risk Committee, has implemented a risk management framework to identify, robustly assess and monitor the principal and emerging risks facing the Company. These risks, and the controls to manage these risks, are captured in a risk register and heat map.
Principal Risks
The principal risks facing the Company, as determined by the Board, are outlined 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.
Emerging Risks
Emerging risks are typified by having a high degree of uncertainty and may arise from sudden events, emerging trends, or evolving risks where the impact and likelihood are difficult to determine. As the assessment becomes clearer, the risk may become a 'known' risk.
During the year under review, the Board did not identify any new emerging risks which are not already encompassed within the existing principal risks.
Review of risk management framework
The effectiveness of the risk management framework is monitored and reviewed throughout the year, as explained in the Audit and Risk Committee Report.
Other disclosures
The principal risks associated with an investment in the Company's shares are also published in the monthly Company 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.
|
Principal Risk |
Trend |
Mitigating Action |
|
Strategy - Demand for the Company's shares may decline if its objectives become misaligned with investor expectations, or if the investment trust sector as a whole - or the equity income sub-sector - loses appeal among investors. |
Risk Unchanged |
The Board monitors the Company's strategy and market positioning through regular updates from the Manager, analysis of share price movements and investor sentiment.
It also reviews the share price premium or discount at which the Company's shares trade relative to the net asset value and its peers. Working with the broker, the Board has undertaken several share issuances during the year to meet investor demand. An annual strategy meeting is held to assess the Company's positioning, during which the Board receives feedback from the broker on the broader investment trust sector, the UK Equity Income sub-sector, and the Company's relative performance.
To further understand investor sentiment, the Board receives regular updates from the Manager's investor relations team regarding market perceptions of the Company and its strategy. |
|
Market Risk- Absolute portfolio losses arising from economic or market factors - such as interest rates, exchange rates, inflation - global political developments and other exogenous factors. |
Risk Unchanged |
The Board recognises that market risk plays a critical role in delivering performance and regularly reviews the investment restrictions and guidelines it has set to ensure that they remain appropriate.
It meets with the Manager frequently and regularly receives reports to assess portfolio diversification, asset allocation, stock selection, and gearing levels. These discussions also consider the impact of geopolitical instability and broader market developments on risk exposure.
The Manager maintains ongoing dialogue with investee companies, economists, and market participants to evaluate the effects of global economic and political conditions on the portfolio and shares these insights with the Board.
Although elevated market risk remains, and the Company is limited in its ability to mitigate the effect of external factors, the Board and Manager recognise that such conditions can also create attractive investment opportunities for the Portfolio Manager. |
|
Investment Performance - Persistent underperformance relative to benchmarks and peers may reduce the Company's appeal as an investment proposition.
|
Risk Decreased
|
The Board reviews the Company's investment performance against its stated objectives, reference benchmark, and the AIC UK Equity Income sector peer group on a monthly basis. Performance is challenged where appropriate at each Board meeting.
At every meeting, the Board assesses the level of gearing and its contribution to performance, the share price premium or discount, revenue forecasts, and the Company's operating expenses. The Board also monitors physical climate risks affecting portfolio companies through quarterly reports provided by the Manager.
It determines the Company's dividend policy and approves the level of dividends payable to shareholders.
The Remuneration & Management Engagement Committee conducts a formal annual appraisal of the Manager's performance.
Given the recent performance of the NAV and the share price, the Board concluded that the risk of the impact of a short-term drop off in performance (should it arise) has diminished. |
|
Discount/Premium to NAV - Volatility in the level of discount increases levels of uncertainty for shareholders. |
Risk Decreased |
The Board actively monitors the Company's share price premium or discount relative to net asset value. Over the final six months of the financial year, the Company predominantly traded at a premium, enabling the issuance of 1,005,000 shares from Treasury to meet investor demand.
At 30 September 2024, the share price traded at a discount of 3.0% to NAV, while at 30 September 2025, it was trading at par. If necessary, the Board retains the authority to buy back shares. The most recent buyback occurred in November 2022.
The Board has assessed the discount/premium control risk as decreased due to the Company sharing price trading at a premium or narrow discount. |
|
Operational Risk - All of the Company's operations are outsourced to third-party service providers. Any failure in their operational controls, poor service delivery, or disruption of technology systems-such as through cyber-attacks, failed software updates, or data breaches-could result in operational disruption, inaccurate financial reporting, regulatory breaches, reputational damage, or financial loss to the Company. |
Risk Unchanged |
The Audit and Risk Committee closely monitor the control environment and quality of services provided by third-party providers through service level agreements, regular meetings, and key performance indicators. It receives and reviews regular reports-including ISAE assurance reports-from the Manager and other significant service providers covering operational controls, risk management, business continuity, and cyber security strategies.
Written agreements are in place with all third-party service providers.
The Remuneration & Management Engagement Committee conducts a formal appraisal of the Company's key service providers annually. No material issues were identified during the 2025 evaluation.
|
|
Governance Risk - An inexperienced or an ineffective Board-unable to engage in discussion, review matters, or make decisions-could adversely impact the Company's governance, strategic direction, and shareholder value. |
Risk Unchanged |
The Board recognises the importance of effective leadership and appropriate board composition and experience. It regularly reviews its structure and tenure to ensure continued independence and diversity of thought. All Directors are subject to annual shareholder re-election. The Board has agreed that Ms Hitch will retire in January 2026, having served nine years. In preparation, a search and selection process was undertaken with the support of Fletcher Jones, resulting in the appointment of Ms Ryder as an independent non-executive director on 1 October 2025. Board, Committee, Chair, and individual Director performance is formally evaluated annually through an externally facilitated process led by Cyclico. No material issues were identified in the 2025 evaluation. |
|
Financial obligations - Inadequate controls over financial record-keeping and forecasting, the implementation of an inappropriate gearing strategy, or a breach of loan covenants could result in the Company being unable to meet its financial obligations. This may lead to financial losses and could impact the Company's ability to continue operating as a going concern. |
Risk Unchanged |
At each Board meeting, the Directors review management accounts, revenue forecasts, and the coverage of the forecasted dividend for the current financial year, alongside the Company's long-term dividend growth strategy.
As at 30 September 2025, the Company held revenue reserves of £10.6 million (prior to payment of the fourth interim dividend) and distributable capital reserves of £83.8 million.
The Board sets the gearing policy, which permits the portfolio to operate within a range of 5% net cash to 15% net gearing. Responsibility for managing gearing within these parameters is delegated to the Manager, who provides quarterly reports on gearing performance and covenant compliance.
These matters are considered in greater depth as part of the Board's annual strategy review.
The Company's annual financial statements are independently audited.
|
|
Legal and Regulatory Risks - The Company operates within a complex legal and regulatory framework. Failure to comply with applicable laws and regulations-or to identify and implement necessary regulatory changes-could result in financial or legal penalties, reputational damage, and the potential loss of investment trust status or suspension of the Company's shares. |
Risk Unchanged |
The Board has formal agreements in place with its key service providers, including the Investment Manager, to support ongoing legal and regulatory compliance. It receives quarterly reports from each provider to monitor adherence to relevant requirements. The Company complied with all legal and regulatory obligations during the reporting period to 30 September 2025.
The Board also receives and reviews monthly reports on compliance with s.1158/9 of the Corporation Tax Act 2010, which governs investment trust status. The Board responds to relevant FCA consultations and monitors legislative and regulatory changes.
The Board has adopted the AIC Code of Corporate Governance (2024) and associated guidance, which will be implemented in the financial year commencing 1 October 2025.
Where necessary, the Board may instruct additional external professional support on behalf of the Company or individual Directors.
|
|
Financial and Non-Financial Reporting Material misstatements in the Company's financial or non-financial reporting-whether due to inaccurate or incomplete disclosures-could result in a loss of investor and public trust, regulatory fines, reputational damage, and potential legal consequences. |
Risk Unchanged |
The Manager oversees the delegated accountant to ensure that all financial and non-financial reporting is accurate and complete. The Board receives regular reports from key service providers detailing internal controls, as well as any breaches or errors identified. The Company Secretary supports the Board in ensuring that all required legal and regulatory disclosures are made to the market and relevant authorities in a timely manner. The Board engages with the external auditor and reviews the annual report, including the financial statements and accounting policies. The auditor conducts an independent annual audit to obtain reasonable assurance that the financial statements are free from material misstatement and provide their opinion in the Independent Auditor's Report to shareholders. A Corporate Governance checklist is completed against the annual report and published on the Company's website. |
Promotional Activities
The Board recognises the importance of promoting the Company to both current and prospective investors, with the aim of improving liquidity and enhancing the value and rating of the Company's shares.
