Dunedin Inc. Regulatory News (DIG)

DUNEDIN INCOME GROWTH INVESTMENT TRUST PLC

Legal Entity Identifier (LEI):  549300PPXLZPR5JTL763

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 JANUARY 2024

Performance Highlights

· NAV total return of 6.7%, outperforming the FTSE All-Share Index return of 1.9%, resulting in the Company ranking top of the AIC UK Equity Income sector by NAV total return for the year.

· Five year NAV total return of 43.8%, with the Company ranking 3rd out of 20 in the AIC UK Equity Income sector by NAV total return. 

· Record revenue return for the year of 13.54p per share, an increase of 4.0%.

· Total dividend for the year of 13.75p per share, an increase of 5.0% which compares to the CPI increase of 4.0%.

For further information, please contact:

Paul Finlayson 

abrdn Fund Managers Limited

07990 130 451

Chairman's Statement

I am pleased to present the Annual Report for Dunedin Income Growth Investment Trust for the year ended 31 January 2024 and to report that our Company's net asset value ("NAV") total return outperformed both the benchmark and peers for the year.

Performance

After the rapid tightening of monetary policy and dramatic geopolitical and domestic political events of 2022, the reporting period this year provided a more stable investment environment and one that provided fewer headwinds to the Company's investment strategy. As a result, the portfolio's total return exceeded that of the FTSE All-Share Index and, in the process, delivered a positive absolute return. Whilst performance of the portfolio, which is highly active and differentiated from our benchmark, should be considered over longer time periods, this year's performance represents a welcome return to outperformance after two years in which the Investment Manager's strategic focus on high quality companies with an emphasis on dividend growth and sustainability had proven something of a challenge in a market that had favoured more value orientated investment styles and seen strong returns from commodity related sectors.

Over the longer term, the Company has delivered a NAV total return of 43.8% over five years compared to the benchmark return of 30.4%, and over that period ranks 3rd out of 20 in the AIC UK Equity Income sector by NAV total return.

The Board recognises the importance of the dividend return to shareholders and we are pleased to report that the portfolio has seen continued revenue growth, with revenue earnings per share reaching another record high, at the upper end of our original expectations for the year.

The NAV total return of the Company remains ahead of the benchmark and peers over both the short and longer term. The main frustration in the period has been the widening of the discount at which the Company's shares are trading to NAV. Particularly as this now represents a wider discount than the average of the UK Equity Income sector, despite stronger performance. Alongside that, the portfolio remains highly differentiated to its peer group, offering a highly active, relatively concentrated strategy, with a sustainability overlay that remains unique within the sector and rare within the wider investment trust universe. 

We remain committed to the sustainability ambitions of the Company and believe it is the right approach when investing for the long term and to deliver sustainable and growing dividends. We expect that investors will return their focus towards this segment of the market as environmental and social risks rise and asset owners turn their attention to the impact of their holdings. For the Investment Manager, this is about both avoiding risks and taking advantage of opportunities such as investing behind the powerful demand trends stemming from the climate transition.

Earnings and Dividend

Investment income increased by 4.6% during the year, reflecting good progress in dividend distributions from companies in the portfolio. The revenue return per share increased by 4.0%, reaching an all-time high of 13.54p, growing slightly less than income due primarily to higher finance costs given increases in interest rates.

Having paid three quarterly dividends of 3.2p per share, the Board is proposing a final dividend of 4.15p per share, payable on 31 May 2024 to shareholders on the register on 3 May 2024. This will make a total dividend of 13.75p per share for the year, an increase of 5.0% on last year and ahead of the rate of inflation of 4.0% as measured by CPI. This represents a welcome return to dividend growth in real terms after two years of exceptionally high inflation and will be the 40th year out of the past 44 that the Company has grown its dividend, with the distribution maintained in the other four years. Furthermore, having increased the dividend in every year since 2011, the Company is classified as a 'next generation of dividend heroes' by the Association of Investment Companies, being one of the 33 investment trusts that have raised their dividend for 10 to 19 consecutive years. 

Following payment of the final dividend, we will have utilised 0.21p per share of the Company's revenue reserves to meet dividends declared for this financial year, meaning that 9.0p per share will be available to support future distributions. This represents approximately 65% of the current annual dividend cost. The net revenue earned during the financial year covers 98.5% of the proposed dividend cost for the year. The Company has drawn 2.84p per share from revenue reserves since January 2019, both through the strategic transition away from higher yielding, lower growth companies and, particularly in 2020/21, to support the dividend through a period of extraordinary market disruption when 1.9p per share was utilised from revenue reserves following the impact of the Covid pandemic on the portfolio. It is worth noting that, given its long history, the Company is in a favourable position of having the ability to pay dividends out of realised capital reserves which exceeded £300 million at the year end, forming a significant part of equity shareholders' funds.

