Invesco Global Equity Income Trust Plc - Annual Financial Report
LEI: 549300JZQ39WJPD7U596
Annual Financial Report for the year ended
The following text is extracted from the Annual Financial Report of the Company for the year ended
‘The Board is delighted to report that, in addition to the Portfolio Managers delivering another year of strong absolute and relative investment performance, IGET’s shares have re-rated to trade at a premium to NAV. The Company is now regularly issuing shares and has raised £13.2 million since the year end. Growing the size of the Company should improve liquidity in the shares and lead to a lower ongoing charges ratio, as well as marginally enhancing the NAV per share.
We believe the Company is well positioned to navigate what remains an uncertain period for global markets, built on bottom-up stock selection and the disciplined, long-term approach of the Portfolio Managers.’
‘It isn't often in your career that almost every business in the market goes on sale, as it did in April following ‘Liberation Day’. There were many businesses on our shopping list that we had been waiting to buy, and many of those went on sale. This is potentially a very exciting time for future returns.'
Financial Performance
Total Return Statistics (1) (dividends reinvested)
Change for the year (%) 2025 2024 Net asset value (NAV) total return(2) 11.9% 21.0% Share price total return(2) 24.6% 26.9% Benchmark index total return(3) 7.4% 21.6%
Capital Statistics
At 31 May
2025 2024 % change
Net assets (£’000) 212,283 197,555 +7.5
NAV per ordinary share 337.36p 313.30p +7.7
Share price(1) 342.00p 286.00p +19.6
Premium/(discount)(2) per ordinary share 1.4% (8.7)%
Average discount over the year(1)(2) (6.9)% (13.2)%
Gearing(2):
– gross 1.2% nil
– net 0.0% (0.9)%
Revenue Statistics
Year ended 31 May
2025 2024(4) % change
Income (£’000) 4,379 7,433 –41.1
Net revenue available for ordinary
shares (£’000) 3,140 6,099 –48.5
Revenue return per ordinary share 5.01p 9.03p –44.5
Dividends per ordinary share(5)
– first interim 3.13p 1.60p
– second interim 3.13p 1.60p
– third interim 3.13p 1.60p
– final dividend 3.13p 2.55p
Total dividends 12.52p 7.35p +70.3
Ongoing charges ratio(2) 0.78% 0.82%
(1) Source: LSEG Data & Analytics.
(2) Alternative Performance Measure (‘APM’). See Glossary of Terms and Alternative Performance Measures on pages 79 to 81 for details of the explanation and reconciliations of APMs.
(3) Index returns are shown on a total return basis, with dividends reinvested net of withholding taxes.
(4)
With the exception of the income and net revenue available for ordinary shares figures which reflect the Company figures, the 2024 comparative figures reflect those of the Company excluding the revenue return per ordinary share and dividends per share attributable to, and paid by, the
(5)
Following the restructuring in
Chair’s Statement
Highlights
• NAV total return of +11.9% over the year, significantly ahead of benchmark index total return of +7.4%.
• Share price total return of +24.6%, reflecting share price moving from discount of –8.7% to premium of +1.7% over year.
• Reduction in shares in circulation of –0.2% over year, with share buy-backs in first nine months mostly offset by sales of treasury shares in final quarter.
•
Based on year-end NAV, projected annualised dividend of 13.50p per share for year ending 31
I am pleased to present your Company’s Annual Report for the year ended
Your Board is delighted to report that, in addition to your Portfolio Managers delivering another year of strong absolute and relative investment performance, the investment merits of your Company are now being recognised by investors. Since the restructuring, the price at which the shares trade relative to NAV has moved from a discount of –13.0% (at
I thank my Board colleagues (past and present) and the Company’s Investment Manager, broker and other advisers for their part in your Company’s successful transformation. However, most importantly, I thank you, our shareholders, for your ongoing support and welcome those who have invested since the restructuring.
Market Overview
During the year, inflationary pressures, central bank policy shifts and geopolitical tensions continued to affect global equity markets. However, the biggest impact came from the outcome of the 2024 US presidential election. Initial market euphoria, triggered by hopes of tax cuts and deregulation under Donald Trump’s second term as US president, rapidly evaporated with his erratic and chaotic policy approach leading to increased volatility across global financial markets. In particular, his ‘Liberation Day’ announcement of US tariffs resulted in widespread market declines and a spike in
Performance
Your Portfolio Managers’ rigorous process around bottom-up stock selection enabled them to weather the market turbulence and capture attractive opportunities.
The NAV total return per share was +11.9%, compared with the Company’s benchmark, the MSCI World Index (£), total return of +7.4%, over the year. A review of your Company’s investment performance during the year, and changes in the portfolio positioning, can be found in the Portfolio Managers’ Report an pages 12 to 15 and in the portfolio analysis on page 18.
The share price total return over the year was +24.6%, with the price at which the shares trade relative to their NAV having moved from a discount of –8.7% at the beginning of the year to a premium of +1.4% at the year end. The average discount over the year was –6.9% (2024: –13.2%).
Whilst, for the purpose of this Annual Report, we are required to review your Company’s performance over its last financial year, we believe that, in assessing the performance of the Investment Manager (which we do at our quarterly Board meetings), longer periods are more appropriate. Over the three and five years ended
Gearing
During the year, the Company’s net gearing position ranged from a high of 6.3% to a net cash position (no borrowing) of 2.2%. (2024: net gearing high of 1.7% to a net cash position of 3.6%). At the year end, net gearing was nil (2024: net cash of 0.9%), with £2.65 million (2024: £nil) drawn down under the loan facility, equivalent to 1.2% (2024: n/a) of net assets.
Revenue and Dividends
Income and net revenue return per ordinary share for the year amounted to £4,379,000 and 5.01p respectively (2024: £7,433,000 and 9.03p respectively). This change reflects the new structure of your Company, with a global strategy covering all assets held as opposed to the majority of the prior year where the three share classes closed as part of the Company restructure towards the end of the financial year followed different investment objectives, making direct comparison at a Company level less relevant as markets now invested in offer lower yielding companies but better total return prospects. The increase in net assets of 7.5% over the financial year is reflective of the success of this restructure.
One of the positive features of an investment trust is its ability to pay dividends out of capital. At the time of last year’s restructuring, the Board took advantage of this and adopted an enhanced dividend strategy. This works by using the Company’s capital reserves to supplement the underlying income the portfolio generates and then paying this combined amount out to shareholders as dividends. The advantage of this approach is that, with no specific portfolio income targets, it allows freedom for your Portfolio Managers to select the best ideas unhindered and the Company to provide shareholders with an attractive level of predictable income. Under the enhanced dividend strategy, your Company pays an annual dividend of at least 4% of the unaudited previous year-end NAV, paid quarterly in equal amounts in August, November, February and May of each financial year.
The NAV per share at
Discount/Premium Management
During the period from
Shortly after
Your Board is pleased to see that the strength of your Company’s investment proposition is now being reflected in the price at which the shares are trading relative to their NAV. However, your Board recognises that a key concern for investors is not only the price at which shares trade relative to their NAV, but also the volatility in that relative price. So, your Board intends, in normal market conditions, to actively use its share issue and buy-back authorities to manage that volatility.
Marketing and Investor Engagement and Communication
A key priority for your Board, both last year and in the current year, is to increase your Company’s profile, broadening the investor pool that is aware of its investment proposition and strong investment track record. This is as important now, when the shares are trading at a premium, as when they were trading at a discount. Ultimately, your Board is looking to grow the size of your Company which should bring added benefits of improved liquidity in the shares and a lower ongoing charges ratio.
Engagement with our shareholders is of paramount importance. Over the past year, your Investment Manager has welcomed opportunities to meet with shareholders and potential new investors, both virtually and in person, to discuss the Company’s strategy, performance and outlook. We value the feedback received. If you wish to communicate with the Board or Investment Manager, please contact us by email (investmenttrusts@invesco.com).
During the current year, we expect to enhance your Company’s website and investor communication. If you have not already done so, I would encourage you sign up for updates on the Company and its portfolio and your Portfolio Managers’ views. You can do this by scanning the QR code on page 8 with your smartphone/device, visiting the Company’s specific page on the Investment Manager’s website at www.digitalservices.invesco.com/uk/en/investment-trusts-subscriptions or contacting Invesco directly at investmenttrusts@invesco.com.
Board Succession
As reported in my interim statement, I joined the Board on 10
Annual General Meeting
I look forward to welcoming shareholders to the Company’s AGM which will take place at
Post-period End Update
Since the year end, the NAV total return per share and share price total return were +7.7% and +9.2% respectively, compared with the Company’s benchmark total return +7.7% (to 30 July 2025).
Since the year end, the Company has sold 3,610,000 shares from treasury (equivalent to 5.7% of the shares in circulation at
At the Company’s AGM in 2024, shareholders authorised the Company to issue, or sell from treasury, shares representing approximately 10% of the issued share capital (excluding treasury shares) at that time. Due to the recent high level of demand for the Company’s shares and the resulting sales of shares from treasury, the current share issuance authority is likely to have been fully utilised before this year’s AGM, which will be held on
Outlook
The constant barrage of geopolitical tensions and tariff disputes has weighed on the global growth outlook, though levels of uncertainty have eased somewhat since the financial year end. Nonetheless, forecasting the year ahead remains inherently difficult, particularly given the US president’s unpredictable approach to policymaking.
Despite these headwinds, global equity market volatility has largely normalised since the height of the ‘tariff tantrum’ as investors appear more sanguine. While further bouts of equity market volatility are likely, corporate fundamentals, particularly in the US, remain broadly supportive. Valuations in other regions, notably
In this environment, your Portfolio Managers will continue to apply a disciplined, long-term approach, focusing on fundamental stock selection to build a resilient, well-diversified portfolio designed to perform across market cycles.
We remain confident that your Company is well positioned to navigate uncertainty and continue to meet its long-term objectives.
Chair
Performance Record
Total Return
For the year ended 31 May
2025 2024 2023 2022 2021
Net asset value(1) 11.9% 21.0% 9.8% 9.6% 35.9%
Share price(1) 24.6% 26.9% 4.6% 4.4% 32.6%
MSCI World Index (£)(1) 7.4% 21.6% 3.8% 7.4% 22.3%
Revenue return per share 5.01p 9.03p 5.20p 4.85p 3.95p
Dividends 12.52p 7.35p 7.20p 7.15p 7.10p
(1) Source: LSEG Data & Analytics.
Historical Shareholder Returns from an
Annual Cumulative Capital Outcome if
Annual dividends dividends value (using dividends
dividends from from Mid-market mid-market reinvested on
per share(1) investment investment share price share price) payment date
(2) (1)(2) (1)(2)
31 May pence £ £ pence £ £
2015 – – – 166.75 1,000 1,000
2016 6.00 35 35 156.00 936 972
2017 6.40 39 74 197.50 1,184 1,273
2018 6.70 40 114 202.00 1,211 1,345
2019 6.90 41 155 195.00 1,169 1,345
2020 7.05 42 197 176.50 1,058 1,263
2021 7.10 43 240 226.00 1,355 1,673
2022 7.15 43 283 229.00 1,373 1,748
2023 7.20 43 326 232.00 1,391 1,827
2024 7.35 44 370 286.00 1,714 2,318
2025 12.52 75 445 342.00 2,050 2,883
Source: LSEG Data & Analytics.
Portfolio Managers’ Report
Q&A
Q How has the Company performed in the year under review?
A In a period marked by significant market volatility, we are pleased to report a net asset value total return of 11.9%, outperforming the MSCI World Index (£), which delivered a total return of 7.4%. We look to construct an all-weather portfolio that can deliver strong performance across market cycles. We aim for returns to be driven by our individual stock selections rather than by sector, geography or style biases. In a constantly evolving geopolitical and market environment, we’re encouraged that this approach has delivered results over the short and long term, with performance supported by a broad and diverse range of holdings.
Q What have been some of the biggest contributors?
A
Broadcom
delivered an exceptional performance over the year. Under the leadership of CEO
3i Group
had another strong year, driven by the continued expansion of Action, its European discount retail holding. As Action has grown to represent a larger share of 3i’s net asset value, the market has re-rated 3i’s valuation to more closely reflect that of Action. While this reduces the margin of safety, we believe it is a rational adjustment. We continue to see significant growth potential ahead and are encouraged by the stewardship of CEO
Top contributors Average Average
portfolio benchmark Attribution
Name weight % weight % effect %
Rolls-Royce 4.5 0.1 3.2
3i Group plc 5.4 0.1 1.9
Broadcom 2.8 1.2 1.8
Standard Chartered 2.9 – 1.2
Apple 0.4 4.8 0.6
Q And detractors?
A Azelis faced a challenging year in equity markets, yet the underlying business has demonstrated impressive resilience. Despite navigating one of the most significant chemical industry downturns in recent history, Azelis has managed to grow both revenues and profits from 2022 through to 2024. This performance stands out, particularly when compared to peers in similarly cyclical sectors that have experienced sharp earnings declines. We believe the company is well positioned for a potential re-rating and continued earnings growth, and we have maintained our position.
