dunedinincomegrowth.co.uk
Dunedin Income Growth
Investment Trust PLC
Annual Report 31 January 2025
A differentiated strategy seeking to deliver resilient income and capital growth,
while meeting our sustainable and responsible investing approach
For more information visit dunedinincomegrowth.co.uk
aberdeeninvestments.com
Dunedin Income Growth Investment Trust PLC 133
Directors
David Barron (Chairman)
Gay Collins
Jasper Judd
Christine Montgomery
Arun Kumar Sarwal (appointed 1 February 2025)
Howard Williams
Registered Office & Company Secretary
abrdn Holdings Limited
1 George Street
Edinburgh EH2 2LL
Email: dunedin.income@aberdeenplc.com
Alternative Investment Fund Manager
abrdn Fund Managers Limited
280 Bishopsgate
London EC2M 4AG
Investment Manager
abrdn Investments Limited
1 George Street
Edinburgh EH2 2LL
Company Registration Number
SC000881 (Scotland)
Legal Entity Identifier (“LEI”)
549300PPXLZPR5JTL763
Website
dunedinincomegrowth.co.uk
LinkedIn: aberdeen Investment Trusts
X: @aberdeenTrusts
Facebook: aberdeen Investment Trusts
YouTube: @aberdeenInvestmentTrusts
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder help can be found at shareview.co.uk.
Alternatively, you can contact the Shareholder Helpline:
+44 (0)371 384 2441*
(*Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday
excluding public holidays in England and Wales. Charges
for calling telephone numbers starting with ‘03’ are
determined by the caller’s service provider.)
If calling from overseas, please ensure the country code
is used.
Depositary
The Bank of New York Mellon (International) Limited
160 Queen Victoria Street
London EC4V 4LA
Stockbroker
JPMorgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Auditor
Deloitte LLP
110 Queen Street
Glasgow G1 3BX
Contact Addresses
Dunedin Income Growth Investment Trust PLC 1
“The Company’s NAV total return was 9.0%, and the
share price total return was 8.4%. The Board is
pleased to declare an increase of 3.3% in the
dividend for the year, to 14.20p per share, equating
to a dividend yield of 5.0% based on the year end
share price.”
David Barron, Chairman
“The high conviction portfolio, with a strong
focus on quality, is highly differentiated from
other UK Equity Income investment trusts.”
Ben Ritchie and Rebecca Maclean,
Aberdeen
2 Dunedin Income Growth Investment Trust PLC
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION. If you are in any doubt about the
action you should take, you are recommended to seek
your own independent financial advice from your
stockbroker, bank manager, solicitor, accountant or other
financial adviser authorised under the Financial Services
and Markets Act 2000 (as amended by the Financial
Services Act 2012) if you are in the United Kingdom or,
if not, from another appropriately authorised
financial adviser.
If you have sold or otherwise transferred all your Ordinary
shares in Dunedin Income Growth Investment Trust PLC,
please forward this document, together with the
accompanying documents, immediately to the purchaser or
transferee, or to the stockbroker, bank or agent through
whom the sale or transfer was effected for transmission to
the purchaser or transferee.
Overview
Company Summary 3
Performance Highlights 5
Financial Calendar 6
Financial Highlights 7
Strategic Report
Chairman’s Statement 9
Overview of Strategy 14
Promoting the Success of the Company 22
Performance 26
Investment Manager’s Review 30
Investment Process 34
Sustainable and Responsible Investment
Equity Approach 36
Sustainable and Responsible Investing Outcomes 41
Information About the Investment Manager 45
Portfolio
Ten Largest Investments 48
Portfolio 49
Sector and Geographical Breakdown 51
Sector Analysis 52
Investment Case Studies 54
Governance
Board of Directors 58
Directors’ Report 61
Directors’ Remuneration Report 70
Audit Committee’s Report 73
Financial Statements
Statement of Directors’ Responsibilities 78
Independent Auditor’s Report 79
Statement of Comprehensive Income 87
Statement of Financial Position 88
Statement of Changes in Equity 89
Statement of Cash Flows 90
Notes to the Financial Statements 91
Other Information
Investor Information 113
Glossary of Terms 115
Your Company’s History 118
Share Capital History 119
AIFMD Disclosures (Unaudited) 120
Alternative Performance Measures 121
General
Notice of Annual General Meeting 124
Contact Addresses 133
Contents
Dunedin Income Growth Investment Trust PLC 3
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Built to help your returns
keep pace with the
cost of living
Searching out the UK and
overseas companies
shaping a better future
Actively investing to bring
together what we believe
are the best opportunities
Long term growth Targeting reliable quarterly income
To capture long-term growth, the Investment
Manager looks across the UK and overseas to find
companies, from major multi-nationals to dynamic
smaller companies, benefiting from major economic
trends such as energy transition, digitisation, shifting
demographics and changing consumer behaviour.
To keep delivering a reliable and growing quarterly
income, the team invests in well-managed, financially
healthy companies with robust earnings potential.
A sustainable focus Robust financial returns
By using a range of forward-looking tools to interrogate
Environmental, Social and Governance (“ESG”)
practices, the Investment Manager looks to ensure
that every company it invests in is leading on
sustainability today or taking steps to
lead the way tomorrow.
By applying these stringent criteria, the Company
is dedicated to delivering robust financial returns
for investors – and helping to shape a better
future for everyone.
Company Summary
4 Dunedin Income Growth Investment Trust PLC
3.3% of the Company’s total assets are invested
in the Banks sub-sector (2024: 3.6%).
Dunedin Income Growth Investment Trust PLC 5
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Net asset value total return per Ord share
AB
Share price total return per Ord share
A
9.0% 8.4%
2024 6.7% 2024 (1.6)%
Revenue return per Ord share Ongoing charges
A
13.8
p
0.56%
2024 13.5p 2024 0.64%
Discount to net asset value
AB
Dividends per Ordinary share
11.6% 14.20
p
2024 10.7% 2024 13.75p
A
Alternative Performance Measure (see pages 121 and 122).
B
With debt at fair value (see page 102).
Net Asset Value per share –
debt at fair value
Share price Dividends per share
At 31 January – pence At 31 January – pence Year ended 31 January - pence
297.6
309.0
302.8
309.0
322.4
2122232425
287.0
310.0
294.0
276.0
285.0
21 22 23 24 25
12.80
12.90
13.10
13.75
14.20
21 22 23 24 25
Performance Hi
g
hli
g
hts
6 Dunedin Income Growth Investment Trust PLC
Calendar
Online shareholder presentation
7 May 2025
Annual General Meeting (Edinburgh)
22 May 2025
Expected payment dates of quarterly dividends
30 May 2025
29 August 2025
28 November 2025
27 February 2026
Half year end
31 July 2025
Expected announcement of results for the
six months ending 31 July 2025
September 2025
Financial year end
31 January 2026
Expected announcement of results for the
year ending 31 January 2026
April 2026
Financial Calendar
Dunedin Income Growth Investment Trust PLC 7
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
31 January 2025 31 January 2024 % change
Total assets (£’000) (see page 116 for definition) 477,187 488,867 –2.4
Equity shareholders’ funds (£’000) 428,528 445,815 –3.9
Market capitalisation (£’000) 384,605 403,437 –4.7
Net asset value per Ordinary share 317.55p 304.99p 4.1
Net asset value per Ordinary share with debt at fair value
A
322.47p 308.98p 4.4
Share price (mid) 285.00p 276.00p 3.3
FTSE All-Share Index 4,710.58 4,173.06 12.9
Discount (difference between share price and net asset value)
Discount where borrowings are deducted at fair value
A
11.6% 10.7%
Gearing (see page 115 for definition)
Net gearing
A
10.9% 6.8%
Dividends and earnings
Total return per share 23.90p 15.45p
Revenue return per share 13.82p 13.54p 2.1
Total dividend per share for the year 14.20p 13.75p 3.3
Dividend cover
A
0.97 0.99
Revenue reserves
Prior to payment of third and final dividends
B
17.65p 16.34p
After payment of third and final dividends
BC
9.85p 8.99p
Operating costs
Ongoing charges
AD
0.56% 0.64%
A
Considered to be an Alternative Performance Measure as defined on pages 121 and 122.
B
Calculated by dividing the revenue reserve per the Statement of Financial Position on page 88 by the number of shares in issue at the reporting date per note 16 on page 101.
C
Third interim dividend for the year ended 31 January 2025 of 3.2p per share (2024 – 3.2p). Final dividend for the year ended 31 January 2025 of 4.6p per share (2024 – final dividend
of 4.15p). See note 16 on page 101 for further details.
D
Calculated in accordance with the latest AIC guidance issued in October 2020 to increase the scope of reporting the look-through costs of holdings in investment companies
where applicable.
Financial Hi
g
hli
g
hts
8 Dunedin Income Growth Investment Trust PLC
Strategic Report
The Company is an investment
trust with its shares listed on the main
market of the London Stock Exchange.
The Company’s objective is to
achieve growth of income and
capital from a high quality portfolio
invested mainly in companies listed
or quoted in the United Kingdom or
companies having significant
operations and/or exposure to the
United Kingdom that meet the
Company’s sustainable and
responsible investing approach.
9.3% of the Company’s total
assets are invested in the
Pharmaceuticals and
Biotechnology sub-sector
(2024: 9.9%).
Dunedin Income Growth Investment Trust PLC 9
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
The UK equity market performed strongly during the year
ended 31 January 2025. The Company’s net asset value
total return was 9.0%, and the share price total return was
8.4%. The Board is pleased to declare an increase of 3.3%
in the dividend for the year, to 14.20p per share, equating
to a dividend yield of 5.0% based on the year end
share price.
Performance
Notwithstanding the positive NAV return for the year, it is
disappointing to report underperformance against the
benchmark, the FTSE All-Share Index, which produced a
total return of 17.1%.
This was a year where relative performance was
characterised by challenging market conditions for the
Investment Manager’s strategy, with relatively
concentrated returns and strong performance from a
number of sectors to which the Company has limited
exposure. In addition, selective tilts towards European
exposure, UK mid-caps and companies with quality
characteristics have historically been sources of
opportunity, but in this period proved a headwind. It is
important to note that, while there were some stocks
whose performance lagged that expected by the
Investment Manager, the Company has suffered primarily
from the opportunity cost of missing out on strong returns,
as opposed to significant issues affecting the holdings
within the portfolio.
The period under review was one of surprisingly positive
absolute equity returns against a backdrop of significant
elections at home and abroad and general economic,
technological and political volatility. The UK stock market
was one of the global leaders with its 17% total return,
despite a domestic economy that began to stall following
the general election in July, and the impact of the new
government’s revenue raising measures in the October
budget. During this time, the large-cap FTSE 100 Index
comfortably outperformed the mid-cap FTSE 250 Index
and Smaller Companies Index. Inflation remained
elevated across most developed economies with UK CPI
ending the year at 3.0%, still above the Bank of England’s
(“BoE”) target rate. Despite persistently higher than
desired price growth, central banks began the process of
easing monetary policy with the BoE cutting interest rates
twice in 2024 to bring the base rate to 4.75%. There has
been a further reduction to 4.5% since the year end and
markets are pricing in a further modest reduction over the
remainder of 2025.
Frustratingly, the discount at which the Company’s shares
are trading to NAV widened over the year by 0.9% to stand
at 11.6%. Reducing the discount remains a key objective
of the Board and we have continued to buy back
substantial numbers of shares over the period. The three
main elements needed to reduce the Company’s discount
are improving benchmark relative performance,
demonstrating a compelling income proposition and
delivering a high quality and targeted investor relations
programme, and these elements continue to be the
Board’s key areas of focus.
“This was a year where relative
performance was characterised by
challenging market conditions for the
Investment Manager’s strategy, with
relatively concentrated returns and
strong performance from a number of
sectors to which the Company has
limited exposure.”
Reflecting on this year’s performance, it is worth
considering what makes a successful investment trust. For
the shares of an investment trust to consistently trade at a
narrow discount or at a premium, the investment trust
needs to offer an investment strategy that shareholders
consider worth investing in, the investment mandate
needs to be well-executed and the company needs to
have a cost-effective marketing and shareholder relations
strategy. These need to be delivered by teams that have
experience in all aspects of investment trust
management. The Company has all these elements in
place. While near-term investment performance has
been below our expectations, since the Board
repositioned the investment strategy in January 2016, the
Company has delivered a NAV total return of 101.3%
compared to the benchmark return of 96.2%, and over
the same period ranks 6th out of 18 in the AIC UK
Equity Income sector by NAV total return, with an
annualised NAV total return of 8.1%. This demonstrates
that, over this longer period, the Company’s returns have
been competitive within the sector.
In the past year, the strategy has faced headwinds. In any
active strategy, not all investment decisions will be
rewarded. In a concentrated portfolio, the effects of poor
stock selection are magnified. This is anything but an
Chairman’s Statement
10 Dunedin Income Growth Investment Trust PLC
index-like portfolio, a feature we believe shareholders
value and, as we have stated before, there will be years
when we perform very differently from the benchmark
and many of our peers. This is demonstrated over the past
two years: for the year just past, the Company delivered a
relatively strong absolute NAV total return of 9.0%, but
underperformed the benchmark index; and in the
previous year, ended 31 January 2024, the Company
delivered a NAV total return of 6.7%, outperforming the
benchmark by nearly 5% and was the best performing
investment trust in the UK Equity Income sector for
that year.
Active management requires the patience to absorb the
vicissitudes of markets. The strategy has delivered
significant outperformance in the past and the Board
believes that it will do so again when the Investment
Manager’s style returns to favour.
