www.abrdnequityincome.com

abrdn Equity

Income Trust plc

Annual Report 30 September 2022

Equity income using an index-agnostic approach focusing

on our best ideas from the full UK market cap spectrum

abrdn Equity Income Trust plc is an “AIC Dividend Hero” – it has consistently increased its dividend for 22 years in a row.

abrdn Equity Income Trust plc 1

“I am delighted that we have been able to cover the

dividend this year and resume making significant

dividend increases while starting to replenish our

revenue reserves.”

Mark White, Chairman

“This sharp recovery in the revenue account

is a result of our focus on achieving the priorities set

out by the Board at the time of the Covid-19 crisis.

The Board emphasised that our first priority should

be to build a portfolio that could deliver sufficient

income to cover the dividend. I welcomed this

challenge as I could see that it was consistent with

our investment process.”

Thomas Moore,

Portfolio Manager

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 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 Aberdeen

Standard Equity Income 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.

2 abrdn Equity Income Trust plc

“The Board is committed to its progressive

dividend policy and to maintaining and extending

its track record of 22 consecutive years of

dividend growth. We therefore expect that, in

the absence of any adverse circumstances, in

the coming financial yearwe will pay a dividend

of at least 22.80 pence per share.”

Mark White, Chairman

Overview

Performance Highlights 3

Financial Calendar, Dividends and Highlights 4

Strategic Report

Chairman’s Statement 6

Overview of Strategy 8

Promoting the Success of the Company 17

Results 20

Portfolio Manager’s Review 23

Portfolio

Ten Largest Investments 29

Investment Portfolio 30

Sector Distribution 33

Investment Case Studies 34

Governance

Board of Directors 38

Directors’ Report 41

Directors’ Remuneration Report 48

Audit Committee’s Report 52

Financial Statements

Statement of Directors’ Responsibilities 58

Independent Auditor’s Report to the Members of abrdn

Equity Income Trust plc 59

Statement of Comprehensive Income 65

Statement of Financial Position 66

Statement of Changes in Equity 67

Notes to the Financial Statements 68

Alternative Performance Measures 83

Corporate Information

Information about the Investment Manager 87

Investor Information 88

Glossary of Terms 92

AIFMD Disclosures (Unaudited) 95

General

Notice of Annual General Meeting 97

Contact Addresses 101

Contents

abrdn Equity Income Trust plc 3

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Net asset value total return per

Ordinary share

Share price total return per

Ordinary share

Year ended 30 September 2022 Year ended 30 September 2022

–7.6% –7.8%

Year ended 30 September 2021 +39.9% Year ended 30 September 2021 +47.1%

Revenue return per Ordinary share Discount to net asset value

Year ended 30 September 2022 As at 30 September 2022

25.51

8.8%

Year ended 30 September 2021 20.06p As at 30 September 2021 8.4%

Dividend per Ordinary share Ongoing charges ratio

Year ended 30 September 2022 Year ended 30 September 2022

22.70

0.91%

Year ended 30 September 2021 21.20p Year ended 30 September 2021 0.93%

Considered to be an Alternative Performance Measure. Further details can be found on pages 83 to 85.

Net asset value per

Ordinary share

Dividends per share Share price

At 30 September– pence For the year to 30 September - pence At 30 September– pence

485.0

411.8

288.0

380.8

331.8

18 19 20 21 22

19.20

20.50

20.60

21.20

22.70

18 19 20 21 22

473.0

381.5

252.0

349.0

302.5

18 19 20 21 22

Performance Hi

hli

hts

4 abrdn Equity Income Trust plc

Pre-AGM Online Investor Event

20 January 2023

Annual General Meeting (London)

2 February 2023

Expected payment dates of interim dividends for year

ending 30 September 2023

March 2023

June 2023

September 2023

January 2024

Half year end

31 March 2023

Expected announcement of results for the

six months ending 31 March 2023

May 2023

Financial year end

30 September 2023

Expected announcement of results for

year ending 30 September 2023

December 2023

Financial Calendar,

Dividends and Hi

hli

hts

abrdn Equity Income Trust plc 5

Strategic Report

The Company is an investment trust

with a premium listing on the London

Stock Exchange.

The Company offers an actively

managed portfolio of UK quoted

companies. The investment approach

is index-agnostic and the aim is to

Focus on Change by evaluating

changing corporate situations and

identifying insights that are not fully

recognised by the market.

6 abrdn Equity Income Trust plc

Earnings

While markets have been very volatile, particularly since

the start of 2022, the Board’s consistent direction to our

Portfolio Manager over the last couple of years has been

to focus on the income account and this has borne fruit.

The Company’s revenue per share, or earnings per share,

for the financial year to 30 September 2022 were 25.51p,

an impressive increase of 27.2% from the previous year.

This exceeds the Company’s previous record earnings of

22.06p in 2018 and means that the dividend for the year is

covered by the earnings for the first time in three years.

Furthermore, the Board has stressed that while the focus

should be on returning to a covered dividend, this was not

to be achieved by simply buying the highest yielding

stocks in the market. Our Portfolio Manager has confirmed

that he currently expects the income generated by the

portfolio to grow, despite the macro environment. Please

see the Portfolio Manager’s Review on pages 23 to 27

for more detail on the sources of the performance

and income.

Results

In the year to 30 September 2022, the Net Asset Value

(“NAV”) total return of the Company was -7.6% and the

share price total return was -7.8%. The FTSE All-Share

Index delivered a total return of -4.0% over the same

period. The reasons for the somewhat disappointing

NAV performance are detailed in the Portfolio

Manager’s Report.

The uncertainty of the outlook is probably about the only

constant in Chairman’s statements these days but the

pace at which events have unfolded since the start of

2022 has been truly remarkable. The last quarter of 2021

was challenging for the Company. However, the market’s

rotation out of growth and into value at the start of the

year was beneficial, and our Portfolio Manager remained

focused on generating sustainable income despite the

challenging geopolitical and economic environment.

Dividend

I am delighted that the strong recovery in earnings has

permitted the Board to announce a substantial increase in

the fourth interim dividend while also making a solid start

in rebuilding the revenue reserves. Furthermore, the

Portfolio Manager’s forecasts implythat net income in

2023 should be sufficient to allow further growth in the

dividend on a fully covered basis. The fourth interim

dividend for 2022 will be 6.5 pence per share which will be

paid on 9 January 2023 to shareholders on the Register on

9 December 2022 with an associated ex-dividend date of

8 December 2022. This takes the total dividend for the

year to 22.70 pence per share which is a 7.1% increase on

the previous year and the 22nd consecutive annual

dividend increase declared by the Company. After the

payment of the fourth interim dividend, 2.94 pence per

share will be transferred to revenue reserves, increasing

revenue reserves to 24.62 pence per share.

In setting the level of the fourth interim dividend the Board

balanced the desire to pay a meaningful dividend

increase with the need to ensure that revenue reserves

were replenished. The situation has been made easier by

the impressive income growth exhibited by the portfolio.

The Board is committed to its progressive dividend policy

and to maintaining and extending its track record of 22

consecutive years of dividend growth. We therefore

expect that, in the absence of any adverse circumstances,

in the coming financial yearwe will pay a dividend of at

least 22.80 pence per share. The first three interim

dividends will be 5.7 pence per share, payable in March,

June and September and the fourth interim will be at least

5.7 pence per share payable in January. We have not

given guidance on the dividend for the coming year in

the past.

We believe that it is important to do so now (a) because

we recognise that shareholders are looking for certainty in

their budgeting and (b) because we want to stress our

confidence in the quality of the portfolio and its ability to

deliver the income required. The Company is currently

trading on a yield of over 7%, the highest in the AIC UK

Equity Income sector, which we do not believe is

reflective of the revenue earning capacity of the

underlying portfolio.

Chairman’s Statement

abrdn Equity Income Trust plc 7

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Buybacks

The Company bought back 561,535 Ordinary shares or

1.17% of the issued share capital during the year. The buy

backs increased the NAV per share by 0.42 pence. The

Board monitors the discount of the share price to the

cum-income NAV in both absolute terms and relative to

the discount of other UK equity income investment trusts

with a view to moderating discount volatility.

The Board

In the Half-Yearly Report to 31 March 2022 I stated that I

would stand down from the Board at the completion of

the Annual General Meeting (the “AGM”) in February 2023

and that Sarika Patel would succeed me as Chair. We

have therefore undertaken a search for Sarika’s successor

as Chair of the Audit Committee. I am delighted to

welcome Mark Little to the Board. Mark is a qualified

accountant and has a wealth of experience in the sector.

I’m sure he will be a great addition to the Board. He will

stand for election to the Board at the AGM in February

2023 and will take over as Audit Chair from that point.

Online Shareholder Presentation

In order to encourage as much interaction as possible with

our shareholders, we will be hosting an Online Shareholder

Presentation, which will be held at 11:00 am on Friday, 20

January 2023. At this event there will be a presentation

from the Portfolio Manager followed by an opportunity to

ask live questions to the Portfolio Manager and the

Chairman. The online presentation is being held ahead of

the AGM to allow shareholders sufficient time to submit

their proxy votes after the presentation but prior to the

AGM should they so wish. Full details on how to register for

the online event can be found on the Company’s website

at www.abrdnequityincome.com.

Annual General Meeting (“AGM”)

This year’s Annual General Meeting (“AGM”) will be held at

wallacespace Spitalsfield, 15-25 Artillery Lane, London, E1

7HA on Thursday, 2 February 2023 at 11:30 am. The

meeting will include a presentation by the Portfolio

Manager and will be followed by lunch. This is a good

opportunity for shareholders to meet the Board and the

Manager and the Board encourages you to attend. The

Notice of the Meeting is contained on pages 97 to 100.

Outlook

I will be retiring from the Board at the AGM after a

relatively brief tenure as Chair but nine years as a director.

In his valedictory remarks, Richard Burns, my predecessor,

hoped that I would have a better story to tell in terms of

our performance when my turn to hand over came round.

Despite the negative capital return in the last 12 months, I

am delighted that we have been able to cover the

dividend this year and resume making significant dividend

increases while starting to replenish our revenue reserves.

The capital performance of the portfolio needs to be set

against the global economic backdrop which remains

troubled. The latest UK budget sets out to raise an

additional £25bn to address the budget deficit caused by

the extensive support provided to households and

businesses during the Covid and Ukraine crises.

While low valuations may indicate that this troubled

economic outlook is at least partially priced in, the Board is

aware that capital growth may be constrained in the near

term. This makes the income component of the total

return all the more important. The Board is maintaining its

direction to the Portfolio Manager that the revenue

account should cover a dividend greater than the 22.70

pence per share that we are paying for FY22. At the time

of writing, the revenue forecasts indicate that this should

be achieved in the coming year.

As the current share price discount to NAV shows, we also

still have some work to do to persuade the market that we

will be able to achieve real growth in our distributions in the

face of a likely UK recession. However, I am very confident

in the ability of my successor, Sarika Patel, to lead the

Board and believe she will be able to report to you that we

have achieved this despite the economic challenges to

come. I wish her every success.

Mark White

Chairman

30 November 2022

8 abrdn Equity Income Trust plc

Business Model

The Company is an investment trust with a premium listing

on the London Stock Exchange.

Investment Objective

The Company’s objective is to provide shareholders with

an above average income from their equity investment,

while also providing real growth in capital and income.

Investment Policy

The Directors set the investment policy, which is to invest in

a diversified portfolio consisting mainly of quoted UK

equities which will normally comprise between 50 and 70

individual equity holdings.

In order to reduce risk in the Company without

compromising flexibility:

· no holding within the portfolio should exceed 10% of

total assets at the time of acquisition; and

· the top ten holdings within the portfolio will not exceed

50% of net assets.

The Company may invest in convertible preference

shares, convertible loan stocks, gilts and corporate bonds.

The Directors set the gearing policy within which the

portfolio is managed. The parameters are that the

portfolio should operate between holding 5% net cash and

15% net gearing. The Directors have delegated

responsibility to the Manager for the operation of the

gearing level within the above parameters.

Delivering the Investment Objective

The Board delegates investment management services to

abrdn. The team within abrdn managing the Company’s

portfolio of investments has been headed up by Thomas

Moore since 2011.

The portfolio is invested on an index-agnostic basis. The

process is based on a bottom-up stock-picking approach

where sector allocations are a function of the sum of the

stock selection decisions, constrained only by appropriate

risk control parameters. The aim is to Focus on Change by

evaluating changing corporate situations and identifying

insights that are not fully recognised by the market.

Idea Generation and Research

The vast majority of the investment insights are generated

from information and analysis from one-on-one company

meetings. Collectively, more than 3,000 company

meetings are conducted annually across abrdn. These

meetings are used to ascertain the company’s own views

and expectations of its future prospects and the markets

in which it operates. Through actively questioning the

senior management and key decision makers of

companies, the portfolio managers and analysts look to

uncover the key changes affecting the business and the

materiality of their impact on company fundamentals

within the targeted investment time horizon.

Investment Process in Practice

The index-agnostic approach ensures that the weightings

of holdings reflect the conviction levels of the investment

team, based on an assessment of the management team,

the strategy, the prospects and the valuation metrics. The

process recognises that some of the best investment

opportunities come from under-researched parts of the

market, where the breadth and depth of the analyst

coverage that the Portfolio Manager can access provides

the scope to identify a range of investment opportunities.

The consequence of this is that the Company’s portfolio

often looks very different from other investment vehicles

providing their investors with access to UK equity income.

This is because the process focuses on conviction levels

rather than index weightings. This means that the

Company may provide a complementary portfolio to the

existing portfolios of investors who prefer to make their

own decisions and manage their ISAs, SIPPs and personal

dealing accounts themselves. Currently 48.9% (2021: 58%)

of the Company’s portfolio is invested in companies

outside the FTSE 100 Index.

The index-agnostic approach further differentiates the

portfolio because it allows the Portfolio Manager to take a

view at a thematic level, concentrate the portfolio’s

holdings in certain areas and avoid others completely. The

effect of this approach is that the weightings of the

portfolio can be expected to differ significantly from that

of any index, and the returns generated by the portfolio

may reflect this divergence, particularly in the short term.

Overview of Strate

abrdn Equity Income Trust plc 9

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

The Investment Manager’s Approach to ESG

Although environmental, social and governance (“ESG”)

factors are not the over-riding criteria in relation to the

investment decisions taken by the Portfolio Manager,

significant emphasis is placed on ESG and climate related

factors throughout the Manager’s investment process.

The Portfolio Manager considers ESG risks and

opportunities for all investments. ESG considerations are

inextricably embedded into the investment process in

order to achieve successful and sustainable performance

for the Company over the long term.

There is a broad understanding that a full and thorough

assessment of ESG factors will for allow for better investment

decisions to be made, which will lead to better outcomes for

the Company’s shareholders. ESG factors are considered

alongside financial and other fundamental factors in order to

make the best possible investment decisions at a stock

picking and at a portfolio construction level.

The Portfolio Manager and his team have a very close

relationship with the ESG specialists within abrdn and have

an on-desk ESG analyst to assist in the research process

and ESG engagements with companies. Through the

utilisation of third party provided research including MSCI

and abrdn’s inhouse ESG rating tools the team is able to

identify, where appropriate, leaders and laggards, areas

of weakness and areas of strength.

However, the Company does not specifically exclude any

sectors from its investment universe. All investments are

required to pass a quality test and ESG issues are only part

of the investment analysis.

The Company may invest in , and vigorously engage

with, well-managed and well-capitalised companies

which may not necessarily immediately be considered

ESG leaders.

The Company’s approach to engagement is set

out below.

Proactive company engagement

Ensures our holdings remain or become better companies

Our Engagement

Engagement allows us to influence for positive outcomes

and act as responsible stewards of our clients’ assets. We

engage with multiple stakeholders far beyond just

company management, such as NGOs, industry and

regulatory bodies, activists and clients

Example areas of engagement include:

· Board Diversity

· Carbon Emissions

· Corporate Governance

· Cyber Security

· Deforestation

· Employee Discrimination

· Employee Safety

· ESG Disclosures

· Human Capital Management

· Human Rights

· Labour Management

· Market Communication

· Remuneration

· Succession Planning

· Waste Affluence Management

· Water Management

Please see the case study on Glencore on page 10, the Spotlight on Thungela on page 24, and the Investment Case

Studies on National Grid and the NatWest Group on pages 34 and 35 for specific examples of the Company’s

engagement with investee entities in the portfolio.

10 abrdn Equity Income Trust plc

Glencore Case Study

For example, the Company invests in Glencore, the

diversified natural resources company. Engagement and

fundamental research by the Portfolio Manager and ESG

equity analyst before investment, and as part of ongoing

monitoring, is critical in ensuring that the investee is a

suitable investment for the Company, and its ESG

credential are fully understood.

The Portfolio Manager has actively engaged with

Glencore in order to deepen the understanding of its

management of ESG-related risks and to encourage

improvements.

During the financial year, the Investment Manager met

with Glencore’s Chairman and Senior Executives to

discuss Glencore’s responses to climate change

challenges, health and safety challenges, and the

progress to resolve regulatory misconduct investigations.

On climate change, in particular, the Investment Manager

discussed Glencore’s approach and noted its improved

transparency on its climate change targets and strategy.

However, the Investment Manager believes that there is

scope for further improvement on strategy, such as with

respect to integration into renumeration structures and

granularity on the actions required to meet Glencore’s

emissions reductions targets. Following engagement, the

Investment Manager elected to vote against a resolution

to approve Glencore’s Climate Progress Report at the

latest AGM.

The Investment Manager has also continued to challenge

Glencore on its strategy to run down its coal business,

amid ongoing debate in the market as to whether

Glencore should spin off its coal assets. While the

Investment Manager continues its own assessment on the

merits of Glencore’s strategy, it has valued Glencore’s

engagement on the challenges to a successful spin off

both from an environmental and financial perspective.

The Investment Manager is encouraging Glencore to

enhance ESG practices and transparency at its coal

business, including health and safety, as the Investment

Manager believes this would strengthen the company’s

position that it is the most responsible owner of

these assets.

Glencore is the fourth largest holding in the Company,

making up 4% of the total portfolio.

Since the financial year end, Glencore announced that,

following the votes against the Climate Progress Report

and engagement with shareholders, it would improve

disclosures around the planning and execution of its

climate strategy, and provide investors with more details

on the Board’s and Management’s governance of

climate matters.

Promoting the Success of the Company

The Board’s statement on pages 17 to 19 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. That

statement forms part of the Strategic Report.

Overview of Strate

Continued

abrdn Equity Income Trust plc 11

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Key Performance Indicators (“KPIs”)

The Board assesses the performance of the Company against the range of KPIs shown below over a variety of time

periods, but has particular focus on the long term, which the Board considers to be at least five years.

KPI Description

Net Asset Value (“NAV”) Total Return

relative to the FTSE All-Share Index

While the Manager does not manage the portfolio with direct reference to any

particular index, the Board does review the performance against that of the FTSE All-

Share Index to provide context for the performance delivered.

The Company’s NAV Total Return relative to the FTSE All Share Index since 2012, the

first full year after Thomas Moore took over the role of Portfolio Manager, is set out on

page 21.

Premium or discount to the NAV

compared to the unweighted

average of the discount of the

peer group

The Board compares the discount of the Company’s share price to its NAV when

compared to the unweighted average discount of the other investment trusts in the

UK Equity Income sector.

The discount at the year end and at the end of the previous year, and the narrowest

and widest discounts during the year, for the Company and the peer group, are

shown in the table on page 21.

Dividend growth compared to the

Retail Price Index (“RPI”)

The Company’s objective is to provide shareholders with an above average income

from their equity investment, while also providing real growth in capital and income.

Between 2012 and the outbreak of the Covid-19 pandemic, the dividend growth of

the portfolio exceeded inflation, as measured by the RPI, indicating that shareholders

had received real growth in the dividends paid by the Company.

However, the income generated by the portfolio was significantly affected by

dividend cuts made by investee companies during 2020. While dividend payments to

shareholders did increase over the last two years they did not keep pace with RPI,

despite the dividends being supplemented by drawing from revenue reserves.

In setting the level of the dividend for the current financial year, the Board has

balanced the need to deliver a meaningful increase to shareholders and its desire to

start rebuilding the revenue reserves. After having paid the fourth interim dividend,

2.94 pence per share will be transferred to revenue reserves.

The Company's dividend has grown at an annualised rate of 5.7% over the last 10

years, while RPI has increased at3.6% per annum over the same time. A breakdown

of the Company’s dividend growth compared with RPI since 2012 is set out on

page 22.

Ongoing charges ratio relative to

comparator investment vehicles

The Board monitors the Company’s ongoing charges ratio against prior years and

other similar sized companies in the peer group.

The Ongoing Charges Ratio for the year reduced to 0.91% based on average net

assets over the year (2021: 0.93%).

12 abrdn Equity Income Trust plc

Principal Risks and Uncertainties

The Board and Audit Committee carry out a regular

review of the risk environment in which the Company

operates, changes to the environment and individual risks.

The Board also identifies emerging risks which might

affect the Company.

There are a number of principal risks and uncertainties

which, if realised, could have a material adverse effect on

the Company and its financial condition, performance

and prospects. The Board, through the Audit Committee

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 faced by the

Company are reviewed by the Audit Committee in the

form of a risk matrix and the Committee also gives

consideration to the emerging risks facing the Company.

The Board has identified the implications for the

Company’s investment portfolio of a changing climate as

an emerging risk which it considers is likely to become

more relevant for the Company in the future. The Board

continues to assess this emerging risk as it develops,

including how investor sentiment is evolving towards

climate risk within investment portfolios, and will consider

how the Company may mitigate this risk and any other

emerging risks. The Board receives regular reporting from

the Manager on its approach to engagement with

investees on climate change and other topics.

The principal risks currently facing the Company, together

with a description of the mitigating actions the Board has

taken, are set out in the table below.

The Board considers its risk appetite in relation to each

principal risk and monitors this on an ongoing basis. Where

a risk is approaching or is outside the tolerance level, the

Board will consider taking action to manage the risk.

Currently, the Board considers the risks to be managed

within acceptable levels.

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 Mitigating Action

Strategy - the Company’s objectives or the

investment trust sector as a whole become

unattractive to investors, leading to a fall in

demand for the Company’s shares.

No Change during the Year

Through regular updates from the Manager, the Board monitors the discount/

premium at which the Company’s shares trade relative to the net asset value. It also

holds an annual strategy meeting and receives feedback from the

Company’s broker and updates from the Manager’s investor relations team at

Board meetings.

The Board appreciates that shareholders overwhelmingly voted in favour of the

continuation of the Company at the AGM in 2022.

Investment Performance - the Board

recognises that market risk is significant in

achieving performance and it reviews

investment guidelines to ensure that they are

appropriate. The Board regularly reviews

the impact of geopolitical instability and

change on market risk.

Risk Increased during the Year

The Board meets the Manager on a regular basis and keeps investment

performance under close review.

The Board sets and monitors the investment restrictions and guidelines and regular

reports are received from the Investment Manager on stock selection, asset

allocation, gearing, revenue forecasts and the costs of running the Company.

The Board determines the Company’s dividend policy and approves the level of

dividends payable to shareholders.

Representatives of the Manager attend all Board meetings and a detailed formal

appraisal of the Manager is carried out by the Management Engagement

Committee on an annual basis to ensure that the continued appointment of the

Manager remains in the best interests of the shareholders.

Overview of Strate

Continued

abrdn Equity Income Trust plc 13

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Risk Mitigating Action

The Board engages with shareholders at its AGM and Pre-AGM Online Event and

with larger shareholders at least annually to listen to sentiment towards the

Company and its performance directly.

Exogenous risks such as health, social,

financial, economic and geopolitical - the

effects of instability or change arising from

these risks could have an adverse impact on

stock markets and the value of the

investment portfolio. Political risks include the

political instability in the UK, the terms of the

UK’s exit from the European Union, any

regulatory changes resulting from a

different political environment, and wider

geo-political issues.