LVMH
was another key detractor during the period. The company has faced several headwinds, including economic softness in
Top detractors Average Average
portfolio benchmark Attribution
Name weight % weight % effect %
Azelis Group 3.2 – –1.2
LVMH 2.2 0.3 –1.0
Verallia 2.1 – –0.8
Novo Nordisk 1.3 0.5 –0.7
Texas Instruments 3.7 0.3 –0.7
Q How do you structure the portfolio?
A We take a flexible, stock-picking approach to investing, guided by three key opportunity pools.
The core of our portfolio is made up of dividend companies with a strong track record of consistently growing their dividends over time. These businesses form the foundation of our long-term value creation strategy and can represent between 70-100% of the fund depending on what opportunities the market presents.
In addition, we allocate up to 20% of the portfolio to high-growth companies that may offer little or no yield today but demonstrate exceptional capital allocation and a clear roadmap to per share value creation. These are businesses we believe can deliver outsized returns through disciplined reinvestment and scalable growth.
Finally, up to 10% of the portfolio is reserved for turnaround opportunities - companies currently facing temporary challenges but with credible plans to restore their dividends. These positions allow us to add balance and contrarian value to the portfolio.
This flexibility has been key in helping us to build a balanced ‘all-weather’ portfolio that has been resilient and outpaced the index through some of the most turbulent markets in recent history.
Q Any interesting new purchases recently?
A On average there was higher turnover than usual as volatility has provided some exciting new opportunities, across a range of sectors and geographies! Here are just a handful of examples of new additions to the portfolio:
ASML : ASML is a Dutch-listed technology leader at the heart of the semiconductor industry. Its advanced lithography machines are essential for producing the smallest, most powerful chips that are critical for technologies like AI, 5G and beyond.
The company holds a near-monopoly in extreme ultraviolet (EUV) lithography, a position that makes it deeply embedded in its customers’ operations and difficult to displace. With a strong balance sheet and minimal disruption risk, ASML is a foundational player in a structurally growing industry.
Following a significant pullback in its share price, we found an attractive long-term entry point into one of the most strategically important companies in global tech.
At the same time, capacity has exited in the market, creating a supply-demand imbalance that should support strong pricing and occupancy for the foreseeable future. Cruise penetration remains low globally, suggesting a significant runway for growth.
While there are concerns about consumer spending, cruising has historically proven resilient even during downturns. Viking’s strong fundamentals and disciplined execution make it well-placed to benefit from long-term tailwinds, despite near-term market caution.
QXO
: QXO is a building products distributor. The company distributes roofing, waterproofing and other such products across
Over the past four decades, Jacobs has launched or scaled multiple multibillion-dollar businesses, often starting in industries where he had no prior experience. From United Waste Systems in the late 1980s, to United Rentals in the 1990s, to XPO Logistics in the 2010s (and its spin-offs GXO and RXO), he’s followed a remarkably consistent strategy: find inefficiencies, consolidate aggressively, inject technology and scale with discipline.
Q Do you still feel like you have an edge on the market given how fast things move?
A The market has changed for active managers, and the pace of change is accelerating. A growing share of market participants now operate with very different time horizons and objectives to ours. These include multi-manager hedge funds, trend followers (momentum chasers) and volatility-focused risk managers. Meanwhile, longterm discretionary investors, once key to price discovery and liquidity, are losing influence.
Today, more capital is focused on short-term moves (from minutes to weeks), and less on long-term fundamentals. Information flows faster than ever, and markets react more quickly, leaving less time to respond thoughtfully. Positions that take years to build can be unwound in days, often for reasons unrelated to capital.
In this environment, our structural advantages matter more, if we use them decisively:
• We have the rare benefit of a genuine 3-5 year investment horizon.
• Our small team can move quickly, without needing to deal with layers of bureaucracy or committee-led decision making.
• We’ve been through drawdowns together and have built a clear playbook.
• We know our companies well and are confident in our research, even when the market disagrees.
Q What are your thoughts on AI?
A AI is evolving at extraordinary speed, and businesses are beginning to adopt generative tools in meaningful ways. This could have far-reaching implications for productivity, profitability and competitive dynamics.
For knowledge-based industries, AI has the potential to significantly boost output with fewer resources. Companies that successfully integrate AI to enhance their customer offering could see faster growth and stronger margins.
But not all businesses will benefit. In some cases, AI may weaken a company’s value proposition or introduce new forms of competition. Google Search being a prime example.
As the pace of change accelerates, the risk of business model disruption rises.
In this environment, we’re focused on backing adaptable, entrepreneurial management teams and staying open-minded about how AI might reshape industries. The winners could be significant, but so could the risks.
Q How are you thinking about the macro given there is so much going on?
A The investment landscape in 2025 has been shaped as much by government policy as by fundamentals. European defence stocks have re-rated sharply following a major shift in military spending. In contrast, healthcare has de-rated due to proposed policy changes, including pressure on US drug pricing and reduced government support. Trade tensions have also had an impact. The US dollar has weakened over 10% on tariff concerns, creating headwinds for European exporters. Some global businesses are being forced to rethink their supply chains, though many are holding off on major investment decisions until there’s more clarity.
Our focus has been on distinguishing between policy changes that will have lasting effects and those that are likely to prove temporary. This helps us stay aligned with businesses that can adapt and thrive through uncertainty.
Q Can you describe how you have taken advantage of the volatility and used it as an opportunity?
A Stay focused on the long term. As mentioned earlier, we draw on our experience from pervious crises and what that has taught us is that short-term volatility is usually a source of opportunity to optimise the portfolio. The muscle memory from managing money through various crises allows us to block out the noise and stay focused on the best risk/return opportunities that are presented at the stock level.
Re-test the thesis . We aim to buy good companies that have strong balance sheets and are run by management teams we trust. If any of these critical elements are no longer true then we may recycle capital, that is, sell existing investments and reallocate the proceeds into more attractive opportunities. The kind of questions we are asking ourselves are as follows: Has their market position changed? Has their industry changed? What can management do to take advantage of new opportunities?
Concentrate on the best risk/reward opportunities . It isn’t often in your career that almost every business in the market goes on sale, as it did in April following ‘Liberation Day’. There were many businesses on our shopping list that we had been waiting to buy, and many of those went on sale. This is potentially a very exciting time for future returns.
Q Any final thoughts on the outlook?
A Uncertainty still exists as to the end game for US tariffs and potential retaliation and countermeasures from other countries. This has an impact on investment and hiring decisions for many businesses. While slowing growth and economic uncertainty are the focus for market participants today, any resolution on tariffs or evidence that the US administration is to be successful in igniting the private sector would shift the emphasis. We choose not to second guess these outcomes, rather focusing our time and energy on building a diversified portfolio of high-quality businesses, trading at attractive valuations from the bottom-up. Diversification is key in this market as we can’t rely on one definitive economic outcome. We will continue to work through the economic implications at an individual business level, but with the focus entirely on building a robust portfolio.
Portfolio Manager Deputy Portfolio Manager
List of Investments
AT
Ordinary shares unless stated otherwise
At market
value % of
Company Industry(1) Country £’000 portfolio
3i Financial Services United Kingdom 12,157 5.8
Rolls-Royce Capital Goods United Kingdom 12,072 5.7
Canadian Pacific Transportation Canada 11,489 5.4
Kansas City
Microsoft Software & Services United States 10,608 5.0
Coca-Cola Europacific Food, Beverage & United Kingdom 8,628 4.1
Partners Tobacco
Semiconductors &
Broadcom Semiconductor United States 8,376 4.0
Equipment
AIA Insurance Hong Kong 7,903 3.7
Semiconductors &
Texas Instruments Semiconductor United States 7,792 3.7
Equipment
Standard Chartered Banks United Kingdom 6,836 3.2
Novo-Nordisk - B Pharmaceuticals,
Shares Biotechnology & Life Denmark 6,447 3.0
Sciences
Top Ten Holdings 92,308 43.6
Universal Music Media & Entertainment Netherlands 6,146 2.9
East West Bancorp Banks United States 6,140 2.9
Taiwan Semiconductor Semiconductors &
Manufacturing Semiconductor Taiwan 5,606 2.7
Equipment
London Stock Exchange Financial Services United Kingdom 5,567 2.6
Azelis Capital Goods Belgium 5,448 2.6
Ferguson Capital Goods United States 5,237 2.5
Equity Real Estate
American Tower Investment Trusts United States 5,023 2.4
(REITs)
Pharmaceuticals,
Recordati Biotechnology & Life Italy 5,021 2.4
Sciences
Aker BP Energy Norway 5,009 2.4
Herc Holdings Capital Goods United States 4,680 2.2
Top Twenty Holdings 146,185 69.2
Tractor Supply Consumer Discretionary United States 4,443 2.1
Distribution & Retail
Corpay Financial Services United States 4,323 2.0
XPO Industrial United States 4,298 2.0
Transportation
KKR & Co Financial Services United States 4,014 1.9
QXO Capital Goods United States 3,984 1.9
Semiconductors &
ASML Semiconductor Netherlands 3,795 1.8
Equipment
Abbott Laboratories Health Care Equipment United States 3,734 1.8
& Services
Itochu Capital Goods Japan 3,681 1.7
Ametek Capital Goods United States 3,667 1.7
Zurich Insurance Insurance Switzerland 3,534 1.7
Top Thirty Holdings 185,658 87.8
Infrastrutture Telecommunication Italy 3,268 1.5
Services
Howden Joinery Capital Goods United Kingdom 3,211 1.5
Viking Holdings Travel & Leisure United States 3,147 1.5
Union Pacific Transportation United States 3,014 1.4
LVMH Consumer Durables & France 2,982 1.4
Apparel
Estee Lauder - A Household & Personal United States 2,519 1.2
Shares Products
Amentum Commercial & United States 2,492 1.2
Professional Services
Semiconductors &
Analog Devices Semiconductor United States 2,432 1.2
Equipment
CME Financial Services United States 1,091 0.5
Old Dominion Freight Transportation United States 1,038 0.5
Line
Top Forty Holdings 210,852 99.7
Progressive Insurance United States 592 0.3
Sberbank(2) – ADR Banks Russia – –
Harbinger – Streamline Hedge Funds Cayman Islands – –
Offshore Fund(3)
Total Holdings 43 (31 211,444 100.0
May 2024: 42)
ADR American Depositary Receipts – are certificates that represent shares in the relevant stock and are issued by a US bank. They are denominated and pay dividends in US dollars.
(1) MSCI and Standard & Poor’s Global Industry Classification Standard.
(2) The investment in Sberbank – ADR has been valued at zero as secondary listings of the depositary receipts on Russian companies have been suspended from trading.
(3)
The hedge fund investment is a residual holding of one of the previous investment strategies, transferred from the Balanced Risk Allocation Portfolio as part of the Company’s restructure in
Environmental, Social and Corporate Governance (‘ESG’) Statement from the Portfolio Managers
What does ESG mean to us?
Head of
Global Equities Fund Manager
• We draw upon ESGintel, Invesco’s proprietary tool, which helps us to better understand how companies are addressing ESG issues
• Engaging with companies to understand corporate strategy today in order to assess how this could evolve in the future
• Monitoring how companies are performing from an ESG perspective and if the valuations fairly reflect the progress being made
Our focus as active portfolio managers is always on finding mispriced stocks and ESG integration underpins our investment process.
The incorporation of ESG into our investment process considers ESG factors as inputs into the wider investment process as part of a holistic consideration of the investment risk and opportunity, from valuation through investment process to engagement and monitoring. The core aspects of our ESG philosophy include: materiality; ESG momentum; and engagement.
• Materiality refers to the consideration of ESG issues that are financially material to the company we are analysing.
• The concept of ESG momentum, or improving ESG performance over time, indicates the degree of improvement of various ESG metrics and factors and help fund managers identify upside in the future. We find that companies which are improving in terms of their ESG practices may enjoy favourable financial performance in the longer term.
• Engagement is part of our responsibility as active owners which we take very seriously, and we see engagement with companies as an opportunity to encourage continual improvement. Dialogue with portfolio companies is a core part of the investment process for our investment team. As such, we often participate in board level dialogue and are instrumental in giving shareholder views on management, corporate strategy, transparency and capital allocation as well as wider ESG aspects.
ESG integration is an ongoing strategic effort to systematically incorporate ESG factors into fundamental analysis. As illustrated by the diagram below, the aim is to provide a 360 degree evaluation of financial and non-financial materially relevant considerations and to help guide the portfolio strategy.
Our investment process has five stages. In this report we go through in detail how ESG is integrated into each stage of the investment process.
Idea Generation
We believe it is important to spread our nets as wide as possible when trying to come up with stock ideas which may find their way into our portfolios. We remain open minded as to the type of companies we will consider. This means not ruling out companies just because they happen to be unpopular at that time and vice versa. Focusing on fundamentals and the broader investment landscape can be a unique way for our portfolios to potentially generate returns in excess of the benchmark as those businesses that have got ESG momentum behind them have the potential to be rerated.