To support this, the Board subscribes to and participates in the promotional programme run by Aberdeen, which covers a number of investment trusts under its management. The Company's financial contribution to the programme is matched by Aberdeen. In addition, the Company supports Aberdeen's investor relations programme, which involves regional roadshows, promotional campaigns, and public relations activity.
Aberdeen's promotional and investor relations teams report to the Board on a quarterly basis, providing analysis of the promotional activity, updates on shareholder engagement, and changes in the composition of the share register.
The purpose of these programmes is to communicate effectively with existing shareholders and attract new investors, thereby supporting share liquidity and valuation. A key element of this, independent paid-for research is commissioned - most recently from Kepler Trust Intelligence Research Limited. The latest research note
is available in the Key Documents section of the Company's website.
During the year, the Board hosted two shareholder engagement events. On 28 January 2025, an online investor presentation was held, during which the Portfolio Manager provided a portfolio update and, alongside the Chair, responded to live questions from attendees. On 28 August 2025, the Board hosted an in-person meeting for large shareholders, where the Portfolio Manager again presented an update. Both events provided valuable opportunities for the Directors to hear shareholder views directly.
Values and Culture
The Board is committed to maintaining high standards of governance, underpinned by a culture of openness, mutual respect, integrity, constructive challenge, and trust. It seeks to act at all times in the best interests of shareholders, making effective use of the diverse skills and experience of its Directors.
This culture of openness and constructive challenge extends to the Board's engagement with the Manager and other service providers.
To support good governance, the Company has established a range of policies and procedures, including those relating to Directors' conflicts of interest, dealings in the Company's shares, anti-bribery (including the acceptance of gifts and hospitality) and the prevention of tax evasion. The Board regularly assesses and monitors compliance with these policies regularly through Board meetings and the annual review process.
Board Diversity
The Board's statement on diversity is set out in the Directors' Report.
At 30 September 2025, the Board comprised two male and two female Directors on the Board. Both the Chair and the Senior Independent Director roles are held
by women.
Modern Slavery Act
Due to the nature of its business - as a company that does not offer goods and services to customers - the Board considers the Company to be outside the scope of the Modern Slavery Act 2015, as it has no turnover. Accordingly, the Company is not required to publish a slavery and human trafficking statement.
Nonetheless, the Board considers the Company's supply chains, which primarily involve professional advisers and service providers within the financial services industry, to present a low risk in relation to modern slavery and human trafficking.
Environmental, Social and Human Rights Issues
The Company has no employees. Day-to-day management and administrative functions are delegated to the Manager. As a result, no employee related disclosures are required.
The Company's socially responsible investment policy is set out below.
Active Engagement
Through active engagement and the exercise of voting rights, the Manager works with investee companies to promote higher standards of corporate standards, transparency, and accountability.
The Manager's primary objective is to deliver strong long-term outcomes for the Company, in line with its fiduciary responsibilities to shareholders. This approach aligns with one of the Manager's core principles in evaluating investments.
Responsible Investment
The Board is mindful of its duty to act in the interests of the Company and its shareholders. It recognises the risks associated with investment in companies that do not operate in a socially responsible manner and has noted the Manager's policy on responsible investment.
As part of its investment process, the Manager considers social, environmental, and ethical factors that may affect the performance of the Company's investments. In particular, the Manager encourages investee companies to adopt best practice in ESG stewardship. This is primarily achieved through constructive engagement with company management, aimed at improving policies where necessary.
The Company's objective is to provide shareholders with an above-average income from their equity investment, alongside real growth in capital and income. The Board and Manager believe this can be achieved sustainably by investing in companies that adhere to high standards of corporate responsibility. Accordingly, the Manager seeks to favour companies that demonstrate a commitment to best practice.
Stewardship
The Company is committed to the UK's Stewardship Code and seeks to play its role in supporting responsible stewardship of the companies in which it invests.
Responsibility for monitoring the activities of portfolio companies has been delegated by the Board to the Manager, which has sub-delegated that authority to the Investment Manager. Aberdeen Group plc is a signatory of the UK Stewardship Code which aims to enhance the quality of investor engagement with investee companies to improve their socially responsible performance and deliver long-term value to shareholders.
While stewardship activities are delegated to the Manager and its group, the Board acknowledges its role in setting the tone for the effective stewardship on behalf of the Company.
The Board has granted discretionary authority to the Manager to exercise voting rights on resolutions proposed by the investee companies. The Manager reports to the Board on a quarterly basis on stewardship matters, including voting activity.
Global Greenhouse Gas Emissions
All of the Company's activities are outsourced to third parties. As a result, the Company does not generate greenhouse gas emissions from its own operations, 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, the Company qualifies as a low energy user under the Streamlined Energy and Carbon Reporting (SECR) regulations and is therefore 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 the requirement to comply with the Task Force on Climate-related Financial Disclosures ("TCFD").
Whilst TCFD does not currently apply to the Company itself, the Manager, as the delegated Alternative Investment Fund Manager ("AIFM") is required to produce a product level climate-related financial disclosure report on the Company. This is in accordance with the Financial Conduct Authority's (FCA) ESG Sourcebook, and its rules and guidance aligned with TCFD Recommendations and Recommended Disclosures.
These disclosures are designed to meet the information needs of institutional clients and other market participants, regarding the climate-related risks and impacts associated with 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 time 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 steps taken to mitigate these risks have been provided.
· All of the Company's investments are traded on major stock exchanges and there is a spread of investments held.
· The Company is closed ended in nature and therefore it is not required to sell investments when shareholders wish to sell their shares.
· The Company's share price and NAV both delivered total returns in excess of 20%, outperforming the Company' reference index which delivered a total return of around 16%.
· The Company's median share price discount to NAV during the year was 0.88% and has traded at a premium for most of the last five months of the financial year.
· The Company has issued 1.005m shares (2.1% of the opening share capital) raising over £3.6m
· The Company's main liability is its bank loan of £22.5 million (2024: £22.5 million), which represents 11.2% (2024: 13.0%) of the Company's investment portfolio. This is a £30 million (2024: £30 million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch, which was refinanced June 2023 and is due to expire in June 2026. The Board is exploring alternative funding options but notes that the Company could continue to operate/be viable without any debt funding.
· The Company's cash balance, and money market funds, at 30 September 2025 amounted to £1.8 million (2024: £1.9 million).
· The levels of ongoing charges have reduced to 0.83% (2024: 0.86%).
· Shareholders' overwhelming voting in favour of the continuation of the Company at the AGM in February 2022. The next continuation vote is due to take place at the AGM to be held in 2027.
When considering the risks, the Board reviewed a three-year revenue forecast and 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, material increases 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 2028.
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 2026, as it is believed that this is in the best interests of shareholders.
On behalf of the Board
Sarika Patel
Chair
8 December 2025
Promoting the Success of the Company
Section 172 Statement
The Board regards strong corporate governance as essential to the successful delivery of the Company's investment proposition. In carrying out their duties under Section 172 of the Companies Act 2006, the Directors act in good faith to promote the success of the Company for the benefit of its members as a whole. In doing so, they have regard to a range of factors including:
· The likely long-term consequences of decisions.
· The interests of the Company's wider stakeholders.
· The impact of the Company's operations on the community and the environment; and
· The importance of maintaining a reputation for high standards of business conduct.
The Board retains overall responsibility for key strategic and governance matters, including:
· Setting and overseeing corporate strategy.
· Monitoring investment performance and the performance of the Company's service providers.
· Assessing the risk and internal controls.
· Determining marketing budgets; and
· Setting the investment objective, policy, and portfolio limits, including gearing parameters.
Engagement with Stakeholders
The Board recognises the importance of identifying and understanding the Company's key stakeholders and fostering appropriate engagement with them. To support this, the Board has mapped its stakeholders and considered the most effective forms of interaction. Engagement is facilitated through a variety of channels, including face-to-face meetings, video conferencing, seminars, presentations, publications, and the Company's website.