We remain committed to the sustainability ambitions
of the Company and believe it is a sensible approach
when investing for the long term and to deliver resilient
and growing dividends. We expect that investors will
return their focus towards this segment of the market
as environmental and social risks rise and asset owners
turn their attention to the impact of their holdings. This
is about both avoiding risks and taking advantage
of opportunities, such as investing behind the powerful
demand trends stemming from the climate transition.
Earnings
The Board recognises the importance of the
revenue return to shareholders and we are pleased to
report that the portfolio has seen revenue earnings per
share grow by 2.1%, reaching another record high of
13.82p per share, aided by a combination of solid dividend
distributions from portfolio companies, a healthy level of
option writing income and a reduction in the number of
shares outstanding through our ongoing programme of
share buybacks. This level of revenue growth per share is
in line with the growth of dividend distributions from the
FTSE All-Share Index over 2024.
Dividend
Having paid three quarterly dividends of 3.20p per
share, we are proposing a final dividend of 4.60p per
share, payable on 30 May 2025 to shareholders on the
register on 2 May 2025. This will make a total dividend of
14.20p per share for the year, an increase of 3.3% on last
year and ahead of the rate of inflation. This will be the 41st
year out of the past 45 years that the Company has
grown its dividend, with the distribution maintained in the
other four years.
In addition, having increased the dividend in every year
since 2011, the Company is pleased to be classified under
the ‘Next Generation of Dividend Heroes’ banner by
the Association of Investment Companies, being one of
the 30 investment trusts that have raised their dividend for
between 10 and 19 consecutive years.
It is also worth noting that, since January 2016, the
Company’s dividend per share has increased by 24.6%,
outpacing the 18% growth in dividend distributions from
the FTSE All Share Index and doing so in a much more
resilient fashion, noting the UK market’s 42% cut to
dividend payments experienced during the pandemic in
2020. The ability to smooth dividends using revenue
reserves or indeed pay from realised capital reserves to
maintain shareholder distributions is one of the key
benefits of the investment trust structure.
“The total dividend of 14.20p per
share for the year is an increase of
3.3% on last year and ahead of the
rate of inflation.”
Following payment of the final dividend, the Company will
have utilised 0.38p per share of its revenue reserves,
leaving nearly 10p per share available to support future
distributions. This represents approximately 69% of the
current annual dividend cost.
The Company has drawn 3.22p per share from revenue
reserves since January 2019, both through the transition
away from higher yielding, lower growth companies and,
particularly in 2020/21, when 1.9p per share was utilised
from revenue reserves following the impact of the Covid
pandemic on the portfolio. The Company does have the
ability to pay dividends out of realised capital reserves
and, given its very long history, is in the very favourable
position of having capital reserves that form a significant
part of equity shareholders’ funds.
The Investment Manager is focussed on enhancing
the Company’s longer-term potential for both faster
dividend growth and better capital performance. The
dividend yield was 5.0% based on the share price of 285p
at the end of the year, a 35% premium compared to a
notional yield of 3.7% from the FTSE All-Share Index and a
premium of 11% to the Bank of England’s base rate of
4.5%, while offering the prospect of real growth.
Chairman’s Statement
Continued
Dunedin Income Growth Investment Trust PLC 11
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Income return through dividends has been a significant
proportion of the return to shareholders from their
investment in the Company, and the Board is aware of its
importance to shareholders. Historic wisdom and practice
is that dividends have and can be largely generated from
revenue returns, that is dividends paid by companies we
invest in, supplemented in the Company’s case by the
strategic use of option writing. Looking back over the past
ten years, as I retire from the Board, it is interesting to note
that the UK market has increasingly moved towards
buybacks as a flexible form of capital management and
distribution. This trend is seemingly structural with
buybacks representing approximately 50% of the value of
total distributions in 2024. Furthermore, the Sterling
amount of dividends being paid by the UK market last year
is not much higher than the total in 2014. This shifting
landscape presents questions for boards and
shareholders both as to dividend policy - what is paid out
in any year, and what is a desirable rate of growth to aim
for - and investment policy, how your capital is invested to
generate this return. Whilst raising questions, in the Board’s
view these structural changes also present the Company
with real potential opportunities, through being able to use
the structural advantages of an investment trust to
address these shifting market dynamics.
Our progressive distribution policy remains, seeking to
grow the dividend faster than inflation over the medium
term. With the Company’s robust revenue and capital
reserves and the healthy underlying earnings growth of
the companies within the portfolio, we believe that an
overall policy delivering both reliable income and capital
growth remains very well supported.
Gearing
The Board believes that the sensible use of
modest financial gearing, whilst amplifying market
movements in the short term, will enhance returns of both
capital and income to shareholders over the long term.
We also recognise the benefit that having a reasonable
proportion of long-term fixed rate funding provides to
managing the Revenue Account, through greater
certainty over financing costs.
The Company currently employs two sources of
gearing, a £30 million loan note which matures in 2045,
and a £30 million multi-currency revolving credit facility
that expires in August 2027 which was put in place in 2024
and negotiated on attractive terms with The Bank of
America. This facility replaced the expiring £30 million loan
with The Bank of Nova Scotia. A Sterling equivalent of
£18.9 million was drawn down from the facility at the
year end.
With debt valued at par, the Company’s net
gearing increased from 6.8% to 10.9% during the year. This
was due to the Investment Manager drawing down an
additional £5 million of borrowings during the year to
deploy into favoured investment opportunities, a lower
level of cash balances and the reduction in net assets as a
result of the ongoing share buybacks. The Board believes
this remains a relatively conservative level of gearing and
the undrawn part of the revolving credit facility provides
the Company with financial flexibility should opportunities
to deploy additional capital arise.
Discount
The share price total return for the year of 8.4% modestly
underperformed the NAV total return, reflecting a move in
the discount from 10.7% at the end of last year to 11.6% as
at 31 January 2025 (on a cum-income basis with
borrowings stated at fair value). Reflecting this widening
during the year, 11.2 million shares were bought back at
an average discount to NAV of 11.0%, providing an
estimated enhancement of 1.0% to the NAV per share.
The widening of the Company’s discount has been a
cause of significant frustration to the Board. The reduction
in net demand for the Company’s shares has a number of
causes, some Company specific and some relating to
broader sectoral issues. Specific issues include the transfer
of the Aberdeen Savings Schemes at the end of 2023 to
the Interactive Investor platform, leading to increased
selling during and after the transfer process. The Board
has engaged with Aberdeen to understand how the
attractive terms of savings schemes and the sense of
connection between investors and the Company can be
replicated on the Interactive Investor platform. In addition,
recent capital performance of the portfolio has not
attracted new investors. The current negativity around
sustainable investing is also unhelpful. More broadly,
UK equities have been out of favour, with the wider
reduction in equity exposure to the UK market being
well-documented.
The Board believes a consistent rating of the
Company’s shares close to the underlying asset value is of
significant benefit to shareholders and strives to achieve
this. The Board also believes that the successful
implementation by the Investment Manager of the
investment strategy and delivery of both dividend growth
and attractive total return performance is key to ensuring
this. As in previous years, we will seek shareholders’
permission at the AGM to buy back shares and issue new
shares. We have actively increased the level of buybacks
in recent months and will continue to look at different
approaches to reduce the discount, including enhancing
12 Dunedin Income Growth Investment Trust PLC
the attractiveness of the Company to potential investors,
whilst preserving the integrity of the closed ended
structure which we believe is a benefit to our portfolio
managers and therefore our shareholders. At the time of
writing the share price discount to NAV has narrowed to
around 8%.
Annual General Meeting and Online
Shareholder Presentation
AGM
The AGM will be held at 12 noon on Thursday 22 May 2025
at InterContinental Edinburgh, The George, 19-21 George
Street, Edinburgh EH2 2PB. The meeting will include a
presentation from the Investment Manager and will be
followed by a buffet lunch. We encourage all shareholders
to complete and return the Proxy Form enclosed with the
Annual Report to ensure that your votes are represented
at the meeting.
If you hold your shares in the Company on a platform via a
nominee, please note that the Association of Investment
Companies has provided helpful information on how to
attend an AGM and how to vote investment company
shares held on some of the major platforms. This
information can be found at: theaic.co.uk/how-to-vote-
your-shares
The Notice of the AGM is contained on pages 124 to 129.
“The AGM will be held at 12 noon on
Thursday 22 May 2025 at
InterContinental Edinburgh, The
George, 19-21 George Street,
Edinburgh EH2 2PB.”
Online Shareholder Presentation
To encourage as much interaction as possible with our
shareholders, especially those who are unable to attend
the AGM, we will again also be hosting an Online
Shareholder Presentation, which will be held at 11.00 am
on Wednesday 7 May 2025. At this event you will receive a
presentation from the Investment Manager and have the
opportunity to ask live questions of the Chairman and the
Investment Manager. The online presentation is being held
ahead of the AGM to allow shareholders to submit their
proxy votes subsequently.
Full details on how to register for the online event can be
found at: bit.ly/abrdn-Dunedin-Income-2025
Details are also available on the Company’s website.
Board Succession
We were pleased to announce the appointment of Arun
Kumar Sarwal as an independent non-executive Director
of the Company with effect from 1 February 2025.
Arun is a Chartered Accountant and has broad
experience of global equities and fund management over
some 35 years in the UK, Europe, and Asia. He is a Board
Advisor to Tumelo and a director and Chairman of the
Audit Committee of JPMorgan European Discovery Trust
plc. Arun’s biographical details are contained on page 60.
He will stand for election at the AGM.
It is the Company’s stated policy that Directors should
stand down after nine years on the Board. Jasper Judd,
who is Chairman of the Audit Committee, and I, both
joined the Board in February 2016. As previously stated, we
will both stand down from the Board at the AGM. It is the
Board’s intention that Arun will be appointed as Chairman
of the Audit Committee in place of Jasper at that time. I
would like to thank Jasper for his diligent and highly
effective chairing of the Company’s Audit Committee and
his contribution to Board deliberations.
Howard Williams, who has been a Director since April
2018, will succeed me as Chair of the Company and it is
the Board’s intention to recruit a further Director later in
2025 to bring the number of Directors back to five.
It has been a great pleasure to be a Director of the
Company for the past nine years. I have enjoyed working
with my Board colleagues past and present. We have
planned for the succession and the Board of Directors
taking the Company forward is highly experienced in all
aspects of investment trust management. Our Manager,
Aberdeen, has undergone significant change over the
past nine years but the team managing Dunedin Income
Growth has been remarkably consistent with Ben Ritchie
involved in managing the portfolio since 2012 and the lead
manager since 2016. The individuals working with the
Board have been committed and diligent in managing
your company and I would like to thank them for
their support.
Chairman’s Statement
Continued
Dunedin Income Growth Investment Trust PLC 13
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Outlook
The past year has been a difficult period for the Company,
notwithstanding the clear focus on generating both total
return and dividend growth. The focus of our approach on
high quality companies, with the ability to invest down the
market cap spectrum and overseas should give the
portfolio both flexibility and resilience. The Board believes
that this is a sound strategy to deliver capital
outperformance and dividend growth over the longer
term. We believe that there are reasons to expect the
Company’s relative performance to significantly improve
and to return to outperformance of both peers and the
benchmark. In aggregate, the portfolio valuation is at the
narrowest premium to the wider market in three years,
despite far stronger levels of profitability, returns and
balance sheets. At the stock level, the Investment
Manager sees compelling prospective returns from a
significant number of the companies in the portfolio,
businesses that are trading at prices well below their
potential value.
“The Board is confident that the
Company is well positioned to return
to deliver relative total return
outperformance over the medium and
long term.”
As we have stated in past years, we also believe that the
income growth of the Company relies more on structural
rather than cyclical growth and that gives the Investment
Manager a higher degree of confidence on the likely path
of income generation. The sustainability overlay enhances
this approach. Our approach should help to underpin
earnings delivery, even in an environment where
economic growth remains modest. The balanced nature
of the portfolio means it is well set to navigate volatile
markets and demonstrate resilience in a range of
different market environments.
There are of course risks to be aware of. At home in the
UK, businesses now have to navigate the substantially
increased costs that will come through from the Autumn
budget. The economy remains stagnant and the
confidence of consumers and companies is subdued.
Global politics have become more volatile and the path
and impact of US economic policy more difficult to
ascertain. President Trump’s trade agenda has caused
markets a great deal of discomfort since the year end,
particularly since his tariff announcement on 2 April.
Alongside this, there are already signs of an economic
slowdown emerging as businesses grapple with the daily
torrent of policy announcements.
While inflationary pressures in the UK have eased, they are
still at elevated levels compared to central bank targets.
Likewise, geopolitical tensions continue to persist across
the Middle East, as does Russia’s conflict with Ukraine.
Meanwhile, China’s economy remains subdued, unlikely to
be aided by the current trade dispute with the United
States. If there is a potential silver lining of this backdrop, it
is that UK inflation may ease faster than expected -
energy prices have fallen sharply and this may give the
Bank of England greater scope to ease monetary policy,
an essential boost to what remains a consumption led
domestic economy. As a result, we think it is important to
maintain a relatively well-balanced portfolio and the
Investment Manager’s focus on investing in companies
with pricing power, strong balance sheets and with
greater exposure to structural, rather than cyclical,
growth should offer greater resilience in both capital and
income generation, while retaining upside optionality.
The Board is confident that the Company is well
positioned to return to deliver relative total return
outperformance over the medium and long term. This,
combined with continuing to deliver a progressive
distribution policy together with a targeted and effective
investor relations programme should help to move the
Company’s shares to trade closer to NAV.