Risk Increased during the Year

The Board discusses current issues with the Manager. During the year under review,

such issues have included political instability in the UK and impact on stock markets,

inflation and the resulting volatility that it created in global stock markets, the Russian

invasion of Ukraine and associated sanctions, the ongoing impact of the UK’s exit

from the European Union, and the steps that the Manager has taken or might take to

limit their impact on the portfolio and the operations of the Company.

The Portfolio Manager’s Review on pages 23 to 27 summarises the purchases and

sales activity during the Period as the Company considered the new set of

opportunities arising from the meaningful change in market backdrop during the

financial year. The Manager is in regular communication with investee entities,

economists, and the wider market to determine the impact of the geopolitical and

economic environment on the portfolio.

The Board oversees the Manager’s performance at each Board Meeting and

formally considers whether the Company’s strategy remains fit for purpose, in light

of exogenous risk, at its annual strategy meeting which last took place in August

2022. The Board also regularly discusses the economic environment, geopolitical

risks, industry trends and the potential impact on the Company with the Company’s

broker.

Operational Risk – in common with most

investment trusts, the Board delegates the

operation of the business to third parties, the

principal delegate being the Manager.

Failure of internal controls and poor

performance of any service provider could

lead to disruption, reputational damage or

loss to the Company.

No Change during the Year

The Audit Committee receives reports from the Manager on its internal controls and

risk management (including an annual ISAE Report) and receives assurances from

all its other significant service providers on at least an annual basis, including on

matters relating to business continuity and cyber security. Written agreements are in

place with all third party service providers.

The Manager monitors closely the control environments and quality of services

provided by third parties, including those of the Depositary, through service level

agreements, regular meetings and key performance indicators.

A formal appraisal of the Company’s main third party service providers is carried out

by the Management Engagement Committee on an annual basis.

The Company’s operations were severely tested during the Covid-19 pandemic.

However, the increased use of online communication and out of office working have,

to date, proved to be robust.

Governance Risk – the Directors recognise

the impact that an ineffective board, unable

to discuss, review and make decisions, could

have on the Company and its shareholders.

No Change during the Year

The Board is aware of the importance of effective leadership and board

composition. The Board regularly reviews its own performance and, at least

annually, formally reviews the performance of the Board and Chair through its

performance evaluation process.

Discount / Premium to NAV – a significant

share price discount or premium to net asset

The Board keeps the level of the Company’s discount / premium under review.

During the financial year, shares have been bought back at a discount by the

14 abrdn Equity Income Trust plc

Risk Mitigating Action

value per share could lead to high levels of

uncertainty for shareholders.

No Change during the Year

Company. Please see the Share Buy Backs section on page 18 for more details on

the Company’s approach to discount control during the financial year.

The Company participates in the Manager’s investment trust promotional

programme where the Manager has an annual programme of meetings with

institutional shareholders and reports back to the Board on these meetings.

Financial obligations - inadequate controls

over financial record keeping and

forecasting, the setting of an inappropriate

gearing strategy or the breaching of loan

covenants could result in the Company

being unable to meet its financial obligations,

losses to the Company and its ability to

continue trading as a going concern.

No Change during the Year

At each Board meeting, the Board reviews management accounts and revenue

forecasts.

The Directors set the gearing policy within which the portfolio is managed. The

parameters are that the portfolio should operate between holding 5% net cash and

15% net gearing. The Directors have delegated responsibility to the Manager for the

operation of the gearing level within the above parameters.

The Company’s annual financial statements are audited by the independent auditor.

Legal and Regulatory Risks – the Company

operates in a complex legal and regulatory

environment. As a UK company with shares

publicly quoted on the London Stock

Exchange, as an alternative investment fund

and an investment trust, there are several

layers of risk of this nature.

No Change during the Year

The actions the Board takes to mitigate these extensive risks are to ensure that there

is breadth and depth of expertise within the Board and the organisations to which

the Company has delegated. There are also authorities whereby the Board or

individual Directors can take further advice by employing experts should that ever

be considered necessary.

Promotional Activities

The Board recognises the importance of promoting the

Company to prospective investors both for improving

liquidity and enhancing the value and rating of the

Company’s shares. The Board believes one effective way

to achieve this is through subscription to, and participation

in, the promotional programme run by abrdn on behalf of

a number of investment trusts under its management. The

Company’s financial contribution to the programme is

matched by abrdn. The Company also supports abrdn’s

investor relations programme which involves regional

roadshows, promotional and public relations campaigns.

abrdn’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 shareholders 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. Part of the

promotional programme includes commissioning

independent paid for research on the Company, most

recently from Kepler Trust Intelligence Research Limited. A

copy of the latest research note is available from the

Latest News section of the Company's website.

During the year, the Board was delighted, in January 2022,

to host an online shareholder presentation where the

Portfolio Manager provided an update on the portfolio.

The Portfolio Manager and Chairman also answered

questions from the audience. In August 2022, the

Company also hosted an in-person meeting for large

shareholders, the first since the outbreak of Covid-19, at

which all members of the Board were present and at

which the Portfolio Manager provided an update. Both

these events gave the Directors the opportunity to hear

the views of shareholders first hand.

Overview of Strate

Continued

abrdn Equity Income Trust plc 15

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Board Diversity

The Board’s statement on diversity is set out in the

Statement of Corporate Governance.

At 30 September 2022, there were three male and two

female Directors on the Board.

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 because it has no turnover. 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.

Environmental, Social and Human

Rights Issues

The Company has no employees as the Board has

delegated the day to day management and

administrative functions to the Manager. There are

therefore no disclosures to be made in respect of

employees. The Company’s socially responsible

investment policy is set out below.

Active Engagement

Through engagement and exercising voting rights, the

Manager actively works with companies to improve

corporate standards, transparency and accountability. By

making ESG central to its investment capabilities, the

Manager looks to deliver robust outcomes as well as

actively contributing to a fairer, more sustainable world.

The primary goal of the Manager is to generate the best

long-term outcomes for the Company in order to fulfil

fiduciary responsibilities to shareholders and this fits with

one of the Manager’s core principles as a business in how

it evaluates investments. The Manager sees ESG factors

as being financially material and impacting corporate

performance. The Manager focuses on understanding the

ESG risks and opportunities of investments alongside other

financial metrics to make better investment decisions.

Responsible Investment

The Board is aware of its duty to act in the interests of the

Company. The Board acknowledges that there are risks

associated with investment in companies which fail to

conduct business in a socially responsible manner and has

noted the Manager’s policy on social responsibility. The

Manager considers social, environmental and ethical

factors which may affect the performance or value of the

Company’s investments as part of its investment process.

In particular, the Manager encourages companies in

which investments are made to adhere to best practice in

the areas of ESG stewardship. The Manager believes that

this can best be achieved by entering into a dialogue with

company management to encourage them, where

necessary, to improve their policies.

The Company’s objective is to deliver above average

income, while also providing real growth in capital and

income, on its investments for its shareholders which the

Board and Manager believes will be produced on a

sustainable basis by investments in companies which

adhere to best practice in ESG. Accordingly, the Manager

will seek to favour companies which pursue best practice.

Stewardship

The Company is committed to the UK’s Stewardship Code,

and seeks to play its role in supporting good stewardship

of the companies in which it invests. Responsibility for

actively monitoring the activities of portfolio companies

has been delegated by the Board to the Manager which

has sub-delegated that authority to the Investment

Manager. abrdn plc is a tier 1 signatory of the UK

Stewardship Code which aims to enhance the quality of

engagement by investors with investee companies in

order to improve their socially responsible performance

and the long term investment return to shareholders.

While delivery of stewardship activities has been

delegated to the Manager and its group, 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.

16 abrdn Equity Income Trust plc

Global Greenhouse Gas Emissions

All of the Company’s activities are outsourced to third

parties. The Company therefore has no greenhouse gas

emissions to report from the operations of its business, nor

does it have responsibility for any other emissions

producing sources under the Companies Act 2006

(Strategic Report and Directors’ Reports)

Regulations 2013.

For the same reason as set out above, the Company

considers itself to be a low energy user under the SECR

regulations and therefore is not required to disclose

energy and carbon information.

Viability Statement

The Board considers that the Company is a long-term

investment vehicle and, for the purposes of this statement,

has decided that three years is an appropriate period over

which to consider its viability. The Board considers this to

be an appropriate period for an investment trust

company with a portfolio of equity investments, and the

financial position of the Company.

Taking into account the Company’s current financial

position and the potential impact of its principal risks and

uncertainties, the Directors have a reasonable

expectation that the Company will be able to continue in

operation and meet its liabilities as they fall due for a

period of three years from the date of this Report.

In assessing the viability of the Company over the

review period, the Directors have focused upon the

following factors:

· The principal risks and uncertainties detailed on pages

12 to 14 and the steps taken to mitigate these risks.

· All of the Company’s investments are traded on

major stock exchanges and there is a spread of

investments held.

· The Company is closed ended in nature and therefore it

is not required to sell investments when shareholders

wish to sell their shares.

· The Company’s main liability is its bank loan of £25m

(2021: £25m), which represents 15.0% (2021: 13.5%) of

the Company’s investment portfolio. This is a £30m

(2021: £30m) revolving credit facility with The Royal

Bank of Scotland International Limited, London Branch,

which is due to expire in June 2023. £25m was drawn at

the end of the financial year. A replacement option will

be sought in advance of the expiry of the facility, or

should the Board decide not to renew this facility, any

outstanding borrowing would be repaid through the

proceeds of equity sales as required.

· The Company’ s cash balance, including money market

funds, at 30 September 2022 amounted to £3.6m

(2021: £3.5m).

· The relatively low level of ongoing charges, which

reduced to 0.91% (2021 0.93%).

· Shareholders’ overwhelming voting in favour of the

continuation of the Company at the AGM in February

2022. The next continuation vote is due to take place at

the AGM to be held in 2027.

When considering the risks, the Board reviewed the

impact of stress testing on the portfolio, including the

effects of any substantial future falls in investment values.

The Board has also had regard to matters such as a

reduction in the income generated in the portfolio, a

significant increase in interest rates, a substantial

reduction in the liquidity of the portfolio or changes in

investor sentiment, all of which could have an impact on

the Company’s prospects and viability in the future. The

results of the stress tests have given the Board comfort

over the viability of the Company.

Taking into account all of these factors, the Company’s

current position and the potential impact of the principal

risks and uncertainties faced by the Company, the Board

has concluded that it has a reasonable expectation that

the Company will be able to continue in operation and

meet its liabilities as they fall due over the three year

period of this assessment to 30 September 2025.

In assessing the Company’s future viability, the Board has

assumed that investors will wish to continue to have

exposure to the Company’s activities, in the form of a

closed ended entity, the Company’s long-term

performance is satisfactory, and the Company will

continue to have access to sufficient capital.

Future Strategy

The Board intends to maintain the strategic policies set out

in the Strategic Report for the year ending 30 September

2022 as it is believed that these are in the best interests of

shareholders.

On behalf of the Board

Mark White

Chair

30 November 2022

Overview of Strate

Continued

abrdn Equity Income Trust plc 17

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

How the Board Meets its Obligations under

Section 172 of the Companies Act 2006

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 Section 172 (1) of the Companies Act 2006

(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 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 Board takes its role very seriously in representing the

interests of the Company’s shareholders. The Board

which, at the year end, comprised five independent Non-

Executive Directors has a broad range of skills and

experience across all major functions that affect the

Company. The Board is responsible 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 ensures that the Company operates in a

transparent culture where all parties are treated with

respect and provided with the opportunity to offer

practical challenge and participate in debate to achieve

the expectations of shareholders and other stakeholders

alike. The Board works very closely with the Manager in

reviewing how 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.

Specific Examples of Stakeholder

Consideration during the Year

The importance of giving due consideration to the

Company’s stakeholders is not a new requirement and is

considered as part of every Board decision.

The Board considers its stakeholders at Board meetings

and receives feedback on the Investment Manager’s

interactions with them.

The Directors were particularly mindful of stakeholder

considerations when considering the following items

during the year ended 30 September 2022:

Portfolio

The Portfolio Manager’s Review on pages 23 to 27 details

the key investment decisions taken during the year. The

overall shape and structure of the investment portfolio is

an important factor in delivering the Company’s stated

investment objective and is reviewed at every Board

Meeting. At every Board Meeting, the Board discusses

performance in detail with the Portfolio Manager. In

addition, during the year, the Board considered in detail

how the Investment Manager incorporates ESG issues into

its research and analysis work that forms part of the

investment decision process.

Dividend

The Board has determined the payment of a fourth

interim dividend for the year of 6.5 pence per Ordinary

share. Following payment of the fourth interim dividend,

total dividends for the year will amount to 22.70 pence per

Ordinary share, an increase of 7.1% compared to the

previous year. In setting the level of the dividend, the Board

has balanced the need to deliver a meaningful increase to

shareholders and start the process of rebuilding the

revenue reserves, which have been depleted in the last

two years. 2.94 pence per share will be transferred to

reserves.

Promoting the Company

In January 2022, the Board hosted an online shareholder

presentation where the Portfolio Manager provided an

update on the portfolio, and the Chairman and Portfolio

Manager answered questions from the audience. Over

200 investors signed up to the event. In August 2022, the

Company hosted a meeting for large shareholders at

which all members of the Board were present and at

which the Portfolio Manager provided an update. Both

these events gave the Directors the opportunity to hear

the views of shareholders first hand.

Promotin

the Success of the Company

18 abrdn Equity Income Trust plc

Pre-AGM Online Investment Event

In line with the Event held in January 2022, we will be

hosting an Online Shareholder Presentation, which will be

held at 11am on Friday, 20 January 2023. At this event

there will be a presentation from the Portfolio Manager

followed by an opportunity to ask live questions of the

Portfolio Manager and the Chairman. The online

presentation is being held ahead of the AGM to allow

shareholders time to submit their proxy votes after the

presentation but prior to the AGM should they so wish. Full

details on how to register for the online event can be

found on the Company’s website at

www.abrdnequityincome.com.

Share Buy Backs

During the year the Company bought back 561,535

Ordinary shares to be held in treasury, providing a small

accretion of 0.38 pence per share to the NAV and a

degree of liquidity to the market at times when the

discount to the NAV per share has widened. The

Company announced on 25 August 2022 its intention to

publish details of its share buyback powers which it

renews annually and that until the AGM, to be held on 2

February 2023, that it had the authority to repurchase a

maximum of 7,200,217 ordinary shares.

The Board believes that the selective use of share

buybacks is in the best interest of all shareholders.

Succession Planning

The Board has continued to consider its succession plans

during the year, as it recognises the benefits of regular

Board refreshment. As reported in the Chairman’s

Statement, Mark White will retire as Chairman and as a

Director at the AGM on 2 February 2022.

During the financial year, it was agreed that Sarika Patel,

having served on the Board since 1 November 2019 would

succeed Mark White as Chairman. The Board, therefore,

commenced the search for an additional non-executive

director to succeed Sarika Patel as Chair of the Audit

Committee. Mark Little was appointed on 1 August 2022

and will take over as Chair of the Audit Committee after

that AGM. Mark brings a wealth of investment trust and

audit committee experience to the Board.

How the Board Engages with Stakeholders

The Board’s main stakeholders have been identified as its

shareholders, the Investment and Portfolio Manager,

service providers, investee companies, debt providers and

the community at large and the environment.

A summary of the Board’s approach to engagement with

stakeholders is set out 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 to all shareholders. The Manager

and the Company’s broker regularly meet with current and prospective shareholders to discuss

performance and shareholder feedback is discussed by the Directors at Board meetings. In addition,

Directors typically meet shareholders at the Annual General Meeting.

The Company subscribes to abrdn’s investor relations programme in order to maintain communication

channels with the Company’s shareholder base.

Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly

factsheets, Company announcements, including daily net asset value 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 Meeting and to provide feedback on the Company.

Promotin

the Success of the Company

Continued

abrdn Equity Income Trust plc 19

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Stakeholder How We Engage

Manager (and

Investment Manager)

The Portfolio Manager’s Review on pages 23 to 27 details the key investment decisions taken during the

year. The Manager has continued to manage the Company’s assets in accordance with the mandate

provided by shareholders, with oversight provided by the Board.

The Board regularly reviews the Company’s performance against its investment objective and 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 Manager at every Board meeting to help it to exercise

effective oversight of the Manager and the Company’s strategy.

The Board, through the Remuneration & Management Engagement Committee, formally reviews the

performance of the Manager at least annually. More details are provided on pages 44 and 45.

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 Remuneration & 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 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 Manager actively works with companies to

improve corporate standards, transparency and accountability. Further details are provided on pages 9

and 10.

The Board monitors investments made and divested and questions the rationale for investment and

voting decisions made.

Debt Providers On behalf of the Board, the Manager maintains a positive working relationship with The Royal Bank of

Scotland International Limited, London Branch, the provider of the Company’s loan facility, and provides

regular updates on business activity and compliance with its loan covenants.

Environment and

Community

The Board and Manager are committed to investing in a responsible manner and the Investment

Manager embeds Environmental, Social and Governance (“ESG”) considerations into the research and

analysis as part of the investment decision-making process. Through the Investment Manager, the Board

encourages improvements in ESG practices and disclosures. Further details are provided on pages 9

and 10.

20 abrdn Equity Income Trust plc

30 September 2022 30 September 2021 % change

Capital

Net asset value per Ordinary share 331.8p 380.8p –12.9%

Ordinary share price 302.5p 349.0p –13.3%

Reference Index capital return

3,763.5 4,059.0 –7.3%

Discount of Ordinary share price to net asset value

8.8% 8.4%

Total assets (as defined on page 94) £182.5m £207.9m –12.2%

Shareholders’ funds £157.5m £182.9m –13.9%

Gearing

Net gearing

15.0% 13.5%

Earnings and Dividends

Revenue return per Ordinary share 25.51p 20.06p 27.2%

Total dividends for the year 22.70p 21.20p 7.1%

Dividend yield

7.5% 6.1%

Expenses

Ongoing charges ratio

0.91% 0.93%

Considered to be an Alternative Performance Measure. Further details can be found on pages 83 and 84.

Calculated in accordance with AIC guidance issued in October 2020 to include the Company’s share of costs of holdings in investment companies on a look-through basis.

FTSE All-Share Index

Performance (total return)

1 year 3 years 5 years 10 years

30 September 2022 % % % %

Net asset value

–7.6 –3.9 –10.5 66.5

Share price

–7.8 –4.2 –12.9 65.7

Reference Index

–4.0 2.4 11.3 79.5

Considered to be an Alternative Performance Measure. Further details can be found on page 85.

FTSE All-Share Index.

Source: abrdn/Morningstar/Factset

Results

abrdn Equity Income Trust plc 21

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Annual total returns of abrdn Equity Income Trust NAV and

FTSE All-Share Index September 2012 – 2022

-30%

-20%

-10%

10%

20%

30%

40%

50%

Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 19 Sep 20 Sep 21 Sep 22

abrdn Equity Income Trust NAV Total Return FTSE All-Share Index Total Return

Thomas Moore was appointed as Portfolio Manager in 2011.

abrdn Equity Income Trust Premium/(Discount) relative to the UK Equity Income unweighted

sector average since 30 September 2017

-20%

-15%

-10%

-5%

30/09/17 30/09/18 30/09/19 30/09/20 30/09/21 30/09/22

AEIT discount Unweighted Sector Average

22 abrdn Equity Income Trust plc

Annual Dividend Growth versus RPI since 2012

10%

12%

14%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Dividend growth RPI

Thomas Moore was appointed as Portfolio Manager in 2011.

Ten Year Financial Record

Revenue

available Net Equity

Gross for Ordinary Revenue Ordinary Net asset Share Ongoing gearing / shareholders’ Revenue

Year ended revenue shareholders return dividends value

price Discount

charges

(cash)

funds reserves

30 September £’000 £’000 p p p p % % % £m (£m)

2013 5,257 4,877 14.07 13.40 383.3 383.0 0.1 0.97 12.5 151.8 4.84

2014 5,780 5,136 15.69 14.00 397.9 394.0 1.0 0.94 13.4 166.5 5.75

2015 6,107 5,361 17.18 14.70 440.7 439.0 0.4 0.94 7.7 195.6 6.88

2016 7,084 6,214 17.92 15.40 431.5 412.4 4.4 0.96 7.5 199.7 8.15

2017 7,957 7,044 19.23 17.10 478.6

459.6 4.8 0.87 9.9 235.3

9.41

2018 11,893 10,846 22.06 19.20 485.0 473.0 2.5 0.87 12.1 238.4 10.82

2019 11,791 10,687 21.74 20.50 411.8 381.5 7.4 0.91 13.7 201.5 11.58

2020 8,730 7,614 15.61 20.60 288.0 252.0 12.5 0.92 13.3 139.2 8.75

2021 10,642 9,693 20.06 21.20 380.8 349.0 8.4 0.93 13.5 182.9 8.49

2022 13,517 12,244 25.51 22.70 331.8 302.5 8.8 0.91 15.0 157.5 10.27

Diluted for the effect of Subscription shares in issue for the year ended 30 September 2012 to 30 September 2016.

Considered to be an Alternative Performance Measure. Further details can be found on pages 83 and 84.

Calculated in accordance with AIC guidance issued in October 2020 to include the Company’s share of costs of holdings in investment companies on a look-through basis. The

figure for 30 September 2020 has been restated in accordance with this guidance.

Revenue reserves are reported prior to paying the final dividend or fourth interim dividend in each year. For 2017 only, reserves are reported after having deducted the third

interim dividend.

The 2017 Net Asset Value is calculated under Financial Reporting Standards, but includes an adjustment for the third interim dividend which had been declared, but not paid, at

the year end.

Results

Continued

abrdn Equity Income Trust plc 23

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Market Review

After showing some resilience in the early months of the

financial year, the UK equity market succumbed to a

range of headwinds including geopolitical tensions, supply

chain issues, rising inflation and interest rate hikes. By far

the most significant event of the period was the Russian

invasion of Ukraine in February 2022. This caused global

equity markets to drop sharply and acted to depress

sentiment, as investors worked through the second-round

effects on economies and markets.

The most important economic impact of the war was a

surge in oil and natural gas prices, adding to existing

inflationary pressures. The resultant cost of living squeeze

drove down consumer confidence, raising fears of a

recession in the UK and Continental Europe. The UK

Consumer Price Index inflation rate hit 10.1% in

September 2022, the highest level since 1982. Central

Banks around the world responded to rising prices by

tightening monetary policy. Having held the base rate at

0.1% since March 2020, the Bank of England made its first

interest rate increase in December 2021 and followed up

with six further hikes by the end of the period, reaching

2.25% in September 2022. The base rate has increased to

3.0% at the time of writing.

Domestic political uncertainty remained a key driver of

markets throughout the period, with Prime Minister Boris

Johnson’s resignation in July followed by a prolonged

leadership election process, culminating in the election of

Liz Truss as his successor. Her tenure turned out to be

short-lived, having spooked financial markets with a mini-

budget aimed at delivering on tax cutting pledges she

made during her leadership campaign. The market

reaction to this mini-budget was sufficiently fierce as to

require the Bank of England to intervene, carrying out

purchases of long-dated government bonds in order to

restore orderly market conditions. This market dysfunction

also led to reports that the Bank of England would delay

the start of its planned sale of government bonds.

Despite such tumultuous conditions, the UK equity market

was relatively resilient over the 12 months to 30

September 2022, with the Company’s reference Index, the

FTSE All-Share Index, returning -4.0% over the period,

performing less badly than other major indices globally.

However, this masked significant variations in

performance within the UK market. The FTSE 100 index

produced a total return of 0.9%, with multi-national

companies benefiting from the decline in sterling against

the US dollar over the period. The more domestically-

orientated FTSE 250 and Small Cap indices fell sharply,

producing a total return of -23.5% and -18.7%

respectively. This divergence can be largely explained by

significant variations at the sector level, with investors

gravitating towards large cap sectors such as Oil and Gas

and Banks on expectations that they would benefit from

rising inflation and interest rates, at the same time as

they shunned domestically-orientated sectors such as

Housebuilders and Travel & Leisure on fears over

the impact of rising inflation and interest rates on

consumer spending.