The table below sets out examples of how the Board and the Company engage with their stakeholders.
|
Stakeholder |
How We Engage |
|
Shareholders and potential investors |
The Board places great importance on clear and effective communication with both existing shareholders and potential new investors. It welcomes shareholders views and is committed to acting fairly and transparently in its dealings with all shareholders. The Company engages with shareholders through a variety of channels, including: · Annual General Meeting (AGM): A formal and informal forum for shareholders to meet the Directors and the Manager, ask questions, and provide feedback. The Board encourages broad shareholder participation. · Online AGM Webinar: Featuring presentations from the Chair and the Portfolio Manager, this live forum allows shareholders and prospective investors to ask questions and engage directly. · Annual Shareholder Lunch: An opportunity for the Board to speak directly with large shareholders and gather their views in a more informal setting. · Regular Meetings: The Manager and the Company Broker meet with current and prospective shareholders to discuss performance and gather feedback, which is reported to the Board. · Ongoing Communications: Shareholders receive regular updates via the Annual Report, Half Yearly Report, monthly factsheets, Company announcements, and the Company website. · Portfolio Manager Presentations: Delivered at external events and online webinars to engage with shareholders and potential investors. · Aberdeen Investor Relations Programme: The Company participates in a broad engagement programme that includes industry press and social media outreach. · Mailing List: Shareholders and potential investors can sign up via the QR code which is located on the inside cover of this Annual Report. · Direct Communication Channels: Shareholders may contact the Chair at the registered office or via e-mail at Equity.Income@aberdeenplc.com. The Senior Independent Director is also available for concerns not addressed through these channels. All correspondence is shared with the Chair immediately and with the Board at each meeting. |
|
Manager (and Investment Manager) |
The Company has appointed abrdn Fund Managers Limited ("AFML") as its Manager and Alternative Investment Fund Manager (AIFM). AFML has sub-delegated investment management responsibilities to The Board meets with the Manager and Investment Manager on a quarterly basis and receive presentations to support effective oversight of the Company's strategy and performance. The Portfolio Manager's Review outlines the key investment decisions taken during The Manager continues 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 holds an annual strategy review meeting to ensure that the Company remains well-positioned to deliver long-term value for stakeholders. The Board receives presentations from the Manager at each Board meeting, covering market outlook, portfolio activity, and performance. The Remuneration & Management Engagement Committee formally reviews the performance of the Manager at least annually. |
|
Service Providers |
As an investment company, all of the Company's operational services are outsourced to third-party The Board recognises the importance of developing and maintaining strong relationships with these providers. This is achieved through a combination of direct engagement and regular communication via the Manager. Oversight of service providers is structured as follows: · The Audit and Risk Committee monitor the internal control systems of the third-party providers and meet with representatives at least annually. · The Remuneration & Management Engagement Committee conducts an annual review of the performance, terms, and conditions of the Company's principal service providers to ensure they are meeting expectations, fulfilling their responsibilities, and delivering value for money. |
|
Investee Companies |
· The Board sets the Company's investment objective and engages with the Portfolio Manager at each meeting to discuss stock selection, asset allocation, and engagement with investee companies. · Stewardship is a fundamental part of the Manager's long-term, active investment approach. Engagement with company management and boards is undertaken to protect and enhance long-term shareholder value. · The Board has delegated discretionary authority to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. · The Manager provides quarterly reports to the Board on stewardship activities including voting decisions, engagement outcomes, and ESG related developments. · Through active engagement and voting, the Manager works with investee companies to improve corporate standards, transparency, and accountability. · The Board monitors investment decisions, including acquisitions and disposals, and regularly questions the rationale behind both investment and voting decisions to ensure alignment with the Company's strategy and values. |
|
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. · The Manager provides regular updates to the lender on business activity, compliance with loan covenants, and any material developments relevant to the facility. · The Board receives updates from the Manager and monitors the Company's gearing levels and covenant compliance as part of its regular oversight responsibilities. |
|
Environment and Community |
· The Board and the Manager are committed to investing in a responsible manner. 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 among investee companies. |
Specific Examples of Stakeholder Consideration during the Year
The importance of giving consideration to the Company's stakeholders is not a new requirement and is embedded in the Board's decision-making process.
Stakeholder interests are considered at every Board meeting, and the Directors receive regular feedback on the Investment Manager's interactions with key stakeholder groups.
During the year ended 30 September 2025, the Board was particularly mindful of stakeholder considerations when reviewing and approving the following matters:
Portfolio
The Portfolio Manager's Review outlines the key investment decisions made during the year. The overall shape and structure of the investment portfolio is a critical factor in delivering the Company's stated investment objective and is reviewed at every Board Meeting. The Board also engages regularly with the Portfolio Manager to discuss the portfolio performance in detail, ensuring that investment decisions remain aligned with the Company's strategy and long-term goals.
Dividend
The Board has determined the payment of a fourth interim dividend for the year of 5.9 pence per Ordinary share.
Following payment of this dividend, total dividends for the year will amount to 23.0 pence per Ordinary share, representing a modest increase compared to the previous year.
In determining the dividend level, the Board carefully balanced the objective of delivering an increase to shareholders with the ongoing process of rebuilding the Company's revenue reserve, which was depleted during the height of the Covid-19 pandemic.
Based on the current number of shares in issue, 0.29 pence per share will be transferred to revenue reserves following payment of the fourth interim dividend.
Board Succession
As part of the Board's ongoing succession planning and following a search and selection process initiated during the financial year, Alice Ryder was appointed as an independent non-executive Director on 1 October 2025.
(Further details are provided in the Chair's Statement and the Director's Report.)
Caroline Hitch, who joined the Board on 1 January 2017, will retire from the Board at the Annual General Meeting.
The Board is committed to ensuring that new appointments achieve a balanced mix of
· Skills and experience.
· Gender and ethnicity; and
· Independence and industry knowledge.
The Board believes that shareholders' interests are best served by ensuring a smooth and orderly refreshment process, which supports continuity and maintains the Board's open and collegiate style.
Promoting the Company
On 28 January 2025, the Board hosted an online investor presentation where the Portfolio Manager provided an update on the portfolio. The Chair and Portfolio Manager also answered questions from the audience.
Over 250 investors signed up to the event demonstrating strong interest and engagement.
On 28 August 2025, the Company hosted a meeting
for large shareholders, attended by members of the Board. The Portfolio Manager provided a detailed
portfolio update.
Both events provided valuable opportunities for the Directors to hear shareholder views first-hand, reinforcing the Board's commitment to transparent and open communication.
During the year, the Portfolio Manager undertook a range of activities to promote the Company and its investment strategy to a broad audience. These included
· Podcasts discussing market outlook and portfolio positioning.
· Webinars featuring live Q&A sessions.
· Panel sessions at industry events.
· Press releases highlighting investment insights; and
· Retail investor events aimed at increasing awareness and engagement.
These activities support the Company's commitment to transparency and help ensure that both existing and potential investors are well-informed about the Company's strategy and performance.
Pre-AGM Online Investor Event
The Board will host an Online Investor Presentation, which will be held at 11:00am on Tuesday, 27 January 2026.
The event will feature:
· Presentations from the Chair and the Portfolio Manager; and
· A live Q&A session with both the Chair and the Portfolio Manager.
The presentation is scheduled ahead of the Annual General Meeting, allowing shareholders time to submit their proxy votes after the event but prior to the AGM, should they wish to do so.
Registration details for the online event are available on the Company's website at aberdeenequityincome.com.
Issuance and Buyback of Shares
During the year, the Company issued 1,005,000 Ordinary shares from treasury to meet investor demand. These shares were issued at a premium to the prevailing net asset value.
The Company did not undertake any share buybacks during the year.
The Board believes that the selective use of share issuance and buybacks from treasury, when market conditions warrant, is in the best interests of all shareholders. This approach helps manage supply and demand, supports the share price, and protects long-term shareholder value.
Online Annual and Half Yearly Report
During the year, the Company undertook a successful initiative with the Registrar to encourage shareholders to receive their annual and half yearly reports online, supporting a more environmentally sustainable approach to reporting. As a result of this initiative, the number of printed and posted reports has been significantly reduced.
Shareholders can elect to receive online communications by e-mailing the Company Secretary CoSec@aberdeenplc.com or calling Computershare on 0370 707 1150
Company Name Change
Following the name change of Aberdeen Group plc, the Board agreed to update the Company's name to Aberdeen Equity Income Trust plc. The Board believes that aligning the Company's name with the wider Aberdeen brand enhances recognition and reinforces its association with the broader Aberdeen Investor Relations Programme from which the Company continues to benefit. The name change supports clear brand identity and strengthens marketing and communication efforts with both existing and prospective investors.