The increased dividend of 13.75p per share represents a yield of 5.0% based on the share price of 276p at the end of the year, compared to a notional yield of 4.0% from the FTSE All-Share Index. Our distribution policy remains to grow the dividend faster than inflation over the medium term and, with the Company's robust revenue and capital reserves and the healthy underlying dividend and earnings growth of the companies within the portfolio, we believe that the policy remains very well supported.

Comments on SDR

The Board notes the FCA's recent regulation on sustainability disclosures, including product labelling and presentation of sustainable credentials by UK funds, including investment trusts; the Sustainable Disclosure Regime ('SDR"). The Board is considering the implications of this for the Company, which is one of the few UK investment trusts to adopt a sustainable investment approach. It is worth noting that the decision to formally adopt the sustainable investment approach in 2021 was very much an evolution of our investment approach which focuses on quality companies capable of delivering superior total returns with growing income, rather than a response to heightened levels of investor interest. The Board will continue to ensure that our approach and process are described in terms that meet all facets of UK regulation and we are confident that our successful, differentiated investment approach will not have to change in any material respect as a result of the introduction of this regulation.

Gearing

The Board believes that the sensible use of modest financial gearing, whilst amplifying market movements in the short term, will enhance returns of both capital and income to shareholders over the long term. We also recognise the benefit that having a reasonable proportion of long-term fixed rate funding provides to managing the Revenue Account, through greater certainty over financing costs. The Company currently employs two sources of gearing; the £30 million loan notes maturing in 2045, and a £30 million multi-currency revolving credit facility that expires in July 2024. A Sterling equivalent of £13.3 million of the revolving credit facility was drawn down at the year end. The loan notes bear a fixed interest rate of 3.99% and the multi-currency facility is at a variable rate, and thus the costs of borrowing have increased compared to the prior year.

With debt valued at par, the Company's net gearing decreased from 7.1% to 6.8% during the year. This decline was due to holding a higher cash balance at the year end and a small reduction in borrowings due to the impact of foreign exchange translation. The Board believes this remains a relatively conservative level of gearing and, with part of the revolving credit facility undrawn, this provides the Company with financial flexibility should opportunities to deploy additional capital arise.

Discount

The share price total return for the year of -1.6% was significantly lower than the NAV total return, reflecting a move in the discount from 2.9% at the end of last year to 10.7% as at 31 January 2024 (on a cum-income basis with borrowings stated at fair value). In response to this widening during the year, 2.1 million shares were bought back at an average price of £2.69, well below the NAV.

The Board believes a consistent rating of the Company's shares close to the underlying asset value is of significant benefit to shareholders. As well as a strong focus on execution of the investment strategy, the Board continues to support efforts to attract new investors and retain existing ones through clear messaging and regular engagement with investors. We are confident that the company's strong performance, attractive dividend profile and differentiated positioning are a good basis to support a strong rating for the Company's shares over the medium term. We will continue to use the buyback facility to provide liquidity and address the imbalances between buyers and sellers. Continued good performance and a renewal of broadly based interest in UK equity markets will, we believe, place the Company's shares back on a rating that reflects its performance. As in previous years, we will seek shareholders' permission at the forthcoming AGM to buy back shares and issue new shares. 

Annual General Meeting and Online Shareholder Presentation

AGM

The AGM will be held at 12 noon on Thursday 23 May 2024 at the offices of abrdn, 18 Bishops Square, London E1 6EG. The meeting will include a presentation from the Investment Manager and will be followed by lunch. We encourage all shareholders to complete and return the Proxy Form enclosed with the Annual Report so as to ensure that your votes are represented at the meeting. If you hold your shares in the Company via a share plan or a platform and would like to attend and/or vote at the AGM, then you will need to make arrangements with the relevant administrator.

We recognise that many shareholders who previously held the Company's shares through the abrdn Savings Schemes now hold their shares through the Interactive Investor platform. Where we have contact details, abrdn will keep you up to date with information relating to the Company, including regarding the AGM. You can also register for email alerts relating to the Company, including links to videos and podcasts by the portfolio managers, articles on the Company and notification of publication of interim and annual results. You can register by scanning the QR Code on the Contents Page of the Annual Report or by registering here: www.dunedinincomegrowth.co.uk/en-gb/contact-and-support?tab=5. We would encourage all shareholders to register for updates. In addition, the Association of Investment Companies has included helpful information on its website explaining how platform customers can attend and vote at an AGM:  www.theaic.co.uk/how-to-vote-your-shares. Should you wish to receive any information directly from the Company, or request to receive a hard copy of this and future Annual Reports, please contact the Company Secretary at CEF.CoSec@abrdn.com

Online Shareholder Presentation

In order to encourage as much interaction as possible with our shareholders, and especially for those who are unable to attend the AGM, we will also be hosting an Online Shareholder Presentation, which will be held at 10.00 am on Tuesday 7 May 2024. At this event you will receive a presentation from the Investment Manager and have the opportunity to ask live questions of the Chairman and the Investment Manager. The online presentation is being held ahead of the AGM to allow shareholders to submit their proxy votes subsequently.

