It is a great pleasure to present a full year report to you for the first time as Chair, having assumed the role at the Annual General Meeting in February 2023, following the retirement of Mark White. While the Company’s Net Asset Value (“NAV”) made progress in the first quarter of the financial year, calendar 2023 has proved to be more challenging. The combination of political and financial turmoil, 40 year-high inflation and rising interest rates have made for a difficult backdrop for small and mid-cap companies, especially those with a focus on the domestic UK economy. The key highlights for the financial year to 30 September 2023 are:
  • A 23rd consecutive year of dividend growth. The dividend for the year is, once again, covered by earnings.
  • A sharp and sustained closing of the discount from around 10% this time last year to around par today. Although the Company bought back shares at the beginning of the year, the Company has been trading at a premium during the year and has issued shares in order to meet the excess demand.
  • A material increase in the proportion of the Company’s shares held by execution-only platforms (such as interactive investor and Hargreaves Lansdown), who typically act on behalf of private shareholders. In the year under review, the ten largest buyers of the Company’s shares were all platforms and those ten large buyers now collectively own over 65% of the Company’s shares on behalf of their various customers. This reaffirms the Board’s view that there remains demand for income mandates from private investors.


Gross income generated by the Company’s investments in the financial year to 30 September 2023 was £12.6 million (2022: £13.5 million). The costs of managing the portfolio, including administration costs, were down 7.3%, largely driven by management fees being down almost 10%. At the same time, interest costs attributable to the revenue account were up from £149,000 to £401,000, reflecting the increase in the cost of debt, as interest rates have risen. After tax, the income of the Company was £11.1 million, down from £12.2 million last year. This resulted in the Company’s earnings per share being 23.43 pence, which was 8.2% lower than last year. Despite this decline, the dividend for the year is covered by the earnings for the second consecutive year. Our Portfolio Manager is focused on delivering increased earnings in order to extend the 23-year track record of dividend growth, which we intend to be covered by the revenue earnings in the financial year. Please see the Portfolio Manager’s Review for more detail on the sources of the performance and income.


As a result of the earnings performance the Board is declaring a fourth interim dividend for 2023 of 5.7 pence per share which will be paid on 8 January 2024 to shareholders on the Register on 8 December 2023 with an associated ex-dividend date of 7 December 2023. This takes the total dividend for the year to 22.80 pence per share, and the 23rd consecutive annual dividend increase declared by the Company. At the time of writing, the Company is trading on a yield of 7.6%, among the highest in the AIC UK Equity Income sector. In setting the level of the fourth interim dividend the Board balanced the desire to ensure that the dividend continues to grow and that revenue reserves were replenished. After payment of the fourth interim dividend, and based on current shares in issue, 0.56 pence per share will be transferred to revenue reserves which will be increased to 15.61 pence per share. The Board is committed to maintaining and extending its track record of dividend growth. We therefore expect that, in the absence of any adverse circumstances, in the coming financial year we will extend our track record to 24 consecutive years of dividend growth by paying a dividend of at least 22.90 pence per share. We believe that we are in a position to do this because we are confident that the portfolio should deliver net earnings that will cover this cost except for unforeseen circumstances. We expect that the first three interim dividends will be 5.7 pence per share, payable in March, June and September and the fourth interim will be at least 5.8 pence per share payable in January. Once again, we have tasked the Portfolio Manager with delivering net revenue earnings to be able to cover this level of distribution.


On a more disappointing note, the NAV total return of the Company for the financial year to 30 September 2023 was 1.8% (2022: -7.6%) and the share price total return was 11.4% (2022: -7.8%). The FTSE All-Share Index delivered a total return of 13.8% (2022: -4.0%) over the same period. More detailed information on capital performance can be found in the Portfolio Manager’s Review and generally relate to the continued outperformance of large-cap stocks which only comprise 52.6% of our portfolio.

Discrete performance (%)

  31/10/23  31/10/22 31/10/21  31/10/20  31/10/19
Share Price  4.2  (5.8) 53.9 (32.9) (10.2)
 NAV (7.3) (6.6) 44.6 (27.5) (3.5)
 FTSE All-Share Index 5.9 (2.8) 35.4 (18.6) 6.8
 FTSE 350 Higher Yield Index 7.0  9.2 44.3 (29.3) 1.9

Source: abrdn, total returns. The percentage growth figures are calculated over periods on a mid to mid basis. Past performance is not a guide to future results. Whilst UK equity markets remain undervalued, there is an opportunity for re-rating that recognises the underlying value of our portfolio. The Board remains focused on improving performance and growing the dividend.

Premium & Discount

The Company share price started the year trading on a discount of 8.8% and closed the year on a discount of 0.2%. The Board was pleased to note the market’s positive reaction to the announcement of the full year results in December 2022. The day before the results were announced the Company’s share price was trading on a discount of around 10%; within a week the share price was trading at around par. Crucially, the rerating of the Company’s share price has been maintained. This meant that the Company has moved from buying back shares in the first two months of the financial year , to re-issuing shares from treasury. In October 2022 and November 2022, the Company bought back 100,417 Ordinary shares or 0.21% of the opening issued share capital in the year at a weighted discount of 10.1%. In August 2023 the Company issued 275,000 shares in the market, from treasury, for the first time since January 2016 at a weighted premium of 1.1%. The Board will only issue shares when it considers that the premium is sustained and sufficient to ensure that, net of commission and reasonable market movements, the issuance will be NAV accretive to existing shareholders. We are very pleased that we are in a position to continue to issue shares and over the year, the net number of shares in issue increased by 174,583 with a value of just over £547,000. We hope to be able to continue to grow the Company in this way. Since the year end, the Company has issued a further 135,000 shares from treasury. Through its buy back and issuance approach, the Board aims to try to reduce any volatility in the discount and indeed in the premium to ensure that shareholders have, as far as possible, confidence that the share price will broadly reflect the value of the underlying assets.