-30%

-25%

-20%

-15%

-10%

-5%

10%

15%

Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Jul 22 Aug 22 Sep 22

FTSE 100 - TOT RETURN IND FTSE 250 - TOT RETURN IND FTSE SMALL CAP - TOT RETURN IND

Portfolio Performance

The Company’s net asset value (“NAV”) total return was -

7.6% for the period. This was behind the total return of -

4.0% from the Company’s reference index, but was in line

with the AIC sector's weighted average NAV total return.

The drivers of our performance over the period can be

summarised as follows:

- The main detractors from performance were

Financials, in particular small and mid cap holdings.

Close Brothers

on fears of slowing activity, Premier

Miton

on weaker fund flows

and

R&Q Insurance

on the

narrow rejection of a bid for the company. Among

large cap financials, the contribution from owning

Standard Chartered and avoiding Prudential was

offset by not holding HSBC. Overall, this sector

detracted just over 7% of relative performance.

- The next biggest detractor was Consumer

Discretionary, notably housebuilder Vistry and sofa

retailer DFS, as fears grew over the cost of living

impact of Russia’s invasion of Ukraine, as well as

Entain and 888

on slowing growth in online gaming

revenues. This sector detracted just under 4% of

relative performance.

Portfolio Mana

er’s Review

24 abrdn Equity Income Trust plc

- The gearing position, averaging 13.4% over the

financial year, detracted around 0.7% of relative

performance.

- On the positive side, the largest contributor to

performance was the portfolio’s heavy weighting to

Energy at a time of rising concerns over energy

security. Notable outperformers were Thungela

Resources, Diversified Energy and BP. This sector alone

contributed over 7% of relative performance.

- The next biggest contributor to performance was

Basic Resources, most notably Glencore and BHP, as

commodity prices supported strong cash generation.

This sector contributed just under 3% of relative

performance. We significantly increased our

weightings in these sectors last year in anticipation of

the strong cash flows and dividends that these stocks

are now delivering.

- This was a busy period for M&A activity, with Go

Ahead, ContourGlobal, River & Mercantile and Vivo

Energy on the receiving end of bids all at meaningful

share price premia. These four holdings generated

just under 2% of relative performance.

As noted in the Market Review, the sharp out-

performance of large-cap stocks was a key feature of the

stock market during the financial year. Overall, this was a

drag on performance given the portfolio’s relatively heavy

weightings in small and mid-cap stocks; itself a function of

the index-agnostic approach that we use in constructing

the portfolio. This approach involves sizing our positions

according to our conviction levels, rather than anchoring

around index weightings. While the constituents of the

FTSE 100 Index typically account for around 80% of the

total value of the Index, our portfolio’s exposure to the

FTSE 100 Index is typically around 60% and was 51% at the

end of the financial year. We are aware that this approach

can cause variations in the portfolio’s return relative to its

benchmark, particularly at times of heightened

geopolitical nervousness when larger stocks tend to

outperform. That said, we remain convinced that this

approach can provide benefits over time, as it allows us to

construct a differentiated portfolio with greater flexibility,

enabling us to identify stocks that can help us to deliver on

our objectives through the cycle and enables us to

generate a diversified income stream.

Spotlight on Thungela Resources

Thungela Resources spun out of Anglo American in June

2021. Rather than selling this tiny position of only 6,572

shares, we concluded that this highly cash-generative

business was deeply under-valued, so we bought an

additional 579,281 shares between June 2021 and

January 2022 in order to make the holding more

meaningful. We paid an average of 187 pence. The shares

ended the financial year at 1,666 pence, nearly nine times

higher than our initial purchase price. The stock also paid

393 pence of dividends per share during the financial year,

taking the total return to 11 times our initial investment in

only 15 months, making it one of the most profitable

investment decisions we have made for this portfolio.

Consensus estimates expect that the company will

distribute over 600 pence per share (at the current

exchange rate) in its next financial year indicating that the

dividend received can be seen as recurring. We believe

that this is a good example of the returns that our

investment process can generate.

We have engaged with the management of Thungela to

understand better the company’s approach to

sustainability and then urge improvements where we see

gaps. We have urged the company to set more ambitious

goals, increase transparency and to commit to clearer

timeframes for developing its sustainability roadmap, in

particular on measures to reduce carbon emissions. We

have provided Thungela with our recommendations on

industry best practices as we seek to support the

company’s growth in this area. We have been

encouraged by Thungela’s development of an ESG

framework, covering issues such as environmental

stewardship and local community relations.

Revenue Account

Dividends distributed by our portfolio in the period under

review rose by 27.0% to £13.5 million, compared to the

£10.6 million received last year. This compares favourably

to the Index where dividends grew by 13% over the same

timeframe. The contribution from special dividends

remained low at 5.9% of the dividend income (2021: 5.7%),

reflecting the continuing scarcity of special dividends in

the wake of the pandemic.

Net revenue was £12.2 million, or 26.3% higher than last

year. Management fees were 2.1% lower, but this is a

function of the decrease in the value of the portfolio. Total

expenditure before interest and tax was 9.0% higher than

last year. This was largely due to the comparative year’s

professional fees being a rebate as a result of reversal of

provisions in the year prior.

Portfolio Mana

er’s Review

Continued

abrdn Equity Income Trust plc 25

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

We are forecasting that the portfolio is currently delivering

a gross dividend yield, before costs, of 8.1% based on the

income expected to be generated by the portfolio over

the financial year divided by the portfolio value at the year

end, representing a significant premium to the effective

monthly average dividend yield of the Index of 3.8% as at

30 September 2022.

Recent interest rate hikes are unhelpful for our investment

return as they increase the cost of our overdraft facility.

However, the gap between the interest rate we pay for

this overdraft facility and the dividend yield we earn on the

portfolio, while narrower than it was a year ago, remains

very wide by historical standards at around four

percentage points at the time of writing.

This sharp recovery in the revenue account is a result of

our focus on achieving the priorities set out by the Board at

the time of the Covid-19 crisis. The Board emphasised that

our first priority should be to build a portfolio that could

deliver sufficient income to cover the dividend. I welcomed

this challenge as I could see that it was consistent with our

investment process which favours companies whose

strong cash flow and dividend potential are not priced in

by the market. During the financial year we identified

many examples of stocks that fit this description, enabling

our dividend cover to exceed 1x sooner than might have

been expected in the midst of the Covid-19 crisis.

For the wider UK equity market, the outlook for dividends

has improved significantly since the pandemic, with

dividend cover recovering to 2.5x (on a 12 month forward

basis), suggesting some cushion for corporates in the

event that macro conditions deteriorate. We also have the

advantage of selecting from a broad palette of UK stocks,

with many different earnings drivers. This helps to

underpin our confidence in the continued progression of

our dividend per share in FY23.

Activity

Purchases

The market backdrop has changed meaningfully in the

past year, creating a new set of opportunities that we

have attempted to seize upon. Inflation was already

increasing prior to Russia’s invasion of Ukraine. Two key

drivers of higher inflation were supply disruptions linked to

the shutdown of the economy during Covid-19 and

rampant growth in money supply caused by the Bank of

England’s Quantitative Easing programme. The war in

Ukraine only exacerbated existing inflationary trends, as

natural gas and food supplies were disrupted. So it is

against this backdrop that we have been carefully

positioning the portfolio.

Our largest purchases are mostly companies whose cash

flows have the potential to benefit from rising prices and

interest rates, providing the portfolio with some inflation

hedge characteristics:

- Oil & Gas: We increased our exposure to the Energy

sector, adding to BP and starting a new holding in

Harbour Energy, anticipating that tight upstream and

downstream markets would persist, driving cash flows

and dividends.

- Banks: We increased our weighting in Banks by

starting a new holding in NatWest and adding to our

holdings in Barclays and Standard Chartered, which

we expect to be beneficiaries of rising base rates, as

net interest income grows thanks to the stickiness of

deposit pricing. Despite the sharp slowdown in

economic growth, we expect bad debts to remain

low, with significant impairment provisions already

taken. If the banks navigate this downturn

successfully, we should expect a substantial

narrowing in the discount to NAV on which they trade.

- National Grid: We added to National Grid whose

earnings are set to benefit from inflation-linked

contracts in the UK, at the same time as their

regulatory asset base starts to grow rapidly to deliver

the infrastructure necessary for the transition to

electric vehicles.

Sales

Our largest sales can be grouped into the following

categories:

- Mergers & Acquisitions: This was a busy year for

corporate activity in the portfolio. We sold our

holdings in Go-Ahead, ContourGlobal and Vivo Energy

after they received bids. We also received the

proceeds from tender offers in River & Mercantile and

Zegona Communications after they divested of their

core divisions. We continue to see the high level of

M&A activity as a sign of the intrinsic value in this

portfolio.

- Online gaming: We took profits in Entain following the

withdrawal of bid interest from DraftKings. While it

was disappointing that the shares fell back following

this announcement, we were still able to sell at over

double the share price that we paid when we bought

into the company in January 2017 (when it was called

GVC Holdings). We also took profits in Playtech as the

chances of a takeover approach diminished. The

wider sector is seeing a slowdown in growth as

regulation toughens and it becomes clearer that

26 abrdn Equity Income Trust plc

activity levels reached unsustainable levels during

Covid-19 lockdowns.

- Iron ore: We reduced our weightings in BHP and Rio

Tinto in the sector half of the financial year, as we

become more concerned about the outlook for the

Chinese construction sector. After years of rapid

growth in floor space, inventories are rising and

activity levels are falling. This is important for BHP and

Rio Tinto because the iron ore they sell is mainly used

in the production of Chinese steel.

Outlook

It is pleasing to report that the improvement in our

portfolio income resulted in the dividend per share being

amply covered by earnings per share in the 12 months to

30 September 2022. This has allowed the Board to resume

meaingful dividend per share growth, while starting to

rebuild our reserves after a hiatus of two years caused by

the Covid-19 pandemic. It is a reflection of the benefits of

the closed-end structure that we have come through

such an exceptional period while maintaining our 22 year

track record of consecutive dividend increases. It should

be noted that this has been achieved without

compromising the investment process, as market

dislocation has created an abundance of stocks that fit

our investment criteria. The result for shareholders is a

high yield portfolio comprised of high conviction

investment ideas.

The global economy is slowing as Central Banks try to

control inflation leading to a high risk of recession in the UK

and other major countries. This is a challenging backdrop,

but we remain confident that we can navigate this

environment successfully for the following reasons:

- Broad universe of stocks: As they are starting with high

levels of dividend cover, we expect many UK stocks to

deliver attractive dividend growth despite the

uncertain economic situation. The UK equity market is

highly diverse, allowing us to access a wide range of

companies with different income drivers. Some

companies will struggle in an inflationary environment,

but others will thrive. Furthermore, the UK equity

market provides exposure to different parts of the

world. It seems likely that economic outturns will differ

widely in the coming year. For example, the US will be

far less affected by the Ukraine war than Germany, as

a result of their radically different energy policies. In

light of this, we can position our portfolio carefully

through thoughtful analysis of how each company is

likely to fare in the current environment.

- Tendency of share prices to price in recessions early:

Recent research by Stifel has mapped the

performance of the S&P 500 index to each US

recession post-1945 and found that the stock market

bottoms out 4 months before the end of the recession.

While it is not possible to know in advance with any

certainty when a recession will start or end, this is a

reminder that recessions can provide opportunities to

buy well-managed companies at attractive

valuations.

- Style rotation: Rising interest rates are up-ending

stock markets. Loose monetary policy was a boon for

highly valued growth stocks, as falling interest rates

mechanically drove up their discounted cash flow

valuations. As we enter an inflationary era with higher

rates, investors are shifting their focus to the cash-

generative value stocks that our investment process

favours. This is a more favourable environment for us

as it enables the delivery of both income and capital

growth.

- Style characteristics of the portfolio: We believe that

the portfolio has a significant “margin of safety” as the

relatively low valuations of our holdings do not appear

to factor in their solid fundamentals. Our Matrix quant

model indicates that the portfolio scores particularly

highly on Valuation and Earnings Momentum factors,

underlining our view that high yield need not come at

the expense of high conviction. At the time of writing,

the median PE (12 months forward) of our holdings is

8.9x. The median dividend cover (12 months forward)

is 1.9x. We expect the valuations of our holdings to re-

rate, as investors respond to the strength of their

corporate fundamentals.

We are aware that the stock market is currently heavily

affected by macro drivers and that it is difficult to know

how the coming year will play out in that regard. For this

reason we have segmented the portfolio into three

discrete baskets, each of which can play a role in helping

the portfolio to deliver our investment objective:

1. Inflation Protection: Stocks with inflation hedge

characteristics; potentially benefiting from rising

prices. We expect inflationary conditions to provide a

tailwind to these companies, helping them to grow

their cash flows and dividends. Examples include Shell,

NatWest and National Grid. At the time of writing, this

basket represented 37% of the portfolio. Objective:

achieve real growth in income.

Portfolio Mana

er’s Review

Continued

abrdn Equity Income Trust plc 27

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

2. Mispriced Yield: Stocks whose high yields indicate that

the market is pricing in bad news. We believe these

stocks are more resilient than their valuation implies.

Examples include Legal & General, Diversified Energy

and Chesnara. At the time of writing, this basket

represented 24% of the portfolio. Objective: achieve

above average income.

3. Latent Growth: Stocks that are capable of delivering

operational progress, driving growth on a medium-

term view once the current period of uncertainty

abates. This change is being overlooked by the

market. Examples include OneSavings Bank, Hiscox

and DFS. At the time of writing, this basket represented

29% of the portfolio. Objective: achieve real growth

in capital.

We expect each of these baskets to perform best in

different scenarios. Inflation Protection stocks should

perform best in an inflationary environment, driven by high

commodity prices and rising interest rates. The Mispriced

Yield basket should perform best in a rotation out of

growth stocks into value stocks. Latent Growth stocks

should perform best on any easing in inflationary

pressures, perhaps triggered by a resolution to the Ukraine

war. We would see the most adverse scenario for the

portfolio as a prolonged and synchronised global

recession, as this could drive down large swathes of the

market. For now we see this as a low probability scenario

given the variations in economic conditions around

the world.

The UK is a particularly unloved stock market due to a

series of political crises since the 2016 Brexit referendum.

The scale of the UK’s furlough and energy bill support

schemes have caused the UK’s debt/GDP ratio to

approach 100%, although it should be noted that this is still

the second lowest in the G7. The arrival of Rishi Sunak as

the third Prime Minister in as many months heralds an era

of more conventional economic policies. This has already

calmed the markets, helping to drive a reduction in Gilt

yields and a recovery in sterling. Amongst all the political

‘fear and loathing’, it is worth keeping in mind that the UK

has many enduring strengths that make it a highly

attractive destination for international capital. As has

been demonstrated by all the recent M&A activity in our

own portfolio, some international investors are coming to

the view that UK companies are now attractively priced. It

would not take much for broader attitudes to the UK to

improve dramatically. This would be helpful for our

portfolio given that we have a heavy position in UK

domestic companies relative to the broader index and

peer group.

Through turbulent times, we will remain focused on

achieving our objective to provide shareholders with an

above average income, while also providing real growth in

capital and income. With inflation at its highest level in 40

years, the resonance of this investment objective is

greater than usual and I will do my utmost to deliver on it

for shareholders.

Thomas Moore

Portfolio Manager

30 November 2022

28 abrdn Equity Income Trust plc

Portfolio

The portfolio is invested on an index-

agnostic basis. The process is based on

bottom-up stock picking approach where

sector allocations are a function of the

sum of the stock selection decisions,

constrained only by appropriate risk

control parameters.

abrdn Equity Income Trust plc 29

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

As at 30 September 2022

Thungela Resources

BP is an oil and petrochemicals

company. The Company explores for

and produces oil and natural gas,

refines, markets, and supplies

petroleum products, generates

renewable energy, and manufactures

and markets chemicals.

Thungela is a leading pure-play

producer and exporter of high quality,

low-cost thermal coal in South Africa.

Shell

Glencore

Shell explores for, produces and refines

petroleum. The Company produces

fuels, chemicals, and lubricants, as well

as operating gasoline filling stations and

developing renewable energy.

Glencore is a diversified natural

resources company, with production

and marketing operations in three

groups; metals and minerals, energy

products and agricultural products.

BHP

Diversified Gas & Oil

BHP is a diversified resources group

with a global portfolio of high quality

assets, focusing on iron ore, petroleum

and copper.

Diversified Gas & Oil is engaged in

conventional natural gas and crude oil

production in the Appalachian Basin of

the United States.

SSE Rio Tinto

SSE engages in the generation,

transmission, distribution and supply of

electricity and the production, storage,

distribution and supply of gas.

Rio Tinto is a leading global mining group

that focuses on finding, mining and

processing mineral resources, with a

focus on iron ore and aluminium.

British American Tobacco

Barclays

British American Tobacco sells

combustible tobacco products in more

than 50 countries around the world, as

well as a growing portfolio of non-

combustible products such as vapour

and tobacco heating products.

Barclays is a global financial services

provider engaged in retail banking,

credit cards, wholesale banking,

investment banking, wealth

management and investment

management services.

Ten Lar

est Investments

30 abrdn Equity Income Trust plc

Investment Portfolio

As at 30 September 2022

Valuation as at Valuation as at

30 September 2022 Weight 30 September 2021

Stock Key Sector £’000 % £’000

BP Oil Gas and Coal 10,244 5.7 6,834

Thungela Resources Oil Gas and Coal 9,109 5.1 2,582

Shell (previously Royal Dutch Shell) Oil Gas and Coal 8,712 4.9 7,038

Glencore Industrial Metals and Mining 7,157 4.0 6,041

BHP Industrial Metals and Mining 6,172 3.4 7,101

Diversified Energy Oil Gas and Coal 6,154 3.4 5,311

SSE Electricity 5,735 3.2 6,026

Rio Tinto Industrial Metals and Mining 5,353 3.0 7,357

British American Tobacco Tobacco 5,068 2.8 4,403

Barclays Banks 4,921 2.7 3,266

Top ten investments 68,625 38.2

CMC Markets Investment Banking and Brokerage Services 4,498 2.5 5,036

Close Brothers Banks 4,445 2.5 7,405

Imperial Brands Tobacco 4,217 2.3 3,285

Standard Chartered Banks 4,015 2.2 919

Chesnara Life Insurance 3,756 2.1 3,873

OSB Group Finance and Credit Services 3,626 2.0 4,312

Natwest Group Banks 3,504 2.0 –

Anglo American Industrial Metals and Mining 3,488 1.9 2,651

Mondi General Industrials 3,424 1.9 1,572

National Grid Gas Water and Multi-utilities 3,180 1.8 1,574

Top twenty investments 106,778 59.4

Investment Portfolio

abrdn Equity Income Trust plc 31

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

As at 30 September 2022

Valuation as at Valuation as at

30 September 2022 Weight 30 September 2021

Stock Key Sector £’000 % £’000

Legal & General Life Insurance 3,145 1.7 3,778

Playtech Travel and Leisure 3,017 1.7 4,441

Vistry Household Goods and Home Construction 2,995 1.7 6,646

DWF Group Industrial Support Services 2,639 1.5 3,111

BAE Systems Aerospace and Defense 2,623 1.5 3,554

Smith (DS) General Industrials 2,503 1.4 2,129

Coca-Cola HBC Beverages 2,470 1.4 1,325

Premier Miton Investment Banking and Brokerage Services 2,411 1.3 5,556

Randall & Quilter Non-life Insurance 2,337 1.3 4,300

Tyman Construction and Materials 2,320 1.3 4,971

Top thirty investments 133,238 74.2

Real Estate Investors Real Estate Investment Trusts 2,319 1.3 2,993

Diageo Beverages 1,922 1.1 1,297

Vodafone Telecommunications Service Providers 1,887 1.1 1,953

Speedy Hire Industrial Transportation 1,865 1.0 2,726

AstraZeneca Pharmaceuticals and Biotechnology 1,839 1.0 1,189

Hargreaves Lansdown Investment Banking and Brokerage Services 1,737 1.0 1,840

Petershill Partners Investment Banking and Brokerage Services 1,706 0.9 2,798

Centamin Precious Metals and Mining 1,668 0.9 1,021

DFS Furniture Retailers 1,667 0.9 4,080

Hiscox Non-life Insurance 1,632 0.9 –

Top forty investments 151,480 84.3

32 abrdn Equity Income Trust plc

Investment Portfolio

As at 30 September 2022

Valuation as at Valuation as at

30 September 2022 Weight 30 September 2021

Stock Key Sector £’000 % £’000

Litigation Capital Investment Banking and Brokerage Services 1,631 0.9 2,436

Phoenix Life Insurance 1,606 0.9 2,171

TP ICAP Investment Banking and Brokerage Services 1,602 0.9 601

Ashmore Investment Banking and Brokerage Services 1,591 0.9 2,751

Conduit Holdings Non-life Insurance 1,520 0.9 2,086

Galliford Try Construction and Materials 1,517 0.8 1,878

Hays Industrial Support Services 1,490 0.8 1,402

Direct Line Insurance Non-life Insurance 1,437 0.8 2,680

International Personal Finance Finance and Credit Services 1,326 0.7 2,307

Quilter Investment Banking and Brokerage Services 1,281 0.7 2,323

Top fifty investments 166,481 92.6

CLS Holdings Real Estate Investment and Services 1,266 0.7 1,410

Bellway Household Goods and Home Construction 1,272 0.7 1,832

GSK (previously GlaxoSmithKline) Pharmaceuticals and Biotechnology 1,257 0.7 1,926

LondonMetric Real Estate Investment Trusts 1,222 0.7 1,129

Harbour Energy Oil Gas and Coal 1,209 0.7 –

Bridgepoint Investment Banking and Brokerage Services 981 0.6 1,176

Industrials REIT Real Estate Investment Trusts 976 0.5 1,351

888 Holdings Travel and Leisure 891 0.5 3,497

Energean Oil Gas and Coal 865 0.5 –

Intermediate Capital Group Investment Banking and Brokerage Services 799 0.4 1,369

Top sixty investments 177,219 98.6

Halfords Retailers 753 0.4 –

AssetCo Investment Banking and Brokerage Services 750 0.4 –

National Express Travel and Leisure 705 0.4 –

Polar Capital Investment Banking and Brokerage Services 303 0.2 1,544

Total Portfolio 179,730 100.0

All investments are equity investments.

Continued

abrdn Equity Income Trust plc 33

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

As at 30 September 2022

31.4

23.6

10.2

9.8

7.6

6.3

5.1

3.2

1.7

1.1%

Portfolio Weightings %

Financials

Energy

Industrials

Basic Materials

Consumer Staples

Consumer Discretionary

Utilities

Real Estate

Health Care

Telecommunications

As at 30 September 2021

34.0

16.4

12.1

10.6

10.3

4.9

4.6

3.3

2.3

1.5%

Portfolio Weightings %

Financials

Consumer Discretionary

Basic Materials

Energy

Industrials

Consumer Staples

Utilities

Real Estate

Telecommunications

Health Care

Sector Distribution

34 abrdn Equity Income Trust plc

National Grid

Towards the end of the financial year, we increased our

stake in National Grid, after the share price weakened.

Prior to investment, we engaged with National Grid on a

variety of topics including the potential impact of the UK

government’s plans to grow transmission by 2030,

future investment requirements to deliver growth plans

and skill-sets on the Board of directors. Our

engagement continues.

We believe that National Grid is well positioned at the

heart of the energy transition, poised to deliver the

significant investment needed to upgrade electricity

networks in the UK and US. We expect earnings to grow

solidly in the coming years, with the UK regulated assets

indexed to inflation and almost half of their earnings

denominated in US dollars.

The shares can be subject to political worries, as utility

companies are seen as vulnerable to windfall taxes.