Full details on how to register for the online event can be found at: https://bit.ly/abrdn-Dunedin-Income-2024

Details are also contained on the Company's website.

Board Succession

It is the Company's stated policy that Directors should stand down after nine years on the Board. Jasper Judd, who is Chairman of the Audit Committee, and I, both joined the Board in February 2016. Accordingly, we will stand down from the Board at the conclusion of the Company's AGM in 2025. The Board will recruit a further Director during the course of this financial year who, it is intended, will take over from Jasper as Chairman of the Audit Committee. The number of Directors will therefore increase to six for a short period to allow for an orderly handover and smooth succession. Howard Williams, who has been a Director since April 2018, will succeed me as Chair of the Company and it is the Board's intention to recruit a fifth Director in 2025 to bring the number of Directors back to five.

Outlook

The Company has a clear focus on generating both total return and dividend growth while formally incorporating sustainability into its mandate. The Board believes that this is the correct strategy to deliver capital outperformance and dividend growth over the longer term. Having weathered a volatile economic and political environment over the past few years, we believe that there are now reasons for cautious optimism for the Company's relative performance to continue to prove robust.

Inflationary pressures have eased substantially, paving the way for the Bank of England to potentially cut interest rates at some point in 2024. The global economy, while far from booming, is continuing to prove relatively robust, despite substantial tightening in monetary policy and very subdued Chinese output. Sustainability is coming back onto investors' radars as environmental, social and governance increasingly impact investment cases. Meanwhile, the market valuations of UK and European equities are extremely attractive on an absolute and relative basis. This all potentially points to an environment that can both support earnings delivery and an expansion in equity multiples which could drive attractive total returns to investors. While declining interest rates may also help to narrow the discount at which your Company's shares trade.

We also believe that the Investment Manager's focus on sustainable companies means that the income growth of the Company should be driven more by structural rather than cyclical growth and that gives the Investment Manager a higher degree of confidence on the likely path of income generation. This should help to underpin earnings delivery even in an environment where economic growth remains modest, while the balance of the portfolio means it is well set to navigate volatile markets and demonstrate resilience in a range of different market environments.

There are a number of reasons to be watchful. Elections at home and abroad will generate plenty of speculation and debate and, while inflationary pressures have eased, they are still at elevated levels compared to central bank targets. Likewise, geopolitical tensions continue to persist across the Middle East, Russia continues with its invasion of Ukraine and China's relationship with Taiwan remains tense. As a result, we think it is important to maintain a relatively well-balanced portfolio and the Investment Manager's focus on investing in companies with pricing power, strong balance sheets and with greater exposure to structural, rather than cyclical, growth should offer greater resilience in both capital and income generation. The Company's track record over the past five years with this strategy remains highly creditable. 

The Board is confident that the Company is well-positioned to continue to deliver relative total return outperformance over the medium and long term. This, combined with the return to growing the dividend ahead of inflation, should enable the Company's shares to trade closer to NAV.

David BarronChairman3 April 2024

Overview of Strategy

Business

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

Investment Objective

The Company's objective is to achieve growth of income and capital from a portfolio invested mainly in companies listed or quoted in the United Kingdom that meet the Company's sustainable and responsible investing criteria as set by the Board. 

Investment Policy

In pursuit of its objective, the Company's investment policy is to invest in high quality companies with strong income potential and providing an above-average portfolio yield. 

The Company may only make material changes to its investment policy (including the level of gearing set by the Board) with the approval of shareholders in the form of an ordinary resolution.

Risk Diversification 

The Company maintains a diversified portfolio consisting, substantially, of equity or equity-related securities, and it can invest in other financial instruments. The Company is invested mainly in companies listed or quoted in theUnited Kingdom and can invest up to 25% of its gross assets overseas.

It is the policy of the Company to invest no more than 15% of its gross assets in other listed investment companies and no more than 15% of its gross assets in any one company.

Gearing

The Board is responsible for determining the gearing strategy for the Company, with day-to-day gearing decisions being made by the Manager within the remit set by the Board. The Board has set its gearing limit at a maximum of 30% of the net asset value at the time of draw down. Gearing is used selectively to leverage the Company's portfolio in order to enhance returns where and to the extent considered appropriate.

Delivering the Investment Objective

The Directors are responsible for determining the Company's investment objective and investment policy. Day-to-day management of the Company's assets has been delegated, via the AIFM, to the Investment Manager.

Benchmark

The Company's benchmark is the FTSE All-Share Index (total return). Performance is measured on a net asset value total return basis over the long-term.

Promoting the Success of the Company

The Board's statement below describes how the Directors have discharged their duties and responsibilities over the course of the financial year under section 172 (1) of the Companies Act 2006 and how they have promoted the success of the Company for the benefit of the members as a whole.

Key Performance Indicators ("KPIs")

The Board uses a number of financial performance measures to assess the Company's success in achieving itsobjective and determining the progress of the Company in pursuing its investment policy. The main KPIs are shown in the table below.