David Barron
Chairman
14 April 2025
14 Dunedin Income Growth Investment Trust PLC
Business
The Company is an investment trust with its shares listed
on the main market of the London Stock Exchange.
Investment Objective
The Company’s objective is to achieve growth of income
and capital from a high quality portfolio invested mainly in
companies listed or quoted in the United Kingdom or
companies having significant operations and/or exposure
to the United Kingdom that meet the Company’s
sustainable and responsible investing approach.
Investment Policy
In pursuit of its objective, the Company's investment policy
is to deliver income and long-term growth from investing
mainly in equities and equity-related securities of
companies incorporated or domiciled in the United
Kingdom, or companies having significant operations
and/or exposure to the United Kingdom, that meet
the Company’s sustainable and responsible
investing approach.
The Company ensures that all equity and equity related
securities adhere to the Investment Manager’s
Sustainable and Responsible Investment Equity Approach
details of which are included on pages 36 to 40.
The Company does not have a UK sustainable investment
label under the sustainability disclosure requirements and
investment labels regime (“SDR”). While the Company has
sustainability characteristics, it does not have a
sustainability objective. Sustainable investment labels are
intended to help investors find products that have a
specific sustainability goal.
Management Process
The Investment Manager has discretion to actively
manage the portfolio to achieve a diverse asset mix at
sector and stock level.
The Company incorporates sustainability characteristics
through a combination of positive allocation, negative
exclusions, and corporate engagement. The Company
uses the Investment Manager’s proprietary, forward-
looking Environmental Social and Governance (“ESG”)
tools to assess the sustainable characteristics of
investments and classifies holdings as Sustainable
Leaders, Solutions Providers and Transition companies.
The Investment Manager’s internal ESG House Score and
ESG Quality Score are also used to identify and exclude
companies exposed to the highest ESG risks. For example,
the Company will not invest in ESG Q 4 and 5 rated
companies or those with an ESG House Score in the
bottom 10% of the investment universe. In addition, a set of
company exclusions are applied relating to the principles
of the UN Global Compact, tobacco manufacturing,
thermal coal, oil & gas and weapons (for further details,
see the Sustainable and Responsible Investment Equity
Approach section on pages 36 to 40).
Further, sustainability characteristics are targeted at the
aggregate portfolio level. The Company is committed to
having a carbon footprint (Scope 1 and 2) of at least 20%
below the FTSE All-Share Index.
The Company may also invest in other investment funds
(including those managed by the Investment Manager),
money-market instruments and cash. These assets may
not adhere to the Company’s investment objective but will
not conflict with the Company’s sustainable and
responsible investing approach and will pass the
Company’s exclusionary screening criteria as agreed by
the Board.
Risk Diversification
The Company maintains a diversified portfolio consisting,
substantially, of equity or equity-related securities, and it
can invest in other financial instruments. The Company is
invested mainly in companies listed or quoted in the
United Kingdom and can invest up to 25% of its gross
assets overseas.
It is the policy of the Company to invest no more than
15% of its gross assets in other listed investment
companies and no more than 15% of its gross assets
in any one company.
Gearing
The Board is responsible for determining the gearing
strategy for the Company, with day-to-day gearing
decisions being made by the Manager within the remit set
by the Board. The Board has set its gearing limit at a
maximum of 30% of the net asset value at the time of
draw down. Gearing is used selectively to leverage the
Company's portfolio in order to enhance returns where
and to the extent considered appropriate.
The Company may only make material changes to its
investment policy (including the level of gearing set by the
Board) with the approval of shareholders in the form of an
ordinary resolution and the prior approval of the FCA.
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Delivering the Investment Objective
and Policy
The Directors are responsible for determining the
Company’s investment objective and investment policy.
Day-to-day management of the Company’s assets has
been delegated, via the AIFM, to the Investment Manager.
Investment Process
The Investment Process adopted by the Investment
Manager is contained on pages 34 to 35.
Benchmark
The Company’s benchmark is the FTSE All-Share Index
(total return). Performance is measured on a net asset
value total return basis over the long-term.
Promoting the Success of the Company
The Board’s statement on pages 22 to 25 describes how
the Directors have discharged their duties and
responsibilities over the course of the financial year under
section 172 (1) of the Companies Act 2006 and how they
have promoted the success of the Company for the
benefit of the members as a whole.
Key Performance Indicators (“KPIs”)
The Board uses a number of financial performance measures to assess the Company’s success in achieving its
objective and determining the progress of the Company in pursuing its investment policy. The main KPIs are shown in
the table below.
KPI Description
Performance of NAV against benchmark index
and comparable investment trusts
The Board measures the Company’s NAV total return performance against the total
return of the benchmark index – the FTSE All-Share Index. The figures for this year
and for the past three and five years, and a graph showing performance against the
benchmark index over the past five years are shown on page 26. The Board also
monitors performance relative to a peer group of investment trusts which have
similar objectives, policies and yield characteristics.
Revenue return per Ordinary share The Board monitors the Company’s net revenue return. The revenue returns per
Ordinary share for each of the past 10 years are set out on page 28.
Dividend per Ordinary share The Board monitors the Company’s annual dividends per Ordinary share. The
dividends per share for each of the past 10 years are set out on page 28.
Share price performance The Board monitors the performance of the Company’s share price on a total return
basis. The returns for this year and for the past three and five years, and a graph
showing the share price total return performance against the benchmark index
over the past five years are shown on page 26.
Premium/discount to NAV The premium/discount of the share price relative to the NAV per share is monitored
by the Board. The discount at the year end and at the end of the previous year are
disclosed on page 7.
Ongoing charges The Board monitors the Company’s operating costs carefully. Ongoing charges for
the year and the previous year are disclosed on page 7.
16 Dunedin Income Growth Investment Trust PLC
Principal Risks and Uncertainties
The Board carries out a regular review of the risk environment in which the Company operates, changes to the
environment and individual risks. The Board also considers emerging risks which might affect the Company. The Board
receives updates from the Manager on the risks that could affect the Company.
The Board has carried out a robust assessment of the Company’s principal and emerging risks, which include those that
would threaten its business model, future performance, solvency, liquidity or reputation. The principal risks and
uncertainties facing the Company at the current time, together with a description of the mitigating actions the Board
has taken, are set out in the table below. In addition to those principal risks and uncertainties, the Board considers that
the development of Artificial Intelligence (“AI”) presents potential risks to businesses in almost every sector. The extent of
the risk presented by AI is extremely hard to assess at this point but the Board considers that it is an emerging risk and,
together with the Manager, will monitor developments in this area.
There are a number of other risks which, if realised, could have a material adverse effect on the Company and its
financial condition, performance and prospects. These include a number of existing geo-political risks, including the
impact on global financial markets of US tariffs announced since the year end. The Board is also conscious of the effect
of higher inflation on financial markets and the resultant implications for interest rates.
The principal risks associated with an investment in the Company’s shares are published monthly in the Company’s
factsheet and they can be found in the pre-investment disclosure document (“PIDD”) published by the Manager, both of
which are available on the Company’s website.
Risk Trend Mitigating Action
Investment objectives - a lack of
demand for the Company’s
shares could result in a widening
of the discount of the share
price to its underlying NAV and a
fall in the value of its shares.
Board review. The Board formally reviews the Company’s objectives and strategies for
achieving them on an annual basis, or more regularly if appropriate.
Shareholder communication. The Board is cognisant of the importance of regular
communication with shareholders. Directors attend meetings with the Company’s
largest shareholders and meet other shareholders at the Annual General Meeting and,
as explained in the Chairman’s Statement, the Company will hold an online shareholder
presentation in advance of the Annual General Meeting this year including the
opportunity for an interactive question and answer session. The Board reviews
shareholder correspondence and investor relations reports and also receives feedback
from the Company’s Stockbroker.
Discount monitoring. The Board, through the Manager, keeps the level of discount under
constant review. The Board is responsible for the Company’s share buy back policy and
is prepared to authorise the use of share buy backs to provide liquidity to the market and
try to limit volatility in the share price and any widening of the discount.
Investment strategies - the
Company adopts inappropriate
investment strategies in pursuit
of its objectives which could
result in investors avoiding the
Company’s shares, leading to
a widening of the discount and
poor investment performance.
Adherence to investment guidelines. The Board sets investment guidelines and
restrictions which the Manager follows, covering matters such as asset allocation,
diversification, gearing, currency exposure and use of derivatives, as well as the
Company’s sustainable and responsible investment criteria. These guidelines are
reviewed regularly and the Manager reports on compliance with them at
Board meetings.
Continued
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Risk Trend Mitigating Action
Diversification. In order to ensure adequate diversification, the Board has set absolute
limits on maximum holdings and exposures in the portfolio at the time of investment,
which are in addition to the limits contained in the Company’s investment policy,
including the following:
· No more than 10% of gross assets to be invested in any single stock; and
· The top five holdings should not account for more than 40% of gross assets.
Investment performance - the
appointment or continuing
appointment of an investment
manager with inadequate
resources, skills or expertise or
which makes poor investment
decisions. This could result in
poor investment performance, a
loss of value for shareholders
and a widening discount.
Monitoring of performance. The Board meets the Investment Manager on a regular
basis and keeps under close review (inter alia) its resources and adherence to
investment processes. The Board also keeps under review the adequacy of risk controls
and investment performance.
Management Engagement Committee. A detailed formal appraisal of the Manager is
carried out annually by the Management Engagement Committee.
Sustainable and responsible
investing criteria - failure of the
Company to adhere to its
sustainable and responsible
investment criteria, or non-
compliance with applicable
regulations, could lead to a loss
of investor confidence or
accusations of greenwashing.
Adherence to restrictions. The Board sets restrictions relating to the Company’s
sustainable and responsible investment criteria, which the Investment Manager follows.
These restrictions are reviewed regularly and the Investment Manager reports on
compliance with them at Board meetings.
Awareness of regulations. Through the regulatory risk controls stated below, the Board is
also aware of the relevant ESG regulations impacting the Company.
Income/dividends - the
Company adopts an
unsustainable dividend policy
resulting in cuts to or suspension
of dividends to shareholders,
or one which fails to meet
investor demands.
Revenue forecasting and monitoring. The Manager presents detailed forecasts of income
and expenditure at Board meetings, covering both the current and subsequent financial
years. Dividend income received is compared to forecasts, and variances analysed.
Use of reserves. The Company has built up revenue reserves which are available to
smooth dividend distributions to shareholders should there be a shortfall in revenue
returns. The Company also has the ability to fund dividend distributions from realised
capital reserves.
Financial/market - insufficient
oversight or controls over
financial risks, including market
risk, foreign currency risk,
liquidity risk and credit risk could
result in losses to the Company.
Management controls. The Manager has a range of procedures and controls relating to
the Company’s financial instruments, including a review of investment risk parameters
by its Investment Risk department and a review of credit worthiness of counterparties by
its Counterparty Credit Risk team.
Foreign currency hedging. It is not the Company’s policy to hedge foreign currency
exposure but the Company may, from time to time, partially mitigate it by drawing down
borrowings in foreign currencies.
Board review. As stated above, the Board sets investment guidelines and restrictions
which are reviewed regularly and the Manager reports on compliance with them at
Board meetings.
18 Dunedin Income Growth Investment Trust PLC
Risk Trend Mitigating Action
Further details of the Company’s financial instruments and risk management are
included in note 19 to the financial statements.
Gearing - gearing accentuates
the effect of rises or falls in the
market value of the Company’s
investment portfolio on its NAV.
An inappropriate level of
gearing at a time of falling
values could result in a
significant fall in the value of the
Company’s net assets and
share price. Such a fall in the
value of the Company’s net
assets could result in a breach of
loan covenants and trigger
demands for early repayment
or require investments to be sold
to meet any shortfall. This could
result in further losses.
Gearing restrictions. The Board sets gearing limits within which the Manager can operate.
Monitoring. Both the limits and actual levels of gearing are monitored on an ongoing basis
by the Manager and at regular Board meetings. In the event of a possible impending
covenant breach, appropriate action would be taken to reduce borrowing levels.
Scrutiny of loan agreements. The Board takes advice from the Manager and the
Company’s lawyers before approving details of loan agreements. Care is taken to
ensure that covenants are appropriate and unlikely to be breached.
Limits on derivative exposure. The Board has set limits on derivative exposures and
positions are monitored at regular Board meetings.
Regulatory - changes to, or
failure to comply with, relevant
regulations (including the
Companies Act, The Financial
Services and Markets Act, The
Alternative Investment Fund
Managers Directive, accounting
standards, investment trust
regulations, the Packaged Retail
and Insurance-based
Investment Product Regulations,
the Listing Rules, Disclosure
Guidance and Transparency
Rules and Prospectus Rules)
could result in fines, loss of
reputation, reduced demand for
the Company’s shares and
potentially loss of an
advantageous tax regime.
Board awareness. The Directors have an awareness of the more important regulations
and are provided with information on changes by the Manager and the Association of
Investment Companies. In terms of day to day compliance with regulations, the Board is
reliant on the knowledge and expertise of the Manager. However, where necessary, the
Board engages the service of external advisers. In addition, all Directors are encouraged
to attend relevant training courses.
Management controls. The Manager’s company secretariat and accounting teams use
checklists to aid compliance and these are backed by the Manager’s compliance
monitoring programme and risk based internal audit investigations.
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Operational (including cyber-
crime) - the Company is reliant
on services provided by third
parties (in particular those of the
Manager and the Depositary)
and any control gaps and
failures in their operations could
expose the Company to loss or
damage.