However, we see a windfall tax as far less likely for National

Grid than other utility companies given the nature of its

activities, with no excess profits being made as a direct

result of high natural gas prices. The shares can also be

subject to macro vicissitudes, with rising bond yields a

negative driver for the share price. However, this is offset

by the benefit of rising inflation which supports the

dividend policy to grow the dividend per share at least in

line with UK inflation.

All of this makes National Grid an appropriate holding

for the Company.

Investment Case Studies

abrdn Equity Income Trust plc 35

Natwest Group

We initiated a new position in the NatWest Group during

the financial year.

We see the NatWest Group as a beneficiary of rising

interest rates, given its low loan to deposit ratio and

significant current account deposit base. We believe that

NatWest is well insulated from economic recession, as a

result of the high quality of its loan book (over 90% of

which is secured lending) and on the level of existing

provisions against bad debts, which factor in a severe

downside scenario.

The flip side of rising interest rates is that loan demand is

likely to slow sharply, although this will not greatly impact

the NatWest Group’s profitability as the bulk of its lending

is re-mortgages, rather than first time buyers. The

competitive position of the larger banks improves when

interest rates increase, as they have access to a range of

funding sources, including current accounts. This tends to

allow banks like the NatWest Group to gain market share

at this point in the cycle. The net effect of these macro

variables is that NatWest should comfortably achieve a

Return on Equity in excess of 10%.

In this context, the stock looks very cheap, trading at

a discount to Net Asset Value. Its strong earnings

delivery and robust capital position should underpin

a generous dividend, making this an attractive

holding for the Company.

During our recent engagement meetings with NatWest

Group, we have focused on climate, particularly its

sustainability finance target, financed emissions and

initiviates to green their mortgage book. We have

encouraged Natwest Group to increase the frequency

that climate is discussed at Board level from every six

months to every Board meeting. We have engaged on

social initiatives too and were impressed by NatWest’s

targets to support minority business owners with gender,

ethnicity and social targets.

36 abrdn Equity Income Trust plc

Governance

abrdn Equity Income Trust plc 37

The Board of Directors of the

Company is a highly experienced

group of individuals with deep

insights into investment trusts and

the financial services industry.

The Board works closely with the

Investment Manager to deliver

shareholder value.

The Board is responsible for

stewardship, including overall

strategy, investment policy,

borrowings, dividends, corporate

governance procedures and

risk management.

38 abrdn Equity Income Trust plc

Mark White

Independent Non-Executive Chair

Experience:

Appointed to the Board on 1 November 2013 and as

Chairman on 5 February 2021, Mark is a director of LGT

Capital Partners UK Holding Limited. He is also a non-

executive Director of Aviva Investors Holdings Limited and

Chairman of Aviva Investors UK Fund Services Limited. He

was previously Joint Head of JP Morgan Asset

Management in Europe and Chief Executive of Jardine

Fleming Investment Management in Hong Kong.

Length of service:

9 years, 1 month. Appointed a Director on 1 November

2013 and as Chair on 5 February 2021 when he ceased to

be Chair of the Remuneration & Management

Engagement Nomination Committees which he had

chaired from 1 February 2015 and 15 December 2016

respectively.

Committee membership:

Audit Committee, Remuneration & Management

Engagement Committee.

Contribution:

As set out in the Chairman’s Statement, Mark White is due

to step down from the Board at the AGM. The Board

would like to thank Mark White for his commitment to the

Company during his nine years on the Board. He has

provided significant investment insight into Board

discussions as well as investment management and

investment trust sectors. He has also proved to be an

extremely effective Chairman since February 2021.

Caroline Hitch

Independent Non-Executive Director and Chair of the

Remuneration & Management Engagement Committee

Experience:

Appointed to the Board on 1 January 2017 and as Chair of

the Remuneration & Management Engagement

Committee on 5 February 2021, Caroline is also Senior

Independent Director of Schroder Asian Total Return

Investment Company plc and Chair of CQS New City High

Yield Fund Ltd. Her career in financial services was mainly

with the HSBC group and most recently she was Head of

Wealth Portfolio Management at HSBC’s asset

management arm with investment responsibility for their

flagship retail multi asset funds. She has worked in London,

Jersey, Monaco and Hong Kong.

Length of service:

5 years, 11 months. Appointed a Director on 1 January

2017 and Chair of the Remuneration & Management

Engagement Committee on 5 February 2021.

Committee membership:

Audit Committee, Remuneration & Management

Engagement Committee (Chair).

Contribution:

The Board has reviewed the contribution of Caroline Hitch

in light of her proposed re-election at the AGM and has

concluded that she continues to bring significant

investment insight to the Board and knowledge of the

investment management sector. She also continues to

expertly Chair the Remuneration & Management

Engagement Committee.

Board of Directors

abrdn Equity Income Trust plc 39

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Mark Little

Independent Non-Executive Director

Experience:

Mark was appointed to the Board on 1 August 2022. He is

a non-executive director and also chairs the audit

committees of BlackRock Smaller Companies Trust plc,

the Majedie Investment Trust Plc and Securities Trust of

Scotland Plc. He was previously Investment Director at

Seven Investment Management and a non-executive

director (and audit committee chairman) of Sanditon

Investment Trust plc. Mr Little began his career in the

investment industry as a fund manager with Scottish

Widows Investment Management after qualifying in 1991

as a chartered accountant with Price Waterhouse. He

subsequently worked as Global Head of Automotive

Research for Deutsche Bank and Managing Director of

Barclays Wealth (Scotland and Northern Ireland), a

position that he held for eight years until 2013.

Length of service:

5 months. Appointed a Director on 1 August 2022.

Committee membership:

Audit Committee and Remuneration & Management

Engagement Committee

Contribution:

The Board has reviewed the contribution of Mark Little in

light of his proposed election at the AGM and has

concluded that he has already contributed positively to

the Board discussions and believe his experience and

attitude will make him an effective successor to Sarika

Patel as Chair of the Audit Committee.

Sarika Patel

Independent Non-Executive Director

and Chair of the Audit Committee

Experience:

Appointed to the Board on 1 November 2019, Sarika Patel

is a business leader with nearly 30 years' experience. She is

a Chartered Accountant and a Chartered Marketer.

Sarika is a non-executive director and Chair of the Audit

Committees of Sequoia Economic Infrastructure Fund

Limited, SDCL Energy Efficiency Income Trust plc and of

Foresight Sustainable Forestry Company.

Previously a partner at Zeus Caps, Sarika has been on a

host of public and private sector boards. She is currently

Chair of Action for Children, one of the UK's leading

charities for children, and a Board Member of the Office

for Nuclear Regulation where she chairs the Audit, Risk and

Assurance Committee.

Length of service:

3 years, 1 month. Appointed a Director on 1 November

2019 and as Chair of the Audit Committee on

23 January 2020.

Committee membership:

Audit Committee (Chair) and Remuneration &

Management Engagement Committee

Contribution:

The Board has reviewed the contribution of Sarika Patel in

light of her proposed re-election at the AGM and has

concluded that she continues to provide significant

financial and risk management insight to Board

discussions, has chaired the Audit Committee effectively

and is a suitable successor to Mark White as Chair

of the Board.

40 abrdn Equity Income Trust plc

Jeremy Tigue

Senior Independent Non-Executive Director

Experience:

Appointed to the Board on 1 October 2014 and as the

Senior Independent Director with effect from 15

December 2016. Mr Tigue is a Non-Executive Director of

The Monks Investment Trust PLC. He was the Fund

Manager of Foreign & Colonial Investment Trust PLC from

1997 to June 2014, a Director of the Association of

Investment Companies ("AIC") from 2003 to 2013 and a

Non-executive Director of The Mercantile Investment

Trust plc until May 2022.

Length of service:

8 years, 2 months. Appointed a Director on 1 October

2014 and as Senior Independent Director on

15 December 2016.

Committee membership:

Audit Committee and Remuneration & Management

Engagement Committee

Contribution:

The Board has reviewed the contribution of Jeremy Tigue

in light of his proposed re-election at the AGM and has

concluded that his contribution to the Board, from an

investment, industry and corporate governance

perspective, has been invaluable during the financial year.

Board of Directors

Continued

abrdn Equity Income Trust plc 41

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

The Directors present their report and the audited

financial statements of the Company for the year ended

30 September 2022.

Results and Dividends

The financial statements for the year ended 30

September 2022 are contained on pages 65 to 82. Interim

dividends of 5.4 pence per share were paid in March, June

and September 2022. The Board has declared that a

fourth interim dividend for the year to 30 September 2022

of 6.5 pence per share is payable on 9 January 2023 to

shareholders on the register on 9 December 2022. The ex-

dividend date is 8 December 2022.

Principal Activity and Status

The Company is registered as a public limited company in

England and Wales under company number 2648152.

The Company is an investment company within the

meaning of Section 833 of the Companies Act 2006,

carries on business as an investment trust and is a

member of the Association of Investment Companies.

The Company has applied for and has been accepted as

an investment trust under Sections 1158 and 1159 of the

Corporation Tax Act 2010 and Part 2 Chapter 1 of

Statutory Instrument 2011/2999. This approval relates to

accounting periods commencing on or after 1 October

2012. The Directors are of the opinion that the Company

has conducted its affairs so as to be able to retain

such approval.

The Company intends to manage its affairs so that its

Ordinary shares continue to be a qualifying investment for

inclusion in the stocks and shares component of an

Individual Savings Account.

Capital Structure and Voting Rights

The Company’s issued share capital at 30 September

2022 consisted of 47,471,939 Ordinary shares of 25 pence

each (2021: 48,033,474) and there were 1,706,828

Ordinary shares held in treasury (2021: 1,145,293),

representing 3.5% (2021: 2.4%) of the issued share capital

as at that date.

During the year, 561,535 Ordinary shares were bought

back into treasury (2021: 294,486). The Company did

not issue any new shares, or shares from treasury,

during the year.

There have been no changes to the Company’s capital

structure or voting rights since the year end.

Each Ordinary shareholder is entitled to one vote on a

show of hands and, on a poll, to one vote for every

Ordinary share held.

Management Agreement

The Company has appointed abrdn Fund Managers

Limited (previously known as Aberdeen Standard Fund

Managers Limited) (“AFML”), a wholly-owned subsidiary of

abrdn plc, as its alternative investment fund manager (the

“Manager”). AFML has been appointed to provide

investment management, risk management,

administration and company secretarial services, and

promotional activities to the Company. The Company's

portfolio is managed by abrdn Investment Management

Limited, (previously known as Standard Life Investments

Limited) (the “Investment Manager”) by way of a group

delegation agreement in place between AFML and the

Investment Manager.

In addition, AFML has sub-delegated administrative and

secretarial services to Aberdeen Asset Management PLC

since 6 September 2019. Subsequent to the financial year

end, Aberdeen Asset Management PLC was renamed

abrdn Holdings Limited on 25 November 2022.

The management fee is calculated as 0.65% per annum of

net assets up to £175million and at a rate of 0.55% of net

assets above this threshold. The Manager also receives a

separate fee for the provision of promotional activities to

the Company.

Further details of the fees payable to the Manager are

shown in notes 3 and 4 to the financial statements.

The management agreement is terminable on not less

than six months’ notice. In the event of termination by the

Company on less than the agreed notice period,

compensation is payable to the Manager in lieu of the

unexpired notice period.

External Agencies

The Board has contractually delegated to external

agencies, including the Manager and other service

providers, certain services including: the management of

the investment portfolio, the day-to-day accounting and

company secretarial requirements, the depositary

services (which include the custody and safeguarding of

the Company’s assets) and the share registration services.

Each of these contracts was entered into after full and

proper consideration by the Board of the quality and cost

of services offered in so far as they relate to the affairs of

the Company. In addition, ad hoc reports and information

are supplied to the Board as requested.

Directors’ Report

42 abrdn Equity Income Trust plc

Substantial Interests

Information provided to the Company by major

shareholders pursuant to the FCA’s Disclosure, Guidance

and Transparency Rules are published by the Company

via a Regulatory Information Service.

The table below sets out the interests in 3% or more of the

issued share capital of the Company, of which the Board

was aware as at 30 September 2022.

Shareholder

Number of Ordinary

shares % held

Interactive Investor 9,366,832 19.7

Hargreaves Lansdown 9,238,384 19.4

Charles Stanley 4,945,565 10.4

AJ Bell 2,300,219 4.8

HSDL 2,005,704 4.2

Evelyn Partners 1,473,161 3.1

The Company has not been notified of any changes to

these holdings as at the date of this Report.

Directors

Biographies of the Directors of the Company are shown

on pages 38 to 40.

Mark White is the Chair, Jeremy Tigue is the Senior

Independent Director, Sarika Patel is Chair of the Audit

Committee and Caroline Hitch is Chair of the

Remuneration & Management Engagement Committee.

Mark Little was appointed as an Independent Non-

executive Director on 1 August 2022.

The Chair is responsible for providing effective leadership

to the Board, by setting the tone of the Company,

demonstrating objective judgement and promoting a

culture of openness and debate. The Chair facilitates the

effective contribution and encourages active

engagement by each Director. In conjunction with the

Company Secretary, the Chair ensures that Directors

receive accurate, timely and clear information to assist

them with effective decision-making. The Chair acts upon

the results of the Board evaluation process by recognising

strengths and addressing any weaknesses and also

ensures that the Board engages with major shareholders

and that all Directors understand shareholder views.

The Senior Independent Director acts as a sounding board

for the Chair and acts as an intermediary for other

Directors, when necessary. Working closely with the

Remuneration & Management Engagement Committees,

the Senior Independent Director takes responsibility for an

orderly succession process for the Chair, and leads the

annual appraisal of the Chair’s performance. The Senior

Independent Director is also available to shareholders to

discuss any concerns they may have.

The Directors attended scheduled Board and Committee

meetings during the year ended 30 September 2022 as

follows (with their eligibility to attend the relevant

meetings in brackets):

Board

Meetings

Audit

Committee

Meetings

Remuneration

Management

Engagement

Committee

Meetings

Mark White 4 (4) 2 (2) 1 (1)

Caroline Hitch 4 (4) 2 (2) 1 (1)

Mark Little

1 (1) 0(0) 1 (1)

Sarika Patel 4 (4) 2 (2) 1 (1)

Jeremy Tigue 4 (4) 2 (2) 1 (1)

Appointed to the Board on 1 August 2022.

The Board meets more frequently when business

needs require, and met additionally once during the

financial year.

Caroline Hitch, Sarika Patel, and Jeremy Tigue will retire

and, being eligible, will offer themselves for re-election at

the Annual General Meeting. Mark Little will offer himself

for election at the Annual General Meeting. As set out in

the Chairman’s Statement, Mark White will retire from the

Board at the Annual General Meeting on 2 February 2023,

having served on the Board for nine years.

The Board believes that all the Directors seeking election

or re-election remain independent of the Manager and

free from any relationship which could materially interfere

with the exercise of their judgement on issues of strategy,

performance, resources and standards of conduct. The

biographies of each of the Directors are shown on pages

38 to 40, setting out their range of skills and experience as

well as length of service and their contribution to the

Board during the year. The Board believes that,

collectively, it has the requisite high level and range of

business, investment and financial experience to enable it

to provide clear and effective leadership and proper

Directors’ Report

Continued

abrdn Equity Income Trust plc 43

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

governance of the Company. Following formal

performance evaluations, each Director’s performance

continues to be effective and demonstrates commitment

to the role, and their individual performances contribute to

the long-term sustainable success of the Company. The

Board therefore recommends the election or re-election

of each of the Directors at the Annual General Meeting.

Board’s Policy on Tenure

In normal circumstances, it is the Board’s expectation that

Directors will not serve beyond the Annual General

Meeting following the ninth anniversary of their

appointment. However, the Board takes the view that

independence of individual Directors is not necessarily

compromised by length of tenure on the Board and that

continuity and experience can add significantly to the

Board’s strength. The Board believes that

recommendation for re-election should be on an

individual basis following a rigorous review which assesses

the contribution made by the Director concerned, but also

taking into account the need for regular refreshment and

diversity.

Board Diversity Policy

The Board recognises the importance of having a range

of skilled, experienced individuals with the right knowledge

represented on the Board in order to allow it to fulfil its

obligations. The Board also recognises the benefits and is

supportive of the principle of diversity in its recruitment of

new Board members. The Board will not display any bias

for age, gender, race, sexual orientation, religion, ethnic or

national origins, or disability in considering the

appointment of its Directors. In view of its size, the Board

will continue to ensure that all appointments are made on

the basis of merit against the specification prepared for

each appointment and the Board does not therefore

consider it appropriate to set measurable objectives in

relation to its diversity.

At 30 September 2022, there were three male and two

female Directors on the Board. One of the female

directors is Chair of the Audit Committee and the other is

Chair of the Remuneration & Management Engagement

Committee. One director has a non-white ethnic

background.

Directors’ and Officers’ Liability Insurance

The Company’s Articles of Association provide for each of

the Directors to be indemnified out of the assets of the

Company against any liabilities incurred by them as a

Director of the Company in defending proceedings, or in

connection with any application to the Court in which

relief is granted. Directors’ and Officers’ liability insurance

cover has been maintained throughout the year at the

expense of the Company.

Management of Conflicts of Interest

The Board has a procedure in place to deal with a

situation where a Director has a conflict of interest. As part

of this process, each Director prepares a list of other

positions held and all other conflict situations that may

need to be authorised either in relation to the Director

concerned or his or her connected persons. The Board

considers each Director’s situation and decides whether

to approve any conflict, taking into consideration what is in

the best interests of the Company and whether the

Director’s ability to act in accordance with his or her wider

duties is affected. Each Director is required to notify the

Company Secretary of any potential, or actual, conflict

situations that will need authorising by the Board.

Authorisations given by the Board are reviewed at each

Board meeting.

No Director has a service contract with the Company

although all Directors are issued with letters of

appointment. There were no contracts during, or at the

end of the year, in which any Director was interested.

The Company has a policy of conducting its business in an

honest and ethical manner. The Company takes a zero-

tolerance approach to bribery and corruption and has

procedures in place that are proportionate to the

Company’s circumstances to prevent them. The Manager

also adopts a group-wide zero-tolerance approach and

has its own detailed policy and procedures in place to

prevent bribery and corruption. Copies of the Manager’s

anti-bribery and corruption policies are available on its

website.

In relation to the corporate offence of failing to prevent tax

evasion, it is the Company’s policy to conduct all business

in an honest and ethical manner. The Company takes a

zero-tolerance approach to facilitation of tax evasion

whether under UK law or under the law of any foreign

country and is committed to acting professionally, fairly

and with integrity in all its business dealings and

relationships.

Financial Instruments

The financial risk management objectives and policies

arising from its financial instruments and the exposure of

the Company to risk are disclosed in note 15 to the

financial statements.

44 abrdn Equity Income Trust plc

Corporate Governance

The Company is committed to high standards of

corporate governance. The Board is accountable to the

Company’s shareholders for good governance and this

statement describes how the Company has applied the

principles identified in the UK Corporate Governance

Code as published in July 2018 (the “UK Code”), which is

available on the Financial Reporting Council’s (the “FRC”)

website: frc.org.uk.

The Board has also considered the principles and

provisions of the AIC Code of Corporate Governance as

published in February 2019 (the “AIC Code”). The AIC

Code addresses the principles and provisions set out in the

UK Code, as well as setting out additional provisions on

issues that are of specific relevance to the Company. The

AIC Code is available on the AIC’s website: theaic.co.uk. It

includes an explanation of how the AIC Code adapts the

principles and provisions set out in the UK Code to make

them relevant for investment companies.

The Board considers that reporting against the principles

and provisions of the AIC Code, which has been endorsed

by the FRC, provides more relevant information to

shareholders.

The Board confirms that, during the year, the Company

complied with the principles and provisions of the AIC

Code and the relevant provisions of the UK Code, except

as set out below.

The UK Code includes provisions relating to:

· interaction with the workforce (provisions 2, 5 and 6);

· the role and responsibility of the chief executive

(provisions 9 and 14);

· requirement to establish a nomination committee and

describe the work of the nomination committee

(provisions 17 and 23);

· the chair shall not be a member of the audit committee

(provision 24);

· previous experience of the chairman of a remuneration

committee (provision 32); and

· executive directors’ remuneration (provisions 33 and 36

to 40).

The Board considers that these provisions, with the

exception of the requirement to establish a nomination

committee and describe the work of the nomination

committee, are not relevant to the position of the

Company, being an externally managed investment

company. In particular, all of the Company’s day-to-day

management and administrative functions are

outsourced to third parties. As a result, the Company has

no executive directors, employees or internal operations.

The Company has therefore not reported further in

respect of these provisions.

During the financial year to 30 September 2021, the Board

determined that there was no need for the Company to

have a standalone Nomination Committee given the

number of Directors on the Board. The Nomination

Committee was therefore wound up and the Board fulfils

the role of the Nomination Committee.

The full text of the Company’s Corporate Governance

Statement can be found on its website.

Board Committees

The Board has appointed two committees, as set out

below. Copies of their terms of reference, which clearly

define the responsibilities and duties of each committee,

are available on the Company’s website, or upon request

from the Company. The terms of reference of each of the

committees are reviewed and re-assessed by the Board

for their adequacy on an ongoing basis.

Audit Committee

The Audit Committee’s Report is contained on pages

52 to 55.

Remuneration & Management Engagement Committee

The Remuneration & Management Engagement

Committee comprises the full Board and is chaired by

Caroline Hitch. The main responsibilities of the Committee

include:

· monitoring and evaluating the performance of the

Manager;

· reviewing at least annually the continued retention of

the Manager;

· reviewing, at least annually, the terms of appointment of

the Manager including, but not limited to, the level and

method of remuneration and the notice period of the

Manager;

· reviewing the performance and remuneration of the

other key service providers to the Company; and

· determining the Directors’ remuneration policy and level

of remuneration.

Continued

Directors’ Report

abrdn Equity Income Trust plc 45

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

The Committee met once during the year to 30

September 2022 and undertook a review of the

management of the Company and its performance.

Following the conclusion of the review, the Committee

recommended to the Board that the continuing

appointment of the Manager and other key service

providers was in the best interests of the shareholders and

the Company as a whole.

Going Concern

The Company’s assets consist mainly of equity shares in

companies listed on recognised stock exchanges and are

considered by the Board to be realisable within a short

timescale under normal market conditions. The Board has

set overall limits for borrowing and reviews regularly the

Company’s level of gearing, cash flow projections and

compliance with banking covenants, when applicable.

The Board has also performed stress testing and liquidity

analysis.

The Company’s Articles require that at every fifth AGM,

the Directors shall propose an Ordinary Resolution to

effect that the Company continues as an investment trust.

An Ordinary Resolution approving the continuation of the

Company for the next five years was passed at the AGM

on 4 February 2022. The next continuation vote will take

place at the AGM to be held in 2027.

As at 30 September 2022, the Company had a £30 million

(2021: £30 million) revolving credit facility with The Royal

Bank of Scotland International Limited, London Branch.

£25 million was drawn at the end of the financial year

(2021: £25 million). The revolving credit facility matures on

25 June 2023. A replacement option will be sought in

advance of the expiry of the facility, or should the Board

decide not to renew this facility, any outstanding

borrowing would be repaid through the proceeds of

equity sales as required.

The Directors are mindful of the Principal Risks and

Uncertainties disclosed in the Strategic Report on pages

12 to 14 and they believe that the Company has adequate

financial resources to continue its operational existence

for a period of not less than 12 months from the date of

approval of this Report. They have arrived at this

conclusion having confirmed that the Company’s

diversified portfolio of realisable securities is sufficiently

liquid and could be used to meet short-term funding

requirements were they to arise. They have also reviewed

the revenue and ongoing expenses forecasts for the

coming year, and expect to secure a replacement facility

upon expiry of the current facility. Accordingly, the

Directors believe that it is appropriate to continue to

adopt the going concern basis in preparing the

financial statements.

Accountability and Audit

The respective responsibilities of the Directors and the

Auditor in connection with the financial statements

appear on page 64.