On behalf of the Board
Sarika Patel
Chair
8 December 2025
Results
Performance (total return)
|
1 year |
3 years |
5 years |
10 years |
|
|
30 September 2025 |
% |
% |
% |
% |
|
Net asset valueA |
21.8 |
40.3 |
81.4 |
47.8 |
|
Share priceA |
25.7 |
54.5 |
109.6 |
51.7 |
|
Reference IndexB |
16.2 |
50.0 |
84.1 |
118.3 |
|
A Considered to be an Alternative Performance Measure. |
||||
|
B FTSE All-Share Index. |
||||
|
Source: Aberdeen/Morningstar/FactSet |
||||
Ten Year Financial Record
|
Revenue |
|||||||||||
|
available |
Net |
Equity |
|||||||||
|
Gross |
for Ordinary |
Revenue |
Ordinary |
Net asset |
Share |
Premium/ |
Ongoing |
gearing / |
shareholders' |
Revenue |
|
|
Year ended |
revenue |
shareholders |
return |
dividends |
valueA |
price |
(discount)AB |
chargesBC |
(cash)B |
funds |
reservesD |
|
30 September |
£'000 |
£'000 |
p |
p |
p |
p |
% |
% |
% |
£m |
(£m) |
|
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 |
|
2025 |
12,499 |
11,242 |
23.43 |
23.00 |
377.8 |
378.0 |
0.0 |
0.84 |
11.2 |
184.3 |
10.56 |
|
A Diluted for the effect of Subscription shares in issue for the year ended 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 where applicable. The figure for 30 September 2020 was 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 2025 |
||||
|
Valuation as at |
Valuation as at |
|||
|
30 September 2025 |
Weight |
30 September 2024 |
||
|
Stock |
Key Sector |
£'000 |
% |
£'000 |
|
HSBC |
Banks |
10,620 |
5.2 |
4,347 |
|
British American Tobacco |
Tobacco |
8,745 |
4.3 |
6,900 |
|
BP |
Oil, Gas and Coal |
8,402 |
4.1 |
6,515 |
|
Galliford Try |
Construction and Materials |
8,077 |
3.9 |
3,823 |
|
Petershill Partners |
Investment Banking and Brokerage Services |
7,528 |
3.7 |
5,125 |
|
Imperial Brands |
Tobacco |
7,286 |
3.6 |
8,462 |
|
Rio Tinto |
Industrial Metals and Mining |
7,214 |
3.5 |
6,136 |
|
M&G |
Investment Banking and Brokerage Services |
6,130 |
3.0 |
5,022 |
|
Chesnara |
Life Insurance |
5,764 |
2.8 |
3,490 |
|
Balfour Beatty |
Construction and Materials |
5,757 |
2.8 |
- |
|
Top ten investments |
75,523 |
36.9 |
||
|
OSB Group |
Finance and Credit Services |
5,519 |
2.7 |
4,128 |
|
TP ICAP |
Investment Banking and Brokerage Services |
5,262 |
2.6 |
3,975 |
|
Ithaca Energy |
Oil, Gas and Coal |
5,176 |
2.5 |
2,947 |
|
Legal & General |
Life Insurance |
4,989 |
2.4 |
5,551 |
|
Barclays |
Banks |
4,689 |
2.3 |
4,430 |
|
International Personal Finance |
Finance and Credit Services |
4,632 |
2.3 |
2,801 |
|
Johnson Matthey |
Chemicals |
4,517 |
2.2 |
2,210 |
|
Drax |
Electricity |
4,434 |
2.2 |
2,986 |
|
Conduit Holdings |
Non-life Insurance |
3,993 |
1.9 |
5,778 |
|
Sabre Insurance |
Non-life Insurance |
3,844 |
1.9 |
2,194 |
|
Top twenty investments |
122,578 |
59.9 |
||
|
Shell |
Oil, Gas and Coal |
3,681 |
1.8 |
4,056 |
|
Mony |
Software and Computer Services |
3,631 |
1.8 |
- |
|
CMC Markets |
Investment Banking and Brokerage Services |
3,603 |
1.8 |
4,852 |
|
Diversified Energy |
Oil, Gas and Coal |
3,447 |
1.7 |
2,811 |
|
easyJet |
Travel and Leisure |
3,340 |
1.6 |
- |
|
Close Brothers |
Banks |
3,332 |
1.6 |
2,448 |
|
Endeavour Mining |
Precious Metals and Mining |
3,258 |
1.6 |
- |
|
Coats |
General Industrials |
3,243 |
1.6 |
- |
|
National Grid |
Gas, Water and Multi-utilities |
3,232 |
1.5 |
7,376 |
|
DCC |
Industrial Support Services |
3,181 |
1.5 |
- |
|
Top thirty investments |
156,526 |
76.4 |
||
|
Barratt Redrow |
Household Goods and Home Construction |
3,171 |
1.6 |
2,380 |
|
Quilter |
Investment Banking and Brokerage Services |
3,130 |
1.5 |
2,940 |
|
DFS Furniture |
Retailers |
3,091 |
1.5 |
2,248 |
|
Pennon |
Gas, Water and Multi-utilities |
2,857 |
1.4 |
- |
|
Inchcape |
Industrial Support Services |
2,805 |
1.4 |
2,021 |
|
Victrex |
Chemicals |
2,646 |
1.3 |
- |
|
Ashmore |
Investment Banking and Brokerage Services |
2,576 |
1.3 |
1,338 |
|
Real Estate Investors |
Real Estate Investment Trusts |
2,319 |
1.1 |
2,394 |
|
Energean |
Oil, Gas and Coal |
2,182 |
1.1 |
2,375 |
|
Standard Chartered |
Banks |
2,104 |
1.0 |
1,922 |
|
Top forty investments |
183,407 |
89.6 |
||
|
BAE Systems |
Aerospace and Defence |
2,051 |
1.0 |
2,702 |
|
Phoenix |
Life Insurance |
1,963 |
1.0 |
1,705 |
|
Harbour Energy |
Oil, Gas and Coal |
1,915 |
0.9 |
2,459 |
|
Lloyds Banking Group |
Banks |
1,832 |
0.9 |
- |
|
Speedy Hire |
Industrial Transportation |
1,767 |
0.9 |
2,388 |
|
Segro |
Real Estate Investment Trusts |
1,715 |
0.8 |
- |
|
NatWest Group |
Banks |
1,705 |
0.8 |
2,450 |
|
LondonMetric |
Real Estate Investment Trusts |
1,678 |
0.8 |
1,889 |
|
Berkeley Group |
Household Goods and Home Construction |
1,645 |
0.8 |
6,812 |
|
Greggs |
Personal Care Drug and Grocery Stores |
1,343 |
0.7 |
- |
|
Top fifty investments |
201,021 |
98.2 |
||
|
Bridgepoint Group |
Investment Banking and Brokerage Services |
1,219 |
0.6 |
- |
|
Sirius Real Estate |
Real Estate Investment Trusts |
1,165 |
0.6 |
1,638 |
|
CLS Holdings |
Real Estate Investment and Services |
901 |
0.4 |
1,391 |
|
Litigation Capital |
Investment Banking and Brokerage Services |
493 |
0.2 |
1,844 |
|
Total Portfolio |
204,799 |
100.0 |
||
|
All investments are equity investments.
|
||||
Sector Distribution
As at 30 September 2025
|
Portfolio Weightings |
% |
|
Financials |
41.5 |
|
Industrials |
13.1 |
|
Energy |
12.1 |
|
Basic Materials |
8.6 |
|
Consumer Staples |
8.6 |
|
Consumer Discretionary |
5.5 |
|
Utilities |
5.1 |
|
Real Estate |
3.7 |
|
Technology |
1.8 |
As at 30 September 2025
|
Portfolio Weightings |
% |
|
Financials |
37.9 |
|
Energy |
13.4 |
|
Basic Materials |
10.4 |
|
Utilities |
8.9 |
|
Consumer Staples |
8.7 |
|
Consumer Discretinary |
7.5 |
|
Industrials |
6.8 |
|
Real Estate |
6.4 |
Directors' Report (extract)
The Directors present their report and the audited financial statements of the Company for the year ended 30 September 2025.