Agreements. Written agreements are in place defining the roles and responsibilities of all
third party service providers.
Internal control systems of the Manager. The Board receives reports on the operation and
efficacy of the Manager’s IT and control systems, including those relating to cyber-crime,
and its internal audit and compliance functions.
Safekeeping of assets. The Depositary is ultimately responsible for the safekeeping of the
Company’s assets and its records are reconciled to those of the Manager on a regular
basis. Through a delegation by the Depositary, the Company’s investments and cash
balances are held in segregated accounts by the Depositary.
Monitoring of other third party service providers. The Manager monitors closely the
control environments and quality of services provided by third parties, including those of
the Depositary. This includes controls relating to cyber-crime and is conducted through
service level agreements, regular meetings and key performance indicators. The
Directors review reports on the Manager’s monitoring of third party service providers on
a periodic basis.
Geo-political – the impact of
current and future geo-political
events could result in losses to
the Company.
Board and Manager awareness. Geo-political events over which the Company has no
control are always a risk. The Investment Manager’s focus on quality companies, the
diversified nature of the portfolio and a managed level of gearing all serve to provide a
degree of protection in times of market volatility.
no change to risk rating during the year
increased risk rating
Geo-political risk is considered to have increased materially during the year as a result of heightened global tensions
and political uncertainties. The trend of other principal risks has not changed during the year.
20 Dunedin Income Growth Investment Trust PLC
Promotional Activities
The Board recognises the importance of promoting the
Company to prospective investors both for improving
liquidity and enhancing the rating of the Company’s
shares. The Board believes one effective way to achieve
this is through subscription to, and participation in, the
promotional programme run by Aberdeen on behalf of a
number of investment trusts under its management. The
Company’s financial contribution to the programme is
matched by the Manager. The Company also supports
the Manager’s investor relations programme which
involves regional roadshows, promotional and public
relations campaigns. The Manager’s promotional and
investor relations teams report to the Board on a quarterly
basis giving analysis of the promotional activities as well as
updates on the shareholder register and any changes in
the make-up of that register.
The purpose of the promotional and investor relations
programmes is both to communicate effectively with
existing and prospective investors and to gain new
shareholders, with the aim of improving liquidity and
enhancing the value and rating of the Company’s shares.
Communicating the long-term attractions of the
Company is key. The promotional programme includes
commissioning independent paid for research on the
Company, most recently from Kepler Trust Intelligence. A
copy of the latest research note is available from the
Literature section of the Company's website.
Social and Human Rights Issues
The Company has no employees as the Board has
delegated the day to day management and
administrative functions to the Manager. There
are therefore no disclosures to be made in respect
of employees.
Modern Slavery Act
Due to the nature of its business, being a company that
does not offer goods and services to customers, the Board
considers that the Company is not within the scope of the
Modern Slavery Act 2015. The Company is therefore not
required to make a slavery and human trafficking
statement. In any event, the Board considers the
Company’s supply chains, dealing predominantly with
professional advisers and service providers in the financial
services industry, to be low risk in relation to this matter.
The UK Stewardship Code and Proxy Voting
The Company supports the UK Stewardship Code, and
seeks to play its role in supporting good stewardship of the
companies in which it invests. Responsibility for actively
monitoring the activities of portfolio companies has been
delegated by the Board to the Manager which has sub-
delegated that authority to the Investment Manager.
Aberdeen Group plc is a signatory to the UK Stewardship
Code which aims to enhance the quality of engagement
by investors with investee companies in order to improve
their socially responsible performance and the long term
investment return to shareholders. While delivery of
stewardship activities has been delegated to the
Manager, the Board acknowledges its role in setting the
tone for the effective delivery of stewardship on the
Company’s behalf.
The Board has also given discretionary powers to the
Manager to exercise voting rights on resolutions proposed
by the investee companies within the Company’s portfolio.
The Manager reports on a quarterly basis on stewardship
(including voting) issues.
The Investment Manager’s approach to stewardship and
engagement and proxy voting is set out on pages 39 to 40.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report
from its operations, nor does it have responsibility for any
other emissions producing sources under the Companies
Act 2006 (Strategic Report and Directors’ Reports)
Regulations 2013.
Under Listing Rule 11.4.22(R), the Company, as a
closed ended investment company, is exempt from
complying with the Task Force on Climate-related
Financial Disclosures.
The carbon intensity of the portfolio is shown on page 44.
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Viability Statement
The Board considers that the Company, which does not
have a fixed life, is a long term investment vehicle and, for
the purposes of this statement, has decided that five years
is an appropriate period over which to consider its viability.
The Board considers that this period reflects a balance
between looking out over a long term horizon and the
inherent uncertainties of looking out further than
five years.
Taking into account the Company’s current position and
the potential impact of its principal risks and uncertainties,
the Directors have a reasonable expectation that the
Company will be able to continue in operation and meet
its liabilities as they fall due for a period of five years from
the date of this Report.
In assessing the viability of the Company over the
review period, the Directors have focused upon the
following factors:
· The principal risks and uncertainties detailed on pages
16 to 19 and the steps taken to mitigate these risks.
· The relevance of the Company’s investment objective.
· The Company is invested in readily-realisable listed
securities.
· The level of share buy backs carried out during the year
and subsequent to the year end.
· Although the Company’s stated investment policy
contains a maximum gearing limit of 30% of the net
asset value at the time of draw down, the Board’s policy
is to have a relatively modest level of gearing and the
financial covenants attached to the Company’s
borrowings provide for significant headroom.
· The level of ongoing charges.
· The robustness of the operations of the Company’s third
party service suppliers.
In making its assessment, the Board is also aware that
there are other matters that could have an impact on the
Company’s prospects or viability in the future, including
current and future geo-political events, economic shocks
or significant stock market volatility caused by other
factors, and changes in regulation or investor sentiment.
Outlook
The Board’s view on the general outlook for the Company
can be found in the Chairman’s Statement on page 13
whilst the Investment Manager’s views on the outlook for
the portfolio are included on page 33.
On behalf of the Board
David Barron
Chairman
14 April 2025
22 Dunedin Income Growth Investment Trust PLC
Introduction
Section 172 (1) of the Companies Act 2006 (the “Act”)
requires each Director to act in the way he/she considers,
in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole.
The Board is required to describe to the Company’s
shareholders how the Directors have discharged their
duties and responsibilities over the course of the financial
year under that provision of the Act (the “Section 172
Statement”). This statement provides an explanation of
how the Directors have promoted the success of the
Company for the benefit of its members as a whole, taking
into account, among other things, the likely long term
consequences of decisions, the need to foster
relationships with all stakeholders and the impact of the
Company’s operations on the environment.
The Purpose of the Company and Role
of the Board
The purpose of the Company is to act as a vehicle to
provide, over time, financial returns (both income and
capital) to its shareholders. Investment trusts, such as the
Company, are long-term investment vehicles and are
typically externally managed, have no employees, and
are overseen by an independent non-executive board
of directors.
The Board, which throughout the year comprised five
independent non-executive Directors with a broad range
of skills and experience across all major functions that
affect the Company, retains responsibility for taking all
decisions relating to the Company’s investment objective
and policy, gearing, corporate governance and strategy,
and for monitoring the performance of the Company’s
service providers.
The Board’s philosophy is that the Company should
operate in a transparent culture where all parties are
provided with the opportunity to offer practical challenge
and participate in positive debate which is focused on the
aim of achieving the expectations of shareholders and
other stakeholders alike. The Board reviews the culture
and manner in which the Manager and Investment
Manager operate at its meetings and receives regular
reporting and feedback from the other key service
providers. The Board works very closely with the Manager
and Investment Manager in reviewing how stakeholder
issues are handled, ensuring good governance and
responsibility in managing the Company’s affairs, as well
as visibility and openness in how the affairs are conducted.
The Company’s main stakeholders have been identified
as its Shareholders, the Manager (and Investment
Manager), Service Providers, Investee Companies, Debt
Providers and, more broadly, the environment and
community at large.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings
and receives feedback on the Manager’s interactions
with them.
Further details are included in the table below.
Stakeholder How We Engage
Shareholders Shareholders are key stakeholders and the Board places great importance on communication with
them. The Board welcomes all shareholders’ views and aims to act fairly between all of them. The
Manager and Company’s Stockbroker meet regularly with current and prospective shareholders to
discuss performance and shareholder feedback is discussed by the Directors at Board meetings. In
addition, the Manager meets with analysts who cover the investment trust sector and the Directors
attend meetings with the Company’s largest shareholders and meet other shareholders at the
Annual General Meeting.
The Company subscribes to the Manager’s investor relations programme in order to maintain
communication channels, in particular, with the Company’s institutional shareholder base.
Regular updates are provided to shareholders through the Annual Report, Half Yearly Report,
monthly factsheets, Company announcements, including daily NAV announcements, and the
Company’s website.
The Company’s Annual General Meeting provides a forum, both formal and informal, for
shareholders to meet and discuss issues with the Directors and Manager. The Board encourages as
many shareholders as possible to attend the Company’s Annual General and to provide feedback on
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the Company. In addition to the Annual General Meeting, this year the Company will again hold an
online shareholder presentation at which shareholders will receive updates from the Chairman and
Investment Manager and there will be the opportunity for an interactive question and answer
session. Further details are provided in the Chairman’s Statement.
Manager
(and Investment Manager)
The Investment Manager’s Review on pages 30 to 33 details the key investment decisions taken
during the year. The Investment Manager has continued to manage the Company’s assets in
accordance with the mandate provided by the Company, with the oversight of the Board.
The Board regularly reviews the Company’s performance against its investment objective and the
Board undertakes an annual strategy review meeting to ensure that the Company is positioned well
for the future delivery of its objective for its stakeholders.
The Board receives presentations from the Investment Manager at every Board meeting to help it to
exercise effective oversight of the Investment Manager and the Company’s strategy.
The Board, through the Management Engagement Committee, formally reviews the performance of
the Manager at least annually. More details are provided on page 65.
Service Providers The Board seeks to maintain constructive relationships with the Company’s suppliers either directly
or through the Manager, with regular communications and meetings.
The Management Engagement Committee conducts an annual review of the performance, terms
and conditions of the Company’s main service providers to ensure they are performing in line with
Board expectations, carrying out their responsibilities and providing value for money.
Investee Companies Responsibility for actively monitoring the activities of portfolio companies has been delegated by the
Board to the Manager which has sub-delegated that authority to the Investment Manager.
The Board has also given discretionary powers to the Manager to exercise voting rights on
resolutions proposed by the investee companies within the Company’s portfolio. The Manager
reports on a quarterly basis on stewardship (including voting) issues.
Through engagement and exercising voting rights, the Investment Manager actively works with
companies to improve corporate standards, transparency and accountability. Further details are
provided on pages 39 and 40.
The Manager reports regularly to the Board on investment and engagement activity.
Debt Providers On behalf of the Board, the Manager maintains a positive working relationship with Bank of America,
N.A., London Branch, the provider of the Company’s multi-currency loan facility, and provides regular
updates on business activity and compliance with its loan covenants.
The Manager also provides regular covenant compliance certificates to the holders of the
Company’s £30 million Loan Notes.
Environment and Community The Board and Manager are committed to investing in a sustainable and responsible manner.
Further details are provided in the Investment Policy on page 14.
24 Dunedin Income Growth Investment Trust PLC
Specific Examples of Stakeholder
Consideration During the Year
While the importance of giving due consideration to the
Company’s stakeholders is not a new requirement, and is
considered during every Board decision, the Directors
were particularly mindful of stakeholder considerations
during the following decisions undertaken during the year
ended 31 January 2025. Each of these decisions was
made after taking into account the short and long term
benefits for stakeholders.
Investment Objective and Portfolio (including sustainable
and responsible investing criteria)
The Investment Manager’s Review details the key
investment decisions taken during the year, including
adherence to the Company’s sustainable and responsible
investing criteria.
The overall shape and structure of the investment
portfolio is an important factor in delivering the
Company’s stated investment objective and is reviewed at
every Board meeting, including adherence to the
Company’s sustainable and responsible investing criteria.
During the year, through the work of the Management
Engagement Committee, the Board decided that the
continuing appointment of the Manager is in the best
interests of shareholders.
Sustainable Disclosure Requirements (“SDR”)
During the year, the Board considered the UK’s
Sustainable Disclosure Requirements, including the
Naming and Marketing rules that come into force on 2
December 2024. No changes were made to the
Company’s investment strategy or the investment
process as a result of the new rules.
The Company adopted a sustainable investment
overlay to its investment objective in 2021. The move
reflected an evolution of the investment process and
formalised the Investment Manager’s approach to
quality investing, which incorporates an assessment of
long term environmental, social and governance risks
and opportunities.
In November 2023, as part of its improvements to the
regulation of sustainable products domiciled in the UK, the
FCA confirmed that it would be possible for investment
companies which met certain qualifying criteria to apply
one of four sustainable investment labels as well as a fifth
category of unlabelled but with sustainability
characteristics under its new naming and labelling regime.
During the year, the Manager advised the Board that,
although the Company’s investment objective explicitly
referenced sustainable and responsible investing criteria,
the objective itself did not constitute a sustainability
objective. Therefore, in its current form, the Company’s
investment policy and the broader investment process
would be unlikely to satisfy the FCA’s requirements for a
label without making some changes. As a result, the Board
decided that the Company would not seek to apply a
sustainability label under UK SDR for the time being but
instead would adopt the category ‘unlabelled but with
sustainability characteristics’.