Research is at the core of what we do. Our fundamental analysis covers many drivers, for example, corporate strategy, market positioning, competitive dynamics, the macroeconomic environment, financials, regulation, valuation and, of course, ESG considerations, which guide our analysis throughout.
We use a variety of tools from different providers to measure ESG factors. In addition, at Invesco, we have developed ESGintel, Invesco’s proprietary tool built by our Global ESG research team in collaboration with our Technology Strategy Innovation and Planning (SIP) team.
ESGintel provides Invesco with environmental, social and governance insights, metrics, data points and direction of change. In addition, ESGintel offers Invesco an internal rating on a company, a rating trend and a rank against sector peers. The approach ensures a targeted focus on the issues that matter most for sustainable value creation and risk management.
This provides a holistic view on how a company’s value chain is impacted in different ways by various ESG topics, such as compensation and alignment, health and safety and low carbon transition/climate change.
We always try to meet with a company prior to investment. Based on our fundamental research, including any ESG findings, we focus on truly understanding the key drivers and, most importantly, the path to change. This helps us better understand corporate strategy today and how this could evolve in the future.
We aim to create a well-diversified portfolio of active positions that reflect our assessment of the potential upside for each stock weighted against our assessment of the risks. Sustainability and ESG factors are assessed alongside other fundamental drivers of valuation. The impact of any new purchases will need to be considered at a portfolio level. How will it affect the shape of the portfolio having regard to objectives, existing positions, overall size of the portfolio, liquidity and conviction.
We do not seek out stocks which score well on internal or third party research simply to reduce portfolio risk.
Ongoing Monitoring
Our team continuously monitors how the stocks are performing as well as considering possible replacements. Is the company performing from an ESG perspective and are the valuations fairly reflecting the progress being made or not?
How do we monitor our holdings from an ESG perspective? Again, the same resources used during the fundamental stage are available to us. Our regular meetings with the management teams of the companies we own provides an ideal platform to discuss key ESG issues, which will be researched in advance. We draw on our own knowledge as well as relevant analysis from our ESG team and data from our previously mentioned proprietary system ESGintel which allows us to monitor progress and improvement against sector peers. Outside of company management meetings we constantly discuss as a team all relevant ESG issues, either stimulated internally or from external sources.
Challenge, Assessing & Monitoring Risk
In addition, there are two more formal ways in which our portfolios are monitored:
There is a rigorous semi-annual review process which includes a meeting led by the ESG team to assess how our portfolios are performing from an ESG perspective. This ensures a circular process for identifying flags and monitoring of improvements over time. These meetings are important in capturing issues that have developed and evolved whilst we have been shareholders.
There is also the ‘CIO challenge’, a formal review meeting held between Joe and I individually and the Henley Investment Centre’s Chief Investment Officer (CIO) and each fund manager. This review includes a full breakdown of the ESG performance using Sustainalytics and ISS data, such as the absolute ESG performance of the portfolio, relative performance to benchmarks, stocks exposed to severe controversies, top and bottom ESG performers, carbon intensity and trends. The ESG team review the ESG data and develop stock specific or thematic ESG questions. The ESG performance of the portfolio is discussed with the CIO using the data and the stock specific questions to analyse the fund manager’s level of ESG integration. The aim of these meetings is not to prevent us from holding any specific stock: rather, what matters is that we can evidence understanding of ESG issues and show that they have been taken into consideration when building the investment case.
Voting Policy
The Global Equity Team’s corporate engagement specialists review AGM and EGM proposals taking into account our own knowledge of the companies in which our funds are invested, as well as the comments and recommendations of ISS (1) , Glass Lewis and IVIS (2) . In addition, Invesco provides proprietary proxy voting recommendations and publishes these recommendations via its PROXYintel platform.
Especially where there are situations of controversy or differing views between the consultants mentioned above we will draw on the additional expertise of our internal ESG team.
There will be times when we will follow the recommendations made by ISS, Glass Lewis and IVIS but times where we disagree with the stance being taken. Voting in line with management recommendations should not be seen as evidence of a lack of challenge on our part, but rather that either the governance of the companies in which we are invested is already good and worthy of support or we have engaged with the company and our concerns have been addressed satisfactorily.
Total Total
Category Number (%)
Ballots voted 44 100
Ballots against management recommendations 13 30
Ballots against ISS recommendations 21 48
Source: Invesco, relates to the period
Engagements in 2024
Our ESG interactions with companies typically occur in group or 1:1 calls between our fund manager(s)/analyst(s) and corporate representative(s).
We strive to meet with companies in order to better understand the management team and their focus and outlook, and to bring up any concerns and suggestions; this can often cover ESG.
Total ESG Engagements
Company % of
meetings times
Company where E/S/G Combinations E/S/G
Period meetings was discussed of E/S/G E only S only G only discussed
2024 142 55 17 8 7 23 39%
Source: Invesco, Data relates to the
Conclusion
The regulatory landscape is rapidly evolving, which increasingly compels organisations and investors alike to clearly demonstrate their awareness of ESG issues in their decisions. Landmark initiatives such as the European Union’s new Sustainable Finance Disclosure Regulation (SFDR) are at the forefront of this shift.
We believe that our approach is fair, coherent and pragmatic. Whilst we consider ESG aspects, we are not bound by any specific ESG criteria and have the flexibility to invest across the ESG spectrum from best to worst in class, but we think that the principles behind ESG deserve to be embedded in an investment framework which encourages positive change. Coupling this with a focus on valuation is, to our minds, the best way to deliver strong investment outcomes for our clients long term. This reinforces our fundamental belief that responsible investing demands a long-term view and that a stakeholder-centric culture of ownership and stewardship is at the heart of ESG integration.
(1)
ISS –
(2)
IVIS –
Business Review
Purpose, Business Model and Strategy
The Company’s purpose is to generate returns for shareholders by investing their pooled capital to achieve the Company’s investment objective through the application of its investment policy and with the aim of spreading investment risk.
The business model the Company has adopted to achieve its investment objective has been to contract out investment management and administration to appropriate external service providers, which are overseen by the Board.
The principal service provider is
The Manager provides company secretarial, sales, marketing and general administration services including accounting and manages the portfolio in accordance with the Board’s strategy.
The Company also has contractual arrangements with MUFG Corporate Markets to act as registrar and the
Investment Objective
The Company’s investment objective aims to provide an attractive level of predictable income and capital appreciation over the long term, predominately through investment in a diversified portfolio of equities worldwide.
Investment Policy and Risk
The portfolio will be invested predominantly in a portfolio of listed, quoted or traded equities worldwide, but may also hold other securities from time to time including, inter alia, fixed interest securities, preference shares, convertible securities and depositary receipts. Investment may also be made in regulated or authorised collective investment schemes. The portfolio will not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Manager will at all times invest and manage the portfolio’s assets in a manner that is consistent with spreading investment risk, but there will be no rigid industry, sector, region or country restrictions.
The portfolio may utilise derivative instruments including index-linked notes, contracts for differences, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes. Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the portfolio’s direct investments, as described above.
It is expected that, typically, the portfolio will hold between 40 and 60 securities.
The Directors believe that the use of borrowings can enhance returns to shareholders, and the Company may use borrowings in pursuing its investment objective.
The Company’s foreign currency investments will not be hedged to sterling as a matter of general policy. However, the Manager may employ currency hedging, either back to sterling or between currencies (i.e. cross hedging of portfolio investments).
Investment Limits
The Board has prescribed the following limits on the investment policy of the Company:
• no more than 20% of the gross assets of the Company may be invested in fixed interest securities;
• no more than 10% of the gross assets of the Company may be held in a single investment;
• no more than 10% of the gross assets of the Company may be held in other listed investment companies (excluding REITs); and
• borrowings may be used to raise equity exposure up to a maximum of 20% of the net assets of the Company, when it is considered appropriate.
Key Performance Indicators
The Board reviews the performance of the Company by reference to a number of key performance indicators, which include the following:
• Investment performance
• Discount/premium
• Ongoing charges
Investment Performance
To assess investment performance the Board monitors the net asset value (‘NAV’) performance of the Company relative to that of the benchmark index it considers to be appropriate. However, given the requirements and constraints of the investment objective and policy followed, no index can be expected to fully represent the performance that might reasonably be expected from the Company.
The NAV total return performance over one, three and five
year periods to
One Three Five
Year Years Years
NAV total return per share 11.9% 48.6% 120.8%
MSCI World Index (£)
total return 7.4% 35.5% 77.9%
Source: LSEG Data & Analytics. The Board also monitors the Company’s NAV total return performance relative to its investment companies peer group and relevant open-ended funds.
Further details on the definition and calculation of total returns can be found in the Glossary and Alternative Performance Measures on pages 79 to 81.
Discount/Premium
The Board recognises the need to address any sustained and significant imbalance of buyers and sellers which might otherwise lead to the Company’s shares trading at a material discount or premium to the NAV per share. The Board intends to utilise its share buy-back and share issuance authorities, where appropriate, in such a way as to mitigate the effects of any such imbalance.
In exercising the Company’s power to buy back shares, the Board has complete discretion as to the timing, price and volume of shares bought back. Shares will only be bought back at prices that enhance the NAV of the remaining shares and may be held in treasury or cancelled. The Board intends to use ad hoc share buy-backs to seek to maintain a single digit discount in normal market conditions.
The Board also has complete discretion as to the timing, price and volume of shares issued pursuant to the Company’s issuance authorities. Shares may only be issued or sold from treasury at a price which, after costs, is not less than the net asset value per share at the relevant time.
The Board reviews the buy-back and issuance parameters from time to time taking into account current market conditions and other factors and instructs the brokers accordingly.
The operation of the Company’s liquidity policy is dependent upon the authorities to buy back and issue shares being renewed by shareholders. Notwithstanding the intended effect of this policy, there can be no guarantee that the Company’s shares will trade at close to their respective NAV.
The Board and the Manager closely monitor movements in the Company’s share price and dealings in the Company’s shares. Share movements in the year are summarised on page 26. At 31
2025 2024 NAV Share NAV Share per share price per share price (Pence) (Pence) Premium(1) (Pence ) (Pence) Discount(1) 337.36 342.00 1.4% 313.30 286.00 (8.7)%
(1) Further details on the definition and calculation of the premium/(discount) can be found in the Glossary and Alternative Performance Measures on pages 79 to 81 of the financial report.
Ongoing Charges
The expenses of managing the Company are reviewed by the Board at every meeting. The Board aims to minimise the ongoing charges figure which provides a guide to the effect on performance of all annual recurring operating costs of the Company. The ongoing charges figure is calculated by dividing the annualised ongoing charges, including those charged to capital, by the average daily net asset value during the year, expressed as a percentage.
Further details on the definition and calculation of ongoing charges can be found in the Glossary and Alternative Performance Measures on pages 79 to 81 of the financial report.
At the year end the ongoing charges figure of the Company was as follows:
Company
2025 0.78%
2024 0.82%
In addition to inflationary effects, shrinkage from buybacks in connection with the discount control policy will tend to cause the ongoing charge percentages to gradually increase. However, as noted above, the ongoing charges figure reduced at the 2025 financial year end as a result of a number of factors, including a growth in assets and share issuances.
Revenue and Dividends
The Directors review revenue estimates and prospective dividend levels regularly. The Directors are able to sanction the use of the Company’s capital reserves to supplement the underlying income generated by the portfolio and therefore can pay dividends from a combination of capital and revenue reserves. Details of dividends paid during the year are set out below.
Revenue earnings per share for the Company was 5.01p (2024: 9.03p), based on net revenue for the year of £3,140,000 (2024: £6,099,000), which included £282,000 (2024: £265,000) of non-recurring special dividends. Net revenue for the year ended
Dividend Policy
Under the current dividend policy, which was adopted with effect from the financial year commencing
The intention is that these dividends will be paid from the Company’s revenues and, if required, capital reserves.
The Board believes that the dividend policy should provide shareholders with an attractive level of predictable income whilst freedom for the investment Manager to select the best ideas irrespective of their yield.
Dividends Declared
Four interim dividends were paid for the year ended
A first interim dividend for the year to
Financial Position
Assets and Liabilities
The Company’s balance sheet on page 59 shows the assets and liabilities at the year end. Details of the Company’s borrowing facility are shown in note 13 of the financial statements on page 67, with interest paid (finance costs) in note 5.
Owing to the readily realisable nature of the Company’s assets, cash flow does not have the same significance as for an industrial or commercial company. The Company’s principal cash flows arise from the purchases and sales of investments and the income from investments against which must be set the costs of borrowing and management and other expenses.
Borrowing Policy
Borrowing policy is under the control of the Board, which has established effective parameters for the portfolio. Borrowing levels are regularly reviewed. As part of the Company’s investment policy, the approved borrowing limit is 20% of the Company’s net assets.