Loan refinancing

During the financial year, the Company renewed its £30 million revolving credit facility with the Royal Bank of Scotland International Limited for three years, expiring in June 2026 (“the Facility”). £21 million was drawn down at the year-end (2022: £25 million). Under the terms of the Facility, the Company also 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 and Manager are very aware of the impact of the increase in the cost of borrowing as a result of rising interest rates. The Board considers the impact of these increased costs versus the financial benefit of gearing the portfolio. The Board continues to believe in the long-term benefits of gearing, one of the tools available to closed-end investment companies.

Management Agreement

The management fee structure that prevailed during the year was introduced in 2019 and during the year the Board undertook a review of the agreement and concluded that it was no longer competitive when compared to other similar investment trusts in the sector. Accordingly, the Board negotiated a revision to the fee structure with the Manager. The new agreement does away with the tiered fee structure of 0.65% on the first £175 million of net assts and replaces it with a flat fee of 0.55% on net assets and took effect on 1 October 2023. Based on the net assets at the year-end of £149.9 million, the change represents a reduction in the fee of 15.4%. The Board considers that this makes the fee structure more competitive when compared to the other similar investment trusts in the sector.

Change of Auditor

The Board, led by the Audit Committee, undertook an audit tender in 2023 with a view to appointing a new auditor for the financial year starting on 1 October 2023. KPMG has been the Company’s auditors for six years and the Board concluded that it was appropriate to test the market. The Board had noted that the audit fee for the Company had risen significantly over the last few years. The Board is aware of a general trend of rising audit fees across the industry and discussed this with KPMG in order to gain an understanding as to the likely future fees. The audit tender attracted strong interest and resulted in the proposed appointment of Johnston Carmichael LLP for the financial year ending 30 September 2024. Manager During the year, the Board has continued its focus on the revenue account and maintained its direction to the Portfolio Manager that the revenue account should cover a dividend greater than 22.80 pence per share. Despite the challenging markets, the Board was encouraged that the revenue account surpassed the planned dividend for the year but has encouraged the Portfolio Manager to concentrate on this. The Board believes that the continued appointment of the Manager remains in the best interest of the Company’s shareholders as a whole.

The Board

The Board has continued to evolve in the last 12 months. Mark White retired at the AGM in February 2023 and I assumed the role of Chair, with Mark Little succeeding me as Chair of the Audit Committee. Jeremy Tigue has announced that, after nine years on the Board, he does not intend to stand for re-election at the Company’s AGM in February 2024 and consequently the Board undertook a recruitment process over the summer, and after a thorough search, we were delighted to invite Nick Timberlake to join the Board. Nick joined the Board on 1 August 2023. He has extensive experience as an investment trust fund manager and is already making a significant contribution. Following the conclusion of the AGM, Caroline Hitch will replace Jeremy as the Senior Independent Director and Nick Timberlake will replace Caroline as Chair of the Remuneration & Management Engagement Committee. I would like to thank Jeremy for his invaluable contribution to the Board and the Company over the last nine years.

Online Shareholder Presentation

In order to encourage as much interaction as possible with our shareholders, we will be hosting an Online Shareholder Presentation, which will be held at 11:30 am on Friday, 26 January 2024. 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

Annual General Meeting (“AGM”)

This year’s Annual General Meeting (“AGM”) will be held at wallacespace Spitalfields, 15-25 Artillery Lane, London, E1 7HA on Tuesday, 20 February 2024 at 11:30 am. The meeting will include a presentation by the Portfolio Manager and will be followed by lunch. This is a good opportunity for shareholders to meet the Board and the Manager and the Board encourages you to attend. The Notice of the Meeting is contained in the Annual Report.


I described last year as "challenging” at the start of this report. I suspect this situation will persist well into 2024. Economically, the Office for Budget Responsibility (“OBR”) has downgraded forecast growth of the UK economy to 0.7% in the coming year which does not suggest much prospect of robust earnings growth. The fact that UK equities are already undervalued relative to other markets might provide some downside protection. This filters through to the sector, where investment trusts are trading at discounts not widely seen for over ten years. The announced reduction in employee National Insurance contributions is welcome, but unlikely to be the catalyst to kick start the recovery the economy needs. On top of that, politically we must expect that by the time we report on the 2024 earnings we will either have had or be about to have a General Election. A change of government seems almost inevitable but, whatever its hue, how it will address the fiscal issues is far from clear. Against that gloomy background, one can see some glimmers of hope. The latest inflation numbers for the UK, announced on 15 November show, as expected, a marked downward trend to 4.6% and there is a possibility that this will continue over the next few months as the impact of the energy prices increases last winter, cease to have a bearing on the calculations. That , in turn, could mean that the next move in interest rates, when it happens (and we are not expecting it to be soon), might be downwards. Both these changes should boost confidence, particularly if they are sustained. From the perspective of the Company, these could be excellent conditions for our Manager’s approach, where the Focus on Change process helps our Portfolio Manager identify those stocks that are, in his view, mispriced by the market. This holds out the prospect of some capital growth to accompany the focus on delivering a growing and covered dividend for the 24th consecutive year.

I would like to close this statement by thanking my fellow Board members, the Manager and all our service providers that support the Company in delivering an attractive yield to our shareholders. Thank you to our shareholders for your continued commitment.