Further details of the Company’s sustainable and
responsible investing criteria are included in the
Sustainable and Responsible Investment Equity Approach
on pages 36 to 40.
Dividend
Following the payment of the final dividend for the year, of
4.60p per Ordinary share, total dividends for the year will
amount to 14.20p per Ordinary share. This represents an
increase of 3.3% compared to the previous year. This will
be the 41st year out of the past 45 that the Company has
grown its dividend, with the distribution maintained in the
other four years, and is in accordance with its policy to
grow total annual dividends in real terms over the
medium term.
Through meetings with shareholders and feedback from
the Manager and the Company’s Stockbroker, the Board
is conscious of the importance that shareholders place on
the level of dividends paid by the Company.
Renewal of Bank Loan
During the year, the Board announced the renewal of the
Company’s £30 million multi-currency revolving credit
facility with Bank of America, N.A., London Branch. The
facility replaced the expiring £30 million multi-currency
revolving credit facility and will expire in August 2027.
Under the terms of the facility, the Company has the
option to increase the level of the commitment from
£30 million to £40 million at any time, subject to the
lender’s consent.
The Board continues to believe that borrowings, in the
form of the Company’s Loan Notes 2045 and the multi-
currency revolving credit facility, are beneficial to long
term net asset value returns and is one of the benefits of
the closed ended investment trust structure.
Promotin
g
the Success of the Company
Continued
Dunedin Income Growth Investment Trust PLC 25
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Share Buy Backs
During the year, the Company bought back 11,223,856
Ordinary shares to be held in treasury, at a cost of £31.5
million, providing a small accretion to the NAV per share
and a degree of liquidity to the market at times when the
discount to the NAV per share had widened in normal
market conditions. It is the view of the Board that this
policy is in the interest of all shareholders.
Shareholder Engagement
During the year, the Board met shareholders at the AGM
which was held in London. The AGM will be held in
Edinburgh this year. The Board receives feedback from
the Stockbroker and the Manager following meetings with
shareholders and the Charman is available to meet with
the Company’s larger shareholders. Shareholder letters
addressed to the Board are shared with all Directors and
responded to directly by the Charman.
To encourage and promote stronger interaction and
engagement with the Company’s shareholders, the Board
will hold an interactive online shareholder presentation
which will be held at 11.00am on Wednesday 7 May 2025.
At the presentation, shareholders will receive updates
from the Chairman and Investment Manager and there
will be the opportunity for an interactive question and
answer session. The online presentation is being held
ahead of the Annual General Meeting to allow
shareholders to submit their proxy votes prior to the
meeting. Details of how to register for the event can be
found in the Chairman’s Statement on page 12.
In addition, the Chairman and the Manager recorded
podcasts during the year which are available on the
Company’s website, providing updates on performance
and the outlook for markets.
The Board considers that it is important to maintain an
ongoing dialogue with shareholders to properly
understand their views and to communicate the actions
of the Board.
Board Succession
As explained in the Chairman’s Statement on page 12 and
the Directors’ Report on page 62, as part of the Board’s
succession planning, and following a search process that
began during the financial year, Arun Kumar Sarwal was
appointed as an independent non-executive Director on
1 February 2025.
David Barron and Jasper Judd joined the Board in
February 2016 and will both retire as Directors at the AGM.
Howard Williams will succeed David Barron as Chairman
of the Board and Arun Kumar Sarwal will be appointed as
Chairman of the Audit Committee in place of Jasper Judd.
It is the Board’s intention to recruit a further Director later
in 2025 to bring the number of Directors back to five.
New Board appointments seek to achieve a good balance
of skills, experience, gender and ethnicity. The Board
believes that shareholders’ interests are best served by
ensuring a smooth and orderly refreshment of the Board
which serves to provide continuity and maintain the
Board’s open and collegiate style.
On behalf of the Board
David Barron
Chairman
14 April 2025
26 Dunedin Income Growth Investment Trust PLC
Performance (total return)
1 year 3 year 5 year
% return % return % return
Total return (Capital return plus net dividends reinvested)
Net asset value
AB
9.0 19.1 28.4
Share price
B
8.4 5.8 19.1
FTSE All-Share Index 17.1 25.5 37.9
Capital return
Net asset value
A
4.4 4.3 3.3
Share price 3.3 (8.1) (5.3)
FTSE All-Share Index 12.9 12.4 16.1
A
Cum-income NAV with debt at fair value.
B
Considered to be an Alternative Performance Measure (see page 122)
Source: Aberdeen, Factset & Morningstar
Comparison of NAV and Share Price Total Return Performance to
FTSE All-Share Index (figures rebased to 100)
Five years to 31 January 2025
90
100
110
120
130
140
31/01/20 31/01/21 31/01/22 31/01/23 31/01/24 31/01/25
Source: Aberdeen & Morningstar
FTSE All-Share total return
NAV total return with debt
at fair value
Share price total return
Performance
Dunedin Income Growth Investment Trust PLC 27
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Comparison of NAV Total Return Performance to FTSE All-Share Index
Total Return for 5 years
(0.3)%
8.1%
2.4%
6.7%
9.0%
28.4%
(7.5)%
18.9%
5.2%
1.9%
17.1%
37.9%
Year to
31/01/21
Year to
31/01/22
Year to
31/01/23
Year to
31/01/24
Year to
31/01/25
5 year total return
(cumulative)
Source: Aberdeen & Morningstar
NAV total return
with debt at fair
value
FTSE All-Share
total return
Analysis of Total Return Performance for the year ended 31 January 2025
%
Gross assets total return
8.3
Total NAV return per share
A
9.0
Total return on FTSE All-Share Index
17.1
Relative performance
–8.1
A
With debt at fair value.
Analysis of Performance for the year Relative to the FTSE All-Share Index
-7.3
-7.0
-0.3
0.3
-0.7
1.0
-0.2
-1.2
-8.1
Listed equities
- Stock selection^
- Sector allocation^
Borrowings & cash
Fees and expenses
Share buybacks
Tax
Technical differences
Total
%
^ Further analysis of performance attributable to listed equities
- Stock selection^
- Sector allocation^
28 Dunedin Income Growth Investment Trust PLC
Ten Year Financial Record
Year ended 31 January 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Total revenue (£’000) 20,359 21,963 22,317 22,263 20,518 18,346 21,518 21,950 22,949 22,550
Per share (p)
Revenue return 12.11 12.55 12.64 12.68 12.08 10.90 12.87 13.02 13.54 13.82
Dividends paid/proposed 11.40 11.70 12.10 12.45 12.70 12.80 12.90 13.10 13.75 14.20
Revenue reserve
A
9.63 10.51 11.16 11.54 10.94 9.07 9.05 8.97 8.99 9.85
Net asset value
B
237.48 270.34 290.57 266.83 312.22 297.64 309.03 302.80 308.98 322.47
Total return
C
(28.94) 43.83 30.83 (11.95) 58.57 (1.81) 23.78 1.92 15.45 23.90
Shareholders’ funds (£’000) 368,041 415,810 442,384 401,731 469,806 448,293 464,579 448,605 445,815 428,528
A
After payment of third interim and final dividends (see note 16 on page 101 for further details).
B
With debt at fair value.
C
Per Statement of Comprehensive Income.
Comparison of Dividend Growth to Inflation
Five years ended 31 January 2025
0.8% 0.8%
1.6%
5.0%
3.3%
11.8%
0.7%
5.4%
10.0%
4.0%
3.0%
25.1%
Year to
31/01/21
Year to
31/01/22
Year to
31/01/23
Year to
31/01/24
Year to
31/01/25
5 years to
31/01/25
Source: Aberdeen, ONS & Factset
DIGIT dividend
growth
Consumer
Price Index
Performance
Continued
Dunedin Income Growth Investment Trust PLC 29
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Dividends per Share – Pence
Year to 31 January
11.40
11.70
12.10
12.45
12.70
12.80
12.90
13.10
13.75
14.20
0
5
10
15
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Dividends per Share
Dividend per share Rate xd date Record date Payment date
Final dividend 2025 4.60p 1 May 2025 2 May 2025 30 May 2025
Third interim dividend 2025 3.20p 6 February 2025 7 February 2025 28 February 2025
Second interim dividend 2025 3.20p 31 October 2024 1 November 2024 29 November 2024
First interim dividend 2025 3.20p 1 August 2024 2 August 2024 30 August 2024
Total dividend 2025 14.20p
Dividend per share Rate xd date Record date Payment date
Final dividend 2024 4.15p 2 May 2024 3 May 2024 31 May 2024
Third interim dividend 2024 3.20p 1 February 2024 2 February 2024 29 February 2024
Second interim dividend 2024 3.20p 2 November 2023 3 November 2023 24 November 2023
First interim dividend 2024 3.20p 3 August 2023 4 August 2023 25 August 2023
Total dividend 2024 13.75p
30 Dunedin Income Growth Investment Trust PLC
Introduction
The UK market rose strongly in the year to 31 January
2025. The Company’s net asset value (“NAV”) total return
for the year of 9.0% compared to a total return of 17.1%
from the benchmark, the FTSE All-Share Index. The UK
equity market ended the year at an all-time high, driven
by performance of the largest UK companies in the
market. The market was supported by declining inflation
and the Bank of England’s (“BoE”) first interest rate cuts in
four years. Concurrently, global markets advanced,
bolstered by favourable economic trends, the resilience of
the US economy, an artificial intelligence (“AI”) investment
cycle, and monetary policy easing by central banks. The
UK economy is anticipated to have achieved modest GDP
growth in 2024, and the Office for Budget Responsibility
revised down its growth forecasts for 2025. At the same
time, rises in tax and spending announced in the new
Labour government’s autumn Budget damaged investor
and business confidence, and threatened to lead to a
slower pace of interest rate cuts in 2025.
“The UK market rose strongly in the
year to 31 January 2025. The
Company’s NAV total return for the
year was 9.0%.”
Although it is disappointing that the Company’s
performance did not keep pace with the strong market
performance, this outcome is consistent with our
defensive and quality-focused investment strategy. Our
emphasis on high-quality companies and investments
that can deliver both income and capital growth, while
adhering to the Company's sustainable and responsible
investing principles, remains unchanged.
The Company offers a distinctive approach within the UK
Equity Income Investment Trust sector, designed to
generate superior long-term returns. The high conviction
portfolio, at the year end comprising 33 holdings with a
strong focus on quality, is highly differentiated from other
UK Equity Income investment trusts. The Company
maintains a differentiated positioning relative to its peers
and benchmark, with an overweight allocation to the UK
mid and small cap companies (at 21% of NAV) and an
allocation to European companies (at 22%). Notably, the
Company remains the only equity income investment
trust with a formal sustainability approach. This year, the
Company updated its policy and consumer facing
documentation to meet the UK Sustainable Disclosure
Regulations, recognising the sustainability characteristics
of the portfolio.
Performance
While the absolute NAV total return of the Company in the
year was a robust 9.0% , this represented an
underperformance of 8.1% against the benchmark index.
There were three main drivers of this. First, our positioning
in the Financials sector to which around half of the
underperformance can be attributed. Secondly the
Company’s stylistic focus on high-quality companies and
its overweight exposure to more domestically orientated
mid and small caps. Thirdly, a small number of companies
that experienced more challenging trading conditions
during the year.
With regards to the Financials sector, the Company has
historically run a large underweight position in the banking
sector, given our focus on high quality businesses and that
sector’s significant economic sensitivity, exposure to
political and regulatory oversight, earnings heavily linked
to the unpredictable interest rate cycle, and variability in
shareholder distributions, with a poor long-term track
record of maintaining and growing dividends. Over the
past few years, we have seen a more supportive
environment for banks with a recovery from Covid lows,
rising interest rates supporting net interest income growth,
low levels of provisions and a more settled regulatory
environment which, alongside modest valuations, has
driven strong share price returns. Choosing not to own the
likes of HSBC, Standard Chartered, Lloyds, Barclays and,
for much of the year, NatWest has proven to be a missed
opportunity and accounted for most of the headwind
from the sector.
Within financials we have tended to focus instead on high
yielding stocks where we have greater confidence in the
maintenance and growth of dividends or on lower yielding
businesses where we see long-term structural growth
opportunities. That has led us to hold M&G and Chesnara
where we have high confidence in the maintenance of
very generous yields and steady longer-term growth.
While both companies have their complexities, their
business models are subject to significantly less variability
than traditional banks and this is evidenced by neither
company having cut its dividend during its life as a listed
business. Alongside this, we hold positions in lower yielding
but faster growing companies such as Intermediate
Capital, Hiscox and London Stock Exchange where we see
very attractive return potential for private markets,
specialist insurance and financial data and services
respectively. Over the long-term, those companies have
Investment Mana
g
er’s Review
Dunedin Income Growth Investment Trust PLC 31
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
performed very well and demonstrated the ability to grow
shareholder distributions at attractive rates of return.
Alongside the lack of exposure to banks, one other holding
that has proven more challenging within the Financials
sector has been Asian-focussed life assurer and asset
manager Prudential. A combination of regulatory changes
in a number of its end markets, weaker economic
performance and some internal missteps have seen its
rate of growth decline. It has also suffered from
association with large exposures to Hong Kong and China
where it has been treated as a proxy for those expressing
caution on those end markets. Prudential, however,
remains exposed to end markets with very low levels of
insurance penetration, large unmet need for personal
provision in the absence of state support, strong market
share positions and helpful demographic trends. While
timing is never certain, we do see substantial potential
upside for those prepared to be patient.
“Although it is disappointing that the
Company’s performance did not keep
pace with the strong market
performance, this outcome is
consistent with our defensive and
quality-focused investment strategy.”