Issued Share Capital
The Company’s former Global Equity Income shares were redesignated as ordinary shares on
Authorities given to the Directors at the AGM on
During the year the Company bought back into treasury 1,342,282 shares at an average price of 316.01p and for an aggregate consideration of £4.27 million. These shares had a nominal value of £13,423 and represented 2.13% of the issued shares of the Company (excluding treasury shares) at the
During the year the Company sold 1,210,000 shares from treasury at an average price of 340.70p and for an aggregate consideration of £4.11 million. These shares had a nominal value of £12,100 and represented 1.92% of the issued shares of the Company (excluding treasury shares) at the
For the period since the year end, and up to
Further details on net changes in issued share capital are set out in note 14 to the financial statements on pages 67 and 68.
Current and Future Developments
As part of the Company’s overall strategy, the Company seeks to manage its affairs so as to maximise returns for shareholders. The key driver behind shareholder returns are investment performance, the share price discount/premium and the Company’s ongoing charges. The Board has a longer-term objective to increase the size of the Company through a combination of strong investment performance and further share issuance. An increase in the size of the Company should lower ongoing charges and make the Company’s shares attractive to a broader range of potential investors, which should result in improved liquidity in the Company’s shares.
Details of trends and factors likely to affect the future development, performance and position of the Company’s business can be found in the Chair’s Statement on pages 6 to 8 and the Portfolio Managers’ Report on pages 12 to 15. Further details as to the risks affecting the Company are set out under ‘Principal Risks and Uncertainties’ below.
Principal Risks and Uncertainties
The Audit Committee regularly undertakes a robust assessment of the risks the Company faces, including those that would threaten its business model, future performance, solvency, reputation or liquidity, and emerging risks, on behalf of the Board (see the Audit Committee Report on pages 43 and 44). In carrying out this assessment, the Audit Committee together with the Manager have considered emerging risks such as recent geopolitical events, evolving cyber threats (including risks associated with artificial intelligence), wider shareholder activism impacting certain investment companies and ESG, including climate-related risks.
The following are considered to be the most significant risks, after consideration of mitigating factors, to the Company and to shareholders in relation to their investment in the Company. Further details of risks and risk management policies as they relate to the financial assets and liabilities of the Company are detailed in note 17 to the financial statements on pages 69 to 73.
______________________________________________________________________________ |Category and principal |Mitigating procedures |Risk trend during| |_____________________________|______________________________|_________________| |risk description |and controls |the year | |_____________________________|______________________________|_________________| |Strategic Risk | | | |_____________________________|______________________________|_________________| | |The Company has a diversified | | | |investment portfolio by | | | |country, sector and stock. Due| | | |to its investment trust | | | |structure, no forced sales | | | |need to take place and | | | |investments can be held over a| | | |longer-term horizon. However, | | | |there are few ways to mitigate| | | |absolute market risk because | | | |it is engendered by factors | | | |which are outside the control | | | |of the Board and the Manager. | | | |These factors include the | | |Market Risk |general health of the world | | | |economy, interest rates, | | |The Company’s investments are|inflation, government | | |mainly traded on global stock|policies, industry conditions | | |markets including those in |and changing investor demand | | |Asia, Continental Europe, the|and sentiment. Such factors | | |US and the UK. The principal |may give rise to high levels | | |risk for investors in the |of volatility in the prices of| | |Company is a significant fall|investments held by the |► Unchanged | |and/or a prolonged period of |Company. | | |decline in these global | | | |markets. This could be |The performance of the Manager| | |triggered by unfavourable |is carefully monitored by the | | |developments in a single |Board and the continuation of | | |country or region or on more |the Manager’s appointment is | | |global basis. |reviewed each year. The Board | | | |has established guidelines to | | | |ensure that the investment | | | |objective and policy of the | | | |Company is pursued by the | | | |Manager. | | | | | | | |For a fuller discussion of the| | | |economic and market conditions| | | |facing the Company and the | | | |current and future performance| | | |of the Company, please see | | | |both the Chair’s Statement on | | | |pages 6 to 8 and the Portfolio| | | |Managers’ Report on pages 12 | | | |to 15. | | |_____________________________|______________________________|_________________| |Geopolitical Risk |The Manager evaluates and | | | |assesses political risk as | | |Political risk has always |part of the stock selection | | |been a feature of investing |and asset allocation policy | | |in stock markets and it is |which is monitored at every | | |particularly so when |Board meeting. This includes | | |investing on a global basis. |political, military and | | |Wider political developments |diplomatic events and changes | | |in global geographies, such |to legislation. Balancing | | |as the war in Ukraine and |political risk and reward is |▲ Increased | |conflict in the Middle East, |an essential part of the | | |can create risks to the value|active management process. | | |of the Company’s assets. | | | |Global markets encompass a |The Company has a nil-valued | | |variety of political systems.|holding in Sberbank, a Russian| | |There are many examples of |bank, but no other direct | | |diplomatic skirmishes and |investments in Russia or other| | |military tensions and |holdings with significant | | |sometimes these result in |links to Russia. | | |military engagement. | | | |_____________________________|______________________________|_________________| | |The Board receives regular | | | |reports reviewing the | | |Investment Objectives and |Company’s investment | | |Strategy |performance against its stated| | | |objective, benchmark, | | |The Company’s investment |investment companies peer |► Unchanged | |objective and strategy are no|group and relevant open-ended | | |longer meeting investors’ |funds and reports from | | |demands. |discussions with its broker | | | |and major shareholders. The | | | |Board also has a separate | | | |annual strategy meeting. | | |_____________________________|______________________________|_________________| | |The Board receives regular | | | |reports from both the Manager | | | |and the Company’s broker on | | | |the Company’s share price | | | |performance, level of share | | | |price discount/premium to NAV | | | |and recent trading activity in| | | |the Company’s shares. As a | | | |result of the restructuring in| | | |2024, the Board has introduced| | | |initiatives to help address | | |Widening Discount |the Company’s share rating, | | | |including the liquidity policy| | |A lack of liquidity and/or |referred to in the | | |lack of investor interest in |‘Discount/Premium’ section on | | |the Company’s shares leads to|page 25 and the dividend | | |a depressed share price and a|policy referred to in the | | |widening discount to its NAV.|‘Revenue and Dividends’ |▼Decreased | | |section on page 26. It may | | |A persistently high discount |seek to reduce any discount | | |may lead to buy-backs of the |volatility and absolute level | | |Company’s shares and result |of any share price discount to| | |in the shrinkage of the |NAV through buying back shares| | |Company. |within stated shareholder | | | |authorities. The Board also | | | |receives regular reports on | | | |investor relation meetings | | | |with shareholders and | | | |prospective investors and | | | |works to ensure that the | | | |Company’s investment | | | |proposition is actively | | | |marketed through relevant | | | |messaging across many | | | |distribution channels. | | |_____________________________|______________________________|_________________| | |The Board regularly compares | | | |the Company’s NAV total return| | | |performance over both the | | |Performance |short and long term to that of| | | |the benchmark, investment | | |Risk that the Portfolio |companies peer group and | | |Managers consistently |relevant open-ended funds as |▼ Decreased | |underperform the benchmark |well as reviewing the | | |and/or peer group over 3-5 |portfolio’s performance | | |years. |against benchmark | | | |(attribution) and | | | |risk-adjusted performance of | | | |the Company and its peers. | | |_____________________________|______________________________|_________________| | |ESG considerations are | | |ESG (including climate risk) |integrated as part of the | | | |investment decision-making in | | |Risks associated with climate|constructing the portfolio. |► Unchanged | |change and ESG considerations|The Manager’s process around | | |could affect the valuation of|ESG is described in the ESG | | |the Company’s holdings. |Monitoring and Engagement | | | |section on pages 21 to 23. | | |_____________________________|______________________________|_________________| | |With the exception of | | |Currency Fluctuation Risk |borrowings in foreign | | | |currency, the Company does not| | |Exposure to currency |normally hedge its currency | | |fluctuation risk negatively |positions but may do so should| | |impacts the Company’s NAV. |the Portfolio Managers or the | | |The movement of exchange |Board feel this to be |► Unchanged | |rates may have an |appropriate. Contracts are | | |unfavourable or favourable |limited to currencies and | | |impact on returns as nearly |amounts commensurate with the | | |all of the Company’s assets |asset exposure. The foreign | | |are non-sterling denominated.|currency exposure of the | | | |Company is reviewed at Board | | | |meetings. | | |_____________________________|______________________________|_________________| |Third Party Service Providers| | | |Risk | | | |_____________________________|______________________________|_________________| | |The Audit Committee receives | | | |regular updates on the | | | |Manager’s information and | | | |cyber security. This includes | | |Information Technology |updates on the cyber security | | |Resilience and Security |framework, staff resource and | | | |training, and the testing of | | |The Company’s operational |its security systems designed | | |structure means that all |to protect against a cyber | | |cyber risk (information and |security attack. | | |physical security) arises at | |► Unchanged | |its third-party service |As well as conducting a | | |providers (‘TPPs’). This |regular review of TPPs’ | | |cyber risk includes fraud, |audited service organisation | | |sabotage or crime perpetrated|control reports, the Audit | | |against the Company or any of|Committee monitors TPPs’ | | |its TPPs. |business continuity plans and | | | |testing including the TPPs’ | | | |and Manager’s regular ‘live’ | | | |testing of workplace recovery | | | |arrangements should a cyber | | | |event occur. | | |_____________________________|______________________________|_________________| | |The Manager’s business | | | |continuity plans are reviewed | | | |on an ongoing basis and the | | | |Directors are satisfied that | | | |the Manager has in place | | | |robust plans and | | | |infrastructure to minimise the| | | |impact on its operations so | | | |that the Company can continue | | |Operational Resilience |to trade, meet regulatory | | | |obligations, report and meet | | |The Company’s operational |shareholder requirements. | | |capability relies upon the | | | |ability of its TPPs to |The Manager has arrangements |► Unchanged | |continue working throughout |and prioritises between work | | |the disruption caused by a |deemed necessary to be carried| | |major event such as the |out on business premises and | | |Covid-19 pandemic. |work from home arrangements | | | |should it be necessary. | | | |Meetings are held in person, | | | |virtually or via conference | | | |calls. Other similar working | | | |arrangements are in place for | | | |the Company’s TPPs. The Audit | | | |Committee receives regular | | | |update reports from the | | | |Manager and TPPs on business | | | |continuity processes. | | |_____________________________|______________________________|_________________| |Regulatory Risk | | | |_____________________________|______________________________|_________________| |Regulatory and Tax-Related | | | | | | | |The Company is subject to | | | |various laws and regulations | | | |by virtue of its status as a | | | |public limited investment | | | |company registered under the | | | |Companies Act 2006, its |The Manager reviews the level | | |status as an investment trust|of compliance with the | | |and its listing on the London|Corporation Tax Act 2010 and | | |Stock Exchange. Loss of |other financial and regulatory| | |investment trust status could|requirements on a daily basis.| | |lead to the Company being |All transactions, income and | | |subject to UK capital gains |expenditure are reported to | | |tax on the sale of its |the Board. The Board ensures |► Unchanged | |investments. A serious breach|that satisfactory assurances | | |of other regulatory rules |are received from service | | |could lead to suspension from|providers. The depositary and | | |the London Stock Exchange, a |the Manager’s compliance and | | |fine or a qualified Audit |internal audit officers report| | |Report. Other control |regularly to the Company’s | | |failures, either by the |Audit Committee. | | |Manager or any other of the | | | |Company’s service providers, | | | |could result in operational | | | |or reputational problems, | | | |erroneous disclosures or loss| | | |of assets through fraud, as | | | |well as breaches of | | | |regulations. | | | |_____________________________|______________________________|_________________|
Continuation Vote
The Board will put forward a vote at the Company’s Annual General Meeting in 2026 for the continuation of the Company (the 2026 Continuation Vote). If the 2026 Continuation Vote is passed the Board will put forward a continuation vote at the Company’s annual general meeting in 2031 and, if passed, at each fifth annual general meeting thereafter.
Viability Statement
The Company is an investment company which operates as a collective investment vehicle, designed and managed for long-term investment. The Board considers long-term for this purpose to be at least three years and so has assessed the Company’s viability over this period. However, the life of the Company is not intended to be limited to that or any other period.
In assessing the viability of the Company the Board considered the principal and emerging risks to which it is exposed, as set out on pages
27 to
29, together with mitigating factors. The risk of failure to meet the Company’s investment objective, contributory market and investment risks and the challenges of lack of scale were considered to be of particular importance. The Board also took into account the capabilities of the Manager and the varying market conditions already experienced by the Company since its launch in 2006, including the potential impact of the Covid-19 pandemic on global economies and the war in
In terms of financial risks to viability, materially all of the investments are readily realisable. The portfolio also produces a stream of dividend income, which may fluctuate but which the Board expects to continue. The Company has no long-term liabilities and the total value of the portfolio more than covers the value of the Company’s short-term liabilities and annual operating costs. In arriving at this assessment, the Board considered stressed scenario-testing for both income and loan covenants; borrowing structure; level of gearing; and the liquidity of the portfolio. Consequently, there appears little to no prospect of the Company not being able to meet its financial obligations as they fall due in the next three years.