Principal Risks and Uncertainties

The Board carries out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks. The Board also considers emerging risks which might affect the Company. The Board receives updates from the Manager on the risks that could affect the Company.

The Board has carried out a robust assessment of the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation. The principal risks and uncertainties facing the Company at the current time, together with a description of the mitigating actions the Board has taken, are set out in the table below. In addition to those principal risks and uncertainties, the Board considers that the development of Artificial Intelligence ("AI") presents potential risks to businesses in almost every sector. The extent of the risk presented by AI is extremely hard to assess at this point but the Board considers that it is an emerging risk and, together with the Manager, will monitor developments in this area.

There are a number of other risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. These include a number of existing geo-political risks. The Board is also conscious of the impact of inflation and higher interest rates on financial markets.

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

Promotional Activities

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

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

Environmental, Social and Human Rights Issues

The Company has no employees as the Board has delegated the day to day management and administrative functions to the Manager. There are therefore no disclosures to be made in respect of employees.

Modern Slavery Act

Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

The UK Stewardship Code and Proxy Voting

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

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

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Under Listing Rule 15.4.29(R), the Company, as a closed ended investment company, is exempt from complying with the Task Force on Climate-related Financial Disclosures.

Viability Statement

The Board considers that the Company, which does not have a fixed life, is a long term investment vehicle and, for the purposes of this statement, has decided that five years is an appropriate period over which to consider its viability. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than five years.

Taking into account the Company's current 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 five years from the date of this Report.

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

- The principal risks and uncertainties detailed above and the steps taken to mitigate these risks.

- The relevance of the Company's investment objective.

- The Company is invested in readily-realisable listed securities.

- Share buy backs carried out in the past have not resulted in significant reductions to the capital of the Company.

- Although the Company's stated investment policy contains a maximum gearing limit of 30% of the NAV at the time of draw down, the Board's policy is to have a relatively modest level of gearing and the financial covenants attached to the Company's borrowings provide for significant headroom.

- The ability of the Company to refinance its £30 million multi-currency credit facility when it matures in July 2024 (see Going Concern).

- The level of ongoing charges.

- The robustness of the operations of the Company's third party service suppliers.

In making its assessment, the Board is also aware that there are other matters that could have an impact on the Company's prospects or viability in the future, including current and future geo-political events, economic shocks or significant stock market volatility caused by other factors, and changes in regulation or investor sentiment.

Outlook

The Board's view on the general outlook for the Company can be found in the Chairman's Statement whilst the Investment Manager's views on the outlook for the portfolio are included in its report..

On behalf of the BoardDavid BarronChairman3 April 2024

Promoting the Success of the Company

Introduction

Section 172 (1) of the Companies Act 2006 (the "Act") requires each Director to act in the way he/she considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole.

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

The Purpose of the Company and Role of the Board

The purpose of the Company is to act as a vehicle to provide, over time, financial returns (both income and capital) to its shareholders. Investment trusts, such as the Company, are long-term investment vehicles and are typically externally managed, have no employees, and are overseen by an independent non-executive board of directors.

The Board, which throughout the year comprised five independent non-executive Directors with a broad range of skills and experience across all major functions that affect the Company, retains responsibility for taking all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's service providers.

The Board's philosophy is that the Company should operate in a transparent culture where all parties are provided with the opportunity to offer practical challenge and participate in positive debate which is focused on the aim of achieving the expectations of shareholders and other stakeholders alike. The Board reviews the culture and manner in which the Manager and Investment Manager operate at its regular meetings and receives regular reporting and feedback from the other key service providers. The Board works very closely with the Manager and Investment Manager in reviewing how stakeholder issues are handled, ensuring good governance and responsibility in managing the Company's affairs, as well as visibility and openness in how the affairs are conducted.

The Company's main stakeholders have been identified as its Shareholders, the Manager (and Investment Manager), Service Providers, Investee Companies, Debt Providers and, more broadly, the environment and community at large.

How the Board Engages with Stakeholders

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

Further details are included in the table below.

Specific Examples of Stakeholder Consideration During the Year

While the importance of giving due consideration to the Company's stakeholders is not a new requirement, and is considered during every Board decision, the Directors were particularly mindful of stakeholder considerations during the following decisions undertaken during the year ended 31 January 2024. Each of these decisions was made after taking into account the short and long term benefits for stakeholders.

Investment Objective and Portfolio

The Investment Manager's Review details the key investment decisions taken during the year. The overall shape and structure of the investment portfolio is an important factor in delivering the Company's stated investment objective and is reviewed at every Board meeting, including compliance with the Company's sustainable and responsible investing criteria. 

During the year, through the work of the Management Engagement Committee, the Board decided that the continuing appointment of the Manager is in the best interests of shareholders.