The second element that held back performance during
the year was our stylistic focus on high-quality companies
and overweighting the mid-cap part of the market. This
was very much a year where companies with low starting
valuations were in vogue, materially outperforming those
with strong quality characteristics. The Company’s
overweight position to UK mid and small cap companies
detracted, with the FTSE 100 Index outperforming the mid
cap focused FTSE 250 Index by 5.2% over the year, with
domestically exposed companies particularly overlooked
in the second half of the year as concerns grew over the
state of UK economy and capital focussed on the larger
part of the market. We believe strongly that over, the long-
term, an emphasis on high quality companies will deliver
good returns for the Company with both greater
resilience and faster rates of earnings and dividend
growth. Likewise, we continue to see numerous
compelling opportunities to invest in UK mid cap
companies, where our research capabilities can give us
an edge in what are often overlooked corners of the
market - we consider that the portfolio has a number of
stocks with substantial potential upside.
Finally, there were a small number of companies that
detracted from performance in the year. Edenred, a
global services and payments business, faced several
headwinds, including regulatory changes in Italy, declining
Eurozone interest rates and slower revenue growth as
inflation benefits wane. However, despite this, Edenred
delivered solid results in 2024, has successfully navigated
similar regulatory pressures in other markets and
continues to deliver strong profit and dividend growth,
leveraging its valuable proposition and extensive portfolio
reach. Now trading at a very modest valuation, we expect
trading to steadily improve through the year and for the
company to rebuild confidence with investors. As was the
case to a degree last year, niche lender Close Brothers
continued to struggle in the face of regulatory pressures
on its car finance business and the potential costs of
compensation and remediation. We had maintained the
holding, looking for a potential recovery, but the prospects
of a rapid resolution to the regulatory overhang receded
and the negative impact on the underlying business
continued to develop, leading us to exit the holding in the
second half of the year. Not holding aerospace engineer
Rolls Royce also proved to be a drag as the company
delivered cash generation ahead of expectations driven
by a robust civil aerospace cycle and recovered from a
number of years of tough market conditions and self-
inflicted challenges. Our primary rationale for not holding
stems from a lack of dividend, with the company not
having paid a distribution since 2020.
While our focus is quite rightly on what has been
challenging during the year. It is important to emphasise
that the headwinds to performance primarily stemmed
from companies we didn’t own, during a year where the
market return of 17% was relatively high in a historic
context. Encouragingly, we saw a number of the holdings
deliver strong returns in the year. Notably Morgan Sindall
published consistently excellent results, as customers
looked to upgrade office space. This substantial profit
growth and strong market position led to a significant
increase in dividend payouts and consequently the share
price. Games Workshop, a leading hobbyist retailer,
demonstrated resilience in the face of cautious consumer
spending, which has challenged many consumer facing
businesses. The company's strategic partnership with
Amazon, finalised in December, will adapt the
Warhammer universe into films and television series,
promising profitable growth opportunities in the coming
years and, alongside the digitalisation of its brand, there
remains a long runway of future growth potential. It has
32 Dunedin Income Growth Investment Trust PLC
also significantly increased its dividend payments back to
investors. As previously mentioned, Intermediate Capital
Group benefitted from strong fund raising and continued
appetite for private market assets, while London Stock
Exchange continued to deliver solid growth and
increasingly demonstrate the value it has been able to
extract from the Refinitiv acquisition.
Revenue Account
We are pleased with the Company’s income progression
in the year, with the final outcome of 13.82p representing
a 2.1% year on year increase, in line with our expectations
at the start of the year and broadly matching the level of
dividends being distributed by the wider market which,
according to Computershare, increased in 2024 by 2.3%
on a headline basis and declined 0.4% on an underlying
basis (adjusting for foreign exchange movements and
special dividends).
“We are pleased with the Company’s
income progression in the year,
with the final outcome of 13.82p
representing a 2.1% year on
year increase.”
We benefitted from special distributions paid by Volvo and
Softcat, and generally dividends were in line with or ahead
of our expectations, reflecting the solid operational
performance of the Company’s holdings during the period
The one significant dividend cut came from Close
Brothers, but this was already reflected in our expectations
for the year. We continued to generate income from
option writing, which represented 10.6% of total income
for the year (2024: 9.0%).
While the actual level of investment income declined
during the year (see note 3 to the financial statements on
page 93), this needs to be seen in the context of funding
the ongoing share buyback programme which reduced
the share count by nearly 8%. Looking at resulting
earnings per share performance takes into account both
of these elements and we believe is the best way to judge
overall income performance.
Portfolio Activity
We introduced several new companies to the portfolio
over the year. This included Genuit, a leading
manufacturer of piping solutions for water, climate, and
ventilation management. Genuit's strong focus on
sustainability positions it well for long-term structural
growth and potential margin expansion, despite its
cyclical nature. Convatec, specialises in advanced wound
care, ostomy care, continence care, and infusion care.
The company benefits from favourable demographic
trends, including an aging population and an increasing
incidence of chronic conditions. We believe it has the
potential to accelerate revenues given its focus on
product innovation, and enhance its operating margins –
something that is not yet reflected in its valuation. We
invested in Azelis, a Belgian-listed specialty chemical
distributor with a significant presence in the life sciences
sector. Azelis operates a capital-light business model and
boasts a network of application laboratories that provide
technical guidance on product development, supporting
its long-term growth prospects. We also acquired a stake
in Gaztransport & Technigaz (GTT), a French-listed
industrial engineering design firm renowned for its
membrane designs used in LNG carrier ships. GTT's
product leadership allows for premium pricing and
positions it for growth alongside the expanding global LNG
fleet. The company has a net cash balance sheet,
generates high cash conversion rates, and returns excess
liquidity to investors, positioning it well to provide an
attractive and growing dividend stream. Lastly, we
introduced NatWest, the UK retail bank, to better balance
our Financials exposure, having sold Nordea earlier in the
year, and to help support the higher income element of
the portfolio. NatWest is a relatively simple banking
operation, generates robust returns, has an improving
revenue outlook, and offers a well above-market dividend
yield, supported by a strong balance sheet, which gives us
greater confidence in its long-term sustainability.
In line with our strategy to focus on best ideas and
maintain a concentrated portfolio, we exited several
holdings. Nordea was sold following the payment of a
special dividend, as we anticipated a weaker interest rate
outlook in Europe. Croda, a specialty chemical business,
was divested due to disappointing results that eroded our
confidence in its competitive strengths. We also exited
Moonpig and Marshalls after strong share price recoveries,
as market confidence in their growth prospects
rebounded post-Covid. Pets at Home was also sold as we
focused the portfolio on higher quality companies,
reflecting some of the inherent challenges faced by pure
domestic retail franchises amidst substantial cost inflation
Investment Mana
g
er’s Review
Continued
Dunedin Income Growth Investment Trust PLC 33
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
and subdued consumer demand. Finally, we exited Close
Brothers following a challenging year marked by
uncertainty related to potential financial redress owning
to regulatory investigation into historic discretionary
commission payments in the motor finance loan book.
We took profits from stronger performers whose
valuations approached fair value and reinvested in
companies that had lagged but retained compelling
investment cases. For example, we took profits in
Intermediate Capital Group, London Stock Exchange,
Games Workshop and Morgan Sindall. We took advantage
of periods of share price weakness in the year to top up
Genus, Convatec, Mercedes Benz, National Grid, Edenred,
Sirius Real Estate and Novo-Nordisk.
Outlook
Sentiment towards UK and European equity markets has
been influenced by a complex interplay of factors, from
weaker Chinese growth, geopolitical tensions, inflation
concerns, and the threat of tariffs from the United States.
Meanwhile, the UK economy is experiencing anaemic
growth, with the government seeking to stimulate activity
within fiscal constraints. Despite robust household cash
flows and record savings rates, UK consumer confidence
remains low, echoing trends in business surveys. The
outlook is uncertain, with risks stemming from trade
tensions, moderating global growth, the efficiency of AI-
related capital expenditures and valuations. However, this
complex environment, combined with stabilising real
interest rates, should present a favourable backdrop for
stock pickers. We continue to believe that UK equity
income offers attractive characteristics for shareholders,
including potential for real growth in dividends and good
rates of capital growth.
“We remain convinced that high-
quality, sustainable businesses with
resilient income streams give the
Company the potential to perform
over the long term.”
Despite these challenges, the UK market performed
strongly over the last year, driven by positive economic
surprises, Sterling weakness, and low starting valuations.
Despite recent performance, the UK and European
markets, as well as the holdings in the portfolio, trade on
valuations that reflect subdued expectations that could be
exceeded again. Mergers and acquisitions remain a
prominent feature, with numerous UK businesses being
approached by private equity and strategic buyers, with
health care real estate company Assura receiving an
approach from private equity after the year end. The
balance sheets of UK corporates are healthy, with many
UK listed companies actively engaging in share buybacks
and increasing dividends.
Since the year end, President Trump’s implementation of
sweeping tariffs, even though somewhat amended, has
caused significant financial market turbulence. While
acknowledging the risks, we maintain an optimistic
outlook for the portfolio. Our investment style and
positioning have faced headwinds this year, but we
remain convinced that high-quality, sustainable
businesses with resilient income streams give the
Company the potential to perform over the long term,
particularly so in a more challenging global economic
environment. We continue to see compelling investment
opportunities across all sizes of UK companies and are
utilising gearing and overseas allocation to enhance
portfolio diversification and return potential. Our focus
remains on balancing protecting downside risks to capital
while participating in opportunities for upside potential.
Ben Ritchie and Rebecca Maclean,
Aberdeen
14 April 2025
34 Dunedin Income Growth Investment Trust PLC
Investment Philosophy and Style
The Investment Manager believes that building a
concentrated portfolio of high quality companies that
meet its sustainable and responsible investment criteria
will deliver both real income growth and attractive total
returns over the long-term.
The application of sustainable and responsible investing
principles enables the Investment Manager to reduce risks
in the portfolio by identifying and excluding companies
whose business models it considers face significant
threats from Environmental, Social and Governance
(“ESG”) factors. It also enables the Investment Manager to
identify positive opportunities for companies to benefit
from the same trends as well as giving the potential for
engagement to improve companies’ performance and
increase shareholder value.
A focus on high quality companies and sustainable and
responsible investing principles is therefore well aligned
with the generation of resilient and growing dividend
income, and a capital return profile that is both robust in
difficult market conditions and able to participate in
upside opportunities, enhancing risk adjusted returns.
Details of the Investment Manager’s Sustainable and
Responsible Investment Equity Approach are included on
pages 36 to 40.
Investment Process
The investment process has five stages:
1. Idea Generation
The Investment Manager’s teams of investment
analysts generate investment ideas from their
comprehensive coverage of the UK and European
equity markets. This involves them considering the
merits of over 1,000 listed UK and European
companies across the market cap spectrum.
2. Sustainability
Companies with excessive ESG risks are excluded
through a combination of pre-set screens and
quantitative and fundamental analysis. This removes
around a quarter of the companies monitored from
the Investment Manager’s consideration.
3. Quality
Businesses that don’t meet the analysts’ quality criteria
are then filtered out. Only around 20% of companies
will meet this hurdle and the Investment Manager
particularly emphasises allocation to companies that
are considered to be sustainable leaders.
4. Total Returns
Focus is then placed on those companies that the
analysts identify as having the most attractive total
return potential as well as those that have compelling
income generation characteristics.
5. Portfolio Construction
The Investment Manager then builds a concentrated
portfolio that can deliver the income and total return
requirements while matching the style and risk profile
and meeting the sustainable and responsible
investing principles.
Investment Process
Dunedin Income Growth Investment Trust PLC 35
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
A Highly Selective Strategy
Emphasis on sustainability, quality, total return and income
Integration of ESG into the
Investment Process
The Investment Manager draws upon three resources to
assist it with the integration of ESG into the investment
process; there is a team of approximately 60 investment
professionals in the Developed Markets team and 30 in the
sustainability institute (“Central ESG capability”), and two
‘on-desk’ ESG specialists. Each plays an important yet
distinct role in implementation.
While deploying these resources, the ultimate
responsibility for stock selection and portfolio construction
lies with the Company’s portfolio managers.
36 Dunedin Income Growth Investment Trust PLC
The Investment Manager believes that building a
concentrated portfolio of high-quality companies that
meet its sustainable and responsible investment criteria
will deliver both real income growth and attractive total
returns over the long-term. The application of sustainable
and responsible investing principles enables the
Investment Manager to reduce risks in the portfolio by
identifying and excluding companies whose business
models it considers face significant threats from ESG
factors. It also enables the Investment Manager to identify
positive opportunities for companies to benefit from the
same trends as well as giving the potential for
engagement to improve companies’ performance and
increase shareholder value. To deliver this, the Sustainable
and Responsible Investment Equity Approach utilises
negative exclusions, qualitative analytical assessment,
proprietary quantitative tools and ongoing corporate
engagement and a voting policy.
Positive Allocation
The Investment Manager will classify the sustainability
characteristics of investments as Sustainable Leaders,
Solutions Providers and Transition companies:
(a) Leaders are companies with the best-in-class ESG
credentials and demonstrate ESG leadership.
(b) Solutions Providers have products and services which
address global environmental and societal
challenges.
(c) Transition companies are typically companies with
average standards of governance, ESG management
practices and disclosure with potential for change
over time.
The Investment Manager uses qualitative analytical
assessment, proprietary quantitative tools and ongoing
corporate engagement to assess the sustainability
characteristics of companies.