Based on the above, the Board has a reasonable expectation that, notwithstanding the continuation vote in 2026, the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of its assessment.
Audit Committee Report
The Audit Committee Report required by the AIC Corporate Governance Code is set out on pages 43 and 44. There are no areas of concern in relation to the financial statements to bring to the attention of shareholders.
Duty to Promote the Success of the Company (s.172)
The Directors have a statutory duty under section 172 of the Companies Act 2006 to promote the success of the Company whilst also having regard to certain broader matters, including the need to engage with employees, suppliers, customers and others, and to have regard to their interests. The Company has no employees and no customers in the traditional sense and, in accordance with the Company’s nature as an investment trust, the Board’s principal concern has been, and continues to be, the interests of the Company’s shareholders taken as a whole. In doing so, it has due regard to the desirability of the Company maintaining a reputation for high standards of business conduct, the need to foster the Company’s business relationships and the impact of its actions on other stakeholders including the Manager and other third-party service providers and the impact of the Company’s operations on the community and the environment, all which are all taken into account, to the extent relevant, during all discussions and as part of the Board’s decision making.
The Board is committed to maintaining open channels of communication and engagement with stakeholders in a manner which they find most meaningful. The table below sets out how the Board engages with each of its key stakeholders:
____________________________________________________________________________________________ |Stakeholder |Key considerations and engagement | |_____________|______________________________________________________________________________| | |To help the Board in its aim to act fairly as between the Company’s members, | | |shareholder relations are given high priority by the Board and the Manager. | | |The prime means by which the Company communicates with shareholders are the | | |annual and half-yearly financial reports, which aim to provide shareholders | | |with a full understanding of the Company’s activities and its results. This | | |information is supplemented by daily publication of the NAV of the Company’s | |Shareholders |shares via the London Stock Exchange, ad hoc regulatory announcements, the | |– continued |monthly factsheet and other information on the Manager’s website, | |shareholder |www.invesco.com/uk/en/investment-trusts/invesco-global-equity-income-trust.htm| |support and |, including pre-investment information, Key Information Document (‘KID’), | |engagement |shareholder circulars, portfolio disclosures, Stock Exchange announcements, | |are important|schedule of matters reserved for the Board, terms of reference of Board | |to the |Committees, Directors’ letters of appointment, the Company’s share price and | |Company and |proxy voting results. | |the delivery | | |of its |The Chair and other Directors welcome contact with shareholders. There is a | |long-term |regular dialogue between the Manager and individual major shareholders to | |strategy. |discuss aspects of investment performance, governance and strategy and to | |Further |listen to shareholder views in order to help develop a balanced understanding | |details of |of their issues and concerns. The Company’s corporate broker, Cavendish | |our strategy |Capital Markets Limited, is also consulted. General presentations to | |can be found |institutional shareholders and analysts take place throughout the year. All | |on page 24. |meetings between the Manager and institutional shareholders are reported to | | |the Board. | | | | | |It is the intention of the Board that the Annual Financial Report and the | | |notice of the AGM be issued to shareholders so as to provide at least twenty | | |working days’ notice of the AGM. Shareholders wishing to lodge questions in | | |advance of the AGM are invited to do so in writing to the Company Secretary at| | |the address given on page 78. | |_____________|______________________________________________________________________________| |The Manager –| | |the Manager’s|The Board engages with the Manager at every Board meeting and reviews the | |performance |Company’s relationships with other service providers, such as the broker, | |is critical |registrar, depositary and custodian, at least annually. During the year the | |for the |most significant engagement was with the Manager, including the Portfolio | |Company to |Managers. At every Board meeting the Directors receive an investor relations | |successfully |update from the Manager, which details any significant changes in the Company’s| |deliver its |shareholder register and shareholder feedback, as well as notifications of any | |investment |publications or press articles. | |strategy and | | |meet its |Maintaining a close and constructive working relationship with the Manager is | |objective to |crucial as the Board and the Manager both aim to achieve consistent, long-term| |provide |returns in line with the Company’s investment strategy. Important components | |shareholders |in the collaboration with the Manager, representative of the Company’s | |with |culture, are: | |consistent | | |long-term |– encouraging an open discussion with the Manager, allowing time and space for| |returns. |original and innovative thinking; | |Further | | |details of |– recognising that the interests of shareholders and the Manager are, for the | |the Portfolio|most part, well aligned, adopting a tone of constructive challenge, balanced | |Managers’ |with robust negotiation of the Manager’s terms of engagement if those | |investment |interests should not be fully united; | |approach can | | |be found in |– the regular review of underlying strategic and investment objectives; | |the Portfolio| | |Managers’ |– drawing on Directors’ individual experience and knowledge to support and | |Report on |challenge the Manager in its monitoring of and engagement with its investee | |pages 12 to |companies; and | |15 and the | | |summary of |– willingness to make the Directors’ experience available to support and | |the |challenge the Manager in the sound long-term development of its business and | |Investment |resources, recognising that the long-term health of the Manager’s business is | |Team and |in the interests of shareholders in the Company. | |Process on | | |page 16. | | |_____________|______________________________________________________________________________| |Third-party | | |Service | | |Providers – |The Board, principally through the Manager, maintains regular contact with its| |in order to |key external service providers and receives regular reporting from them, both | |function as |through the Board and Committee meetings, as well as outside of the regular | |an investment|meeting cycle. Their advice, as well as their needs and views, are routinely | |trust with a |taken into account. | |listing on | | |the London |The Board (through the Management Engagement Committee) formally assesses the | |Stock |third-party service providers’ performance, fees and continuing appointment | |Exchange, the|annually to ensure that the key service providers continue to function at an | |Company |acceptable level and are appropriately remunerated to deliver the expected | |relies on a |level of service. | |diverse range| | |of reputable |The Audit Committee reviews and evaluates the financial reporting control | |service |environments in place at each service provider. There have been no material | |providers for|changes to the level of service provided by the Company’s third-party | |support in |suppliers during the financial year. | |meeting all | | |relevant | | |obligations. | | |_____________|______________________________________________________________________________| |Investee | | |Companies – | | |the Board | | |recognises | | |the | | |importance of| | |good | | |stewardship |On the Company’s behalf the Portfolio Managers engage with investee companies,| |and |particularly in relation to ESG matters, and shares held in the portfolio are | |communication|voted at general meetings. | |with investee| | |companies in | | |meeting the | | |Company’s | | |investment | | |objective and| | |strategy. | | |_____________|______________________________________________________________________________| |Regulators – | | |the Company | | |can only | | |operate as an| | |investment | | |trust if it | | |conducts its | | |affairs in | | |compliance | | |with such | | |status. | | |Interaction | | |with | | |regulators |The Company regularly considers how it meets various regulatory and statutory | |such as the |obligations and how any governance decisions it makes can have an impact on | |Financial |its stakeholders, both in the shorter and in the longer term. The Board | |Conduct |receives reports from the Manager and Auditor on their respective regulatory | |Authority |compliance and any inspections or reviews that are commissioned by regulatory | |(‘FCA’) and |bodies. | |Financial | | |Reporting |The Company is a member of the AIC, which looks after the interests of | |Council |investment companies and provides information to investment company boards and| |(‘FRC’), who |the market. Comprehensive information relating to the Company can be found on | |have a |the AIC website, www.theaic.co.uk. | |legitimate | | |interest in |As a member of the AIC, the Company is welcomed to comment on consultations | |how the |and proposal documents on matters affecting the Company and annually to | |Company |nominate and vote for future board members. | |operates in | | |the market | | |and treats | | |its | | |shareholders,| | |and industry | | |bodies such | | |as the | | |Association | | |of Investment| | |Companies | | |remains an | | |area of Board| | |focus. | | |_____________|______________________________________________________________________________|
The mechanisms for engaging with stakeholders are kept under review by the Directors are discussed on a regular basis at Board meetings to ensure that they remain effective. Examples of key discussions and considerations of the Board made during the year were:
• to consider and approve the renewal of the Company’s loan facility;
• to consider and approve four quarterly dividend payments (see page 26 for further details);
• to consider and approve the ongoing use of share buy-backs and issuances as part of the Board’s adopted liquidity policy (see the Discount/Premium section page 25 for further details);
• to approve an increased marketing budget, the additional cost of which is expected to be more than offset by attracting new demand for the Company’s shares and the resulting issue of new shares; and
•
to consider and approve the appointment of
Board Diversity
The Company’s policy on diversity is set out on page 38, under the section ‘Nomination Committee’. The Board considers diversity, including the balance of skills, knowledge, experience and gender amongst other factors, when reviewing its composition and appointing new Directors. The Board continues to recognise 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.
In view of its relatively small 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 seek to meet the targets set out in the FCA’s
In accordance with
Board Gender as at
Number of Number in Percentage of
Number of Percentage senior positions executive executive
Board members of the Board on the Board management(1) management(1)
Men 3 60% 1(3) n/a n/a
Women 2 40%2 1(3)(4) n/a n/a
(1) The Company does not disclose the number of directors in executive management as this is not applicable for an investment trust.
(2) Meets the target of 40% as set out in UKLR 6.6.6R (9)(a)(i).
(3) The position of Chair is held by a woman. The position of Senior Independent Director is held by a man. The position of Chair of the Audit Committee is held by a man but this is not currently defined as a senior position.
(4) Meets the target of 1 as set out in UKLR 6.6.6R (9)(a)(ii).
Number of Number in Percentage of
Number of Percentage of senior executive executive
positions
Board the Board on the Board management(1) management(1)
members
White British
or other White
(including
minority-white 5 100% 2 n/a n/a
groups)
Minority 0(2) 0% 0 n/a n/a
ethnic
(1) The Company does not disclose the number of directors in executive management as this is not applicable for an investment trust.
(2) Does not meet the target as set out in UKLR 6.6.6R (9)(a)(iii).
There have been no changes since the year end that have affected the Company’s ability to meet the targets set in
Environment, Social and Governance (‘ESG’) Matters
In relation to the portfolio, the Company has delegated the management of the Company’s investments to the Manager, who has an ESG Guiding Framework which sets out a number of principles that are considered in the context of its responsibility to manage investments in the financial interests of shareholders.
The Manager is committed to being a responsible investor and applies, and is a signatory to, the United Nations Principles for
The Manager is complying with the spirit of the Sustainable Finance Disclosure Regulation (‘SFDR’) which came into effect within the
The wider Invesco investment team incorporates ESG considerations in its investment process as part of the evaluation of new opportunities, with identified ESG concerns feeding into the final investment decision and assessment of relative value. The Portfolio Managers make their own conclusions about the ESG characteristics of each investment held and about the overall ESG characteristics of the portfolio, although third party ESG ratings may inform their view. Additionally, the Manager’s ESG team provides formalised ESG portfolio monitoring. This is a rigorous semi-annual process where the portfolio is reviewed from an ESG perspective.
Regarding stewardship, the Board considers that the Company has a responsibility as a shareholder towards ensuring that high standards of corporate governance are maintained in the companies in which it invests. To achieve this, neither the Board or the Manager seek to intervene in daily management decisions, but both aim to support high standards of governance and, where necessary, will take the initiative to ensure those standards are met. The principal means of putting shareholder responsibility into practice is through the exercise of voting rights. The Company’s voting rights are exercised on an informed and independent basis.
Further details are shown in the ESG Statement from the Manager on pages 21 to 23.
The Company’s stewardship functions have been delegated to the Manager. The Manager has adopted a clear and considered policy towards its responsibility as a shareholder on behalf of the Company. As part of this policy, the Manager takes steps to satisfy itself about the extent to which the companies in which it invests look after shareholders’ value and comply with local recommendations and practices, such as the
A copy of the Manager’s Stewardship Policy can be found at www.invesco.com/uk.
A greenhouse gas emissions statement is included in the Directors’ Report on page 40.
Whilst TCFD is currently not applicable to the Company, the Manager has produced a product level report on the Company in accordance with the Financial Conduct Authority’s (‘FCA’) rules and guidance regarding the disclosure of climate-related financial information consistent with TCFD Recommendations and Recommended Disclosures. These disclosures are intended to help meet the information needs of market participants, including institutional clients and consumers of financial products, in relation to the climate-related impact and risks of the Manager’s TCFD in-scope business. The product level report on the Company is available on the Manager’s website at www.invesco.com/uk/en/investment-trusts/invesco-global-equity-income-trust.html.
Key elements of the product level report include a scenario analysis of how climate change is likely to impact the portfolio valuation under net zero 2050, delayed transition and hothouse scenarios, and a discussion of the most significant drivers of performance under those scenarios.
Invesco’s
Modern Slavery
As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not within the scope of the Modern Slavery Act 2015.
This Strategic Report was approved by the Board on
Statement of Directors’ Responsibilities
IN RESPECT OF THE PREPARATION OF THE ANNUAL FINANCIAL REPORT.