The Directors who held office at the date of approval of

this Directors’ Report confirm that, so far as they are each

aware, there is no relevant audit information of which the

Company’s Auditor is unaware; and each Director has

taken all the steps that he/ she ought to have taken as a

Director to make himself/ herself aware of any relevant

audit information and to establish that the Company’s

Auditor is aware of that information.

Independent Auditor

Shareholders approved the re-appointment of KPMG LLP

as the Company’s Independent Auditor at the AGM on 4

February 2022. Resolutions to approve the re-

appointment of KPMG LLP for the year to 30 September

2023 and to authorise the Directors to determine the

remuneration of the Auditor will be proposed at the AGM

on 2 February 2023.

Relations with Shareholders

The Directors place a great deal of importance on

communications with shareholders. Shareholders and

investors may obtain up to date information on the

Company through its website and the Manager’s

Customer Services Department (see contact details on

page 88).

The Board’s policy is to communicate directly with

shareholders and their representative bodies without the

involvement of the management group (including the

Company Secretary or the Manager) in situations where

direct communication is required, and representatives

from the Manager meet with major shareholders on at

least an annual basis in order to gauge their views, and

report back to the Board on these meetings. In addition,

the Company Secretary only acts on behalf of the Board,

not the Manager, and there is no filtering of

communication. At each Board meeting the Board

receives full details of any communication from

shareholders to which the Chair responds personally

as appropriate.

46 abrdn Equity Income Trust plc

The Company’s Annual General Meeting provides a forum

for communication primarily with private shareholders

and is attended by the Board. The Manager normally

makes a presentation to the meeting and all shareholders

have the opportunity to put questions to both the Board

and the Manager at the meeting. The Board will also be

hosting an Online Pre-AGM Investor Session to engage

directly with shareholders, regardless of their location.

Details on how to register for the Online Pre-AGM Investor

Session are set out in the Chairman’s Statement on

page 7.

Prior to the Covid-19 pandemic, the Manager hosted an

annual Meet the Manager session at which members of

the Board were present and to which all shareholders

were invited. Although this programme has been

interrupted due to Covid-19, Thomas Moore has

continued to provide updates to shareholders by video

conference.

The notice of the Annual General Meeting is sent out at

least 20 working days in advance of the meeting. All

shareholders have the opportunity to put questions to the

Board and Manager at the meeting.

Additional Information

Where not provided elsewhere in the Directors’ Report, the

following provides the additional information required to

be disclosed by Part 15 of the Companies Act 2006.

There are no restrictions on the transfer of Ordinary

shares in the Company issued by the Company other than

certain restrictions which may from time to time be

imposed by law (for example, the Market Abuse

Regulation). The Company is not aware of any

agreements between shareholders that may result in a

transfer of securities and/or voting rights.

The rules governing the appointment of Directors are set

out in the Directors’ Remuneration Report on pages 48 and

49. The Company’s Articles of Association may only be

amended by a special resolution passed at a general

meeting of shareholders.

The Company is not aware of any significant agreements

to which it is a party that take effect, alter or terminate

upon a change of control of the Company following a

takeover. Other than the management agreement with

the Manager, further details of which are set out on page

41, the Company is not aware of any contractual or other

agreements which are essential to its business which

could reasonably be expected to be disclosed in the

Directors’ Report.

Annual General Meeting

The Notice of the Annual General Meeting, which will be

held on 2 February 2023, and related notes, may be found

on pages 97 to 100.

Resolutions including the following business will be

proposed.

Dividend Policy

As a result of the timing of the payment of the Company’s

quarterly dividends, the Company’s shareholders are

unable to approve a final dividend each year. In line with

good corporate governance, the Board therefore

proposes to put the Company’s dividend policy to

shareholders for approval at the Annual General Meeting

and on an annual basis thereafter.

The Company’s dividend policy is that interim dividends on

the Ordinary shares are payable quarterly in March, June,

September and January each year. Resolution 4 will seek

shareholder approval for the dividend policy.

Aggregate fees payable to Directors

The Board carried out a review of the level of Directors’

fees during the financial year. The resulting increases,

which took effect from 1 October 2022, are detailed in the

Directors’ Remuneration Report on page 49.

As a result of these increases in fees, and in order to

ensure that the Board has ongoing flexibility to manage

succession planning and potentially appoint additional

directors, Resolution 5, an ordinary resolution, will be put to

shareholders at the 2023 AGM seeking approval to

increase the maximum aggregate limit of remuneration

of the directors each year in respect of their ordinary

services as Directors from £150,000 to £250,000. Whilst

the directors do not intend to rely on this increase, they

believe that it gives the Board additional flexibility to

manage succession plans and recruit additional directors

if necessary.

Issue of Ordinary Shares

Resolution 12, which is an ordinary resolution, will, if passed,

renew the Directors’ authority to allot new Ordinary shares

up to an aggregate nominal amount of £1,184,288, being

10% of the issued share capital of the Company

(excluding treasury shares) as at 29 November 2022.

Directors’ Report

Continued

abrdn Equity Income Trust plc 47

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Resolution 13, which is a special resolution, will, if passed,

renew the Directors’ existing authority to allot new

Ordinary shares or sell treasury shares for cash without

the new Ordinary shares first being offered to existing

shareholders in proportion to their existing holdings. This

will give the Directors authority to allot Ordinary shares or

sell shares from treasury on a non pre-emptive basis for

cash up to an aggregate nominal amount of £1,184,288

(representing 10% of the issued ordinary share capital of

the Company (excluding treasury shares) as at 29

November 2022).

New Ordinary shares, issued under this authority, will only

be issued at prices representing a premium to the last

published net asset value per share.

The authorities being sought under Resolutions 12 and 13

shall expire at the conclusion of the Company’s next AGM

in 2024 or, if earlier, on the expiry of 15 months from the

date of the passing of the resolutions, unless such

authorities are renewed, varied or extended prior to such

time. The Directors have no current intention to exercise

these authorities and will only do so if they believe it is

advantageous and in the best interests of shareholders as

a whole.

Purchase of the Company’s Ordinary Shares

Resolution 14, which is a special resolution, seeks to renew

the Board’s authority to make market purchases of the

Company’s Ordinary shares in accordance with the

provisions contained in the Companies Act 2006 and the

FCA’s Listing Rules. Accordingly, the Company will seek

authority to purchase up to a maximum of 14.99% of the

issued share capital (excluding treasury shares) at the

date of passing of the resolution at a minimum price of 25

pence per share (being the nominal value). Under the

Listing Rules, the maximum price that may be paid on the

exercise of this authority must not exceed the higher of: (i)

105% of the average of the middle market quotations (as

derived from the Daily Official List of the London Stock

Exchange) for the shares over the five business days

immediately preceding the date of purchase; and (ii) the

higher of the last independent trade and the highest

current independent bid on the trading venue on which

the purchase is carried out.

The Board does not intend to use this authority to

purchase the Company’s Ordinary shares, unless to do so

would result in an increase in the net asset value per

Ordinary share and would be in the best interests of

shareholders as a whole. Any Ordinary shares purchased

shall either be cancelled or held in treasury. The authority

being sought shall expire at the conclusion of the AGM in

2024 or, if earlier, on the expiry of 15 months from the date

of the passing of the resolution unless such authority is

renewed, varied or extended prior to such time.

Notice of General Meetings

Under the Companies Act 2006, the notice period for the

holding of general meetings of the Company is 21 clear

days unless shareholders agree to a shorter notice period

and certain other conditions are met. Resolution 15, which

is a special resolution, will seek to authorise the Directors to

call general meetings of the Company (other than Annual

General Meetings) on not less than 14 clear days’ notice,

as permitted by the Companies Act 2006 amended by the

Companies (Shareholders’ Rights) Regulations 2009.

It is currently intended that this flexibility to call general

meetings on shorter notice will only be used for non-

routine business and where it is considered to be in the

interests of all shareholders. If Resolution 15 is passed, the

authority to convene general meetings on not less than 14

clear days’ notice will remain effective until the conclusion

of the AGM in 2024 or, if earlier, on the expiry of 15 months

from the date of the passing of the resolution, unless

renewed prior to such time.

Recommendation

The Board considers that the resolutions to be proposed

at the Annual General Meeting are in the best interests of

the Company’s shareholders as a whole, and most likely to

promote the success of the Company for the benefit of its

members as a whole. Accordingly, the Board

recommends that shareholders vote in favour of the

resolutions as they intend to do in respect of their own

beneficial shareholdings, amounting to 138,786 Ordinary

shares, representing 2.9% of the issued share capital.

By order of the Board

abrdn Holdings Limited

Company Secretary

1 George Street

Edinburgh EH2 2LL

30 November 2022

48 abrdn Equity Income Trust plc

This Directors’ Remuneration Report comprises three

parts:

1. a Remuneration Policy which is subject to a binding

shareholder vote every three years (or sooner if

varied during this interval) – most recently voted on at

the Annual General Meeting on 23 January 2020, with

approval to be sought at the Annual General Meeting

on 2 February 2023;

2. an Implementation Report which is subject to an

advisory vote on the level of remuneration paid during

the year; and

3. an Annual Statement.

Company law requires the Company’s Auditor to audit

certain of the disclosures provided in the Directors’

Remuneration Report. Where disclosures have been

audited, they are indicated as such. The Auditor’s report is

included on pages 59 to 64.

The Director’s Remuneration Policy and level of Directors’

remuneration are determined by the Remuneration &

Management Engagement Committee, which is chaired

by Caroline Hitch and comprises all of the Directors.

Remuneration Policy

The Directors’ Remuneration Policy takes into

consideration the principles of UK corporate governance

and the AIC’s recommendations regarding the application

of those principles to investment companies.

No shareholder views have been sought in setting the

remuneration policy and no communication was received

from shareholders during the year regarding Directors’

remuneration.

The Company’s policy is that the remuneration of the

Directors, all of whom are non-executive, should reflect

the experience of the Board as a whole and be fair and

comparable to that of other investment trusts with a

similar capital structure and similar investment objectives.

Directors are remunerated exclusively in the form of fees,

payable quarterly in arrears to the Director personally. The

fees for the Directors are determined within the limits set

out in this Remuneration Policy which limits the aggregate

of the fees payable to the Directors to £150,000 per

annum (or, if Resolution 5 is approved by shareholders at

the 2023 AGM, to £250,000 per annum) It is intended that

the fees payable to the Directors should reflect their

duties, responsibilities, and the value and amount of time

committed to the Company’s affairs, and should also be

sufficient to enable candidates of a high quality to be

recruited and retained. There is no performance-related

remuneration scheme and therefore the Directors do not

receive bonuses, pension benefits, share options, long-

term incentive schemes or other benefits, and the fees are

not specifically related to the Directors’ performance,

either individually or collectively.

The levels of fees at the year end are set out in the table

below. Fees are reviewed annually and, if considered

appropriate, adjusted accordingly.

September

2022

September

2021

Chair 32,000 29,500

Chair of Audit Committee 27,500 25,000

Chair of the Remuneration &

Management Engagement

Committee

24,000 22,000

Director 22,500 20,500

Directors fees were increased with effect from 1 April 2022. The increased fee rates

were only applicable for six months of the financial year

Appointment

· The Company only intends to appoint Non-Executive

Directors.

· All the Directors are non-executive and are appointed

under the terms of letters of appointment.

· The terms of appointment provide that Directors should

retire and be subject to election at the first Annual

General Meeting after their appointment. The

Company’s Articles of Association require all Directors to

retire by rotation at least every three years. However,

notwithstanding the Articles of Association, the Board

has agreed that all Directors should retire annually and

seek re-election at the AGM.

· Any Director newly appointed to the Board will receive

the fee applicable to each of the other Directors at the

time of appointment together with any other fee then

currently payable in respect of a specific role which the

new Director is to undertake for the Company.

· No incentive or introductory fees will be paid to

encourage a person to become a Director.

· Directors are not eligible for bonuses, pension benefits,

share options, long term incentive schemes or other

benefits.

· Directors are entitled to re-imbursement of out-of-

pocket expenses incurred in connection with the

performance of their duties.

Directors’ Remuneration Report

abrdn Equity Income Trust plc 49

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

· The Company indemnifies its Directors for all costs,

charges, losses, expenses and liabilities which may be

incurred in the discharge of duties as a Director of the

Company.

Performance, Service Contracts, Compensation and

Loss of Office

· Directors’ remuneration is not subject to any

performance related fee.

· No Director has a service contract.

· No Director was interested in contracts with the

Company during the period or subsequently.

· The terms of appointment provide that a Director may

be removed without notice.

· There is no notice period and no provision for

compensation upon early termination of appointment,

save for any arrears of fees which may be due.

· No Director is entitled to any other monetary payment

or any assets of the Company.

Directors’ & Officers’ liability insurance cover is maintained

by the Company on behalf of the Directors.

There were no changes to the Directors’ Remuneration

Policy during the year and, aside from the proposed

increase in aggregate of remuneration payable to

Directors as set out on page 46, there are no proposals for

changes in the foreseeable future. The Remuneration

Policy is reviewed by the Remuneration & Management

Engagement Committee on an annual basis and it is the

Committee’s intention that this Remuneration Policy

will apply for the three year period ending

30 September 2025.

Statement of Voting on the Directors’ Remuneration Policy

at General Meeting

At the Annual General Meeting held on 23 January 2020,

shareholders approved the Directors’ Remuneration

Policy. 98.1% of proxy votes were in favour of the

resolution and 1.1% of proxy votes were cast against

the resolution.

A resolution to approve the Directors’ Remuneration Policy

will be proposed at the Annual General Meeting on

2 February 2023.

Implementation Report

Review of Directors’ Fees

The Remuneration & Management Engagement

Committee carried out a review of the level of Directors’

fees during the year, which included consideration of fees

paid by comparable investment trusts and the sector as a

whole. During the year, it was acknowledged that

Directors’ fees had not changed since 2018 and were

materially below peers and, with effect from 1 April 2022, it

was agreed that Directors’ fees would be increased by

£2,500 for the Chair and Chair of the Audit Committee,

and by £2,000 per annum for each other Director. And,

with effect from 1 October 2022, it was agreed that

Directors’ Fees would be increased by £2,500 per annum

for the Chair and Chair of the Audit Committee, and by

£2,000 per annum for each other Director.

The Remuneration & Management Engagement

Committee was not provided with advice or services by

any person in respect of its consideration of the

Directors’ remuneration.

Company Performance

The graph below shows the share price and NAV total

return (assuming all dividends are reinvested) to Ordinary

shareholders compared to the total return from the FTSE

All-Share Index for the ten year period to 30 September

2022 (rebased to 100 at 30 September 2012). This index

was chosen for comparison purposes only, as it is a widely

used indicator for the equity market in which the

Company invests.

100

120

140

160

180

200

220

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Share price total return NAV total retu rn

Benchmark total return

50 abrdn Equity Income Trust plc

Statement of Voting on the Directors’ Remuneration

Report at General Meeting

At the Company’s last Annual General Meeting, held on 4

February 2022, shareholders approved the Directors’

Remuneration Report in respect of the year ended 30

September 2021. 98.8% of proxy votes were in favour of

the resolution, and 2.2% of proxy votes were cast against

the resolution.

A resolution to approve the Directors’ Remuneration

Report in respect of the year ended 30 September 2022

will be proposed at the Annual General Meeting on

2 February 2023.

Spend on Pay

As the Company has no employees, the Directors do not

consider it appropriate to present a table comparing

remuneration paid to employees with distributions to

shareholders. However, for ease of reference, the total

fees paid to Directors are shown in the table below while

dividends paid to shareholders are set out in note 7 and

share buybacks are detailed in note 12.

Audited Information

Directors’ Remuneration

The Directors who served during the year received the

following emoluments in the form of fees:

Director

Year ended 30

September 2022

Year ended 30

September 2021

Mark White

30,750 26,562

Caroline Hitch

23,000 21,478

Mark Little

3,750 n/a

Sarika Patel 26,250 25,000

Jeremy Tigue 21,500 20,500

Richard Burns

n/a

10,272

Total 105,250 103,812

Appointed as Chair on 5 February 2021

B Appointed as Chair of the Remuneration Management & Engagement Committee

on 5 February 2021

Appointed as a Director on 1 August 2022

Retired on 5 February 2021

Directors fees were increased with effect from 1 April 2022. The increased fee

rates were only applicable for six months of the financial year

The above amounts exclude any employers’ national

insurance contributions, if applicable. All fees are at a fixed

rate and there is no variable remuneration. Fees are pro-

rated where a change takes place during a financial year.

There were no payments to third parties included in the

fees referred to in the table above. No other forms of

remuneration were received by the Directors and none of

the Directors has any taxable expenses, compensation for

loss of office or non-cash benefit for the year ended 30

September 2022 (2021: nil).

Annual Percentage Change in Directors’ Remuneration

The following table sets out the annual percentage

change in Directors’ fees for the past three years from 1

October 2019 to 30 September 2022.

Year ended

September

2022

Year ended

September

2021

Year ended

September

2020

Fees

Mark White

15.8 20.7 0.0

Caroline Hitch

7.1 4.8 0.0

Mark Little

n/a n/a n/a

Sarika Patel

5.0 14.2 n/a

Jeremy Tigue 4.9 0.0 0.0

Appointed as Chair on 5 February 2021

Appointed as Chair of the Remuneration Management & Engagement Committee

on 5 February 2021

Appointed as a Director on 1 August 2022

Appointed as a Director on 1 November 2019 and as Chair of the Audit Committee

on 23 February 2020

Directors’ Remuneration Report

Continued

abrdn Equity Income Trust plc 51

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Directors’ Interests in the Company

The Directors (including their connected persons) at 30

September 2022 and 30 September 2021 had no interest

in the share capital of the Company other than those

interests shown in the following table.

30 September 2022 30 September 2021

Ordinary shares Ordinary shares

Mark White 75,000 50,000

Caroline Hitch

27,900 27,900

Mark Little

0 n/a

Sarika Patel 1,968 1,679

Jeremy Tigue 25,886 25,886

Includes non-beneficial holdings

Appointed on 1 August 2022

Since 30 September 2022, Sarika Patel has increased her

interest in the Company to 10,000 Ordinary shares. There

have been no other changes to the Directors’ interests in

the share capital of the Company since the year end up

to the date of approval of this Report.

Annual Statement

On behalf of the Board and in accordance with Part 2 of

Schedule 8 of the Large and Medium-sized Companies

and Groups (Accounts and Reports) (Amendment)

Regulations 2013, it is confirmed that the above

Remuneration Report summarises, as applicable, for the

year to 30 September 2022:

· the major decisions on Directors’ remuneration;

· any substantial changes relating to Directors’

remuneration made during the year; and

· the context in which the changes occurred and

decisions have been taken.

Caroline Hitch

Chair of the Remuneration &

Management Engagement Committee

30 November 2022

52 abrdn Equity Income Trust plc

The Audit Committee presents its Report for the year

ended 30 September 2022.

Committee Composition

The Committee is chaired by Sarika Patel who is a

Chartered Accountant and has recent and relevant

financial experience. As set out in the Chairman’s

Statement on page 7, Mark Little will succeed Sarika Patel

as Chair following the Annual General Meeting on 2

February 2023.

The Committee comprises all Non-Executive Directors.

The Audit Committee and Board considers that the Chair

of the Board, Mark White, was independent on

appointment, and continues to be independent of

the Manager.

Given the size of the Board, and the continued

independence of Mark White, the Board believes that it is

appropriate for all the independent Directors, including the

Chair, to constitute the Audit Committee. The Board is

satisfied that the Committee as a whole has competence

relevant to the investment trust sector.

Functions of the Audit Committee

The principal role of the Audit Committee is to assist the

Board in relation to the reporting of financial information,

the review of financial controls and the management

of risk.

The Committee has defined terms of reference which are

reviewed and re-assessed for their adequacy on at least

an annual basis. Copies of the terms of reference are

published on the Company’s website and are available

from the Company on request.

The Committee’s main functions are listed below:

· to review and monitor the internal control systems and

risk management systems (including review of non-

financial risks) on which the Company is reliant (the

Directors’ statement on the Company’s internal controls

and risk management is set out below);

· to consider whether there is a need for the Company to

have its own internal audit function;

· to monitor the integrity of the half-yearly and annual

financial statements of the Company and any formal

announcements relating to the Company’s financial

performance, by reviewing, and challenging where

necessary, the actions and judgements of the Manager;

· to review, and report to the Board on, the significant

financial reporting issues and judgements made in

connection with the preparation of the Company’s

financial statements, half-yearly financial reports, any

formal announcements relating to the Company’s

financial performance;

· to review the content of the Annual Report and advise

the Board on whether, taken as a whole, it is fair,

balanced and understandable and provides the

information necessary for shareholders to assess the

Company’s position and performance, business model

and strategy;

· to meet with the Auditor to review the proposed audit

programme of work and the findings of the Auditor. The

Committee shall also use this as an opportunity to

assess the effectiveness of the audit process;

· to develop and implement policy on the engagement of

the Auditor to supply non-audit services. Non-audit fees

paid to the Auditor during the year under review

amounted to £nil (2021 £nil). All non-audit services must

be approved in advance by the Audit Committee and

will be reviewed in the light of relevant guidance and

statutory requirements regarding the provision of non-

audit services by the external audit firm, and the need to

maintain the Auditor’s independence;

· to review a statement from the Manager detailing the

arrangements in place within the Manager whereby

staff may, in confidence, escalate concerns about

possible improprieties in matters of financial reporting or

other matters;

· to make recommendations to the Board in relation to

the appointment of the Auditor and to approve the

remuneration and terms of engagement of the Auditor;

and

· to monitor and review the Auditor’s independence,

objectivity, effectiveness, resources and qualification,

taking into consideration relevant UK professional and

regulatory requirements.

Audit Committee’s Report

abrdn Equity Income Trust plc 53

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Activities During the Year

The Audit Committee met twice during the year when,

amongst other things, it considered the Annual Report and

the Half-Yearly Financial Report in detail. Representatives

of the Manager’s internal audit, risk and compliance

departments reported to the Committee at these

meetings on matters such as internal control systems, risk

management and the conduct of the business in the

context of its regulatory environment. No significant

weaknesses in the control environment were identified

and it was also noted that there had not been any adverse

comment from the independent Auditor and that the

independent Auditor had not identified any significant

issues in its audit report. The Committee, therefore,

concluded that there were no significant issues which

required to be reported to the Board.

Internal Controls and Risk Management

The Board confirms that there is an ongoing process for

identifying, evaluating and managing the Company’s

significant business and operational risks, that has been in

place for the year ended 30 September 2022 and up to

the date of approval of the Annual Report, is regularly

reviewed by the Board and accords with the FRC’s

guidance on internal controls.

The Board has overall responsibility for ensuring that there

is a system of internal controls and risk management in

place and a process for reviewing its effectiveness. Day-

to-day measures have been delegated to the Manager

with an effective process of reporting to the Board for

supervision and control. The system of internal controls

and risk management is designed to meet the Company’s

particular needs and the risks to which it is exposed.

Accordingly, the system of internal control and risk

management is designed to manage, rather than

eliminate, the risk of failure to achieve business objectives

and, by its nature, can only provide reasonable and not

absolute assurance against material misstatement or loss.

The design, implementation and maintenance of controls

and procedures to safeguard the assets of the Company

and to manage its affairs properly extends to operational

and compliance controls and risk management. The

Board, through the Audit Committee, has prepared its

own risk register which lists potential risks as set out in the

Strategic Report on pages 12 to 14. The Board considers

the potential cause and possible effect of these risks as

well as reviewing the controls in place to mitigate them.

Clear lines of accountability have been established

between the Board and the Manager. The Board receives

regular reports covering key performance and risk

indicators and considers control and compliance issues

brought to its attention. In carrying out its review, the

Board has had regard to the activities of the abrdn,

including its internal audit and compliance functions, and

the Auditor.