Results and Dividends
Interim dividends of 5.7 pence per share were paid in March, June, and September 2025. The Board has declared that a fourth interim dividend for the year to 30 September 2025 of 5.9 pence per share is payable on 16 January 2026 to shareholders on the register on 12 December 2025. The ex-dividend date is 11 December 2025. This takes the total dividend for the year to 23.0 pence per share (2024: 22.9 pence), representing the 25th consecutive annual dividend increase declared by the Company.
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 Issuance
The Company's capital structure is summarised in note 12 to the financial statements.
At 30 September 2025, there were 48,786,522 fully paid Ordinary shares of 25 pence each (2024: 47,781,522 Ordinary shares of 25 pence each) in issue with a further 392,245 Ordinary shares of 25 pence each held in treasury (2024: 1,397,245 Ordinary shares of 25 pence each held in treasury).
During the year, the Company issued 1,005,000 Ordinary shares of 25 pence each from treasury (2024: 135,000 Ordinary shares of 25 pence each were issued from treasury).
The Company did not buy back any shares in the year ended 30 September 2025 (2024: nil).
Since the year end the Company has issued a further 135,000 Ordinary shares of 25 pence each from Treasury.
Voting Rights
Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. Issued and fully paid-up Ordinary shares carry a right to receive dividends.
Management Agreement
The Company has appointed abrdn Fund Managers Limited ("AFML"), a wholly owned subsidiary of Aberdeen Group 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 2025.
|
Shareholder |
Number of Ordinary shares |
% held |
|
Hargreaves Lansdown |
12,775,415 |
26.19 |
|
Interactive Investor |
12,645,737 |
25.92 |
|
AJ Bell |
3,535,947 |
7.25 |
|
HSDL |
2,968,796 |
6.09 |
|
Charles Stanley |
2,736,196 |
5.61 |
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 and Risk Committee and Nick Timberlake is Chair of the Remuneration & Management Engagement Committee.
Alice Ryder was appointed as an Independent Non-Executive Director on 1 October 2025 and will stand for election at the Annual General Meeting. The Board engaged Fletcher Jones, an independent search consultant, to assist with the appointment process.
Under the terms of the Company's Articles of Association, Directors are subject to election at the first Annual General Meeting after their appointment and are required to retire and be subject to re-election at least every three years thereafter. However, the Board has decided that all directors will retire annually. Accordingly, Sarika Patel, Mark Little and Nick Timberlake will retire at the Annual General Meeting and being eligible, offer themselves for re-election.
Having served as a Director for nine years, Caroline Hitch will retire from the Board at the conclusion of the Annual General Meeting.
The Roles of the Chair and Senior Independent Director
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.
Board and Committee Meeting Attendance
The Directors attended scheduled Board and Committee meetings during the year ended 30 September 2025 as follows (with their eligibility to attend the relevant meetings in brackets):
|
|
Board and Strategy Meetings |
Audit and Risk Committee Meetings |
Remuneration & Management Engagement Committee Meetings |
|
Sarika Patel |
5 (5) |
2 (2) |
1 (1) |
|
Caroline Hitch |
5 (5) |
2 (2) |
1 (1) |
|
Mark Little |
5 (5) |
2 (2) |
1 (1) |
|
Nick Timberlake |
5 (5) |
2 (2) |
1 (1) |
The Board meets more frequently when business needs require and met an additional ten times during the financial year. Individual directors also had meetings with the Manager and the Company Stockbroker.
Board Evaluation
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 biographies of each of the Directors set out their range of skills and experience and their contribution to the Board during the year. The Board believes that, collectively, it has the requisite high level and range of business, investment, and financial experience to enable it to provide clear and effective leadership and proper governance of the Company.
During the year, the Board appointed Cyclico to facilitate the annual Board evaluation process, which included the Board, its Committees, the Chair, and individual directors.
Following formal performance evaluations, it was concluded that 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 eligible Director 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. As a consequence, the tables do not reflect the appointment of Alice Ryder on 1 October 2025.
The following information has been provided by each Director through the completion of questionnaires.
Board Gender as at 30 September 2025
|
|
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 2025
|
|
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 |
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 and Risk 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)
4. Neither table accounts for Alice Ryder, who was appointed as a Non-Executive Director to the Board on 1 October 2025.
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
Conflicts of Interest Policy
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.
Service contracts with the Company
No Director has a service contract with the Company although all Directors are issued with letters of appointment. There were no contracts during, or at the end of the year, in which any Director was interested.
Bribery and corruption
The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company's circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager's anti-bribery and corruption policies are available on
its website.
Tax evasion
In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.
Financial Instruments
The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 15 to the financial statements.
Corporate Governance
The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance, and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code as published in July 2018 (the "UK Code"), which is available on the Financial Reporting Council's (the "FRC") website: frc.org.uk.
The Board has also considered the principles and provisions of the AIC Code of Corporate Governance as published in February 2019 (the "AIC Code"). The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company. The AIC Code is available on the AIC's website: theaic.co.uk. It includes an explanation of how the AIC Code adapts the principles and provisions set out in the UK Code to make them relevant for investment companies.
The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the FRC, provides more relevant information to shareholders. The Board confirms that, during the year, the Company complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
· interaction with the workforce (provisions 2, 5 and 6).
· the role and responsibility of the chief executive (provisions 9 and 14).
· requirement to establish a nomination committee and describe the work of the nomination committee (provisions 17 and 23).
· the chair shall not be a member of the audit and risk 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.
The Board is mindful of the recent updates to the UK Corporate Governance Code issued by the FRC, as well as the corresponding changes to the AIC Code. Certain provisions of these revised codes will apply to the Company's financial year beginning on 1 October 2025. The Board intends that the Company will comply with all relevant requirements of the updated Codes.
Board Committees
The Board has appointed two committees. 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 reassessed by the Board for their adequacy on an ongoing basis.
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.
As at 30 September 2025, the Company had a £30 million (2024: £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 (2024: £22.5 million). The revolving credit facility matures on 23 June 2026. The Board is exploring alternative funding options but notes that the Company could continue to operate/be viable without any debt funding.
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.
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.
Having taken these matters into account, the Directors believe that the Company has adequate financial resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of this Report. Accordingly, they 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
Shareholders approved the re-appointment of Johnston Carmichael LLP as the Company's Auditor at the Annual General Meeting on 18 February 2025, and resolutions to approve the re-appointment for the year to 30 September 2026, and for the Directors to determine its remuneration, will be proposed at the forthcoming Annual General Meeting.
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 Equity.Income@aberdeenplc.com
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.
Annual General Meeting
The Annual General Meeting will be held at Aberdeen Group plc, 18 Bishops Square, London, E1 6EG on Tuesday 17 February 2026 at 11:30am.
By order of the Board
abrdn Holdings Limited
Company Secretary
1 George Street
Edinburgh
EH2 2LL
8 December 2025
Audit Committee's Report
The Audit and Risk Committee present its Report for the year ended 30 September 2025.
Committee Composition
During the financial year, the Audit and Risk Committee was chaired by Mark Little, a Chartered Accountant with 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 considers it appropriate for all the independent Directors, including the Chair of the Board, to serve on the Committee. The Board is satisfied that the Committee as a whole possesses the competence and experience relevant to the investment trust sector, enabling it to fulfil its responsibilities effectively.
Functions of the Audit and Risk Committee
The principal role of the Audit and Risk Committee is to assist the Board in overseeing the reporting of financial information, the review of financial controls and the management of risk.
The Committee operates under defined terms of reference, which are reviewed and reassessed for adequacy on at least annually. Copies of the terms of reference are published on the Company's website and are available on request.
The Committee discharges its responsibilities through the following key activities:
· Reviewing and monitoring the internal control and risk management systems, including 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.
· Considering whether there is a need for the Company to have its own internal audit function.
· Monitoring 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.
· Reviewing and reporting to the Board on significant financial reporting issues and judgements relating to the Company's financial statements and formal financial announcements.
· Reviewing the content of the Annual Report and advising 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.
· Meeting with the Auditor to review the proposed audit programme and findings and using this opportunity to assess the effectiveness of the audit process.
· Developing and implementing 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 (2024: £nil). All non-audit services must be approved in advance by the Committee and are 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.