Dividend

Following the payment of the final dividend for the year, of 4.15p per Ordinary share, total dividends for the year will amount to 13.75p per Ordinary share. This represents an increase of 5.0% compared to the previous year. This will be the 40th year out of the past 44 that the Company has grown its dividend, with the distribution maintained in the other four years, and is in accordance with its policy to grow total annual dividends in real terms over the medium term. 

Through meetings with shareholders and feedback from the Manager and the Company's Stockbroker, the Board is conscious of the importance that shareholders place on the level of dividends paid by the Company.

Renewal of Bank Loan

During the year, the Board announced the renewal of the Company's £30 million multi-currency revolving credit facility with Bank of Nova Scotia London Branch. The facility replaced the expiring £30 million multi-currency revolving credit facility and will expire on 11 July 2024. 

Under the terms of the facility, the Company has the option to increase the level of the commitment from £30 million to £40 million at any time, subject to the lender's credit approval.

The Board continues to believe that borrowings, in the form of the Company's Loan Notes 2045 and the multi-currency revolving credit facility, are beneficial to long term net asset value returns and is one of the benefits of the closed ended investment trust structure.

Share Buy Backs

During the year, the Company bought back 2,091,781 Ordinary shares to be held in treasury, providing a small accretion to the NAV per share and a degree of liquidity to the market at times when the discount to the NAV per share had widened in normal market conditions. It is the view of the Board that this policy is in the interest of all shareholders.

Shareholder Engagement

During the year, the Board met shareholders at the AGM and the Chairman met directly with representatives of some of the Company's largest shareholders. The AGM was held in Dundee in 2023 and will be held in London this year.

To encourage and promote stronger interaction and engagement with the Company's shareholders, the Board will hold an interactive online shareholder presentation which will be held at 10.00am on Tuesday 7 May 2024. At the presentation, shareholders will receive updates from the Chairman and Investment Manager and there will be the opportunity for an interactive question and answer session. The online presentation is being held ahead of the Annual General Meeting to allow shareholders to submit their proxy votes prior to the meeting. Details of how to register for the event can be found in the Chairman's Statement.

The Board considers that it is very important to maintain an ongoing dialogue with shareholders to properly understand their views and to communicate the actions of the Board. 

On behalf of the BoardDavid BarronChairman3 April 2024

Performance

Performance (total return)

Ten Year Financial Record

Investment Manager's Review

Introduction

For the year ended 31 January 2024, the Company's net asset value total return of 6.7% compared favourably to a total return of 1.9% from the benchmark, the FTSE All-Share Index. This encouraging outcome occurred despite various challenges in the UK market, such as geopolitical risks, concerns over the financial stability of the banking sector, fears of persistent inflation, and the delayed impact of tight monetary policy. Economies proved more resilient than anticipated coming into the year. Consumer confidence has benefited from real wage growth and a moderating cost of living, meanwhile the UK faced a mild technical recession in the latter half of the year. More disappointingly, in the context of strong portfolio outperformance, the share price of the Company declined over the year by 1.6% in total return terms and the discount widened. The revenue return hit a new record level of 13.54p a share.

The global macro-economic outlook remains mixed, with a high degree of uncertainty. While fears of a US recession have lessened, the Chinese recovery has disappointed and global growth is expected to slow. Recognising this backdrop, we believe the Company is well-positioned to navigate potential challenges in the market. Our focus on higher-quality companies and investments that can deliver both income and capital growth, while adhering to the Company's sustainable and responsible investing approach, should help us manage any difficult market conditions ahead.

The portfolio remains highly differentiated compared to both peers and its benchmark. It remains the only UK Equity Income investment trust with a formal sustainability approach. The active share of the portfolio is 76%, while the number of holdings is a focussed group of 35. We see attractive opportunities in innovative mid-sized UK companies and have 25% of the Company's assets in the FTSE 250 Index and 50% in UK large companies. We utilise the Company's flexibility to invest overseas with an allocation of up to 25% to high quality overseas companies, offering diversification and unique exposures.

The Company offers an attractive 5.0% dividend yield (based on the year end share price of 276p), approximately 20% ahead of the FTSE All-Share Index. The free cash flow performance of companies held in the portfolio has been strong, with many growing their dividends during the year. As a result, income generation came in ahead of our initial expectations.

Performance

We are pleased with the Company's income progression in the year. The revenue earnings per share of 13.54p exceeded our expectations and represents an increase of 4.0% over the previous year. Special dividends were paid by Volvo and Softcat in the year. A number of holdings delivered strong dividend growth, including Games Workshop, Morgan Sindall, Novo-Nordisk, Relx, and Sirius Real Estate. We continued writing options based on our fundamental analysis of holdings in the portfolio and this has been a benefit to the Company by diversifying and increasing the level of income generated.

The UK market concluded the year with a modest increase, despite experiencing some volatility throughout the year. The Company benefited from positive sector allocation given its underweight exposure to the basic materials sector, which underperformed due to lower commodity prices associated with weaker Chinese activity. The portfolio's overweight position in the technology sector, an area with numerous quality and growth characteristics that we focus on, proved beneficial to performance.