Sustainable and Responsible Investment
Equity Approach
Dunedin Income Growth Investment Trust PLC 37
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
ESG House Score
Using its proprietary ESG House Score, the Investment
Manager seeks to focus investments in companies with
good governance practices and sustainable operations.
The ESG House Score is an analytical tool developed by
the Investment Manager’s Investments Sustainability
Group in collaboration with the Quantitative Investment
Team. The score (1-100) is calculated by combining a
variety of data inputs within a proprietary framework,
combining its underlying Governance and
Operational scores:
· The operational score assesses how well companies
address their adverse environmental impacts and
promote societal welfare.
· The governance score assesses the corporate
governance structure and the quality and behaviour of
an investee company’s leadership and management.
38 Dunedin Income Growth Investment Trust PLC
ESG Q Score
Within the Investment Manager’s equity investment
process, every company it invests in is given a proprietary
overall Quality rating and a component of this is the ESG
Quality rating. The Investment Manager analyses the
foundations of each business to ensure proper context for
its investments. This includes assessment of a company’s
business model, the industry it operates in and its financial
strength. The Investment Manager will consider the quality
of a company’s management team and analyse ESG
opportunities and risks impacting the business and
appraise how well these are managed. The Investment
Manager assigns a proprietary rating (1 indicates best in
class and 5 indicates laggard) to articulate the quality
attributes of each company. Inputs that inform the ESG Q
Score include qualitative and quantitative assessment of
the key ESG factors facing a company, the MSCI score,
the Investment Manager’s ESG House Score and
ongoing engagement.
Companies eligible for inclusion in the Company’s portfolio
must have an ESG Quality rating of 3 or better.
Revenue Alignment
To identify Solution companies, the Investment Manager
will assess the revenues or investments derived from a
company’s products or services that contribute to the UN
Sustainable Development Goals (“SDGs”).
Engagement
Rather than taking a purely best-in-class approach, the
Investment Manager also invests in companies that are
taking real steps to improve their ESG performance.
Transition companies typically have ESG potential that is
being overlooked by the market and the Investment
Manager supports these companies through active
engagement. Opportunities for improvement are
identified by the team of investment analysts in
conjunction with the Investment Manager’s on-desk ESG
analysts and central ESG team.
Sustainable and Responsible Investment
Equity Approach
Continued
Dunedin Income Growth Investment Trust PLC 39
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Negative Exclusions
The Company will not invest in companies with an ESG
House Score in the bottom 10% of the investment universe.
The Company will not invest in companies that are
deemed below average on the quality of their
management of ESG risks, as measured by the
Investment Managers’ ESG Quality Score.
In addition, the Investment Manager applies the following
exclusions to the portfolio and will not invest in:
· companies that have failed to uphold one or more
principles of the UN Global Compact or that are state
owned enterprises in countries subject to international
sanctions that materially violate universal basic
principles;
· companies that derive a revenue contribution of 10% or
more from tobacco or are tobacco manufacturers;
· controversial weapons including cluster munitions, anti-
personnel landmines, nuclear weapons, chemical and
biological weapons, depleted uranium ammunition and
blinding lasers;
· companies that have a revenue contribution of 10% or
more from the manufacture or sale of conventional
weapons or weapons support systems;
· companies that have any revenue contribution from
thermal coal extraction;
· companies that have any revenue contribution of 10%
or more from unconventional oil and gas or are investing
in new unconventional extraction capacity in their own
operations;
· companies that are primarily involved in conventional oil
and gas extraction and do not have significant revenue
contribution from natural gas or renewable alternatives;
· companies that have a revenue contribution of 10% or
more from electricity generation with a carbon
emissions intensity inconsistent with the Paris
Agreement, 2 degrees scenario; and
· companies that are directly investing in new thermal
coal or nuclear electricity generation capacity in their
own operations.
Stewardship and Engagement
Engagement with investee companies on ESG risks and
opportunities is a fundamental part of the Investment
Manager’s investment process and stewardship activities.
The discussions cover a wide range of topics, including, but
not limited to: strategic, operational, ESG issues and
considering the long-term drivers of value. It is a process
through which the Investment Manager can discuss how
an investee company identifies, prioritises and mitigates its
key risks and optimises outcomes from its most significant
opportunities. It also provides the opportunity for the
Investment Manager to discuss any areas of concern,
share best practice and drive positive change within the
business. The Investment Manager believes that effective
engagement presents a significant opportunity to add
shareholder value over time.
The engagement process is based on four types of
engagements:
· Review: part of ongoing due diligence and frequent
interactions led by the analyst responsible for oversight
of the investment.
· Respond: reacting to an event that may impact a single
investment or a selection of similar investments.
· Enhance: designed to seek change that, in the
Investment Manager’s view, would enhance the value of
the investment.
· Thematic: resulting from focus on a particular ESG
theme, such as climate change, diversity and inclusion
or modern slavery.
Engagement efforts will be tracked in order to assess
engagement progress against milestones. To do this the
Investment Manager has defined the following ‘lifecycle’
steps for engagements:
· Identify: identify specific concerns or issues to be raised
with those investee companies.
· Acknowledge: the concern is acknowledged by those
investee companies.
· Plan: there is a credible plan to address our concerns.
· Execute: the plan is being executed to address
concerns.
· Close: the plan has been successfully executed and
concerns have been addressed.
40 Dunedin Income Growth Investment Trust PLC
Proxy Voting
Proxy voting is an integral part of an active stewardship
approach, and the Investment Manager seeks to exercise
voting rights in a manner in line with best interests of
shareholders. The Investment Manager believes that
voting is a vital mechanism for holding boards and
management teams to account and is an important tool
for escalation and shareholder action. Vote instructions
are decided by analysts in regional and ESG investment
teams. The Investment Manager subscribes to proxy
research providers IVIS and ISS and uses their research to
support proprietary analysis rather than automatically
following recommendations of any third party. The
Investment Manager’s decisions will reflect its knowledge
of companies, and insights gained through engagement.
The involvement of portfolio managers in voting decisions
allows the Investment Manager to ensure proxy voting
remains an integral part of the investment process.
Divestment Approach
Divestment from companies is required if:
· they breach any of the negative screens;
· they have an Aberdeen ESG Quality rating of 4 or 5; or
· they have an Aberdeen ESG House Score in the bottom
10% of the investment universe.
Should the review of a security result in it being deemed
non-compliant, the intention would be to exit as soon as is
practicably possible, but generally never longer than three
months, allowing for market conditions.
Portfolio Carbon Commitment
The Company also commits to having a carbon intensity
(Scope 1 & 2) of less than 80% of the FTSE All-Share
Index, which constrains investment in high carbon
emitting companies.
Sustainable and Responsible Investment
Equity Approach
Continued
Dunedin Income Growth Investment Trust PLC 41
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
This section of the Annual Report highlights some of the sustainable and responsible investment outcomes
within the portfolio.
Positive Allocation
The Investment Manager classifies the sustainability characteristics of investments as Sustainable Leaders, Solutions
Providers and Transition companies:
(a) Leaders are companies with the best-in-class ESG credentials and demonstrate ESG leadership.
(b) Solutions Providers have products and services which address global environmental and societal challenges.
(c) Transition companies are typically companies with average standards of governance, ESG management practices
and disclosure with potential for change over time.
The Investment Manager uses qualitative analytical assessment, proprietary quantitative tools and ongoing corporate
engagement to assess the sustainability characteristics of companies.
The majority of the Company’s portfolio is invested into Leaders and Solutions Providers.
Split of Sustainable Leaders, Solutions Providers and Transition Companies
24%
46%
30%
Leaders Solutions Transition
Sustainable and Responsible Investin
g
Outcomes
42 Dunedin Income Growth Investment Trust PLC
Engagement
During the year ended 31 January 2025, the Investment Manager held 76 separate meetings with portfolio companies
where ESG topics were raised. Seven of these were dedicated priority engagement meetings, addressing areas of
material improvement. By topic, Corporate Governance and Labour Management were the areas most discussed.
% of Meetings where Topic Discussed
Engagement Case Studies
Unilever (Leader)
Unilever has faced significant sustainability challenges, including increased regulation on deforestation, human rights,
and plastics usage, as well as disruptions to natural raw material sourcing due to climate change. This year, Unilever
revised its sustainability targets, prompting both criticism and reflection on its sustainability leadership. The Investment
Manager has engaged with Unilever alongside other UK Consumer Staples peers to better understand its approach to
sustainability and the ESG risks and opportunities facing the sector.
Unilever's decision to scale back several ambitious targets was made to focus resources on the most impactful
sustainability priorities. The company reduced its goal to reduce virgin plastics usage from 50% by 2025 to a 30%
reduction by 2026. The company has also dropped pledges related to food sourcing, food waste and spending on
diverse businesses. This strategic shift aims to accelerate delivery with greater impact by integrating sustainability into
business performance.
Despite criticism, Unilever remains committed to ambitious climate goals, including a net-zero emissions target across its
value chain by 2039. The company's updated Climate Transition Action Plan outlines specific strategies to reduce
emissions, such as a 42% absolute reduction in Scope 3 energy and industrial greenhouse gas emissions by 2030.
Unilever's efforts to enhance supply chain resilience and advocate for systemic change through policy engagement are
crucial components of its sustainability leadership.
Overall, the Investment Manager’s engagement with Unilever and its peers highlighted the potential financial costs
associated with new regulatory and societal demands. The insights gained from these discussions underscore how
companies in the sector are exposed to different critical inputs such as palm oil and water. Unilever, facing some of the
greatest risks due to its high dependency on natural raw materials, remains an ambitious player from a sustainability
perspective and is committed to its sustainability investments.
Sustainable and Responsible Investin
g
Outcomes
Continued
Dunedin Income Growth Investment Trust PLC 43
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Convatec (Solutions)
Convatec, a global medical products and technologies company, specialises in solutions for managing chronic
conditions. Its product portfolio which includes Advanced Wound Care, Ostomy Care, Continence Care, and Infusion
Care, support quality healthcare for patients worldwide. Advanced Wound Care (accounting for 32% of sales) provides
dressings for acute and chronic wounds; Ostomy Care (28% of sales) offers devices and services for patients with bowel
and bladder cancer, as well as Crohn’s disease; Continence Care (22% of sales) supports people with urinary
continence issues; and Infusion Care (18% of sales), supplies infusion sets for diabetes and Parkinson’s
disease management.
The Investment Manager assessed Convatec’s ESG progress and met with the company to discuss the key themes this
year. Its engagement highlighted improvements in customer complaints, staff turnover, environmental metrics, and
safety performance over recent years. These advancements reflect Convatec's commitment to enhancing operational
and sustainability practices and align to its turnaround progress. The company acknowledges areas for improvement,
particularly in product quality and R&D processes. Despite these challenges, Convatec remains committed to innovation
and improving patient outcomes, as evidenced by its recent clinical study results for ConvaNiox for treating hard to
heal wounds.
The company's products are designed to address the complex needs of chronic care patients, enhancing their quality of
life. As Convatec continues to evolve, the Investment Manager will monitor its progress in addressing ESG challenges and
maintaining its position as a leader in the medical technologies sector.
Proxy Voting
The table below provides a summary of poxy voting undertaken during the year by the Investment Manager in relation
to the portfolio holdings.
Metric Value
Number of meetings held 36
Number of meetings with at least one vote against management 8
Percentage of meetings with at least one vote against management 22.2%
Total number of voteable proposals 754
Number of votes against management 17
Votes against management as a percentage of voteable proposals 2.2%
Number of votes against ISS Policy 19
Votes against ISS Policy as a percentage of voteable proposals 2.5%
Number of votes against policy 13
Votes against policy as a percentage of voteable proposals 1.7%
The Investment Manager voted against management recommendations in 22.2% of the general meetings held by
portfolio companies during the year, which it thinks is the most useful metric for measuring the level of its constructive
engagement. It is important to bear in mind that the Investment Manager typically begins from a position of support for
the select group of companies it invests in.
There is an extensive ongoing programme which allows the Investment Manager to actively engage with investee
companies throughout the year beyond the voting season.
44 Dunedin Income Growth Investment Trust PLC
Carbon Intensity
The Company commits to having a carbon intensity (Scope 1 & 2) of less than 80% of the FTSE All-Share Index, which
constrains investment in high carbon emitting companies.
Carbon intensity reflects carbon emissions relative to a specific activity. For company carbon footprinting, the carbon
intensity reflects the CO2e emissions divided by revenue in million US$. For countries, the standard intensity metric is the
ratio of greenhouse gas emissions produced to gross domestic product. Carbon emissions is used as a generic term for
the main greenhouse gas (“GHG”) emissions (carbon dioxide, methane, nitrous oxide, F-gases).
Weighted Average Carbon Intensity (WACI)
In tonnes of CO2e / million USD revenue
Scope 1 & 2 Scope 1 Scope 2 Scope 3
Upstream
Scope 3
Downstream
Portfolio 43.14 30.39 12.75 143.68 887.82
Benchmark 84.08 61.64 22.44 162.61 1,350.27
Relative carbon intensity % 51.31 49.30 56.82 88.36 65.75
Total Emissions
(In tonnes of CO2e)
Scope 1 & 2 Scope 1 Scope 2 Scope 3
Upstream
Scope 3
Downstream
Portfolio 19,935 16,058 3,877 56,664 364,689
Benchmark 53,748 43,475 10,273 83,573 614,364
Relative carbon intensity % 37.09 36.94 37.74 67.80 59.36
Source: Trucost
The Company’s portfolio therefore currently has a Carbon Intensity on Scope 1 and 2 emissions of 51% of the
benchmark. On a total emissions basis, the portfolio sits at 37% of the benchmark on Scope 1 and 2 emissions.