· Reviewing a statement from the Manager detailing the arrangements in place whereby staff may confidentially escalate concerns about possible improprieties in matters of financial reporting or other issues.
· Making recommendations to the Board regarding the appointment of the Auditor and approving the remuneration and terms of engagement; and
· Monitoring and reviewing the Auditor's independence, objectivity, effectiveness, resources, and qualifications, taking into consideration relevant UK professional and regulatory requirements.
Activities During the Year
The Audit and Risk Committee met twice during the year when, amongst other matters, it considered the Annual Report and the Half-Yearly Financial Report in detail.
Representatives from the Manager's internal audit, risk and compliance departments reported to the Committee at these meetings on topics 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 requiring report to the Board.
Internal Controls and Risk Management
Ongoing Risk Management Process
The Board confirms that there is an ongoing process for identifying, evaluating, and managing the Company's significant business and operational risks. This process has been in place for the year ended 30 September 2025 and up to the date of approval of the Annual Report. It is regularly reviewed by the Board and accords with
the Financial Reporting Council's guidance on internal controls.
Board Oversight and Delegation
The Board has overall responsibility for ensuring that a system of internal controls and risk management is in place, and for reviewing its effectiveness. Day-to-day measures have been delegated to the Manager, with an effective reporting process in place to enable supervision and oversight by the Board. The system of internal controls and risk management is tailored to the Company's specific needs and the risks to which it is exposed. Accordingly, it 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.
Control Framework
The design, implementation and maintenance of controls and procedures to safeguard the assets of the Company and to manage its affairs properly extend to operational and compliance controls and risk management. The Board, through the Audit and Risk Committee, has prepared its own risk register which lists potential risks including those set out in the Strategic Report. The Board considers the potential causes and possible effects of these risks as well as reviewing the controls in place to mitigate them.
Reporting and Accountability
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.
Review of Manager's Control Systems
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. It 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 and Risk 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 and Risk Committee.
Key Components of Internal Control
The key components designed to provide effective internal control are outlined below:
· written agreements that clearly define the roles and responsibilities of the Manager and other third-party service providers. These agreements are reviewed periodically by the Board.
· Clearly defined investment criteria specified levels of authority and exposure limits agreed between the Board and the Manager. Reports on these matters, including performance statistics and investment valuations, are regularly submitted to the Board.
· Forecasts and management accounts prepared by the Manager, enabling the Board to assess the Company's activities and review its performance.
· Ongoing review of operations by the Manager's internal audit and compliance departments.
Consideration of an Internal Audit Function
The Board has considered the need for the Company to establish its own internal audit function. As the Company has no employees, and the day-to-day management of the Company's assets has been delegated to Aberdeen which has its own compliance and internal control systems., the Board has decided to place reliance on those systems and internal audit procedures. It has therefore 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 2025, the Audit and Risk Committee considered the following significant issues, particularly those communicated by the Auditor during its planning and reporting of the year-end audit:
Valuation, Existence and Ownership of Investments
The Company uses the services of an independent depositary, BNP Paribas S.A., London Branch (the "Depositary"), to hold its assets. An annual internal control report is received from the Depositary and reviewed by the Audit and Risk Committee. This report provides details of the Depositary's control environment.
The investment portfolio is reconciled regularly by the Manager and reviewed and verified on an ongoing basis. Management accounts, including a full portfolio listing, are prepared quarterly and 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, or ownership of the investments which required further action.
Recognition of Dividend Income
The recognition of dividend income is undertaken in accordance with accounting policy note 1(d) to the financial statements. Special dividends are allocated to either the capital or revenue account depending on 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 received.
The Committee concluded that there were no issues associated with the recognition of dividend income which required further action.
Review of Financial Reporting
When considering the draft Annual Report and financial statements for the year ended 30 September 2025, the Audit and Risk Committee concluded that, taken as a whole, the report is fair, balanced, and understandable. It provides the information necessary for shareholders to assess the Company's position and performance, business model, and strategy.
In reaching this conclusion, the Committee assumed that the reader of the Annual Report and financial statements would have a reasonable knowledge of the investment industry in general, and of investment trusts in particular.
Review of Independent Auditor
The Audit and Risk Committee has reviewed the effectiveness of the independent Auditor, Johnston Carmichael LLP ("Johnston Carmichael"), across the following key areas:
· Independence - the Auditor discusses with the Committee, at least annually, the steps it takes to ensure its independence and objectivity. It also highlights any potential issues and explains the safeguards in place to address them.
· Quality of audit work -This includes the Auditor's ability to resolve issues in a timely manner (with identified issues satisfactorily and promptly resolved), the clarity and completeness of its communications (including the audit plan, any deviations from it, and the subsequent audit findings), and its working relationship with the Manager, which is constructive and professional.
· Quality of people and service - The audit team comprises sufficient, suitably experienced staff with appropriate knowledge of the investment trust sector. Continuity and succession planning are in place, including retention on rotation of the senior statutory auditor.
· Fees - The Committee considered the current audit fees and reviewed proposals for future years to ensure they remain appropriate and proportionate to the scope and quality of the audit services provided.
The fees payable to Johnston Carmichael LLP for audit services in respect of the year ended 30 September 2025 were £48,000 (2024: £44,400) (inclusive of VAT).
Tenure of the Independent Auditor
Johnston Carmichael LLP was initially 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 2025 is the second 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 provided by Johnston Carmichael LLP, as well as the level of fees. It is also satisfied that Johnston Carmichael LLP remains 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 and Risk Committee
Mark Little
Chair of the Audit and Risk Committee
8 December 2025
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 'The Financial Reporting Standard Applicable in the UK and Republic
of Ireland'.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for
that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently.
· make judgements and estimates that are reasonable and prudent.
· state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
The Directors confirm that to the best of their knowledge:
· the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
· the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.
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
8 December 2025
Statement of Comprehensive Income
|
2025 |
2024 |
||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
||
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Net gains on investments at fair value |
9 |
- |
23,683 |
23,683 |
- |
9,452 |
9,452 |
|
Currency gains |
- |
1 |
1 |
- |
- |
- |
|
|
Income |
2 |