The Company's sustainable investment approach targets investment in high-quality, sustainable Leaders and Improvers across the market and we continue to engage with investee companies. Filters are applied to the universe to reduce exposure to sectors and companies facing the highest environmental and social risks. During the year, the investable universe provided a tailwind to relative performance, primarily due to its lower exposure to basic materials. While the primary focus of the Company is on selecting high-quality, sustainable companies, we continue to monitor factor risks presented by this approach and remain confident that it aligns with positive outcomes for shareholders. 

Encouragingly, fundamental analysis and stock picking contributed positively, with the market rewarding companies that demonstrated attractive growth and improving fundamentals. In the healthcare sector, Novo-Nordisk announced a series of trial data indicating that the anti-obesity drug Wegovy not only leads to weight loss in patients but also reduces the risk of cardiovascular events. The drug targets a significant unmet need, obesity, with attractive long-term supply/demand dynamics and the shares responded very favourably. The accounting software firm Sage exceeded expectations with accelerating revenue growth, driven by its US cloud accounting software product, Sage Intacct. Upon purchasing shares in late 2022, we anticipated that the company was at a growth and margin inflection point, which has subsequently materialised. Sage's transition to subscription contracts and product innovation form a strong foundation for sustained growth in the medium term. Relx is performing better than anticipated due to its investment in data analytics and decision-making tools, which enable customers to extract more value from its platform. With the valuation at a discount to US peers, mainly due to its UK listing, we continue to believe it is a compelling opportunity.

As addressed in last year's Annual Report, UK domestic and mid-sized companies' underperformance in 2022 resulted in heavily discounted valuations, but we anticipated that long-term alpha generation from UK mid-sized companies would return. This trend of underperformance continued through to October 2023 due to concerns about sticky inflation, recession risk and market liquidity headwinds, before sharply reversing in the last quarter of the financial year. The holding in Intermediate Capital rebounded strongly, while UK construction company Morgan Sindall and large housebuilder Taylor Wimpey saw share price recovery as fears of a deep UK recession and house price deflation moderated. Taylor Wimpey's unique dividend policy, based on net asset value rather than earnings, ensured a visible and healthy shareholder distribution.

Turning to the detractors to performance. The holding in the Asian insurer Prudential underperformed on concerns about the pace of recovery in China. We view this as a temporary setback and believe that Prudential's long-term structural growth potential, offered by its market exposures, is not reflected in its discounted valuation. The specialist UK lender Close Brothers faced news that the UK financial regulator, the FCA, has opened an enquiry into legacy motor finance commission structures in the industry and whether customers are owed financial redress. The quantum and timing of the amount to be paid to customers is uncertain and patience will be required, with a regulatory announcement anticipated in September this year. Meanwhile the company cut its dividend in order to conserve capital which was a disappointing development.

Portfolio Activity

We introduced several new holdings this year. We initiated a position in Telecom Plus, a retailer of utility, telecom and insurance products, which operates in the UK under the Utility Warehouse brand. The company has a capital-light business model, strong balance sheet and attractive cost advantage which means it is well placed to deliver long-term customer growth, earnings progression and shareholder distributions. We also introduced the UK's largest IT value added reseller Softcat to the portfolio. We believe Softcat has significant potential for long-term growth, coupled with a strong balance sheet and the optionality for enhanced shareholder cash returns. Alongside these additions, we purchased a new position in German automotive manufacturer Mercedes-Benz which is repositioning its strategy towards the luxury end of the market and is well positioned from a technology perspective to meet the challenges of the electric vehicle transition and the gradual move to autonomous driving.

Finally, we introduced National Grid, which has been owned by the Company in the past. The company aims to deliver both asset value and earnings growth over the medium term, driven by the investment required to decarbonise the UK and US energy networks and is a critical enabler of the energy transition. We part funded this purchase with a reduction in the holding in SSE, which benefits from similar drivers. National Grid has a superior shareholder distribution return and so is helpful from an income perspective.

To fund these new ideas we exited small holdings in lower conviction names Direct Line Insurance, Ashmore and Ubisoft. We also took the opportunity to exit Dechra Pharmaceuticals after it received an all-cash offer from private equity company EQT and the private equities investment department of Abu Dhabi Investment Authority. Finally, we exited Coca-Cola Hellenic Bottling Company following strong share price recovery from the negative reaction to the Russian invasion of Ukraine, and resilient earnings.

Outlook

Signs are emerging that the actions taken by central banks to manage the high levels of inflation in the UK and Europe are having their desired effect. While inflation is decelerating, geopolitical risk and wage growth remain elevated, together making the path to monetary easing a challenge to predict. Global growth is expected to slow and the UK and Eurozone are already in recession-like conditions. The US economy has remained more resilient than many feared, however household savings and corporate balance sheets are finite. Chinese growth has stabilised amid easing but household confidence and the real estate sector weigh on the economy. Despite this backdrop, we remain positive on the potential long-term returns available from the portfolio. Fundamental company analysis supports our conviction in the high quality businesses in the portfolio, and we see attractive opportunities that are underappreciated by the market.