Carbon Emissions – Scope 1
Greenhouse gas emissions generated from burning fossil fuels and production processes which are owned or controlled
by a company.
Carbon Emissions – Scope 2
Greenhouse gas emissions generated from the consumption of purchased electricity, heat or steam by a company.
Carbon Emissions – Scope 3
Other upstream and downstream indirect greenhouse gas emissions such as the extraction and production of
purchased materials and fuels, transport-related activities in vehicles not owned or controlled by a reporting entity, and
electricity related activities (egT&D losses) not covered in Scope 2.
Sustainable and Responsible Investin
g
Outcomes
Continued
Dunedin Income Growth Investment Trust PLC 45
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
Aberdeen Group
The Company’s Investment Manager is abrdn
Investments Limited which is a wholly-owned subsidiary of
Aberdeen Group plc. The Aberdeen Group’s assets under
management and administration were £511 billion as at
31 December 2024, managed for a range of clients
including 14 UK-listed closed end investment companies.
The Investment Team Senior Managers
Ben Ritchie
Head of Developed Markets Equities
Ben Ritchie is Head of Developed Markets Equities at
Aberdeen. He originally joined Aberdeen in 2002 as a
graduate trainee and has been managing the Company
since 2012, including as lead manager since 2016. Ben has
a BA (Hons) in Modern History and Politics from Pembroke
College, University of Oxford, and is an alumni of Harvard
Business School. He is a certified CFA Charterholder.
Rebecca Maclean
Investment Director, UK Equities
Rebecca Maclean is an Investment Director in the UK
Equities team at Aberdeen. She has worked in the
responsible investment industry since 2010 and joined
Aberdeen in 2013 as a Responsible Investment Analyst.
She moved to the UK Equities team in 2016. Rebecca
graduated with a BA in Experimental Psychology from
University of Oxford, holds a MA in International Relations
from King’s College London, and is a CFA Charterholder.
Information About the Investment Mana
g
er
46 Dunedin Income Growth Investment Trust PLC
Portfolio
The Investment Manager believes that
building a concentrated portfolio of
high quality companies that meet its
sustainable and responsible
investment criteria will deliver both
real income growth and attractive
total returns over the long-term.
4.0% of the Company’s total assets are invested in
the Beverages sub-sector (2024: 4.6%).
Dunedin Income Growth Investment Trust PLC 47
48 Dunedin Income Growth Investment Trust PLC
As at 31 January 2025
Unilever (Leader)
TotalEnergies (Transition)
Unilever is a global consumer goods
company, with particularly strong
market positions in emerging markets
and operating in a number of product
areas including Beauty, Personal Care,
Home Care and Nutrition.
TotalEnergies is an energy company
producing and marketing fuels, natural
gas and electricity globally.
National Grid (Solutions)
RELX (Solutions)
National Grid owns gas and electricity
transmission and distribution assets in
the UK and United States.
RELX is a global provider of information
and analytics for professionals and
businesses across a number of
industries including scientific, technical,
medical and law.
London Stock Exchange (Leader)
AstraZeneca (Solutions)
London Stock Exchange is a leading
financial information company that
also owns prominent pieces of
market infrastructure.
AstraZeneca is a pharmaceutical
company that focuses on the research,
development and manufacture of
drugs in a range of therapeutic areas.
Diageo (Leader)
Chesnara (Transition)
Diageo is a global leader in spirits and
liquers with a portfolio of world-
renowned brands.
Chesnara is an owner and manager of
primarily closed books of life assurance
assets in the UK, Sweden and Holland.
NatWest (Transition)
Sage (Solutions)
NatWest is a UK-based banking
company providing personal, private
and business banking needs.
Sage is UK-based company, providing
cloud business management solutions,
supporting small and medium sized
businesses globally.
Ten Lar
g
est Investments
Dunedin Income Growth Investment Trust PLC 49
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
At 31 January 2025
Valuation Total Valuation
2025 assets 2024
Company Sector £’000 % £’000
Unilever Personal Care, Drug and Grocery Stores 32,470 6.8 28,205
TotalEnergies Oil, Gas and Coal 29,564 6.2 26,125
National Grid Gas, Water and Multi-utilities 28,807 6.0 17,956
RELX Media 25,008 5.2 23,846
London Stock Exchange Finance and Credit Services 22,874 4.8 23,696
AstraZeneca Pharmaceuticals and Biotechnology 22,179 4.6 32,517
Diageo Beverages 19,205 4.0 22,711
Chesnara Life Insurance 15,599 3.3 15,510
NatWest Banks 15,361 3.3 –
Sage Software and Computer Services 14,624 3.1 12,769
Ten largest investments 225,691 47.3
Genus Pharmaceuticals and Biotechnology 13,180 2.8 6,865
Convatec Medical Equipment and Services 13,086 2.7 –
Prudential Life Insurance 13,060 2.7 13,015
Games Workshop Leisure Goods 12,242 2.6 12,196
Assura Real Estate Investment Trusts 11,880 2.5 10,061
Intermediate Capital Investment Banking and Brokerage Services 11,595 2.4 16,018
M&G Investment Banking and Brokerage Services 11,544 2.4 12,402
Volvo Industrial Transportation 11,375 2.4 11,466
Sirius Real Estate Real Estate Investment Trusts 11,334 2.4 11,433
Hiscox Non-life Insurance 10,555 2.2 10,043
Twenty largest investments 345,542 72.4
Telecom Plus Telecommunications Service Providers 10,303 2.2 8,970
Weir Group Industrial Engineering 10,166 2.1 10,471
Mercedes-Benz Automobiles & Parts 10,154 2.1 9,893
Edenred Industrial Support Services 10,136 2.1 10,040
Softcat Software and Computer Services 9,994 2.1 7,269
Gaztransport & Technigaz Oil, Gas and Coal 9,913 2.1 –
Genuit Construction and Materials 9,889 2.1 –
Azelis Industrial Support Services 9,788 2.1 –
ASML Technology Hardware and Equipment 9,785 2.0 13,067
Taylor Wimpey Household Goods and Home Construction 9,607 2.0 15,075
Thirty largest investments 445,277 93.3
Portfolio
50 Dunedin Income Growth Investment Trust PLC
Portfolio
At 31 January 2025
Valuation Total Valuation
2025 assets 2024
Company Sector £’000 % £’000
Morgan Sindall Construction and Materials 9,541 2.0 11,166
Novo-Nordisk Pharmaceuticals and Biotechnology 9,126 1.9 9,009
Oxford Instruments Electronic and Electrical Equipment 8,708 1.9 9,228
Total investments 472,652 99.1
Net current assets
A
4,535 0.9
Total assets less current liabilities
A
477,187 100.0
A
Excluding bank loan falling due within one year of £18,907,000 (2024 – £13,307,000).
Continued
Dunedin Income Growth Investment Trust PLC 51
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
0% 5% 10% 15% 20% 25% 30%
Financials
Consumer Discretionary
Industrials
Consumer Staples
Health Care
Technology
Utilities
Energy
Real Estate
Basic Materials
Telecommunications
2025
2024
0% 10% 20% 30% 40% 50% 60% 70% 80%
United Kingdom
Europe
2025
2024
Sector and Geo
g
raphical Breakdown
52 Dunedin Income Growth Investment Trust PLC
As at 31 January 2025
FTSE All-Share Portfolio Portfolio
Index weighting weighting weighting
2025 2025 2024
% % %
Energy Oil, Gas and Coal 9.6 8.3 5.3
9.6 8.3 5.3
Basic Materials Chemicals 0.4 – –
Industrial Metals and Mining
5.4 – 1.9
Precious Metals & Mining
0.2 – –
6.0 – 1.9
Industrials Aerospace & Defence 4.1 – –
Construction and Materials 0.4 4.1 4.1
Electronic and Electrical Equipment 1.1 1.8 1.9
General Industrials 1.4
Industrial Engineering 0.6 2.1 2.1
Industrial Support Services 3.3 4.2 2.1
Industrial Transportation 1.2 2.4 2.3
12.1 14.6 12.5
Consumer Discretionary Automobiles & Parts 0.1 2.1 2.0
Consumer Services 1.9 – –
Household Goods and Home Construction 1.0 2.0 3.1
Leisure Goods 0.2 2.6 2.5
Media 4.4 5.2 4.9
Personal Goods 0.2 – –
Retailers 1.5 – 2.9
Travel & Leisure
2.3 – –
11.6 11.9 15.4
Health Care Medical Equipment and Services 0.5 2.7 –
Pharmaceuticals and Biotechnology 10.6 9.3 9.9
11.1 12.0 9.9
Sector Analysis
Dunedin Income Growth Investment Trust PLC 53
Strategic Report Governance Overview General Portfolio Other Information Financial Statements
As at 31 January 2025
FTSE All-Share Portfolio Portfolio
Index weighting weighting weighting
2025 2025 2024
% % %
Consumer Staples Beverages 2.4 4.0 4.6
Food Producers 0.6 – –
Personal Care, Drug and Grocery Stores 7.7 6.8 5.8
Tobacco 3.5 – –
14.2 10.8 10.4
Real Estate Real Estate Investment Trusts 2.3 4.9 4.4
2.3 4.9 4.4
Utilities Electricity 0.9 – 2.8
Gas, Water and Multi-utilities 2.8 6.0 3.7
3.7 6.0 6.5
Financials Banks 11.8 3.3 3.6
Closed End Investments 6.0 – –
Finance and Credit Services 2.6 4.8 4.8
Investment Banking and Brokerage Services 3.5 4.8 5.8
Life Insurance 2.1 6.0 5.8
Non-life Insurance 0.9 2.2 2.1
26.9 21.1 22.1
Technology Software and Computer Services 1.4 5.2 4.1
Technology Hardware and Equipment – 2.1 2.7
1.4 7.3 6.8
Telecommunications Telecommunications Service Providers 1.1 2.2 1.8
1.1 2.2 1.8
Total investments 100.0 99.1 97.0
Net current assets before borrowings
A
– 0.9 3.0
Total assets less current liabilities
A
100.0 100.0
A
Excluding bank loan falling due within one year of £18,907,000 (2024 – £13,307,000).
54 Dunedin Income Growth Investment Trust PLC
RELX (Solutions)
RELX is a multinational information and analytics company
that provides critical decision-making tools to professional
and business customers across various sectors. The
company's offerings include risk prediction and fraud
detection solutions, scientific information supporting
research, legal and regulatory insights for informed legal
decisions, and market-leading events.
RELX has successfully transitioned from its print media
heritage, with digital products now accounting for 83% of
its sales. This shift has been driven by the company's
strategic focus on high-growth analytics and AI-driven
tools, such as Lexis+ AI, which automates tasks such as
drafting and document analysis for legal professionals.
The business model benefits from excellent earnings
visibility due to subscription contracts and proprietary
databases, creating a strong competitive moat. This has
resulted in robust and accelerating revenue growth, driven
by strong demand for its analytics and decision tools.
Through its Scientific, Technical and Medical segment,
RELX plays a crucial role in facilitating scientific progress.
Platforms such as ScienceDirect offer access to over 18
million documents, supporting primary research for
scientists and researchers. Elsevier, a leading academic
publisher within RELX, ensures rigorous peer review
processes to maintain the quality of scientific publications.
This commitment to academic excellence underscores
RELX's position as a key enabler of scientific advancement.
Investment Case Studies
Dunedin Income Growth Investment Trust PLC 55
NatWest (Transition)
NatWest is a major UK retail and commercial bank, serving
over 19 million customers. The business is generating
robust returns, including a 17.5% return on tangible equity
in 2024, supported by higher interest rates and low
impairment rates in the UK. The business has delivered
growth across its three divisions of personal, commercial
and private banking. The company is focused on
simplification and investing in technology to support
customer service and operational efficiency. The
combination of an improving outlook, good visibility of
returns and strong balance sheet supports an attractive
above-market distribution yield.
NatWest has taken significant strides in recent years to
enhance its sustainability credentials. These include
growing its climate and sustainable funding and financing
business, gradual improvements in gender and ethnic
diversity in management, and major work on internal
culture and investment in training for staff. The company
reports detailed analysis of its financed and facilitated
emissions, and has ambitious targets to decarbonise its
lending portfolio. Furthermore, it is putting in place the
foundations, such as sustainable-finance solutions,
including green mortgages, to take advantage of
opportunities from home energy efficiency investments in
the UK, once the policy environment improves.
Games Workshop (Transition)
Games Workshop is a prominent designer, manufacturer,
and distributor of fantasy miniatures, notably under the
Warhammer brand. Despite a challenging consumer
environment, the company has delivered resilient growth
through its retail stores and online channels. Strong
customer loyalty, premium pricing power and a vertically
integrated supply chain, have enabled Games Workshop
to sustain high gross margins.
The company has granted Amazon exclusive rights to
adapt the Warhammer 40,000 universe into films and
television series, creating a new and potentially lucrative
licensing revenue stream. Games Workshop continues to
return surplus cash to shareholders in the form of
dividends while maintaining a strong balance sheet and
investing organically in the business, offering a compelling
and growing income stream.
The Investment Manager views Games Workshop as a
transition business and has been monitoring its progress in
key areas. For example, it is monitoring packaging and
plastics volumes, efforts to enhance the strong human
capital base through greater diversity, and levels of
disclosures and transparency for investors. These initiatives
are crucial for long-term sustainability and growth.
56 Dunedin Income Growth Investment Trust PLC
Governance