12,499 |
- |
12,499 |
12,735 |
219 |
12,954 |
|
Investment management fee |
3 |
(276) |
(643) |
(919) |
(252) |
(588) |
(840) |
|
Administrative expenses |
4 |
(488) |
- |
(488) |
(459) |
- |
(459) |
|
Net return before finance costs and taxation |
11,735 |
23,041 |
34,776 |
12,024 |
9,083 |
21,107 |
|
|
Finance costs |
5 |
(423) |
(989) |
(1,412) |
(454) |
(1,060) |
(1,514) |
|
Return before taxation |
11,312 |
22,052 |
33,364 |
11,570 |
8,023 |
19,593 |
|
|
Taxation |
6 |
(70) |
- |
(70) |
(560) |
- |
(560) |
|
Return after taxation |
11,242 |
22,052 |
33,294 |
11,010 |
8,023 |
19,033 |
|
|
Return per Ordinary share |
8 |
23.43p |
45.95p |
69.38p |
23.05p |
16.80p |
39.85p |
|
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
|
2025 |
2024 |
||
|
Notes |
£'000 |
£'000 |
|
|
Fixed assets |
|||
|
Investments at fair value through profit or loss |
9 |
204,799 |
177,978 |
|
Current assets |
|||
|
Debtors |
10 |
669 |
1,411 |
|
Investments in AAA-rated money market funds |
1,577 |
1,311 |
|
|
Cash and short-term deposits |
244 |
591 |
|
|
2,490 |
3,313 |
||
|
Current liabilities |
|||
|
Creditors: amounts falling due within one year |
|||
|
Bank loan |
11 |
(22,484) |
(22,462) |
|
Other creditors |
11 |
(471) |
(414) |
|
(22,955) |
(22,876) |
||
|
Net current liabilities |
(20,465) |
(19,563) |
|
|
Net assets |
184,334 |
158,415 |
|
|
Capital and reserves |
|||
|
Called-up share capital |
12 |
12,295 |
12,295 |
|
Share premium account |
52,475 |
52,043 |
|
|
Capital redemption reserve |
12,616 |
12,616 |
|
|
Capital reserve |
13 |
96,393 |
71,161 |
|
Revenue reserve |
10,555 |
10,300 |
|
|
Equity shareholders' funds |
184,334 |
158,415 |
|
|
Net asset value per Ordinary share |
14 |
377.84p |
331.54p |
|
The financial statements were approved by the Board of Directors and authorised for issue on 8 December 2025 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 2025 |
|||||||
|
Share |
Capital |
||||||
|
Share |
premium |
redemption |
Capital |
Revenue |
|||
|
capital |
account |
reserve |
reserve |
reserve |
Total |
||
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Balance at 30 September 2024 |
12,295 |
52,043 |
12,616 |
71,161 |
10,300 |
158,415 |
|
|
Return after taxationA |
- |
- |
- |
22,052 |
11,242 |
33,294 |
|
|
Sale of own shares from treasury |
- |
432 |
- |
3,180 |
- |
3,612 |
|
|
Dividends paid during the year |
7 |
- |
- |
- |
- |
(10,987) |
(10,987) |
|
Balance at 30 September 2025 |
12,295 |
52,475 |
12,616 |
96,393 |
10,555 |
184,334 |
|
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 |
|
|
A per the Statement of Comprehensive Income. |
|||||||
|
The capital reserve at 30 September 2025 is split between realised gains of £83,780,000 and unrealised gains of £12,613,000 (30 September 2024: realised gains £78,223,000 and unrealised losses of £7,062,000). |
|||||||
|
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 £94,335,000 (30 September 2024: £88,523,000). |
|||||||
|
The accompanying notes are an integral part of the financial statements. |
|||||||
Notes to the Financial Statements
For the year ended 30 September 2025
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 2025, the Company had a £30 million (2024: £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 (2024: £22.5 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 short-term deposits. 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 |
|
|||
|
2025 |
2024 |
|
|||
|
£'000 |
£'000 |
|
|||
|
Income from investments |
|
||||
|
UK investment income |
|
||||
|
Ordinary dividends |
9,419 |
9,283 |
|
||
|
Special dividends |
932 |
644 |
|
||
|
Special dividends - capital |
- |
219 |
|
||
|
Stock dividends |
91 |
255 |
|
||
|
10,442 |
10,401 |
|
|||
|
|
|||||
|
Overseas and Property Income Distribution investment income |
|
||||
|
Ordinary dividends |
1,981 |
2,321 |
|
||
|
Stock dividends |
- |
131 |
|
||
|
1,981 |
2,452 |
|
|||
|
12,423 |
12,853 |
|
|||
|
|
|||||
|
Other income |
|
||||
|
Money-market interest |
66 |
96 |
|
||
|
Underwriting commission |
10 |
- |
|
||
|
Bank interest |
- |
5 |
|
||
|
76 |
101 |
|
|||
|
Total income |
12,499 |
12,954 |
|
||
|
|
|||||
|
Included in income from investments is £796,000 (2024: £1,161,000) 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 |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Charged to revenue reserve |
276 |
252 |
|
|
Charged to capital reserve |
643 |
588 |
|
|
919 |
840 |
||
|
The Company has an agreement with abrdn Fund Managers Limited ("aFML") for the provision of management services, under which investment management services have been delegated to abrdn Investment Management Limited. The contract is terminable by either party on not less than six months' notice. |
|||
|
The management fee is charged at 0.55% of the Company's net assets. 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 £256,000 (2024: £219,000). |
|||
4. |
Administrative expenses |
||||
|
2025 |
2024 |
||||
|
£'000 |
£'000 |
||||
|
Directors' fees |
131 |
136 |
|||
|
Employers' National Insurance |
8 |
8 |
|||
|
Fees payable to the Company's Auditor (excluding VAT): |
|||||
|
- for the audit of the annual financial statements |
40 |
37 |
|||
|
Professional fees |
35 |
3 |
|||
|
Depositary fees |
20 |
19 |
|||
|
Promotional activitiesA |
109 |
109 |
|||
|
Other expenses |
145 |
147 |
|||
|
488 |
459 |
||||
|
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 (2024: £109,000). At 30 September 2025, £82,000 was due to aFML (2024: £55,000). |
|||||
|
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 |
||||
|
2025 |
2024 |
||||
|
£'000 |
£'000 |
||||
|
On bank loans and overdrafts: |
|||||
|
Charged to revenue reserve |
423 |
454 |
|||
|
Charged to capital reserve |
989 |
1,060 |
|||
|
1,412 |
1,514 |
||||
|
Finance costs are chargeable 30% to revenue and 70% to capital (see note 1(e)). |
|||||
6. |
Taxation |
|||||||
|
2025 |
2024 |
|||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
(a) |
Analysis of charge for the year |
|||||||
|
Overseas withholding tax |
70 |
- |
70 |
560 |
- |
560 |
||
|
(b) |
Factors affecting total tax charge for the year. The corporation tax rate was 25% (2024: 25%). The total tax assessed for the year is lower (2024: 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: |
||||||||
|
2025 |
2024 |
|||||||
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
Return before taxation |
11,312 |
22,052 |
33,364 |
11,570 |
8,023 |
19,593 |
||
|
Corporation tax at a rate of 25% (2024: 25%) |
2,828 |
5,513 |
8,341 |
2,892 |
2,006 |
4,898 |
||
|
Effects of: |
||||||||
|
Non-taxable UK dividends |
(2,693) |
- |
(2,693) |
(2,563) |
- |
(2,563) |
||
|
Non-taxable overseas dividends |
(342) |
- |
(342) |
(475) |
- |
(475) |
||
|
Expenses not deductible for tax purposes |
1 |
- |
1 |
2 |
- |
2 |
||
|
Gains on investments not relievable |
- |
(5,921) |
(5,921) |
- |
(2,418) |
(2,418) |
||
|
Excess management expenses and loan relationship losses |
206 |
408 |
614 |
144 |
412 |
556 |
||
|
Irrecoverable overseas withholding tax |
70 |
- |
70 |
560 |
- |
560 |
||
|
Total taxation |
70 |
- |
70 |
560 |
- |
560 |
||
|
At 30 September 2025, the Company had unutilised management expenses and loan relationship losses of £39,254,000 (2024: £36,810,000). 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 |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Amounts recognised as distributions to equity holders in the year: |
|||
|
Fourth interim dividend for 2024 of 5.80p per share (2023: 5.70p) |
2,771 |
2,724 |
|
|
First interim dividend for 2025 of 5.70p per share (2024: 5.70p) |
2,724 |
2,723 |
|
|
Second interim dividend for 2025 of 5.70p per share (2024: 5.70p) |
2,732 |
2,724 |
|
|
Third interim dividend for 2025 of 5.70p per share (2024: 5.70p) |
2,760 |
2,723 |
|
|
10,987 |
10,894 |
||
|
The fourth interim dividend of 5.90p per Ordinary share, payable on 16 January 2026 to shareholders on the register on 12 December 2025 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. |
|||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
First interim dividend for 2025 of 5.70p per share (2024: 5.70p) |
2,724 |
2,723 |
|
|
Second interim dividend for 2025 of 5.70p per share (2024: 5.70p) |
2,732 |
2,724 |
|
|
Third interim dividend for 2025 of 5.70p per share (2024: 5.70p) |
2,760 |
2,723 |
|
|
Fourth interim dividend for 2025 of 5.90p per share (2024: 5.80p) |
2,886 |
2,771 |
|
|
11,102 |
10,941 |
||
8. |
Return per Ordinary share |
||||
|
2025 |
2024 |
||||
|
£'000 |
p |
£'000 |
p |
||
|
Basic |
|||||
|
Revenue return |
11,242 |
23.43 |
11,010 |
23.05 |
|
|
Capital return |
22,052 |
45.95 |
8,023 |
16.80 |
|
|
Total return |
33,294 |
69.38 |
19,033 |
39.85 |
|
|
Weighted average number of Ordinary shares in issueA |
47,989,878 |
47,766,631 |
|||
|
A Calculated excluding shares held in Treasury where applicable. |