The Board has reviewed the Manager’s process for

identifying and evaluating the significant risks faced by the

Company and the policies and procedures by which these

risks are managed. The Board has also reviewed the

effectiveness of the Manager’s system of internal control

including its annual internal controls report prepared in

accordance with the International Auditing and Assurance

Standards Board’s International Standard on Assurances

Engagements (“ISAE”) 3402, “Assurance Reports on

Controls at a Service Organisation”. Any weaknesses

identified are reported to the Audit Committee and

timetables are agreed for implementing improvements to

systems. The implementation of any remedial action

required is monitored and feedback provided to the Audit

Committee.

The key components designed to provide effective

internal control are outlined below:

· written agreements are in place which specifically

define the roles and responsibilities of the Manager and

other third party service providers. These agreements

are reviewed periodically by the Board;

· the Board and Manager have agreed clearly defined

investment criteria, specified levels of authority and

exposure limits. Reports on these issues, including

performance statistics and investment valuations, are

regularly submitted to the Board;

· the Manager prepares forecasts and management

accounts which allow the Board to assess the

Company’s activities and review its performance;

· as a matter of course the Manager’s internal audit and

compliance departments continually review its

operations;

· bi-annually, the Audit Committee carries out an

assessment of internal controls by considering

documentation from the Manager, including the internal

audit and compliance functions and reports to the

Board on its conclusions; and

· the Audit Committee reviews internal control reports

from its third party service providers including the

Depositary, BNP Paribas Trust Corporation UK Limited

and the Registrar, Computershare.

54 abrdn Equity Income Trust plc

The Board has considered the need for an internal audit

function. However, the Company has no employees and

the day-to-day management of the Company’s assets

has been delegated to abrdn which has its own

compliance and internal control systems. The Board has

therefore decided to place reliance on those systems and

internal audit procedures and has concluded that it is not

necessary for the Company to have its own internal

audit function.

Financial Statements and Significant Issues

During its review of the Company’s financial statements

for the year ended 30 September 2022, the Audit

Committee considered the following significant issues, in

particular those communicated by the Auditor during its

planning and reporting of the year-end audit:

Valuation, Existence and Ownership of

Investments

How the issue was addressed - The Company uses the

services of an independent depositary (BNP Paribas Trust

Corporation UK Limited) (the “Depositary”) to hold the

assets of the Company. An annual internal control report is

received from the Depositary and reviewed by the Audit

Committee. This provides details of the Depositary’s

control environment. The investment portfolio is

reconciled regularly by the Manager. The portfolio is

reviewed and verified by the Manager on a regular basis

and management accounts, including a full portfolio

listing, are prepared quarterly and are considered at the

quarterly meetings of the Board. The valuation of

investments is undertaken in accordance with the

accounting policies disclosed in notes 1(b) and 1(c) to the

financial statements.

The Committee satisfied itself that there were no issues

associated with the valuation, existence and ownership of

the investments which required to be addressed.

Recognition of Dividend Income

How the issue was addressed - The recognition of

dividend income is undertaken in accordance with

accounting policy note 1(d) to the financial statements.

Special dividends are allocated to the capital or revenue

accounts according to the nature of the payment and the

specific circumstances. Management accounts are

reviewed by the Board on a quarterly basis and

discussions take place with the Manager regarding

the allocation of any special dividends that have

been received.

The Committee concluded that there were no issues

associated with the recognition of dividend income which

required to be addressed.

Review of Financial Reporting

The Committee, when considering the draft Annual

Report and financial statements for the year ended 30

September 2022, concluded that taken as a whole, it is fair,

balanced and understandable and provides the

information necessary for shareholders to assess the

Company’s position and performance, business model

and strategy. In reaching this conclusion, the Committee

has assumed that the reader of the Annual Report and

financial statements would have a reasonable knowledge

of the investment industry in general and of investments

trusts in particular.

Audit Committee’s Report

Continued

abrdn Equity Income Trust plc 55

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Review of Independent Auditor

The Audit Committee has reviewed the effectiveness of

the independent Auditor, KPMG LLP (“KPMG”), including:

· Independence - the Auditor discusses with the Audit

Committee, at least annually, the steps it takes to ensure

its independence and objectivity and makes the

Committee aware of any potential issues, explaining all

relevant safeguards.

· Quality of audit work - including the ability to resolve

issues in a timely manner (identified issues are

satisfactorily and promptly resolved), its

communications/presentation of outputs (the

explanation of the audit plan, any deviations from it and

the subsequent audit findings are comprehensive and

comprehensible), and working relationship with

management (the Auditor has a constructive working

relationship with the Manager).

· Quality of people and service - including continuity and

succession plans (the audit team is made up of

sufficient, suitably experienced staff with provision

made for knowledge of the investment trust sector and

retention on rotation of the senior statutory auditor).

· Fees - including current and proposed fees for

future years.

The independent Auditor’s report is included on pages

59 to 64. Details of the amounts paid to KPMG during the

year for audit services are set out in note 4 to the

financial statements.

Tenure of the Independent Auditor

KPMG was initially appointed as the Company’s

independent Auditor on 15 March 2018 and approved by

shareholders at the Annual General Meeting on 17

January 2019. In accordance with present professional

guidelines the senior statutory auditor is rotated after no

more than five years. The year ended 30 September 2022

is the first year during which the present senior statutory

auditor has served.

The next audit tender of the Company is due to take place

by 2027 in compliance with the EU regulations and FRC

Guidance on audit tenders.

The Audit Committee is satisfied with the quality of the

work and service carried out by KPMG and with the level

of fees. The Committee is also satisfied that KPMG is

independent and therefore supports the

recommendation to the Board that the re-appointment of

KPMG be put to shareholders for approval at the Annual

General Meeting.

On behalf of the Audit Committee

Sarika Patel

Chair of the Audit Committee

30 November 2022

56 abrdn Equity Income Trust plc

Financial

Statements

abrdn Equity Income Trust plc 57

The Directors set the investment

policy, which is to invest in a

diversified portfolio consisting mainly

of quoted UK equities which will

normally comprise between 50 and

70 individual equity holdings.

58 abrdn Equity Income Trust plc

The Directors are responsible for preparing the Annual

Report and the financial statements in accordance with

applicable law and regulations. Company law requires

the Directors to prepare financial statements for each

financial year. Under that law the Directors are required to

prepare the financial statements in accordance with UK

Accounting Standards, including FRS 102 ‘The Financial

Reporting Standard Applicable in the UK and Republic

of Ireland’.

Under company law the Directors must not approve the

financial statements unless they are satisfied that they

give a true and fair view of the state of affairs of the

Company and of the profit or loss of the Company for

that period.

In preparing these financial statements, the Directors are

required to:

· select suitable accounting policies and then apply them

consistently;

· make judgements and estimates that are reasonable

and prudent;

· state whether applicable UK Accounting Standards

have been followed, subject to any material departures

disclosed and explained in the financial statements;

· assess the Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to

going concern; and

· prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the Company’s transactions and disclose with reasonable

accuracy at any time the financial position of the

Company and enable them to ensure that its financial

statements comply with the Companies Act 2006. They

are responsible for such internal control as they determine

is necessary to enable the preparation of financial

statements that are free from material misstatement,

whether due to fraud or error, and have general

responsibility for taking such steps as are reasonably open

to them to safeguard the assets of the Company and to

prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are

also responsible for preparing a Strategic Report,

Directors’ Report, Directors’ Remuneration Report and

Statement of Corporate Governance that comply with

that law and those regulations.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information

included on the Company’s website, but not for the

content of any information included on the website that

has been prepared or issued by third parties. Legislation in

the UK governing the preparation and dissemination of

financial statements may differ from legislation in other

jurisdictions.

The Directors confirm that to the best of their knowledge:

· the financial statements have been prepared in

accordance with applicable accounting standards and

give a true and fair view of the assets, liabilities, financial

position and profit or loss of the Company; and

· the Strategic Report and Directors’ Report include a fair

review of the development and performance of the

business and the position of the Company, together with

a description of the principal risks and uncertainties that

the Company faces.

We consider the Annual Report and accounts, taken as a

whole, is fair, balanced and understandable and provides

the information necessary for shareholders to assess the

Company’s position and performance, business model

and strategy.

On behalf of the Board

Mark White

Chair

30 November 2022

Statement of Directors’ Responsibilities

abrdn Equity Income Trust plc 59

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

1. Our Opinion is Unmodified

We have audited the financial statements of abrdn Equity Income Trust plc (“the Company”) for the year ended 30

September 2022 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement

of Changes in Equity, and the related notes, including the accounting policies in note 1.

In our opinion the financial statements:

· give a true and fair view of the state of the Company’s affairs as at 30 September 2022 and of its loss for the

year then ended;

· have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting

Standard applicable in the UK and Republic of Ireland; and

· have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.

Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and

appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.

We were first appointed as auditor by the shareholders on 15 March 2018. The period of total uninterrupted

engagement is for the 5 financial years ended 30 September 2022. We have fulfilled our ethical responsibilities under,

and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical

Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided.

2. Key Audit Matters: Our Assessment of Risks of Material Misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the

financial statements and include the most significant assessed risks of material misstatement (whether or not due to

fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of

resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matter

(unchanged from 2021), in arriving at our audit opinion above, together with our key audit procedures to address this

matter and, as required for public interest entities, our results from those procedures. This matter was addressed, and

our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial

statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do

not provide a separate opinion on this matter.

The Risk Our Response

Carrying amount of quoted investments

(£179.9 million; 2021: £207.4 million)

Refer to page 54 (Audit Committee

Report), pages 68 and 69 (accounting

policy) and page 75 (financial disclosures).

Low risk, high value

The Company’s portfolio of quoted

investments makes up 97% (2021: 98%) of

the Company’s total assets (by value) and is

one of the key drivers of results. We do not

consider these investments to be at a high

risk of significant misstatement, or to be

subject to a significant level of judgement

because they comprise liquid, quoted

investments. However, due to their

materiality in the context of the financial

statements as a whole, they are considered

to be the area which had the greatest

effect on our overall audit strategy and

allocation of resources in planning and

completing our audit.

We performed the detailed tests below

rather than seeking to rely on controls,

because the nature of the balance is such

that detailed testing is determined to be the

most effective manner of obtaining audit

evidence.

Our procedures included:

· Tests of detail: Agreeing the valuation of

100% of investments in the portfolio to

externally quoted prices; and

· Enquiry of Depositary: Agreeing 100% of

investment holdings in the portfolio to

independently received third party

confirmation from the Depositary.

Our results: We found the carrying amount

of quoted investments to be acceptable

(2021: acceptable).

Independent Auditor’s Report to the Members of abrdn

Equity Income Trust plc

60 abrdn Equity Income Trust plc

3. Our Application of Materiality and an Overview of the Scope of our Audit

Materiality for the financial statements as a whole was set at £1.85million (2021: £2.1million), determined with reference

to a benchmark of total assets, of which it represents 1% (2021: 1%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a

lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial

misstatements in individual account balances add up to a material amount across the financial statements as a whole.

Performance materiality was set at 75% (2021: 75%) of materiality for the financial statements as a whole, which

equates to £1.38 million (2021: £1.60 million). We applied this percentage in our determination of performance

materiality because we did not identify any factors indicating an elevated level of risk.

In addition, we applied a lower materiality of £0.63 million (2021: £0.49 million) to the income balance, and materiality of

£1,000 to Director’s remuneration, for which we believe misstatements of lesser amounts than materiality for the

Financial Statements as a whole could be reasonably expected to influence the Company’s members’ assessment of

the financial performance of the Company.

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.09

million (2021: £0.10 million), in addition to other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the materiality level specified above and was performed by a single

audit team.

The scope of the audit work performed was fully substantive as we did not rely upon the Company’s internal control over

financial reporting.

4. Going Concern

The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the

Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is

realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its

ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going

concern period”).

We used our knowledge of the Company, its industry, and the general economic environment to identify the inherent

risks to its business model and analysed how those risks might affect the Company’s financial resources or ability to

continue operations over the going concern period. The risks that we considered most likely to adversely affect the

Company’s available financial resources and its ability to operate over this period were:

· The impact of a significant reduction in the valuation of investments and the implications for the Company’s

debt covenants;

· The liquidity of the investment portfolio and its ability to meet the liabilities of the Company as and when they fall due;

and

· The operational resilience of key service organisations.

We considered whether these risks could plausibly affect the liquidity in the going concern period by assessing the

degree of downside assumption that, individually and collectively, could result in a liquidity issue, taking into account the

Company’s current and projected cash and liquid investment position.

We considered whether the going concern disclosure in note 1 to the financial statements gives a full and accurate

description of the Directors’ assessment of going concern, including the identified risks and related sensitivities.

Independent Auditor’s Report to the Members of abrdn

Equity Income Trust plc

Continued

abrdn Equity Income Trust plc 61

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Our conclusions based on this work:

· we consider that the Directors’ use of the going concern basis of accounting in the preparation of the financial

statements is appropriate;

· we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to

events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as

a going concern for the going concern period;

· we have nothing material to add or draw attention to in relation to the Directors’ statement in note 1 (a) to the financial

statements on the use of the going concern basis of accounting with no material uncertainties that may cast

significant doubt over the Company’s use of that basis for the going concern period, and we found the going concern

disclosure in note 1(a) to be acceptable; and

· the related statement under the Listing Rules set out on page 45 is materially consistent with the financial statements

and our audit knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are

inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a

guarantee that the Company will continue in operation.

5. Fraud and Breaches of Laws and Regulations – Ability to Detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could

indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment

procedures included:

· enquiries of Directors as to the Company’s high-level policies and procedures to prevent and detect fraud, as well as

whether they have knowledge of any actual, suspected or alleged fraud;

· Assessing the segregation of duties in place between the Directors, the Administrator and the Company’s Investment

Manager; and

· Reading Board and Audit Committee minutes.

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud

throughout the audit.

As required by auditing standards, we perform procedures to address the risk of management override of controls, in

particular to the risk that management may be in a position to make inappropriate accounting entries. We evaluated the

design and implementation of the controls over journal entries and other adjustments and made inquiries of the

Administrator about inappropriate or unusual activity relating to the processing of journal entries and other adjustments.

We substantively tested all material post-closing entries and, based on the results of our risk assessment procedures and

understanding of the process, including the segregation of duties between the Directors and the Administrator, no

further high-risk journal entries or other adjustments were identified.

On this audit we do not believe there is a fraud risk related to revenue recognition because the revenue is non-

judgemental and straightforward, with limited opportunity for manipulation particularly in light of the segregation

of duties.

We did not identify any additional fraud risks.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial

statements from our general commercial and sector experience and through discussion with the Directors, the

Investment Manager and the Administrator (as required by auditing standards) and discussed with the Directors the

policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment

of risks involved gaining an understanding of the control environment including the entity’s procedures for complying

with regulatory requirements.

62 abrdn Equity Income Trust plc

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial

reporting legislation (including related companies legislation), distributable profits legislation, and its qualification as an

Investment Trust under UK taxation legislation, any breach of which could lead to the Company losing various

deductions and exemptions from UK corporation tax, and we assessed the extent of compliance with these laws and

regulations as part of our procedures on the related financial statement items.

We assessed the legality of the distributions made by the Company in the period based on comparing the dividends

paid to the distributable reserves prior to each distribution, including consideration of accounts filed during the year.

Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance

could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of

fines or litigation. We identified the following areas as those most likely to have such an effect: money laundering, data

protection, bribery and corruption legislation and certain aspects of company legislation recognising the financial and

regulated nature of the Company’s activities and its legal form. Auditing standards limit the required audit procedures to

identify non-compliance with these laws and regulations to enquiry of the Directors and the Administrator and

inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not

disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material

misstatements in the financial statements, even though we have properly planned and performed our audit in

accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is

from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures

required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion,

forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed

to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be

expected to detect non-compliance with all laws and regulations.

6. We Have Nothing to Report on the Other Information in the Annual Report

The Directors are responsible for the other information presented in the Annual Report together with the financial

statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not

express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements

audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit

knowledge. Based solely on that work we have not identified material misstatements in the other information.

Strategic Report and Directors’ Report

Based solely on our work on the other information:

· we have not identified material misstatements in the Strategic Report and the Directors’ report;

· in our opinion the information given in those reports for the financial year is consistent with the financial statements;

and

· in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Independent Auditor’s Report to the Members of abrdn

Equity Income Trust plc

Continued

abrdn Equity Income Trust plc 63

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Directors’ Remuneration Report

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance

with the Companies Act 2006.

Disclosures of Emerging and Principal Risks and Longer-Term Viability

We are required to perform procedures to identify whether there is a material inconsistency between the Directors’

disclosures in respect of emerging and principal risks and the viability statement, and the financial statements and our

audit knowledge.

Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw

attention to in relation to:

· the Directors’ confirmation within the Viability Statement on page 16 that they have carried out a robust assessment of

the emerging and principal risks facing the Company, including those that would threaten its business model, future

performance, solvency and liquidity;

· the Principal Risks and Uncertainties disclosures describing these risks and how emerging risks are identified, and

explaining how they are being managed and mitigated; and

· the Directors’ explanation in the Viability Statement of how they have assessed the prospects of the Company, over

what period they have done so and why they considered that period to be appropriate, and their statement as to

whether they have a reasonable expectation that the Company will be able to continue in operation and meet its

liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any

necessary qualifications or assumptions.

We are also required to review the Viability Statement, set out on page 16 under the Listing Rules. Based on the above

procedures, we have concluded that the above disclosures are materially consistent with the financial statements and

our audit knowledge.

Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial

statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes

that are inconsistent with judgements that were reasonable at the time they were made, the absence of anything to

report on these statements is not a guarantee as to the Company’s longer-term viability.

Corporate Governance Disclosures

We are required to perform procedures to identify whether there is a material inconsistency between the Directors’

corporate governance disclosures and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially consistent with the financial

statements and our audit knowledge:

· the Directors’ statement that they consider that the annual report and financial statements taken as a whole is fair,

balanced and understandable, and provides the information necessary for shareholders to assess the Company’s

position and performance, business model and strategy;

· the section of the annual report describing the work of the Audit Committee, including the significant issues that the

audit committee considered in relation to the financial statements, and how these issues were addressed; and

· the section of the annual report that describes the review of the effectiveness of the Company’s risk management and

internal control systems.

We are required to review the part of the Corporate Governance Statement relating to the Company’s compliance with

the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to

report in this respect.

64 abrdn Equity Income Trust plc

7. We Have Nothing to Report on the Other Matters on Which we are Required to Report by

Exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:

· adequate accounting records have not been kept, or returns adequate for our audit have not been received from

branches not visited by us; or

· the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with

the accounting records and returns; or

· certain disclosures of directors’ remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

8. Respective Responsibilities

Directors’ Responsibilities

As explained more fully in their statement set out on page 58, the Directors are responsible for: the preparation of the

financial statements including being satisfied that they give a true and fair view; such internal control as they determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to

fraud or error; assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related

to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or

to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable

assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will

always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users

taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

9. The Purpose of Our Audit Work and to Whom we Owe our Responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted

by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as

a body, for our audit work, for this report, or for the opinions we have formed.

Hannah Walsh (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

Saltire Court

20 Castle Terrace,

Edinburgh, EH1 2EG

30 November 2022

Independent Auditor’s Report to the Members of abrdn

Equity Income Trust plc

Continued

abrdn Equity Income Trust plc 65

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

2022 2021

Revenue Capital Total Revenue Capital Total

Notes £’000 £’000 £’000 £’000 £’000 £’000

Net (losses)/gains on investments at fair value 9 – (24,281) (24,281) – 46,078 46,078

Currency gains/(losses) – 1 1 – (2) (2)

Income 2 13,517 – 13,517 10,642 – 10,642

Investment management fee 3 (335) (782) (1,117) (342) (799) (1,141)

Administrative expenses 4 (464) – (464) (373) – (373)

Net return before finance costs and taxation 12,718 (25,062) (12,344) 9,927 45,277 55,204

Finance costs 5 (149) (347) (496) (109) (253) (362)

Return before taxation 12,569 (25,409) (12,840) 9,818 45,024 54,842

Taxation 6 (325) – (325) (125) – (125)

Return after taxation 12,244 (25,409) (13,165) 9,693 45,024 54,717

Return per Ordinary share 8 25.51p (52.93p) (27.42p) 20.06p 93.18p 113.24p

The total column of this statement represents the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

The accompanying notes on pages 68 to 82 are an integral part of the financial statements.

Statement of Comprehensive Income

66 abrdn Equity Income Trust plc

2022 2021

Notes £’000 £’000

Fixed assets

Investments at fair value through profit or loss 9 179,730 207,418

Current assets

Debtors 10 2,343 1,322

Money-market funds 2,503 3,408

Cash and short-term deposits 1,054 45

5,900 4,775

Current liabilities

Creditors: amounts falling due within one year

Bank loan 11 (24,979) (24,951)

Other creditors 11 (3,152) (4,311)

(28,131) (29,262)

Net current liabilities (22,231) (24,487)

Net assets 157,499 182,931

Capital and reserves

Called-up share capital 12 12,295 12,295

Share premium account 52,043 52,043

Capital redemption reserve 12,616 12,616

Capital reserve 13 70,276 97,491

Revenue reserve 10,269 8,486

Equity shareholders’ funds 157,499 182,931

Net asset value per Ordinary share 14 331.77p 380.84p

The financial statements on pages 65 to 82 were approved by the Board of Directors and authorised for issue on 30 November 2022

and were signed on its behalf by:

Mark White

Chairman

The accompanying notes are an integral part of the financial statements.

Statement of Financial Position

abrdn Equity Income Trust plc 67

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

For the year ended 30 September 2022

Share Capital

Share premium redemption Capital Revenue

capital account reserve reserve reserve Total

Notes £’000 £’000 £’000 £’000 £’000 £’000

Balance at 30 September 2021 12,295 52,043 12,616 97,491 8,486 182,931

Return after taxation – – – (25,409) 12,244 (13,165)

Purchase of own shares for treasury – – – (1,806) – (1,806)

Dividends paid 7 – – – – (10,461) (10,461)

Balance at 30 September 2022 12,295 52,043 12,616 70,276 10,269 157,499

For the year ended 30 September 2021

Share Capital

Share premium redemption Capital Revenue

capital account reserve reserve reserve Total

Notes £’000 £’000 £’000 £’000 £’000 £’000

Balance at 30 September 2020 12,295 52,043 12,616 53,494 8,748 139,196

Return after taxation – – – 45,024 9,693 54,717

Purchase of own shares for treasury – – – (1,027) – (1,027)

Dividends paid 7 – – – – (9,955) (9,955)

Balance at 30 September 2021 12,295 52,043 12,616 97,491 8,486 182,931

The capital reserve at 30 September 2022 is split between realised gains of £85,606,000 and unrealised losses of £15,330,000 (30

September 2021: realised gains of £81,939,000 and unrealised gains of £15,552,000).

The revenue and capital reserves represent the amount of the Company’s reserves distributable by way of dividend.

The accompanying notes on pages 68 to 82 are an integral part of the financial statements.

Statement of Chan

es in Equity

68 abrdn Equity Income Trust plc

1. Accountin

olicies

(a) Basis of accounting and going concern. The Financial Statements have been prepared in accordance with Financial

Reporting Standard 102 and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust

Companies and Venture Capital Trusts’ issued in July 2022. They have also been prepared on the assumption that

approval as an investment trust will continue to be granted. The Financial Statements have been prepared on a going

concern basis.

The Company had net current liabilities at the year end. The Company’s assets consist mainly of equity shares in

companies listed on recognised stock exchanges and are considered by the Board to be realisable within a short

timescale under normal market conditions. The Board has set overall limits for borrowing and reviews regularly the

Company’s level of gearing, cash flow projections and compliance with banking covenants, when applicable. The Board

has also performed stress testing and liquidity analysis.

The Company’s Articles require that at every fifth AGM, the Directors shall propose an Ordinary Resolution to effect that

the Company continues as an investment trust. An Ordinary Resolution approving the continuation of the Company for

the next five years was passed at the AGM on 4 February 2022. The next continuation vote will take place at the AGM to

be held in 2027.