There are reasons to be optimistic. The Company should benefit from the focus on higher quality companies with less reliance on the economic cycle, given our attention to diversification, balance sheet strength, and resilience of income. The UK equity market remains highly attractive in terms of valuation, both on an absolute basis and relative to global markets. This view is supported by the increased frequency of mergers and acquisitions across the market which, in our view, will act as a catalyst to address the mispricing. 

Overall, we will continue to maintain a balanced approach to the positioning of the portfolio, giving it the potential to perform in a range of market environments. Our primary attention is on protecting capital, but we will continue to look to participate in opportunities where share prices in good companies with attractive long-term prospects have been oversold. Simultaneously, we will concentrate on those UK and overseas companies committed to creating a more sustainable future. 

Ben Ritchie and Rebecca Maclean,abrdn Investments Limited3 April 2024

Portfolio

Sector Analysis

Directors' Report (extract)

The Directors present their report and the audited financial statements for the year ended 31 January 2024.

Results and Dividends

The financial statements for the year ended 31 January 2024 are contained below. First, second and third interim dividends, each of 3.20p per Ordinary share, were paid on 25 August 2023, 24 November 2023 and 29 February 2024 respectively. The Directors recommend a final dividend of 4.15p per Ordinary share, payable on 31 May 2024 to shareholders on the register on 3 May 2024. The ex-dividend date is 2 May 2024. A resolution to approve the final dividend will be proposed at the Annual General Meeting.

Principal Activity and Status

The Company is registered as a public limited company (registered in Scotland No. SC000881) and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as an investment trust subject to it continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 February 2012. The Directors are of the opinion that the Company has conducted its affairs for the year ended 31 January 2024 so as to enable it to comply with the ongoing requirements for investment trust status.

Individual Savings Accounts

The Company has conducted its affairs in such a way as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.

Donations to Charity

During the previous year, the Board decided that amounts of unclaimed dividends greater than 12 years old, which are returned annually to the Company by the Registrar in accordance with the Company Articles of Association, would be donated to charity. Accordingly, the Company made a donation of £19,000 (2023: £16,000) to the abrdn Charitable Foundation, which directs funding to charities around the world.

The abrdn Charitable Foundation is a registered charity. Its board of directors includes independent representation from the abrdn Group and provides oversight and guidance for its charitable giving activities.

Capital Structure and Voting Rights

The issued Ordinary share capital at 31 January 2024 consisted of 146,172,889 Ordinary shares of 25p and 7,505,046 Ordinary shares held in treasury.

Each Ordinary share holds one voting right and shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary shares, excluding treasury shares, carry a right to receive dividends. On a winding up or other return of capital, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.

There are no restrictions on the transfer of, or voting rights attaching to, the Ordinary shares in the Company other than certain restrictions which may from time to time be imposed by law.

Management Agreement

The Company has appointed abrdn Fund Managers Limited ("aFML"), a wholly owned subsidiary of abrdn plc, as its alternative investment fund manager. aFML has been appointed to provide investment management, risk management, administration and company secretarial services and promotional activities to the Company. The Company's portfolio is managed by abrdn Investments Limited ("aIL) by way of a group delegation agreement in place between aFML and aIL. In addition, aFML has sub-delegated administrative and secretarial services to abrdn Holdings Limited and promotional activities to aIL. Details of the management fees and fees payable for promotional activities are shown in notes 4 and 5 to the financial statements.

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

Substantial Interests

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

The table below sets out the interests in 3% or more of the issued share capital of the Company, of which the Board was aware as at 31 January 2024.

There have been no changes notified to the Company between the year end and the date of approval of this Report.

Directors

Throughout the year, the Board comprised five non-executive Directors, each of whom is considered by the Board to be independent of the Company and the Manager. David Barron is the Chairman and Howard Williams is the Senior Independent Director.

The Directors attended scheduled Board and Committee meetings during the year ended 31 January 2024 as follows (with their eligibility to attend the relevant meetings in brackets):

A David Barron is not a member of the Audit Committee but attends by invitation. He attended all Audit Committee meetings during the year.

The Board meets more frequently when business needs require. 

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, Gay Collins, Jasper Judd, Howard Williams, Christine Montgomery and David Barron will retire at the Annual General Meeting and, being eligible, offer themselves for re-election. 

The Board believes that all the Directors seeking re-election remain independent of the Manager and free from any relationship which could materially interfere with the exercise of their judgement on issues of strategy, performance, resources and standards of conduct. The Board believes that each Director has the requisite high level and range of business, investment and financial experience which enables the Board to provide clear and effective leadership and proper governance of the Company. Following formal performance evaluations, each Director's performance continues to be effective and demonstrates commitment to the role, and their individual performances contribute to the long-term sustainable success of the Company. The Board therefore recommends the re-election of each of the Directors at the Annual General Meeting.