The Directors are responsible for preparing the Annual Financial Report in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under the law the Directors have elected to prepare financial statements in accordance with
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 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 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 which 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, a Directors’ Report, which includes a Corporate Governance Statement, and a Directors’ Remuneration Report that comply with that law and those regulations.
The Directors confirm that:
• in so far as they are aware, there is no relevant audit information of which the Company’s Auditor is unaware; and
• each Director has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information.
The Directors of the Company each confirm to the best of their knowledge that:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position, net return and cash flows of the Company; and
• this Annual Financial Report includes 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 it faces.
The Directors consider that this Annual Financial Report, 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.
Signed on behalf of the Board of Directors
Chair
Electronic Publication
The Annual Financial Report is published on the Manager’s website www.invesco.com/uk/en/investment-trusts/invesco-global-equity-income-trust.html. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, which is maintained by the Company’s Manager. Legislation in the
Income Statement
Year ended 31 May 2025 Year ended 31 May 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held 9 – 20,482 20,482 – 23,634 23,634
at fair value
(Losses)/gains on 10 – – – (10) 261 251
derivative instruments
Losses on foreign exchange – (4) (4) – (68) (68)
Income 2 4,379 – 4,379 7,433 – 7,433
Investment management fees 3 (332) (775) (1,107) (340) (788) (1,128)
Other expenses 4 (563) 6 (557) (551) (702) (1,253)
Net return before finance 3,484 19,709 23,193 6,532 22,337 28,869
costs and taxation
Finance costs 5 (50) (116) (166) (194) (453) (647)
Return before taxation 3,434 19,593 23,027 6,338 21,884 28,222
Tax 6 (294) – (294) (239) 59 (180)
Return after taxation for 3,140 19,593 22,733 6,099 21,943 28,042
the financial year
Return per ordinary share 7
(basic and diluted)
– Ordinary (formerly 5.01p 31.29p 36.30p 9.03p 54.72p 63.75p
Global Equity Income)
– UK Equity(1) n/a n/a n/a 5.12p 9.89p 15.01p
– Balanced Risk Allocation n/a n/a n/a 4.45p 8.72p 13.17p
(1)
– Managed Liquidity(1) n/a n/a n/a 17.07p 1.15p 18.22p
(1) This share class was closed on
The total column of this statement represents the Company’s income statement prepared in accordance with
The accompanying accounting policies and notes are an integral part of these financial statements.
Statement of Changes in Equity
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
At 31 May 2023 1,707 377 137,424 60,129 102 199,739
Cancellation of – 233 (233) – – –
deferred shares
Shares bought back 14 – – (2,702) – – (2,702)
and held in treasury
Share conversions (348) 116 232 – – –
Return after taxation
per the income – – – 21,943 6,099 28,042
statement
Dividends paid 8 – – (597) – (6,099) (6,696)
Costs associated with 14 – – (145) – – (145)
tender offer
Tender offer in
respect of the share
class 14 – – (20,683) – – (20,683)
reclassification
Treasury shares (559) 559 – – – –
cancellation
At 31 May 2024 800 1,285 113,296 82,072 102 197,555
Shares bought back 14 – – (4,270) – – (4,270)
and held in treasury
Shares sold from – – 4,110 – – 4,110
treasury
Return after taxation
per the income – – – 19,593 3,140 22,733
statement
Dividends paid 8 – – (4,603) – (3,242) (7,845)
At 31 May 2025 800 1,285 108,533 101,665 – 212,283
The accompanying accounting policies and notes are an integral part of these financial statements.
Balance Sheet
At At
31 May 2025 31 May 2024
Notes £’000 £’000
Fixed assets
Investments held at fair value through
profit or loss 9 211,444 195,824
Current assets
Debtors 11 1,314 1,639
Cash and cash equivalents 2,618 1,859
3,932 3,498
Creditors: amounts falling due within one year
Other creditors 12 (443) (1,767)
Bank facility 13 (2,650) –
(3,093) (1,767)
Net current assets 839 1,731
Net assets 212,283 197,555
Capital and reserves
Share capital 14 800 800
Special reserve 15 108,533 113,296
Capital redemption reserve 15 1,285 1,285
Capital reserve 15 101,665 82,072
Revenue reserve 15 – 102
Shareholders’ funds 212,283 197,555
Net asset value per ordinary share 16 337.36p 313.30p
The financial statements were approved and authorised for issue by the Board of Directors on
Signed on behalf of the Board of Directors
Chair
Company No. 05916642
The accompanying accounting policies and notes are an integral part of these financial statements.
Cash Flow Statement
Year ended Year ended
31 May 2025 31 May 2024
Notes £’000 £’000
Cash flows from operating activities
Net return before finance costs and taxation 23,193 28,869
Tax paid on overseas income 6 (294) (180)
Purchase of investments (137,107) (177,227)
Sale of investments 141,822 212,682
Sale of futures – 190
Scrip dividends – (109)
Gains on investments 9 (20,482) (23,634)
Losses on derivatives – (251)
(Increase)/decrease in debtors (212) 954
Decrease in creditors (120) (12)
Net cash inflow from operating activities 6,800 41,282
Cash flows from financing activities
Interest paid on bank borrowings (176) (641)
Increase/(decrease) in bank facility(1) 2,650 (9,650)
Shares bought back and held in treasury (4,270) (2,702)
Costs associated with tender offer – (145)
Tender offer in respect of the share class – (20,683)
reclassification
Shares sold from treasury 3,600 –
Equity dividends paid 8 (7,845) (6,696)
Net cash outflow from financing activities (6,041) (40,517)
Net increase in cash and cash equivalents 759 765
Cash and cash equivalents at the start of the year 1,859 1,094
Cash and cash equivalents at the end of the year 2,618 1,859
Reconciliation of cash and cash equivalents to the
Balance Sheet is as follows:
Cash held at custodian 618 559
Invesco Liquidity Funds plc – Sterling, money 2,000 1,300
market fund
Cash and cash equivalents 2,618 1,859
Cash flow from operating activities includes:
Interest received 27 47
Dividends received 3,662 6,599
(1) Due to the nature of the bank facility allowing weekly marginal changes to the amount borrowed, rather than full repayment and new drawdown amount, management judges it appropriate to show the net increase/(decrease) over the year rather than the gross repayments and drawdowns separately, as defined in FRS 102 section 7.10A (b).
The accompanying accounting policies and notes are an integral part of these financial statements.
Notes to the Financial Statements
1. Accounting Policies
Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end.
The principal accounting policies are set out below:
(a) Basis of Preparation
(i) Accounting Standards Applied
The financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards, including FRS 102 ‘The Financial Reporting Standard applicable in the
The accounting policies applied to these financial statements are consistent with those applied for the preceding year.
(ii) Functional and Presentational Currency
The Company’s investments are made in several currencies. However, the financial statements are presented in sterling, which is the Company’s functional currency. In arriving at this conclusion, the Directors considered that the Company’s shares are listed and traded on the
(iii) Transactions and Balances
Transactions in foreign currency, whether of a revenue or capital nature, are translated to sterling at the rates of exchange ruling on the dates of such transactions. Foreign currency assets and liabilities are translated to sterling at the rates of exchange ruling at the balance sheet date. Any gains or losses, whether realised or unrealised, are taken to the capital reserve or to the revenue account, depending on whether the gain or loss is of a capital or revenue nature. All gains and losses are recognised in the income statement.
(iv) Significant Accounting Estimates and Judgements
The preparation of the financial statements may require the Directors to make estimations where uncertainty exists. It also requires the Directors to make judgements, estimates and assumptions in the process of applying the accounting policies. There have been no significant judgements, estimates or assumptions for the current or preceding year.
(b) Financial Instruments
The Company has chosen to apply the provisions of sections 11 and 12 of FRS 102 in full in respect of the financial instruments, which is explained below.
(i) Recognition of Financial Assets and Financial Liabilities
The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual provisions of the instrument. The Company will offset financial assets and financial liabilities if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
(ii) Derecognition of Financial Assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Company is recognised as an asset.
(iii) Derecognition of Financial Liabilities
The Company derecognises financial liabilities when its obligations are discharged, cancelled or expire.
(iv) Trade Date Accounting
Purchases and sales of financial assets are recognised on trade date, being the date on which the Company commits to purchase or sell the assets.
(v) Classification and Measurement of Financial Assets and Financial Liabilities
Financial assets
The Company’s investments, including financial derivative instruments, are classified as held at fair value through profit or loss.
Financial assets held at fair value through profit or loss are initially recognised at fair value, which is taken to be their cost, with transaction costs expensed in the income statement, and are subsequently valued at fair value.
Fair value for investments, including financial derivative instruments, that are actively traded in organised financial markets is determined by reference to stock exchange quoted bid prices at the balance sheet date. For investments that are not actively traded or where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques including broker quotes and price modelling. Where there is no active market, unlisted/illiquid investments are valued by the Directors at fair value with regard to the International Private Equity and Venture Capital Valuation Guidelines and on recommendations from the Manager’s pricing committee, both of which use valuation techniques such as earnings multiples, recent arm’s length transactions and net assets.
Financial liabilities
Financial liabilities, excluding financial derivative instruments but including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method.
(c) Cash and Cash Equivalents
Cash and cash equivalents may comprise cash (including short-term deposits which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value) as well as cash equivalents, including money market funds. Investments are regarded as cash equivalents if they meet all of the following criteria: highly liquid investments held in the Company’s base currency that are readily convertible to a known amount of cash, are subject to an insignificant risk of change in value, have a maturity of less than three months at date of origination and provide a return no greater than the rate of a three-month high quality government bond.
(d) Income
Dividend income from investments is recognised when the shareholders’ right to receive payment has been established, normally the ex-dividend date.
(e) Expenses and Finance Costs
All expenses are accounted for on an accruals basis. Expenses are charged to the income statement and shown in revenue except where expenses are presented as capital items when a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and thus management fees and finance costs are charged to revenue and capital to reflect the Directors’ expected long-term view of the nature of the investment returns from the portfolio.
Finance costs are accounted for on an accruals basis using the effective interest rate method.
The investment management fee and finance costs are allocated 70% to capital and 30% to revenue. This is in accordance with the Board’s expected long-term split of returns, in the form of capital gains and income respectively, from the portfolio.
(f) Dividends
Dividends are accrued in the financial statements when there is an obligation to pay the dividends at the balance sheet date.
(g) Taxation
Tax expense represents the sum of tax currently payable and deferred tax. Any tax payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expenses 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 balance sheet date.
For the Company, any allocation of tax relief to capital is based on the marginal basis, such that tax allowable capital expenses are offset against taxable income.
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements. Deferred taxation assets are recognised where, in the opinion of the Directors, it is more likely than not that these amounts will be realised in future periods.
A deferred tax asset has not been recognised in respect of surplus management expenses as the Company is unlikely to have sufficient future taxable revenue to offset against these.
Investment trusts which have approval under the appropriate tax regulations are not liable for taxation on capital gains.
(h) Segmental Reporting
The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.
2. Income
This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source.
2025 2024
£’000 £’000
Income from investments:
UK dividends:
– ordinary dividends 844 3,881
– scrip dividends – 109
844 3,990
Overseas dividends
– ordinary dividends 3,227 3,027
– special dividends 282 265
Interest from Treasury bills – 103
3,509 7,385
Other income:
Deposit interest 26 47
Rebates of management fee – 1
Total income 4,379 7,433
Special dividends recognised as revenue for the year are as shown above. No special dividends have been recognised in capital during the year (2024: £nil).
3. Investment Management Fees
This note shows the investment management fee due to the Manager which is calculated and paid quarterly.
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 332 775 1,107 340 788 1,128
332 775 1,107 340 788 1,128
Details of the Investment Management Agreement are given on page 39 in the Directors’ Report.
4. Other Expenses
The other expenses of the Company, including those paid to Directors and the auditor, are presented below; those paid to the Directors and the auditor are separately identified.
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Directors’ remuneration(1)(2) 176 – 176 166 10 176
Auditor’s fees(3):
– for audit of the Company’s
annual financial statements 67 – 67 74 – 74
– non-audit fees – – – – 37 37
Other expenses(4) 320 (14) 306 311 648 959
Custodian transaction charges – 8 8 – 7 7
563 (6) 557 551 702 1,253
(1) The Director's Remuneration Report provides further information on Directors’ fees. Included within other expenses is £18,000 (2024: £16,000) of employer’s national insurance payable on Directors’ remuneration.
(2)
As at
(3)
The auditor’s fees shown include out-of-pocket expenses, but exclude VAT, which is included in other administrative expenses. (2024: An additional fee of £10,000 was paid to the auditor in respect of extra audit work performed in relation to the share class reclassification;
(4) Includes fees for depositary, broker and registrar, and also marketing, printing, postage and listing costs. Capital costs related to an over accrual in the prior year of costs related to the Company’s restructuring.
5. Finance Costs
Finance costs arise on any borrowing the Company has utilised in the year. The Company has a committed £40 million revolving credit facility (see note 13 for further details).