|||||
9. |
Investments |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Fair value through profit or loss |
|||
|
Opening book cost |
185,040 |
183,673 |
|
|
Opening fair value losses on investments held |
(7,062) |
(17,939) |
|
|
Opening fair value |
177,978 |
165,734 |
|
|
Movements in the year: |
|||
|
Purchases at cost |
64,039 |
80,819 |
|
|
Sales - proceeds |
(60,901) |
(78,246) |
|
|
Gains on investments |
23,683 |
9,671 |
|
|
Closing fair value |
204,799 |
177,978 |
|
|
Closing book cost |
192,186 |
185,040 |
|
|
Closing fair value gains/(losses) on investments held |
12,613 |
(7,062) |
|
|
Closing fair value |
204,799 |
177,978 |
|
|
The Company received £60,901,000 (2024: £78,246,000) from investments sold in the year. The book cost of these investments when they were purchased was £56,893,000 (2024: £79,452,000). 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: |
|||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Purchases |
341 |
408 |
|
|
Sales |
28 |
48 |
|
|
Total |
369 |
456 |
|
10. |
Debtors: amounts falling due within one year |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Net dividends and interest receivable |
631 |
1,377 |
|
|
Other debtors |
38 |
34 |
|
|
669 |
1,411 |
11. |
Creditors: amounts falling due within one year |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Bank loan |
22,500 |
22,500 |
|
|
Unamortised loan arrangement expenses |
(16) |
(38) |
|
|
22,484 |
22,462 |
||
|
Other creditors |
|||
|
Investment management fee payable |
256 |
219 |
|
|
Sundry creditors |
215 |
195 |
|
|
471 |
414 |
||
|
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 2025 and at the date of signing this Report, £22.5 million had been drawn down from the facility, at an all-in SONIA rate of 5.47%. This is due to mature on 23 December 2025. |
|||
12. |
Called-up share capital |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Issued and fully paid: |
|||
|
Ordinary shares of 25p each |
|||
|
Opening balance of 47,781,522 (2024: 47,646,522) Ordinary shares |
11,946 |
11,912 |
|
|
Issue of 1,005,000 (2024: 135,00) Ordinary shares |
251 |
34 |
|
|
Closing balance of 48,786,522 (2024: 47,781,522) Ordinary shares |
12,197 |
11,946 |
|
|
Treasury shares |
|||
|
Opening balance of 1,397,245 (2024:1,532,245) Treasury shares |
349 |
383 |
|
|
Issue of 1,005,000 (2024: 135,000) Ordinary shares from Treasury |
(251) |
(34) |
|
|
Closing balance of 392,245 (2024: 1,397,245) treasury shares |
98 |
349 |
|
|
12,295 |
12,295 |
||
|
During the year, 1,005,000 Ordinary shares (2024: 135,000) were issued from Treasury for a consideration of £3,612,000 (2024: £403,000). At the year end the number of shares held in Treasury was 392,245 (2024: 1,397,245). |
|||
|
Since the year end the Company has issued a further 135,000 Ordinary shares from Treasury for a total consideration of £520,00. |
|||
13. |
Capital reserve |
||
|
2025 |
2024 |
||
|
£'000 |
£'000 |
||
|
Opening balance |
71,161 |
62,735 |
|
|
Unrealised gains on investment holdings |
19,675 |
10,877 |
|
|
Gains/(losses) on realisation of investments at fair value |
4,008 |
(1,206) |
|
|
Currency gains |
1 |
- |
|
|
Investment management fee charged to capital |
(643) |
(588) |
|
|
Finance costs charged to capital |
(989) |
(1,060) |
|
|
Issue of Ordinary shares from treasury |
3,180 |
403 |
|
|
Closing balance |
96,393 |
71,161 |
|
|
The capital reserve includes investment holding gains amounting to £12,613,000 (2024: losses of £7,281,000) 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: |
|||
|
2025 |
2024 |
||
|
Basic |
|||
|
Total shareholders' funds (£'000) |
184,334 |
158,415 |
|
|
Number of Ordinary shares in issue at year endA |
48,786,522 |
47,781,522 |
|
|
Net asset value per share |
377.84p |
331.54p |
|
|
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 2025 |
Years |
% |
£'000 |
£'000 |
||
|
Assets |
||||||
|
Investments in AAA-rated money-market funds |
- |
4.15 |
- |
1,577 |
||
|
Cash deposits |
- |
2.47 |
- |
244 |
||
|
Total assets |
- |
- |
- |
1,821 |
||
|
Liabilities |
||||||
|
Bank loans |
0.25 |
5.47 |
22,484 |
- |
||
|
Total liabilities |
- |
- |
22,484 |
- |
||
|
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 |
- |
||
|
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 2025 or 30 September 2024 that had a maturity date. The £22.5 million (2024: £22.5 million) loan drawn down had a maturity date of 23 December 2025 (2024: 23 December 2024) 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 2025 would decrease/increase by £207,000 (2024: decrease/increase by £206,000). 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 2025 would have increased/decreased by £20,480,000 (2024: increase/decrease of £17,798,000). 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: |
||||||
|
2025 |
2024 |
|||||
|
Statement of |
Statement of |
|||||
|
Financial Position |
Maximum exposure |
Financial Position |
Maximum exposure |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
Current assets |
||||||
|
Debtors |
669 |
669 |
1,411 |
1,411 |
||
|
Investments in AAA-rated money market funds |
1,577 |
1,577 |
1,311 |
1,311 |
||
|
Cash and short-term deposits |
244 |
244 |
591 |
591 |
||
|
2,490 |
2,490 |
3,313 |
3,313 |
|||
|
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 £22,484,000 (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 (2024: 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 (2025: £204,799,000; 2024: £177,978,000) have therefore been deemed as Level 1. The investment in AAA rated money market funds of £1,577,000 (2024: £1,311,000) 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 11.2% of net assets (2024: 13.0%). |
|
|
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 2025 there were no contingent liabilities (2024: 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 £33,000 (2024: £31,000). |
|
|
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 2025 |
30 September 2024 |
|||
|
Share price |
378.00p |
321.50p |
||
|
Net asset value per share |
377.84p |
331.54p |
||
|
Premium/(discount) |
0.0% |
(3.0%) |
||
Dividend yield |
||||
|
Dividend yield measures the dividend per share as a percentage of the share price per share. |
||||
|
30 September 2025 |
30 September 2024 |
|||
|
Share price |
378.00p |
321.50p |
||
|
Dividend per share |
23.00p |
22.90p |
||
|
Dividend yield |
6.1% |
7.1% |
||
Net gearing |
||||
|
Net gearing measures the total borrowings less cash and cash equivalents divided by Shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due from and to brokers at the period end as well as cash and short-term deposits. |
||||
|
30 September 2025 |
30 September 2024 |
|||
|
£'000 |
£'000 |
|||
|
Total borrowings |
a |
22,484 |
22,462 |
|
|
Cash and short-term deposits |
244 |
591 |
||
|
Investments in AAA-rated money-market funds |
1,577 |
1,311 |
||
|
Total cash and investments in AAA-rated money-market funds |
b |
1,821 |
1,902 |
|
|
Gearing (borrowings less cash & investments in AAA-rated money-market funds) |
c=(a-b) |
20,663 |
20,560 |
|
|
Shareholders' funds |
d |
184,334 |
158,415 |
|
|
Net gearing |
e=(c/d) |
11.2% |
13.0% |
|
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 2025 |
30 September 2024 |
|||
|
£'000 |
£'000 |
|||
|
Investment management fees |
919 |
840 |
||
|
Administrative expenses |
488 |
459 |
||
|
Less: non-recurring chargesA |
(28) |
(1) |
||
|
Ongoing charges |
a |
1,379 |
1,298 |
|
|
Average net assets |
b |
164,305 |
150,930 |
|
|
Ongoing charges ratio |
c=(a/b) |
0.84% |
0.86% |
|
|
A Comprises professional fees not expected to recur. |
||||
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 2025 |
NAV |
Price |
||
|
Opening at 1 October 2024 |
a |
331.5p |
321.5p |
|
|
Closing at 30 September 2025 |
b |
377.8p |
378.0p |
|
|
Price movements |
c=(b/a)-1 |
14.0% |
17.6% |
|
|
Dividend reinvestmentA |
d |
7.8% |
8.1% |
|
|
Total return |
c+d |
21.8% |
25.7% |
|
|
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% |
|
|
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 Aberdeen's offices, 18 Bishops Square, London, E1 6EG on Tuesday, 17 February 2026 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 2025 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 2024 and 2025 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 2024 is derived from the statutory accounts for 2022 which have been delivered to the Registrar of Companies. The 2025 accounts will be filed with the Registrar of Companies in due course.
The Annual Report and Accounts will be posted to shareholders in December 2025. 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, aberdeenequityincome.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
8 December 2025
* 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.
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