Board's Policy on Tenure

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

It is the Board's policy that the Chairman of the Board will not serve as a Director beyond the Annual General Meeting following the ninth anniversary of his or her appointment to the Board. However, this may be extended in exceptional circumstances or to facilitate effective succession planning and the development of a diverse Board. In such a situation the reasons for the extension will be fully explained to shareholders and a timetable for the departure of the Chairman clearly set out.

Board Diversity

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

The Board has resolved that the Company's year end date is the most appropriate date for disclosure purposes.

Table for reporting on gender as at 31 January 2024

Table for reporting on ethnic background as at 31 January 2024

Notes:

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

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

3. This column is not applicable as the Company is externally managed and does not have any executive staff. Specifically, it does not have either a CEO or CFO. The Company considers that the roles of Chairman of the Board, Senior Independent Director and Chairs of the Audit Committee, Nomination and Remuneration Committee and Management Engagement Committee are senior Board positions and, accordingly, that the Company meets in spirit the requirement that at least one of the senior Board positions is held by a woman as set out in LR 9.8.6R (9)(a)(ii) .

As shown in the above table, the Company has not as yet met the target set out in LR 9.8.6R (9)(a)(iii) that at least one Director is from a minority ethnic background. It is the Board's intention that this target will be taken into account at the time of the next appointment.

The Roles of the Chairman and Senior Independent Director

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

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

Directors' and Officers' Liability Insurance

The Company maintains insurance in respect of Directors' and Officers' liabilities in relation to their acts on behalf of the Company. Each Director is entitled to be indemnified out of the assets of the Company to the extent permitted by law against any loss or liability incurred by him or her in the execution of his or her duties in relation to the affairs of the Company. These rights are included in the Articles of Association of the Company.

Management of Conflicts of Interest

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

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

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

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

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.

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 of the chairman of a remuneration committee to have served on a remuneration committee for at least 12 months prior to appointment (provision 32); and

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

The Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. 

Full details of the Company's compliance with AIC Code can be found on its website.

Going Concern

The Company's assets consist mainly of equity shares in companies listed on the London Stock Exchange and in most circumstances are considered to be realisable within a short timescale. The Board has set limits for borrowing and derivative contract positions and regularly reviews actual exposures, cash flow projections and compliance with loan covenants. The Directors have considered the fact that Company's investments comprise readily realisable securities which can be sold to meet funding requirements if necessary. The Directors have also performed stress testing on the portfolio and the loan financial covenants.

The Company has borrowings in the form of £30 million 3.99% Loan Notes that mature in December 2045, and a £30 million multi-currency revolving credit facility with The Bank of Nova Scotia, London Branch, which matures in July 2024. The Board has reviewed indicative quotes for the renewal of the multi-currency revolving credit facility and expects to be able to renew it upon its maturity with a similar facility.

Following this assessment, 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 of accounting in preparing the financial statements.

Accountability and Audit

Each Director confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and they have taken all the steps that they could reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Independent Auditor

The Company's Auditor, Deloitte LLP, has indicated its willingness to remain in office. The Board will propose resolutions at the Annual General Meeting to re-appoint Deloitte LLP as Auditor for the ensuing year and to authorise the Directors to determine its remuneration.

Relations with Shareholders

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

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 Board and Manager meet with major shareholders on at least an annual basis in order to gauge their views.

abrdn Holdings Limited has been appointed Company Secretary to the Company. Whilst abrdn Holdings Limited is a wholly owned subsidiary of the abrdn Group, there is a clear separation of roles between the Manager and Company Secretary with different board compositions and different reporting lines in place. The Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication.

At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds personally as appropriate.

Directors attend meetings with the Company's largest shareholders and meet other shareholders at the Annual General Meeting and, as explained in the Chairman's Statement, the Company will hold an online shareholder presentation in advance of the Annual General Meeting this year, which will include an interactive question and answer session.

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.

Disclosures in Strategic Report

In accordance with Section 414 C (11) of the Companies Act 2006, the following information otherwise required to be set out in the Directors' Report has been included in the Strategic Report: risk management objectives and policies and likely future developments in the business.

Annual General Meeting

The Annual General Meeting will be held at 18 Bishops Square, London E1 6EG at 12 noon on Thursday 23 May 2024.

By order of the Boardabrdn Holdings Limited Company Secretary1 George StreetEdinburgh EH2 2LL3 April 2024

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 have elected to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 'The Financial Reporting Standard Applicable in the UK and Republicof 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 forthat period. 

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

- select suitable accounting policies and then apply them consistently; 

- make judgments 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; and 

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

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

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

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

The 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 Annual Report taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's position and performance, business model and strategy; and

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

On behalf of the BoardDavid BarronChairman3 April 2024

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

For the year ended 31 January 2024