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Commitment fees due on loan facility 18 41 59 – – –
Interest payable on borrowings 32 75 107 194 453 647
50 116 166 194 453 647
6. Tax
As an investment trust, the Company pays no tax on capital gains. However, the Company suffers tax on certain overseas dividends that is irrecoverable and this note shows details of the tax charge. In addition, this note clarifies the basis for the Company having no deferred tax asset or liability.
(a) Tax Charge
2025 2024
£’000 £’000
Overseas taxation 431 180
Corporation tax – prior year adjustment (137) –
294 180
The accounting policy for taxation is disclosed in note 1(g).
(b) Reconciliation of Tax Charge
2025 2024
£’000 £’000
Return before taxation 23,027 28,222
Theoretical tax at the current UK corporation tax rate of 25% 5,757 7,056
(2024: 25%)
Effect of:
- Non-taxable UK dividends (211) (937)
- Foreign tax expensed (6) –
- Non taxable scrip dividends – (27)
- Non-taxable overseas dividends (755) (626)
- Non-taxable overseas special dividends (70) (66)
- Non-taxable gains on investments (5,121) (5,958)
- Non-taxable losses on foreign exchange 1 17
- Excess of allowable expenses over taxable income 407 382
- Disallowable expenses (2) 159
- Overseas taxation 431 180
– Corporation tax - prior year adjustment (137) –
Tax charge for the year 294 180
Given the Company’s status as an investment trust, and the intention to continue meeting the conditions required to retain such status for the foreseeable future, the Company has not provided any
(c) Factors That May Affect Future Tax Charges
The Company has excess management expenses and loan relationship deficits of £21,830,000 (2024: £20,209,000) that are available to offset future taxable revenue.
A deferred tax asset of £5,458,000 (2024: £5,052,000), measured at the standard corporation tax substantively enacted rate of 25% (2024: 25%), has not been recognised in respect of these expenses since the Directors believe that there will be no taxable profits in the future against which the deferred tax assets can be offset.
7. Return per Ordinary Share
Return per share is the amount of profit (or loss) generated for the financial year divided by the weighted average number of the shares in issue. The basic and diluted returns per share are identical as the ordinary shares of the Company are not dilutive.
Revenue, capital and total return per ordinary share is based on each of the returns after taxation shown by the income statement and on the following numbers of shares, being the weighted average number of shares in issue throughout the year:
Average
number of shares
Share 2025 2024
Ordinary (formerly Global Equity Income) shares 62,623,090 28,258,528
UK Equity(1) n/a 62,061,213
Balanced Risk Allocation(1) n/a 3,757,960
Managed Liquidity(1) n/a 1,177,858
(1)
As this share class was closed on
Return per ordinary share is shown in the income statement on page 57.
8. Dividends
Dividends represent a return of income to shareholders for investing in the Company’s shares. These are determined by the Directors and paid four times a year.
Dividends paid for each applicable share class, which represent distributions for the purpose of section 1159 of the Corporation Tax Act 2010, follows:
2025 2024
Dividend Total Dividend Total
rate (pence) £’000 rate (pence) £’000
Ordinary (formerly Global Equity Income)
shares
First interim 3.13 1,974 1.60 402
Second interim 3.13 1,970 1.60 402
Third interim 3.13 1,969 1.60 409
Fourth interim 3.13 1,932 2.55 651
12.52 7,845 7.35 1,864
Combined closed share classes(1)
First interim n/a n/a 3.60 1,156
Second Interim n/a n/a 1.60 1,083
Third interim n/a n/a 1.60 1,067
Fourth interim n/a n/a 2.55 1,443
Special dividend n/a n/a 2.00 83
n/a n/a 11.35 4,832
Total paid in the year 7,845 6,696
(1)
The combined closed share class dividends were those paid by
The Company’s dividend policy permits the payment of dividends from capital. An analysis of dividends paid in the year from revenue and capital follows:
2025 2024
£'000 £'000
Dividends in respect of the year:
From revenue – current year 3,140 6,099
From revenue – brought forward 102 –
From revenue 3,242 6,099
From capital 4,603 597
7,845 6,696
9. Investments Held at Fair Value
The portfolio is made up of investments which are listed, i.e. traded on a regulated stock exchange, and a small proportion of investments which are valued by the Directors as they are unlisted or not regularly traded. Gains and losses are either:
• realised, usually arising when investments are sold; or
• unrealised, being the difference from cost on the investments held at the year end.
(a) Analysis of Investments by Listing Status
2025 2024
£’000 £’000
UK listed investments 48,471 40,398
Overseas listed investments 162,973 155,426
211,444 195,824
(b) Analysis of investment gains
2025 2024
£’000 £’000
Opening valuation 195,824 207,389
Movements in year:
Purchases at cost 135,913 178,530
Sales proceeds (140,775) (213,729)
Gains on investments in the year 20,482 23,634
Closing valuation 211,444 195,824
Closing book cost 194,110 179,567
Closing investment holding gains 17,334 16,257
Closing valuation 211,444 195,824
The Company received £140,775,000 (2024: £213,729,000) from investments sold in the year. The book cost of these investments when they were purchased was £121,370,000 (2024: £192,972,000) realising a profit of £19,405,000 (2024: profit of £20,757,000). These investments have been revalued over time and until they were sold any unrealised profits/losses were included in the fair value of the investments.
(c) Transaction Costs
Transaction costs were £95,000 (2024: £236,000) on purchases and £41,000 (2024: £103,000) on sales.
10. Derivative Instruments
Derivative instruments are contracts whose price is derived from the value of other securities or indices. The Balanced Risk Allocation Portfolio used futures, which represented agreements to buy or sell commodities or financial instruments at a pre-determined price in the future.
2025 2024
£’000 £’000
Opening derivative assets held at fair value through profit or loss – 125
Opening derivative liabilities held at fair value through profit or – (186)
loss
Opening net derivative liabilities held at fair value as shown in – (61)
balance sheet
Closing derivative assets held at fair value through profit or loss – –
Closing derivative liabilities held at fair value through profit or – –
loss
Closing net derivative liabilities held at fair value shown in – –
balance sheet
Movement in derivative holding liabilities – 61
Net realised gains on derivative instruments – 200
Net capital gains on derivative instruments as shown in the income – 261
statement
Net expense arising on derivatives – (10)
Total gains on derivative instruments – 251
The derivative assets/(liabilities) shown in the opening balance for the year to
11. Debtors
Debtors are amounts due to the Company, such as monies due from brokers for investments sold and income which has been earned (accrued) but not yet received.
2025 2024
£’000 £’000
Amounts due from brokers – 1,047
Share reissues from treasury awaiting settlement 510 –
Tax recoverable 353 256
Prepayments and accrued income 451 336
1,314 1,639
12. Other Creditors
Creditors are amounts owed by the Company and include amounts due to brokers for the purchase of investments and amounts owed to suppliers, such as the Manager and auditor.
2025 2024
£’000 £’000
Tax payable – 137
Amounts due to brokers – 1,194
Accruals 443 436
443 1,767
Interest payable on the bank facility is included within the amounts outstanding on the bank facility as shown in the balance sheet.
13. Bank Facility and Overdraft
At the year end the Company had a £40 million (2024: £40 million) committed 364 day multicurrency revolving credit facility, which is due for renewal on
Under the bank facility’s covenants, the Company’s total indebtedness must not exceed 30% of total assets and the total assets must not be less than £100 million (2024: £100 million). The Company was in compliance with the covenants throughout the year and at the year end.
At the year end, the bank facility drawn down was £2,650,000 (2024: £nil), and the interest payable on the bank facility was £nil (2024: £nil).
14. Share Capital
Share capital represents the total number of shares in issue, including treasury shares.
All shares have a nominal value of
2025 2024
Number £’000 Number £’000
Allotted, called-up and fully paid:
Ordinary shares of 1p each 62,924,182 629 63,056,464 631
Treasury shares of 1p each 17,062,404 171 16,930,122 169
79,986,586 800 79,986,586 800
(a) Movements in Share Capital During the Year
Issued and fully paid:
Total
share
capital
Ordinary Shares (number)
At 31 May 2024 63,056,464
Shares bought back into treasury (1,342,282)
Shares sold from treasury 1,210,000
At 31 May 2025 62,924,182
Total
share
capital
Treasury shares (number)
At 31 May 2024 16,930,122
Shares bought back into treasury 1,342,282
Shares sold from treasury (1,210,000)
At 31 May 2025 17,062,404
Total
Share
Capital
Ordinary shares of 1 pence each (£’000)
At 31 May 2024 631
Shares bought back into treasury (14)
Shares sold from treasury 12
At 31 May 2025 629
Treasury shares of 1 pence each (£’000)
At 31 May 2024 169
Shares bought back into treasury 14
Shares sold from treasury (12)
At 31 May 2025 171
Total share capital (£’000)
Ordinary share capital 629
Treasury share capital 171
At 31 May 2025 800
Average buyback price 316.01p
Average sold price 340.70p
The total cost of share buy-backs was £4,270,000 (2024: £2,702,000). The total proceeds from shares that were sold from treasury during the year was £4,110,000 (2024: nil).
(b) Movements in Share Capital After the Year End
Since the year end the Company has sold from treasury 3,610,000 ordinary shares. As at the date of this report the Company has 66,534,182 ordinary shares in issue and holds 13,452,404 ordinary shares in treasury.
(c) Voting Rights
Rights attaching to the shares are described in the Directors’ Report on page 40.
15. Reserves
This note explains the different reserves attributable to shareholders. The aggregate of the reserves and share capital (see previous note) make up total shareholders’ funds.
The special reserve arose from the cancellation of the share premium account, in
The capital redemption reserve arises from the nominal value of shares bought back and cancelled; this and the share premium are non-distributable.
Capital investment gains and losses are shown in note 9(b), and form part of the capital reserve. The revenue reserve shows the net revenue retained after payments of any dividends. The capital and revenue reserves are distributable.
16. Net Asset Value per Ordinary Share
The Company’s total net assets (total assets less total liabilities) are often termed shareholders’ funds and are converted into net asset value per ordinary share by dividing by the number of shares in issue as at the reporting date.
The net asset value per share and the net assets attributable at the year end were as follows:
2025 2024
Net asset Net asset
value per Net assets value per Net assets
share attributable share attributable
pence £’000 pence £’000
Ordinary shares 337.36 212,283 313.30 197,555
Net asset value per share is based on net assets at the year end and on the number of shares in issue (excluding treasury shares) at the year end.
17. Financial Instruments
This note summarises the risks deriving from the financial instruments that comprise the Company’s assets and liabilities.
At
• investments in equities and liquidity funds which are held in accordance with the Company’s investment objectives; and
• short-term debtors, creditors and cash arising directly from operations.
The financial instruments held by the Company are shown on pages 19 and 20.
The accounting policies in note 1 include criteria for the recognition and the basis of measurement applied for these financial instruments. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised and measured.
The Company’s principal risks and uncertainties are outlined in the Strategic Report on pages 26 to 29. This note expands on risk areas in relation to the Company’s financial instruments. The portfolio is managed in accordance with the Company’s investment objective and policies, which are set out on page 24. The management process is subject to risk controls, which the Audit Committee reviews on behalf of the Board, as described on page 44.
The principal risks that an investment company faces in its portfolio management activities are set out below:
Market risk – arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk:
• Currency risk – arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in foreign exchange rates;
• Interest rate risk – arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in market interest rates; and
• Other price risk – arising from fluctuations in the fair value or future cash flows of a financial instrument for reasons other than changes in foreign exchange rates or market interest rates, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
Liquidity risk – arising from any difficulty in meeting obligations associated with financial liabilities.
Credit risk incorporating counterparty risk – arising from financial loss for a company where the other party to a financial instrument fails to discharge an obligation.
Risk Management Policies and Procedures
As an investment trust the Company invests in equities and other investments for the long-term in accordance with its investment policies so as to meet its investment objectives. In pursuing its objectives, the Company is exposed to a variety of risks that could result in a reduction in the Company’s net assets or a reduction of the profits available for dividends. The risks applicable to the Company and the Directors’ policies for managing these risks follow. These have not changed from those applying in the previous year.
The Directors have delegated to the Manager the responsibility for the day-to-day investment activities of the Company as more fully described in the Directors’ Report.
The main risk that the Company faces arising from its financial instruments is market risk – this risk is reviewed in detail below. Since the Company mainly invests in quoted investments, liquidity risk and credit risk are significantly mitigated.
17.1 Market Risk
Market risk arises from changes in the fair value of future cash flows of a financial instrument because of movements in market prices. Market risk comprises three types of risk: currency risk (17.1.1), interest rate risk (17.1.2) and other price risk (17.1.3).
The Company’s Portfolio Managers assess the Company’s exposure when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. The Board meets at least quarterly to assess risk and review investment performance. Borrowings can be used, which will increase the Company’s exposure to market risk and volatility. The borrowing limit is 20% of net assets.
17.1.1 Currency Risk
The majority of the Company consists of assets, liabilities and income denominated in currencies other than sterling. As a result, movements in exchange rates will affect the sterling value of those items.