As at 30 September 2022, the Company had a £30 million (2021 – £30 million) revolving credit facility with The Royal Bank

of Scotland International Limited, London Branch. £25 million was drawn at the end of the financial year (2021 – £25

million). The revolving credit facility matures on 25 June 2023. A replacement option will be sought in advance of the

expiry of the facility, or should the Board decide not to renew this facility, any outstanding borrowing would be repaid

through the proceeds of equity sales as required

The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report on pages 12 to 14 and

they believe that the Company has adequate financial resources to continue its operational existence for a period of not

less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that

the Company’s diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term

funding requirements were they to arise. They have also reviewed the revenue and ongoing expenses forecasts for the

coming year, and expect to secure a replacement facility upon expiry of the current facility. Accordingly, the Directors

believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements

As an investment fund the Company has the option, which it has taken, not to present a cash flow statement. A cash flow

statement is not required when an investment fund meets all the following conditions: substantially all of the entity’s

investments are highly liquid, substantially all of the entity’s investments are carried at market value, and the entity

provides a Statement of Changes in Equity. The Directors have assessed that the Company meets all of these conditions.

The accounting policies applied are unchanged from the prior year and have been applied consistently.

All values are rounded to the nearest thousand pounds (£’000) except where indicated otherwise.

(b)

Investments. Investments have been designated upon initial recognition as fair value through profit or loss in accordance

with IAS 39. As permitted by FRS 102, the Company has elected to apply the recognition and measurement provisions of

IAS 39 Financial Instruments. This is done because all investments are considered to form part of a group of financial

assets which is evaluated on a fair value basis, in accordance with the Company’s documented investment strategy, and

information about the grouping is provided internally on that basis.

Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms

require delivery to be made within the timeframe established by the market concerned, and are measured initially at fair

value. Subsequent to initial recognition, investments are valued at fair value. For listed investments, this is deemed to be

bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock

Exchange electronic trading service covering most of the market including all the FTSE All-Share and the most liquid

AIM constituents.

Notes to the Financial Statements

For the year ended 30 September 2022

abrdn Equity Income Trust plc 69

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the

Statement of Comprehensive Income and are ultimately recognised in the capital reserve.

term liquidity. As they are not listed on a recognised exchange and due to their short term nature, they are recognised in

the financial statements as a current asset and are included at fair value through profit or loss.

The Company invests in a AAA-rated money-market fund, Aberdeen Standard Liquidity Fund, which is managed by

abrdn Investments Limited. The share class of the money market fund in which the Company invests does not charge a

management fee.

(d) Income. Income from equity investments, including taxes deducted at source, is included in revenue by reference to the

date on which the investment is quoted ex-dividend. Special dividends are credited to revenue or capital according to

the circumstances. Foreign income is converted at the exchange rate applicable at the time of receipt. Interest

receivable on cash at bank and in hand and on the money market fund is accounted for on an accruals basis.

(e) Expenses and interest payable. Expenses are accounted for on an accruals basis. Expenses are charged to capital when

they are incurred in connection with the maintenance or enhancement of the value of investments. In this respect, the

investment management fee and relevant finance costs are allocated between revenue and capital in line with the

Board’s expectation of returns from the Company’s investments over the long term in the form of revenue and capital

respectively (see notes 3 and 5).

Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the

Statement of Comprehensive Income.

(f) Dividends payable. Interim dividends are accounted for when they are paid. Final dividends are accounted on the date

that they are approved by shareholders.

(g) Capital and reserves

Called-up share capital. Share capital represents the nominal value of Ordinary shares issued. This reserve is not

distributable.

Share premium account. The share premium account represents the premium above nominal value received by the

Company on issuing shares net of issue costs. This reserve is not distributable.

Capital redemption reserve. The capital redemption reserve represents the nominal value of Ordinary shares

repurchased and cancelled. This reserve is not distributable.

Capital reserve. Gains or losses on realisation of investments and changes in fair values of investments are included within

the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve.

Any associated tax relief is also credited to this reserve. The part of this reserve represented by realised capital gains is

available for distribution by way of a dividend and for the purpose of funding share buybacks.

Revenue reserve. The revenue reserve represents accumulated revenue profits retained by the Company that have not

currently been distributed to shareholders as a dividend.

70 abrdn Equity Income Trust plc

(h) Taxation. The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the

taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive

Income because it excludes items of income or expense that are taxable or deductible in other years and it further

excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates

that have been enacted or substantively enacted by the Statement of Financial Position date.

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement

of Financial Position date where transactions or events that result in an obligation to pay more or a right to pay less tax in

future have occurred at the Statement of Financial Position date measured on an undiscounted basis and based on

enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that

there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing

differences are differences arising between the Company’s taxable profits and its results as stated in the accounts that

arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are

recognised in the accounts.

Owing to the Company’s status as an investment trust company, and the intention to continue meeting the conditions

required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains

and losses arising on the revaluation or disposal of investments.

(i) Cash and cash equivalents. Cash comprises bank balances and cash held by the Company. Cash equivalents are short-

term, highly liquid investments including money-market funds that are readily convertible to known amounts of cash and

which are subject to an insignificant risk of changes in value.

(j) Bank borrowings. Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds

received, net of direct issue costs. They are subsequently measured at amortised cost. Finance charges, including

premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the

Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of

the instrument to the extent that they are not settled in the period in which they arise.

(k) Treasury shares. When the Company purchases its Ordinary shares to be held in treasury, the amount of the

consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction

from the capital reserve. When these shares are sold subsequently, the amount received is recognised as an increase in

equity, and any resulting surplus on the transaction is transferred to the share premium account and any resulting deficit

is transferred from the capital reserve.

(l) Judgements and key sources of estimation uncertainty. Disclosure is required of judgements and estimates made by

management in applying the accounting policies that have a significant effect on the Financial Statements. There are no

significant estimates or judgements which impact these Financial Statements.

Notes to the Financial Statements

Continued

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2. Income

2022 2021

£’000 £’000

Income from investments

UK investment incom

Ordinary dividends 8,460 8,286

Special dividends 800 600

9,260 8,886

Overseas and Property Income Distribution investment incom

Ordinary dividends 4,243 1,748

Special dividends – 5

4,243 1,753

13,503 10,639

Other income

Money-market interest 14 2

Underwriting commission – 1

14 3

Total income 13,517 10,642

3. Investment management fee

2022 2021

£’000 £’000

Charged to revenue reserve 335 342

Charged to capital reserve 782 799

1,117 1,141

The Company has an agreement with abrdn Fund Managers Limited (“aFML”) for the provision of management services,

under which investment management services have been delegated to abrdn Investment Management Limited. The

contract is terminable by either party on not less than six months’ notice.

The fee payable to aFML was calculated at a rate of 0.65% per annum of net assets up to £175 million and at a rate of 0.55%

per annum of net assets thereafter. The fee is payable quarterly in arrears and is chargeable 30% to revenue and 70% to

capital (see note 1(e) for further detail). The balance of fees due at the year end was £530,000 (2021 – £298,000).

72 abrdn Equity Income Trust plc

4. Administrative expenses

2022 2021

£’000 £’000

Directors’ fees 105 104

Employers’ National Insurance 4 6

Fees payable to the Company’s Auditor (excluding VAT):

– for the audit of the annual financial statements 40 32

Professional fees 52 (3)

Depositary fees 22 25

Other expenses 241 209

464 373

The Company has an agreement with aFML for the provision of promotional activities. Fees paid under the agreement during

the year were £103,000 (2021 - £95,000). At 30 September 2022, £166,000 was due to aFML (2021 - £63,000).

With the exception of fees payable to the Company’s auditor, irrecoverable VAT has been included under the relevant

expense line above. Irrecoverable VAT on fees payable to the Company’s auditor is included within other expenses.

The Company has no employees.

5. Finance costs

2022 2021

£’000 £’000

On bank loans and overdrafts:

Charged to revenue reserve 149 109

Charged to capital reserve 347 253

496 362

Finance costs are chargeable 30% to revenue and 70% to capital (see note 1(e)).

6. Taxation

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

(a) Analysis of charge for the year

Overseas withholding tax 325 – 325 125 – 125

Notes to the Financial Statements

Continued

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(b) Factors affecting total tax charge for the year. The corporation tax rate was 19% (2021 – 19%). The total tax assessed for

the year is higher (2021 – lower) than that resulting from applying the standard rate of corporation tax in the UK.

A reconciliation of the Company’s total tax charge is set out below:

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Return before taxation 12,569 (25,409) (12,840) 9,818 45,024 54,842

Corporation tax at a rate of 19% (2021 – 19%) 2,388 (4,828) (2,440) 1,865 8,555 10,420

Effects of:

Non-taxable UK dividends (1,770) – (1,770) (1,686) – (1,686)

Non-taxable overseas dividends (744) – (744) (273) – (273)

(Gains)/losses on investments not relievable – 4,613 4,613 – (8,755) (8,755)

Excess management expenses and loan

relationship losses

126 215 341 94 200 294

Irrecoverable overseas withholding tax 325 – 325 125 – 125

Total taxation 325 – 325 125 – 125

At 30 September 2022, the Company had unutilised management expenses and loan relationship losses of £31,990,000

(2021 – £30,202,000). No deferred tax asset has been recognised on the unutilised management expenses and loan

relationship losses as it is unlikely that the Company will generate suitable taxable profits in the future that these tax

losses could be deducted against.

7. Dividends on Ordinary shares

2022 2021

£’000 £’000

Amounts recognised as distributions to equity holders in the year:

Fourth interim dividend for 2021 of 5.60p per share (2020 – 5.00p) 2,690 2,416

First interim dividend for 2022 of 5.40p per share (2021 – 5.20p) 2,594 2,513

Second interim dividend for 2022 of 5.40p per share (2021 – 5.20p) 2,594 2,513

Third interim dividend for 2022 of 5.40p per share (2021 – 5.20p) 2,583 2,513

10,461 9,955

The fourth interim dividend of 6.50p per Ordinary share, payable on 9 January 2023 to shareholders on the register on 9

December 2022 has not been included as a liability in the financial statements.

74 abrdn Equity Income Trust plc

The total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections

1158-1159 of the Corporation Tax Act 2010 are considered, are set out below.

2022 2021

£’000 £’000

First interim dividend for 2022 of 5.40p per share (2021 – 5.20p) 2,594 2,513

Second interim dividend for 2022 of 5.40p per share (2021 – 5.20p) 2,594 2,513

Third interim dividend for 2022 of 5.40p per share (2021 – 5.20p) 2,583 2,513

Fourth interim dividend for 2022 of 6.50p per share (2021 – 5.60p) 3,079 2,690

10,850 10,229

8. Return per Ordinary share

2022 2021

£’000 p £’000 p

Basic

Revenue return 12,244 25.51 9,693 20.06

Capital return (25,409) (52.93) 45,024 93.18

Total return (13,165) (27.42) 54,717 113.24

Weighted average number of Ordinary shares in issue

48,004,224 48,320,851

Calculated excluding shares held in Treasury where applicable.

Notes to the Financial Statements

Continued

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9. Investments

2022 2021

£’000 £’000

Fair value through profit or loss

Opening book cost 191,866 188,007

Opening fair value gains/(losses) on investments held 15,552 (30,208)

Opening fair value 207,418 157,799

Movements in the year:

Purchases at cost 40,986 59,701

Sales – proceeds (44,393) (56,160)

(Losses)/gains on investments (24,281) 46,078

Closing fair value 179,730 207,418

Closing book cost 195,060 191,866

Closing fair value (losses)/gains on investments held (15,330) 15,552

Closing fair value 179,730 207,418

The Company received £44,393,000 (2021 – £56,160,000) from investments sold in the year. The book cost of these

investments when they were purchased was £37,797,000 (2021 – £55,842,000). These investments have been revalued over

time and until they were sold any unrealised gains/(losses) were included in the fair value of the investments.

Transaction costs. During the year, expenses were incurred in acquiring or disposing of investments classified as fair value

through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the

Statement of Comprehensive Income. The total costs were as follows:

2022 2021

£’000 £’000

Purchases 201 261

Sales 30 44

Total 231 305

76 abrdn Equity Income Trust plc

10. Debtors: amounts falling due within one year

2022 2021

£’000 £’000

Amounts due from brokers 9 670

Net dividends and interest receivable 2,056 611

Other debtors 278 41

2,343 1,322

11. Creditors: amounts falling due within one year

2022 2021

£’000 £’000

Bank loan 25,000 25,000

Unamortised loan arrangement expenses (21) (49)

24,979 24,951

Other creditors

Amounts due to brokers 2,247 3,823

Investment management fee payable 530 298

Sundry creditors 375 190

3,152 4,311

On 28 June 2021, the Company agreed a new two year £30 million revolving credit facility with the Royal Bank of Scotland

International Limited, which has a maturity date of 25 June 2023.

The facility agreement contains the following covenants:

– The Company’s gross assets will not be less than £120 million (2021 – £120 million) at any time.

– The Company’s total net debt will not exceed 25% (2021 – 25%) of net asset value at any time.

All covenants were complied with throughout the year.

At 30 September 2022, and the date of signing this Report, £25 million had been drawn down, at a SONIA rate of 2.791%. This is

due to mature on 30 November 2022.

Notes to the Financial Statements

Continued

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12. Called-up share capital

2022 2021

£’000 £’000

Issued and fully paid:

Ordinary shares of 25p each

Opening balance of 48,033,474 (2021 – 48,327,960) Ordinary shares 12,009 12,083

Buyback of 561,535 (2021 – 294,486) Ordinary shares (141) (74)

Closing balance of 47,471,939 (2021 – 48,033,474) Ordinary shares 11,868 12,009

Treasury shares

Opening balance of 1,145,293 (2021 – 850,807) Treasury shares 286 212

Buyback of 561,535 (2021 – 294,486) Ordinary shares to Treasury 141 74

Closing balance of 1,706,828 (2021 – 1,145,293) treasury shares 427 286

12,295 12,295

During the year, 561,535 Ordinary shares (2021 – 294,486) were repurchased for a consideration of £1,806,000

(2021 – £1,027,000). The total shares held in Treasury is 1,706,828 (2021 – 1,145,293).

Subsequent to the year end, a further 100,417 Ordinary shares were repurchased to be held in Treasury for a

consideration of £315,000.

13. Capital reserve

2022 2021

£’000 £’000

Opening balance 97,491 53,494

Unrealised (losses)/gains on investment holdings (30,877) 45,760

Gains on realisation of investments at fair value 6,596 318

Currency gains/(losses) 1 (2)

Investment management fee charged to capital (782) (799)

Finance costs charged to capital (347) (253)

Buyback of Ordinary shares into treasury (1,806) (1,027)

Closing balance 70,276 97,491

The capital reserve includes investment holding losses amounting to £15,330,000 (2021 - gains of £15,552,000)

as disclosed in note 9.

78 abrdn Equity Income Trust plc

14. Net asset value per share

The net asset value per share and the net assets attributable to Ordinary shares at the end of the year calculated in

accordance with the Articles of Association were as follows:

2022 2021

Basic

Total shareholders’ funds (£’000) 157,499 182,931

Number of Ordinary shares in issue at year end

47,471,939 48,033,474

Net asset value per share 331.77p 380.84p

Excludes shares in issue held in treasury where applicable.

15. Financial instruments

Risk management. The Company’s financial instruments comprise securities and other investments, cash balances, loans and

debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting

settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions for the

purpose of managing currency and market risks arising from the Company’s activities.

The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk,

currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.

The Board regularly reviews and agrees policies for managing each of these risks. The Manager’s policies for managing these

risks are summarised below and have been applied throughout the year.

(i) Market risk. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of

changes in market prices.

This market risk comprises three elements - interest rate risk, currency risk and other price risk.

Interest rate risk

Interest rate movements may affect:

- the level of income receivable on cash deposits;

- interest payable on the Company’s variable rate borrowings.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into

account when making investment and borrowing decisions.

It is the Company’s policy to increase its exposure to equity market price risk through the judicious use of borrowings.

When borrowed funds are invested in equities, the effect is to magnify the impact on Shareholders’ funds of changes -

both positive and negative - of revenue and capital returns.

Notes to the Financial Statements

Continued

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Interest rate profile

The interest rate risk profile of the portfolio of financial assets and liabilities at the Statement of Financial Position date

was as follows:

Weighted

average Weighted

period for average

which interest Fixed Floating

rate is fixed rate rate rate

As at 30 September 2022 Years % £’000 £’000

Assets

Money market funds – 6.67 – 2,503

Cash deposits – – – 1,054

Total assets – 6.67 – 3,557

Liabilities

Bank loans – 2.79 24,979 –

Total liabilities – 2.79 24,979 –

Weighted

average Weighted

period for average

which interest Fixed Floating

rate is fixed rate rate rate

As at 30 September 2021 Years % £’000 £’000

Assets

Money market funds – 0.08 – 3,408

Cash deposits – – – 45

Total assets – 0.08 – 3,453

Liabilities

Bank loans – 1.15 24,951 –

Total liabilities – 1.15 24,951 –

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The

weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of

the loans.

The floating rate assets consist of money market funds and cash deposits on call earning interest at prevailing

market rates.

All financial liabilities are measured at amortised cost.

80 abrdn Equity Income Trust plc

Maturity profile. The Company did not hold any assets at 30 September 2022 or 30 September 2021 that had a maturity

date. The £25 million (2021 – £25 million) loan drawn down had a maturity date of 30 November 2022 (2021 – 30

December 2021) at the Statement of Financial Position date.

Interest rate sensitivity. The sensitivity analysis below have been determined based on the exposure to interest rates at

the Statement of Financial Position date and with the stipulated change taking place at the beginning of the financial

year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Company’s :

– profit for the year ended 30 September 2022 would decrease/increase by £214,000 (2021 – decrease/increase by

£215,000). This is mainly attributable to the Company’s exposure to interest rates on its fixed rate borrowings and floating

rate cash balances.

Currency risk. All of the Company’s investments are in Sterling. The Company can be exposed to currency risk when it

receives dividends in currencies other than Sterling. The current policy is not to hedge this risk but this policy is kept under

constant review by the Board.

Other price risk. Other price risks (ie changes in market prices other than those arising from interest rate or currency risk)

may affect the value of the quoted investments.

It is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from

factors specific to a particular sector. The Manager actively monitors market prices throughout the year and reports to

the Board. The investments held by the Company are listed on the London Stock Exchange.

Other price risk sensitivity. If market prices at the Statement of Financial Position date had been 10% higher or lower while

all other variables remained constant, the return attributable to ordinary shareholders and equity for the year ended 30

September 2022 would have increased/decreased by £17,973,000 (2021 – increase/decrease of £20,742,000). This is

based on the Company’s equity portfolio held at each year end.

(ii) Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with

financial liabilities.

Liquidity risk is not considered to be significant as the Company’s assets comprise mainly readily realisable securities,

which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan

and overdraft facilities (note 11).

(iii) Credit risk. This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could

result in the Company suffering a loss.

The risk is not significant, and is managed as follows:

- where the investment manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is

taken into account so as to minimise the risk to the Company of default;

- investment transactions are carried out with a large number of brokers, whose credit-standing and credit rating is

reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one

broker;

- cash and money invested in AAA money market funds are held only with reputable institutions.

None of the Company’s financial assets are secured by collateral or other credit enhancements.

Notes to the Financial Statements

Continued

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Credit risk exposure. In summary, compared to the amount in the Statement of Financial Position, the maximum

exposure to credit risk at 30 September was as follows:

2022 2021

Statement

Financial

Position

Maximum

exposure

Financial

Position

Maximum

exposure

£’000 £’000 £’000 £’000

Current assets

Debtors 2,343 2,343 1,322 1,322

Money market funds (indirect exposure) 2,503 2,503 3,408 3,408

Cash and short term deposits 1,054 1,054 45 45

5,900 5,900 4,775 4,775

None of the Company’s financial assets is past due or impaired.

Fair values of financial assets and financial liabilities. The fair value of borrowings is not materially different to the accounts

value in the financial statements of £24,979,000 (note 11).

16. Fair value hierarchy

FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the

inputs used in making the measurements. The fair value hierarchy shall have the following classifications:

Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the

measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market date) for the

asset or liability, either directly or indirectly.

Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

All of the Company’s investments are in quoted equities (2021 – same) that are actively traded on recognised stock

exchanges, with their fair value being determined by reference to their quoted bid prices at the reporting date. The total value

of the investments (2022 – £179,730,000; 2021 – £207,418,000) have therefore been deemed as Level 1.

82 abrdn Equity Income Trust plc

17. Capital management policies and procedures

The Company’s capital management objectives are:

– to ensure that the Company will be able to continue as a going concern; and

– to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and

debt. The Board normally seeks to limit gearing to 15% of net assets. At the year end the Company had gearing of 15.0% of

net assets (2021 - 13.5%) (see page 84 for more details).

The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes the

nature and planned level of gearing, which takes account of the Manager’s views on the market and the extent to which

revenue in excess of that which is required to be distributed should be retained.

The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting

period. Any year end positions are presented in the Statement of Financial Position.

The Company does not have any externally imposed capital requirements.

18. Contingent liabilities

As at 30 September 2022 there were no contingent liabilities (2021 – none).

19. Segmental Information

The Company is engaged in a single segment of business, which is to invest in equity securities. All of the Company’s activities

are interrelated and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the

Company as one segment.

20. Related party transactions and transactions with the Manager

Related party transactions. Fees payable during the year to the Directors and their interests in shares of the Company are

considered to be related party transactions and are disclosed within the Directors’ Remuneration Report on pages 50 to 51.

The balance of fees due to Directors at the year end was £30,000 (2021 – £nil).

Transactions with the Manager. abrdn Fund Managers Limited received fees for its services as Manager. Further details are

provided in notes 3 and 4.

Notes to the Financial Statements

Continued

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Alternative performance measures (‘APM’) are numerical measures of the Company’s current, historical or future performance,

financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The

Company’s applicable financial framework includes FRS 102 and the AIC SORP.

The Directors assess the Company’s performance against a range of criteria which are viewed as particularly relevant for closed-

ended investment companies. Where the calculation of an APM is not detailed within the financial statements, an explanation of the

methodology employed is provided below:

Discount & premium

A discount is the percentage by which the market price of an investment trust is lower than the Net Asset Value (“NAV”) per share. A

premium is the percentage by which the market price per share of an investment trust exceeds the NAV per share.

30 September 2022 30 September 2021

Share price 302.50p 349.00p

Net asset value per share 331.77p 380.84p

Discount 8.8% 8.4%

Dividend yield

Dividend yield measures the dividend per share as a percentage of the share price per share.

30 September 2022 30 September 2021

Share price 302.50p 349.00p

Dividend per share 22.70p 21.20p

Dividend yield 7.5% 6.1%

Alternative Performance Measures

84 abrdn New Dawn Investment Trust PLC

Net gearing

Net gearing measures the total borrowings less cash and cash equivalents divided by Shareholders’ funds, expressed as a

percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due from and to brokers at the period end as

well as cash and short-term deposits.

30 September 2022 30 September 2021

£’000 £’000

Total borrowings a 24,979 24,951

Cash and short-term deposits 1,054 45

Investments in AAA-rated money-market funds 2,503 3,408

Amounts due from brokers 9 670

Amounts payable to brokers (2,247) (3,823)

Total cash and cash equivalents b 1,319 300

Gearing (borrowings less cash & cash equivalents) c=(a-b) 23,660 24,651

Shareholders’ funds d 157,499 182,931

Net gearing e=(c/d) 15.0% 13.5%

Ongoing charges ratio

The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC, which is defined as the total of

investment management fees and recurring administrative expenses and expressed as a percentage of the average daily net asset

values published throughout the period.

30 September 2022 30 September 2021

£’000 £’000

Investment management fees 1,117 1,141

Administrative expenses 464 373

Less: non-recurring charges

(42) (2)

Ongoing charges a 1,539 1,512

Average net assets b 178,283 173,473

Ongoing charges ratio (excluding look-through costs) c=(a/b) 0.86% 0.87%

Look-through costs

d 0.05% 0.06%

Ongoing charges ratio (including look-through costs) e=c+d 0.91% 0.93%

Comprises professional fees not expected to recur.