Management of the currency risk
The Portfolio Managers monitor the Company’s exposure to foreign currencies on a daily basis and report to the Board on a regular basis. Forward foreign currency contracts can be used to limit the Company’s exposure to anticipated future changes in exchange rates and to achieve portfolio characteristics that assist the Company in meeting its investment objectives in line with its investment policies. All contracts are limited to currencies and amounts commensurate with the exposure to those currencies. No such contracts were in place at the current or preceding year end. Income denominated in foreign currencies is converted to sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is accrued and its receipt.
Foreign currency exposure
The fair values of the Company’s monetary items that have currency exposure at 31 May are shown below. Where the Company’s investments (which are not monetary items) are priced in a foreign currency they have been included separately in the analysis so as to show the overall level of exposure.
Year ended
Debtors Investments
(due from Foreign at fair value
brokers, Creditors currency through
prepayments, (due to exposure profit or
accrued Cash brokers on net loss Total net
income and cash and monetary that are foreign
and tax) equivalents accruals) items equities currency
Currency £’000 £’000 £’000 £’000 £’000 £’000
Australian – 4 – 4 – 4
dollar
Canadian 1 4 – 5 11,489 11,494
dollar Danish krone 30 – – 30 6,447 6,477
Euro 142 45 – 187 26,659 26,846
Hong Kong 158 – – 158 7,903 8,061
dollar Japanese yen 38 5 – 43 3,682 3,725
Norwegian 6 – – 6 5,009 5,015
krone Swiss franc 208 – – 208 3,534 3,742
Taiwan 7 – – 7 5,606 5,613
dollar US dollar 98 8 – 106 101,272 101,378
688 66 – 754 171,601 172,355
Year ended
31 May 2024
Australian – 4 – 4 – 4
dollar
Canadian – 5 – 5 2,671 2,676
dollar Danish krone 23 – (8) 15 4,804 4,819
Euro 120 72 (161) 31 37,488 37,519
Hong Kong 121 – – 121 6,115 6,236
dollar
Japanese yen – 5 – 5 – 5
Norwegian 17 – – 17 4,815 4,832
krone
South Korean – – – – 1,791 1,791
won Swiss franc 159 – – 159 4,375 4,534
Taiwan 1 – – 1 1,890 1,891
dollar US dollar 1,121 1 (753) 369 97,332 97,701
1,562 87 (922) 727 161,281 162,008
Foreign currency sensitivity
The preceding exposure analysis is based on the Company’s monetary foreign currency financial instruments held at each balance sheet date and takes account of forward foreign exchange contracts, if used, that offset the effects of changes in currency exchange rates.
The effect of strengthening or weakening of sterling against other currencies to which the Company is exposed is calculated by reference to the volatility of exchange rates during the year using the standard deviation of currency fluctuations against the mean, giving the following exchange rate fluctuations:
2025 2024
£/Australian dollar +/–2.9 +/–1.3%
£/Canadian dollar +/–2.0 +/–1.2%
£/Danish krone +/–1.0 +/–0.7%
£/Euro +/–1.1 +/–0.7%
£/Hong Kong dollar +/–2.4 +/–1.6%
£/Japanese yen +/–2.5 +/–2.9%
£/Norwegian krone +/–1.6 +/–1.7%
£/South Korean won n/a +/–1.9%
£/Swedish krona +/–2.6 +/–2.1%
£/Swiss franc +/–1.5 +/–1.8%
£/Taiwan dollar +/–1.9 +/–1.5%
£/US dollar +/–2.4 +/–1.6%
The tables that follow illustrate the exchange rate sensitivity of revenue and capital returns arising from the Company’s financial non-sterling assets and liabilities for the year using the exchange rate fluctuations shown above.
If sterling had strengthened against other currencies by the exchange rate fluctuations shown in the table above, this would have had the following after tax effect:
2025 2024
Revenue Capital Total Revenue Capital Total
return return return return return return
£’000 £’000 £’000 £’000 £’000 £’000
Canadian dollar (1) (230) (231) – (32) (32)
Danish krone (2) (64) (66) – (34) (34)
Euro (8) (294) (302) (6) (262) (268)
Hong Kong dollar (5) (190) (195) (3) (98) (101)
Japanese yen (1) (92) (93) – – –
Norwegian krone (1) (80) (81) (4) (82) (86)
South Korean won – – – (1) (34) (35)
Swiss franc (3) (53) (56) (3) (79) (82)
Taiwan dollar (1) (107) (108) – (28) (28)
US dollar (45) (2,431) (2,476) (12) (1,562) (1,574)
Total return (67) (3,541) (3,608) (29) (2,211) (2,240)
Net assets (67) (3,541) (3,608) (29) (2,211) (2,240)
If sterling had weakened by the same amounts, the effect would have been the converse.
17.1.2 Interest Rate Risk
Interest rate movements may affect:
• the fair value of the investments in fixed interest rate securities;
• the level of income receivable on cash deposits; and
• the interest payable on variable rate borrowings.
Management of interest rate risk
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account as part of the portfolio management and borrowings processes of the Portfolio Managers. The Board reviews on a regular basis the investment portfolio and borrowings. This encompasses the valuation of fixed-interest and floating rate securities and gearing levels.
When the Company has cash balances, they are held in variable rate bank accounts yielding rates of interest dependent on the base rate of the custodian or deposit taker. The Company has a £40 million (2024: £40 million), 364 day multicurrency revolving credit facility which is due for renewal on
Interest rate exposure
The Company also has available an uncommitted overdraft facility for settlement purposes and interest is dependent on the base rate determined by the custodian.
At 31 May the exposure of financial assets and financial liabilities to interest rate risk is shown by reference to:
• floating interest rates (giving cash flow interest rate risk) – when the interest rate is due to be reset; and
• fixed interest rates (giving fair value interest rate risk) – when the financial instrument is due for repayment.
The following table sets out the financial assets and financial liabilities exposure at the year end:
Company
Total
2025 £’000
Exposure to floating interest rates:
Cash and short-term deposits 2,618
Bank facility (2,650)
Net exposure to interest rates (32)
Company
Total
2024 £’000
Exposure to floating interest rates:
Cash and short-term deposits 1,859
Net exposure to interest rates 1,859
Interest rate sensitivity
At the maximum possible borrowing level of £40 million (2024: £40 million), the maximum effect over one year of a 3.5% movement in interest rates would be a £1,400,000 (2024: maximum effect over one year of a 3.5% movement: £1,400,000) movement in the Company’s income and net assets.
The effect of a 3.5% movement in the interest rates on investments held at fair value through profit and loss would result in a £nil (2024: 3.5% movement: £nil) maximum movement in the Company’s income statement and net assets.
The above exposure and sensitivity analysis are not representative of the year as a whole, since the level of exposure changes frequently throughout the year.
Other price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of the equity investments, but it is the role of the Portfolio Managers to manage the portfolio to achieve the best return.
17.1.3 Other Price Risk
Management of other price risk
The Directors monitor the market price risks inherent in the investment portfolio by meeting regularly to review performance.
The Company’s investment portfolio is the product of the Manager’s investment processes and the application of the portfolio investment policy. The value will move according to the performance of the shares held within the portfolio. However, the portfolio does not replicate its benchmark or the markets in which it is invested, so the performance may not correlate.
Notwithstanding the issue of correlation, if the fixed asset value of the portfolio moved by 10% at the balance sheet date, the profit after tax and net assets for the year would increase/decrease by the following amounts:
2025 2024
£,000 £,000
Profit after tax increase/decrease due to rise/fall of 10% 21,144 19,582
17.2 Liquidity Risk
Management of liquidity risk
Liquidity risk is mitigated by the investments held by the Company’s portfolio being diversified and the majority being readily realisable securities which can be sold to meet funding commitments. If required, the Company’s borrowing facilities provide additional long-term and short-term flexibility.
The Directors’ policy is that in normal market conditions short-term borrowings be used to manage short-term liabilities and working capital requirements rather than realising investments.
Liquidity risk
The contractual maturities of financial liabilities at the year end, based on the earliest date on which payment can be required, are as follows:
2025 2024
3 months More than 3 months More than
or less 3 months or less 3 months
£’000 £’000 £’000 £’000
Bank facility(1) 2,650 – - -
Amount due to brokers – – 1,194 –
Other creditors and accruals 443 – 573 –
3,093 – 1,767 –
(1) Interest due on the bank facility at the year end was £nil (2024: £nil).
17.3 Credit Risk
Credit risk is that the failure of the counterparty in a transaction to discharge its obligations under that transaction could result in the Company suffering a loss.
This risk is managed as follows:
• investment transactions are carried out with a selection of brokers, approved by the Manager and settled on a delivery versus payment basis. Brokers’ credit ratings are regularly reviewed by the Manager, so as to minimise the risk of default to the Company;
• the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the daily review of failed trade reports and the use of daily stock and cash reconciliations. Only approved counterparties are used;
• the Company’s ability to operate in the short-term may be adversely affected if the Company’s Manager, other outsource service providers, or their delegates suffer insolvency or other financial difficulties. The Board reviews annual controls reports from major service providers; and
• cash balances are limited to a maximum of 4% of NAV, across all deposit takers. Only deposit takers approved by the Manager are used.
The following table sets out the maximum credit risk exposure at the year end:
2025 2024
£’000 £’000
Cash and short-term deposits 2,618 1,859
2,618 1,859
18. Fair Value of Financial Assets and Financial Liabilities
‘Fair value’ in accounting terms is the amount at which an asset can be bought or sold in a transaction between willing parties, i.e. a market-based, an independent measure of value. This note sets out the fair value hierarchy comprising three ‘levels’ and the aggregate amount of investments in each level.
The financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments and derivative instruments), or the balance sheet amount is a reasonable approximation of fair value.
FRS 102 as amended for fair value hierarchy disclosures sets out three fair value levels. These are:
Level 1 – fair value based on quoted prices in active markets for identical assets.
Level 2 – fair values based on valuation techniques using observable inputs other than quoted prices within Level 1.
Level 3 – fair values based on valuation techniques using inputs that are not based on observable market data.
Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability.
The valuation techniques used by the Company are explained in the accounting policies note. All of the Company’s non-zero valued investments are quoted equity investments which are deemed to be Level 1.
2025 2024
£’000 £’000
Financial assets designated at fair value through profit or
loss:
Level 1 211,444 195,824
Level 2 – –
Level 3 – –
Total for financial assets 211,444 195,824
19. Capital Management
This note is designed to set out the Company’s objectives, policies and processes for managing its capital. The capital is funded from monies invested in the Company by shareholders (both initial investment and any retained amounts) and any borrowings by the Company.
The Company’s total capital employed at
The Company’s total capital employed is managed to achieve the Company’s investment objective and policy as set out on page 24, including that borrowings may be used to raise equity exposure up to a maximum of 20% of net assets. At the balance sheet date, maximum gross gearing was 1.2% (2024: nil%). The Company’s policies and processes for managing capital are unchanged from the preceding year.
The main risks to the Company’s investments are shown in the Directors’ Report under the ‘Principal Risks and Uncertainties’ section on pages 26 to 29. These also explain that the Company has borrowing facilities which can be used in accordance with the Company’s investment objective and policies and that this will amplify the effect on equity of changes in the value of the portfolio.
The Board can also manage the capital structure directly since it has taken the powers, which it will be seeking to renew at the 2025 AGM, to issue and buy back shares and it also determines dividend payments. Details of the Company's liquidity policy can be found under the Discount/Premium section on page 25.
The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by the Corporation Tax Act 2010 and by the Companies Act 2006, respectively, and, with respect to the availability of the overdraft facility, by the terms imposed by the lender. The Board regularly monitors, and has complied with, the externally imposed capital requirements. This is unchanged from the prior year.
Borrowings can comprise any drawings on the credit and/or overdraft facilities, details of which are given in note 13.
20. Contingencies, Guarantees and Financial Commitments
Liabilities the Company is committed to honour but which are dependent on a future circumstance or events occurring would be disclosed in this note if any existed.
There were no contingencies, guarantees or financial commitments of the Company at the year end (2024: £nil).
21. Analysis of Changes in Net Debt
This note summarises the changes in net debt from the start of the year to the end of the year.
At At
1 June Cash 31 May
2024 flows 2025
£’000 £’000 £’000
Cash and cash equivalents 1,859 759 2,618
Bank facility – (2,650) (2,650)
Total 1,859 (1,891) (32)
22. Related Party Transactions and Transactions with the Manager
A related party is a company or individual who has direct or indirect control or who has significant influence over the Company. Under accounting standards, the Manager is not a related party.
Under
Details of the Manager’s services and fees are disclosed in the Director’s Report on page 39 and note 3.
23. Post Balance Sheet Events
Any significant events that occurred after the Company’s financial year end but before the signing of the balance sheet will be shown here.
There are no significant events after the end of the reporting period requiring disclosure.
The figures and financial information for the year ended
The figures and financial information for the year ended
The audited annual financial report will be posted to shareholders during
A copy of the annual financial report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