Calculated in accordance with AIC guidance issued in October 2020 to include the Company’s share of costs of holdings in investment companies on a look-through basis.

The ongoing charges ratio provided in the Company’s Key Information Document is calculated in line with the PRIIPs regulations, which

includes financing and transaction costs.

Alternative Performance Measures

Continued

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Total return

NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking

into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-

ended and closed-ended competitors, and the Reference Index, respectively.

Year ended 30 September 2022 NAV Price

Opening at 1 October 2021 a 380.8p 349.0p

Closing at 30 September 2022 b 331.8p 302.5p

Price movements c=(b/a)-1 (12.9%) (13.3%)

Dividend reinvestment

d 5.3% 5.5%

Total return c+d (7.6%) (7.8%)

Year ended 30 September 2021 NAV Price

Opening at 1 October 2020 a 288.0p 252.0p

Closing at 30 September 2021 b 380.8p 349.0p

Price movements c=(b/a)-1 32.2% 38.5%

Dividend reinvestment

d 7.7% 8.6%

Total return c+d 39.9% 47.1%

NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return

involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.

86 abrdn Equity Income Trust plc

Corporate

Information

The Manager is a subsidiary of abrdn plc.

Assets under the management of the abrdn

investment division, were equivalent to

£508 billion at 30 June 2022.

abrdn Equity Income Trust plc 87

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abrdn Investment Management Limited

The Company’s Investment Manager is abrdn Investment

Management Limited (previously known as Standard Life

Investments Limited), a subsidiary of abrdn whose assets

under management and administration were £508billion

as at 30 June 2022.

The Investment Team Senior Managers

Thomas Moore

Portfolio Manager

Thomas is a Senior Investment Director within the UK

equities team. He began his career in 1998, joining

Schroder Investment Management as Assistant Fund

Manager, UK Equities. He joined abrdn in 2002 as an

Investment Analyst. He then managed EMEA portfolios

before moving to the UK equities team in 2006.

Thomas began managing abrdn Equity Income Trust plc

in November 2011.

Iain Pyle

Investment Director

Iain is an Investment Director in the UK Equities team,

having joined abrdn in 2015. He is the lead manager of

Shires Income PLC and is deputy manager for Murray

Income Trust PLC and abrdn Equity Income Trust plc.

Within his role, he also manages the UK Equity High

Income Fund and has sector responsibility for oil &

gas and banks.

Information about the Investment Mana

88 abrdn Equity Income Trust plc

Alternative Investment Fund Managers

Directive (“AIFMD”) and Pre-Investment

Disclosure Document (“PIDD”)

The Company has appointed abrdn Fund Managers

Limited as its alternative investment fund manager and

BNP Paribas Trust Corporation UK Limited as its Depositary

under the AIFMD.

The AIFMD requires abrdn Fund Managers Limited, as the

Company’s AIFM, to make available to investors certain

information prior to such investors’ investment in the

Company. Details of the leverage and risk policies which

the Company is required to have in place under the AIFMD

are published in the Company’s PIDD which can be found

on its website: abrdnequityincome.com. The periodic

disclosures required to be made by the AIFM under the

AIFMD are set out on page 95.

Investor Warning: Be alert to share fraud and

boiler room scams

abrdn has been contacted by investors informing us that

they have received telephone calls and emails from

people who have offered to buy their investment

company shares, purporting to work for abrdn or for third

party firms. abrdn has also been notified of emails

claiming that certain investment companies under our

management have issued claims in the courts against

individuals. These may be scams which attempt to gain

your personal information with which to commit identity

fraud or could be ‘boiler room’ scams where a payment

from you is required to release the supposed payment for

your shares. These callers/senders do not work for abrdn

and any third party making such offers/claims has no link

with abrdn.

abrdn does not ‘cold-call’ investors in this way. If you have

any doubt over the veracity of a caller, do not offer any

personal information, end the call, and contact our

Customer Services Department.

The Financial Conduct Authority provides advice with

respect to share fraud and boiler room scams at:

fca.org.uk/consumers/scams.

Shareholder Enquiries

For queries regarding shareholdings, lost certificates,

dividend payments, registered details and related

matters, shareholders holding their shares directly in the

Company are advised to contact the Registrars (see

Corporate Information). Changes of address must be

notified to the Registrars in writing.

Any general queries, comments or complaints, including

for the specific attention of the Chairman or Senior

Independent Director, should be directed to the Company

Secretary in writing (see Contact Addresses) or by email

to: CEF.CoSec@abrdn.com.

For questions about an investment held through the abrdn

Investment Plan for Children, Investment Trust Share Plan

or Investment Trust Stocks and Shares ISA, please

telephone the Manager’s Customer Services Department

on 0808 500 0040, email inv.trusts@abrdn.com

or write to:

abrdn Investment Trusts

PO Box 11020

Chelmsford

Essex CM99 2DB

Dividend Tax Allowance

The annual tax-free personal allowance for dividend

income for UK investors is £2,000 for the 2022/23 tax year.

Above this amount, individuals pay tax on their dividend

income at a rate dependent on their income tax bracket

and personal circumstances. The Company provides

registered shareholders with a confirmation of dividends

paid and this should be included with any other dividend

income received when calculating and reporting to HMRC

total dividend income received. It is the shareholder’s

responsibility to include all dividend income when

calculating any tax liability.

How to Invest

Investors can buy and sell shares in the Company directly

through a stockbroker or indirectly through a lawyer,

accountant or other professional adviser. Alternatively, for

retail clients, shares can be bought directly through the

abrdn Investment Plan for Children, Investment Trust

Share Plan or Investment Trust Individual Savings

Account (“ISA”), or through the many broker platforms

which offer the opportunity to acquire shares in

investment companies.

Investor Information

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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

abrdn Investment Plan for Children

abrdn runs an Investment Plan for Children (the “Children’s

Plan”) which covers a number of investment companies

under its management including the Company. Anyone

can invest in the Children’s Plan, including parents,

grandparents and family friends (subject to the eligibility

criteria as stated within the terms and conditions). All

investments are free of dealing charges on the initial

purchase of shares, although investors will suffer the bid-

offer spread, which can, on some occasions, be a

significant amount. Lump sum investments start at £150

per trust, while regular savers may invest from £30 per

month. Investors simply pay Government Stamp Duty

(currently 0.5%) where applicable on entry. Selling costs

are £10 + VAT. There is no restriction on how long an

investor need invest in the Children’s Plan, and regular

savers can stop or suspend participation by instructing

abrdn in writing at any time. In common with other

schemes of this type, all investments are held in nominee

accounts. Investors have full voting and other rights of

share ownership.

abrdn Investment Trust Share Plan

abrdn operates an investment trust Share Plan (the “Plan”)

through which shares in the Company can be purchased.

There are no dealing charges on the initial purchase of

shares, although investors will suffer the bid-offer spread,

which can, on some occasions, be a significant amount.

Lump sum investments start at £250, while regular savers

may invest from £100 per month. Investors only pay

Government Stamp Duty (currently 0.5%) on entry where

applicable. Selling costs are £10 + VAT. There is no

restriction on how long an investor need invest in a Plan,

and regular savers can stop or suspend participation by

instructing abrdn in writing at any time.

abrdn Investment Trust ISA

abrdn operates an Investment Trusts ISA (“ISA”) through

which an investment may be made of up to £20,000 in the

2022/23 tax year.

There are no brokerage or initial charges for the ISA,

although investors will suffer the bid-offer spread, which

can be a significant amount. Investors only pay

Government Stamp Duty (currently 0.5%) on purchases

where applicable. Selling costs are £15 + VAT. The annual

ISA administration charge is £24 + VAT, calculated

annually and applied on 31 March (or the last business day

in March) and collected soon thereafter either by direct

debit or, if there is no valid direct debit mandate in place,

from the available cash in the ISA prior to the distribution or

reinvestment of any income, or, where there is insufficient

cash in the ISA, from the sale of investments held in the ISA.

Under current legislation, investments in ISAs can grow

free of capital gains tax.

ISA Transfer

Investors can choose to transfer previous tax year

investments to abrdn, which can be invested in the

Company while retaining their ISA wrapper. The minimum

lump sum for an ISA transfer is £1,000 and is subject to a

minimum per trust of £250.

Nominee Accounts and Voting Rights

In common with other schemes of this type, all

investments in the abrdn Share Plan, Investment Plan for

Children and Investment Trusts ISA are held in nominee

accounts and investors have full voting and other rights of

share ownership.

How to Attend and Vote at Company

Meetings

Investors who hold their shares in the Company via the abrdn

Investment Plan for Children, Investment Trust Share Plan

and Investment Trust Stocks and Shares ISA and who would

like to attend and vote at Company meetings (including

AGMs) will be sent for completion and return a Letter of

Direction in connection with the relevant meeting.

Investors who hold their shares via another platform or

share plan provider (for example Hargreaves Lansdown,

Interactive Investor or AJ Bell) and would like to attend and

vote at Company meetings (including AGMs) should

contact their platform or share plan provider directly to

make arrangements.

90 abrdn Equity Income Trust plc

Investors who hold their shares through platforms and

have their shares held through platform nominees, may

not necessarily receive notification of general meetings

and are advised to keep themselves informed of

Company business by referring to the Company’s

website. Where voting is required, and the Board

encourages shareholders to vote at all general meetings

of the Company, shareholders with their holdings in

nominees, need to instruct the nominee to vote on their

behalf and should do so in good time before the meetings.

Keeping You Informed

Further information about the Company may be found on

its dedicated website: abrdnequityincome.com.

This provides access to information on the Company’s

share price performance, capital structure, London Stock

Exchange announcements, current and historic Annual

and Half-Yearly Reports, and the latest monthly factsheet

on the Company issued by the Manager.

Details are also available at: invtrusts.co.uk.

Twitter:

@abrdnTrusts

LinkedIn:

abrdn Investment Trusts

Key Information Document (“KID”)

The KID relating to the Company and published by the

Manager can be found on the Company’s website.

Literature Request Service

For literature and application forms for abrdn investment

trust products, please contact us through: invtrusts.co.uk.

Or telephone: 0808 500 4000

Or write to:

abrdn Investment Trusts

PO Box 11020

Chelmsford

Essex CM99 2DB

Terms and Conditions

Terms and conditions for abrdn managed savings

products can also be found on the Manager’s website at:

invtrusts.co.uk.

Suitable for Retail/NMPI Status

The Company’s shares are intended for investors,

primarily in the UK, including retail investors, professionally-

advised private clients and institutional investors. Investors

should consider consulting a financial adviser who

specialises in advising on the acquisition of shares and

other securities before acquiring shares. Investors should

be capable of evaluating the risks and merits of such an

investment and should have sufficient resources to bear

any loss that may result.

The Company currently conducts its affairs so that the

securities issued by the Company can be recommended

by a financial adviser to ordinary retail investors in

accordance with the Financial Conduct Authority’s rules in

relation to non-mainstream pooled investments (“NMPIs”)

and intends to continue to do so for the foreseeable future.

The Company’s securities are excluded from the Financial

Conduct Authority’s restrictions which apply to NMPIs

because they are securities issued by an investment trust.

Online Dealing

There are a number of online dealing platforms for private

investors that offer share dealing, ISAs and other means to

invest in the Company. Real-time execution-only

stockbroking services allow you to trade online, manage

your portfolio and buy UK listed shares. These sites do not

give advice. Some comparison websites also look at

dealing rates and terms.

Discretionary Private Client Stockbrokers

If you have a large sum to invest, you may wish to contact

a discretionary private client stockbroker. They can

manage your entire portfolio of shares and will advise you

on your investments. To find a private client stockbroker

visit The Personal Investment Management and Financial

Advice Association at: pimfa.co.uk.

Financial Advisers

To find an adviser who recommends on investment trusts

visit: unbiased.co.uk.

Regulation of Stockbrokers

Before approaching a stockbroker, always check that

they are regulated by the Financial Conduct Authority:

fca.org.uk/firms/financial-services-register

Investor Information

Continued

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Note

Please remember that past performance is not a guide to

the future. Stock market and currency movements may

cause the value of shares and the income from them to

fall as well as rise and investors may not get back the

amount they originally invested.

As with all equity investments, the value of investment

trusts purchased will immediately be reduced by the

difference between the buying and selling prices of the

shares, the market maker’s spread.

Investors should further bear in mind that the value of any

tax relief will depend on the individual circumstances of

the investor and that tax rates and reliefs, as well as the

tax treatment of ISAs, may be changed by future

legislation.

The information on pages 88 to 91 has been approved for

the purposes of Section 21 of the Financial Services and

Markets Act 2000 (as amended by the Financial Services

Act 2012) by abrdn Fund Managers Limited which is

authorised and regulated by the Financial Conduct

Authority in the United Kingdom

92 abrdn Equity Income Trust plc

abrdn or abrdn plc (formerly Standard Life

Aberdeen plc) or the Group

The abrdn plc group of companies. Standard Life

Aberdeen plc changed its name to abrdn plc in July 2021.

AFML or AIFM or Manager

abrdn Fund Managers Limited (“AFML”), formerly

Aberdeen Standard Fund Managers Limited, is a wholly

owned subsidiary of abrdn Holdings Limited, which is part

of abrdn, and acts as the alternative investment fund

manager (“AIFM”) for the Company. AFML is authorised

and regulated by the Financial Conduct Authority.

AIC

The Association of Investment Companies.

AIFMD

The Alternative Investment Fund Managers Directive. The

AIFMD is European legislation which created a European-

wide framework for regulating managers of ‘alternative

investment funds’ (“AIFs”). It is designed to regulate any

fund which is not a UCITS fund and which is managed

and/or marketed in the EU. The Company has been

designated as an AIF.

Alternative Performance Measures or APMs

Numerical measures of the Company’s current, historical

or future performance, financial position, other than the

financial measures defined or specified in the applicable

financial framework. The Company’s applicable financial

framework includes FRS102 and the AIC SORP.

Capital Return Per Share

The realised and unrealised gains and losses of the

investment portfolio net of costs, interest and tax of the

Company that have been allocated to capital, divided by

the weighted average number of shares in issue during

the year.

Closed-End Fund

A collective investment scheme which has a fixed number

of shares which are not redeemable from the fund itself.

Unlike open-ended funds, new shares/units are not

created by managers to meet demand from investors;

instead, shares are purchased (or sold) only in the market.

Closed-end funds are normally listed on a recognised

stock exchange, such as the London Stock Exchange, and

shares can be bought and sold on that exchange.

Depositary

A depositary is responsible for cash monitoring, the

custody and safeguarding of the Company’s financial

instruments and monitoring the Company’s compliance

with investment limits and leverage requirements. The

Company’s Depositary is BNP Paribas Trust Corporation

UK Limited.

Discount

The amount by which the market price per share of an

Investment Trust is lower than the Net Asset Value per

share. The discount is normally expressed as a

percentage of the Net Asset Value per share.

Dividend Cover

Revenue return per share divided by dividends per share

expressed as a ratio.

Dividend per Share or DPS

The total of all dividends paid by the Company for the

financial year on a per share basis.

Dividend Yield

The annual dividend expressed as a percentage of the

share price.

Earnings per Share or EPS

The net income after tax of the Company divided by the

weighted average number of shares in issue during the

year. In an Investment Trust this is made up of Revenue

Return Per Share and Capital Return Per Share.

ESG

Environmental, social and governance (ESG) factors,

which are considered in all investment decisions.

Ex-dividend date (“XD date”)

The day before the Record Date. The XD date is normally

about a month before the dividend is paid.

FCA

Financial Conduct Authority.

Gearing or Net Gearing

Gearing is calculated by dividing total borrowings less

cash and cash equivalents by Shareholders’ Funds,

expressed as a percentage.

Glossary of Terms

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Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

Index

A market index calculates the average performance of its

constituents, normally on a weighted basis. It provides a

means against which the performance of individual

instruments can be assessed.

Investment Trust

A type of Closed-End Fund which invests in other

securities, allowing shareholders to share the risks, and

returns, of collective investment.

Key Information Document or KID

The Packaged Retail and Insurance-based Investment

Products (“PRIIPS”) Regulation requires the Manager, as

the Company’s PRIIP ‘manufacturer’, to prepare a Key

Information Document (“KID”) in respect of the Company.

This KID must be made available by the Manager to retail

investors prior to them making any investment decision

and is available via the Company’s website. The Company

is not responsible for the information contained in the KID

and investors should note that the procedures for

calculating the risks, costs and potential returns are

prescribed by law. The figures in the KID may not reflect

the expected returns for the Company and anticipated

performance.

Leverage

For the purposes of the AIFMD, leverage is any method

which increases the Company’s exposure, including the

borrowing of cash and the use of derivatives. It is

expressed as a ratio between the Company’s exposure

and its Net Asset Value and can be calculated on a gross

and a commitment method. Under the gross method,

exposure represents the sum of the Company’s positions

after the deduction of sterling cash balances, without

taking into account any hedging and netting

arrangements. Under the commitment method, exposure

is calculated without the deduction of sterling cash

balances and after certain hedging and netting positions

are offset against each other.

Market Capitalisation

The latest price of an Ordinary share multiplied by the

number of shares in issue.

Net Asset Value, NAV or Shareholders’ Funds

The value of total assets less liabilities. Liabilities for this

purpose include current and long-term liabilities. The Net

Asset Value divided by the number of shares in issue

produces the Net Asset Value per Ordinary share.

Ongoing Charges Ratio

Ratio of total expenses as a percentage of average daily

Shareholders’ Funds calculated as per the AIC’s industry

standard method.

Pre-Investment Disclosure Document

(“PIDD”)

The AIFM and the Company are required to make certain

disclosures available to investors in accordance with the

AIFMD. Those disclosures that are required to be made

pre-investment are included within a PIDD, which can be

found on the Company’s website.

Premium

The amount by which the market price per share of an

Investment Trust exceeds the Net Asset Value per share.

The premium is normally expressed as a percentage of

the Net Asset Value per share.

Price/Earnings Ratio

This is calculated by dividing the market price per share by

the earnings per share. The calculation assumes no

change in earnings but in practice the multiple reflects the

stock market’s view of a company’s prospects and profit

growth potential.

Realised Gains / Losses

The profit / loss on the sale of investments during the year.

Record Date

The date when an investor needs to be holding a share in

order to qualify for a forthcoming dividend.

Relative Performance

Performance of the Company relative to the FTSE All-

Share Index.

94 abrdn Equity Income Trust plc

Retail Prices Index (“RPI”)

One of the main measures of consumer inflation in the UK,

produced by the Office for National Statistics.

Revenue Return Per Share

The net income from dividends and interest received,

after costs, interest and tax allocated to revenue, divided

by the weighted average number of shares in issue during

the year.

Revenue Reserves

The total of undistributed revenue earnings from prior

years. This is available for distribution to shareholders by

way of dividend.

Total Assets

Total assets less current liabilities (before deducting Prior

Charge as defined above), as per the Statement of

Financial Position.

Total Return

The theoretical return including reinvesting each dividend

in additional shares in the Company on the day that the

shares go ex-dividend. The NAV Total Return involves

investing the same net dividend in the NAV of the

Company on the ex-dividend date.

Unrealised Gains / Losses

The profit / loss on the revaluation of the investment

portfolio at the end of the period.

Glossary of Terms

Continued

abrdn Equity Income Trust plc 95

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

abrdn Fund Managers Limited (“AFML”) and the Company are required to make certain disclosures available to

investors in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”). Those disclosures that are

required to be made pre-investment are included within a pre-investment disclosure document (“PIDD”) which can be

found on the Company’s website.

There have been no material changes to the disclosures contained within the PIDD since its most recent update in

December 2021.

The periodic disclosures as required under the AIFMD to investors are made below:

· information on the investment strategy, geographic and sector investment focus and principal stock exposures is

included in the Strategic Report;

· none of the Company’s assets are subject to special arrangements arising from their illiquid nature;

· the Strategic Report, note 15 to the financial statements and the PIDD together set out the risk profile and risk

management systems in place. There have been no changes to the risk management systems in place in the period

under review and no breaches of any of the risk limits set, with no breach expected;

· there are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity

management systems and procedures employed by AFML; and

· all authorised Alternative Investment Fund Managers are required to comply with the AIFMD Remuneration Code. In

accordance with the Remuneration Code, the AIFM’s remuneration policy is available from the Company Secretary,

abrdn Holdings Limited, on request, and the remuneration disclosures in respect of the AIFM’s reporting period for the

year ended 31 December 2021 are available on the Company’s website.

Leverage

The table below sets out the current maximum permitted limit and actual level of leverage for the Company:

Gross Method Commitment Method

Maximum level of leverage 3.00:1 2.00:1

Actual level at 30 September 2022 1.30:1 1.34:1

There have been no breaches of the maximum level during the period and no changes to the maximum level of

leverage employed by the Company. There have been no changes to the circumstances in which the Company may

be required to post assets as collateral and no guarantees granted under the leveraging arrangement. Changes to the

information contained either within this Annual Report or the PIDD in relation to any special arrangements in place, the

maximum level of leverage which AFML may employ on behalf of the Company, the right of use of collateral or any

guarantee granted under any leveraging arrangement, or any change to the position in relation to any discharge of

liability by the Depositary will be notified via a regulatory news service without undue delay in accordance with

the AIFMD.

The information on this page has been approved for the purposes of Section 21 of the Financial Services and Markets Act

2000 (as amended by the Financial Services Act 2012) by abrdn Fund Managers Limited which is authorised and

regulated by the Financial Conduct Authority in the United Kingdom

AIFMD Disclosures

(

Unaudited

)

96 abrdn Equity Income Trust plc

General

The Annual General Meeting

of abrdn Equity Income Trust plc

will be held at wallacespace

Spitalsfield, 15-25 Artillery Lane,

London, E1 7HA on 2 February 2023

at 11:30 am.

abrdn Equity Income Trust plc 97

Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements

NOTICE IS HEREBY GIVEN that the thirty first Annual General Meeting of abrdn Equity Income Trust plc (“the Company”)

will be held at wallacespace Spitalsfield, 15-25 Artillery Lane, London, E1 7HA on 2 February 2023 at 11:30 am for the

following purposes:

To consider and, if thought fit, pass resolutions 1 to 12 (inclusive) as ordinary resolutions:

1. To receive and adopt the Directors’ Report and financial statements of the Company for the year ended 30

September 2022, together with the independent Auditor’s report thereon.

2. To receive and approve the Directors’ Remuneration Policy.

3. To receive and approve the Directors’ Remuneration Report for the year ended 30 September 2022.

4. To approve the Company’s dividend policy to pay four interim dividends per annum.

5. That, with effect from 1 October 2022, the aggregate annual fees paid to the directors for their services as directors

of the Company shall not exceed £250,000 per annum.

6. To re-elect Caroline Hitch as a Director of the Company.

7. To re-elect Sarika Patel as a Director of the Company.

8. To re-elect Jeremy Tigue as a Director of the Company.

9. To elect Mark Little as a Director of the Company.

10. To re-appoint KPMG LLP as independent Auditor of the Company to hold office until the conclusion of the next

Annual General Meeting at which accounts are laid before the Company.

11. To authorise the Directors to fix the remuneration of the independent Auditor for the year to 30 September 2023.

Special Business

12. That, in substitution for any existing authority, but without prejudice to the exercise of any such authority prior to the

date of the passing of this resolution, the Directors of the Company be and they are hereby generally and

unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the “Act”) to exercise all the

powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any

security into shares in the Company (“Securities”) provided that such authority shall be limited to the allotment of

shares and the grant of rights in respect of shares with an aggregate nominal value of up to £1,184,288

(representing 10% of the Company’s total issued share capital (excluding shares held in treasury) as at the date of

this notice. Such authority shall expire at the conclusion of the next Annual General Meeting of the Company after

the passing of this resolution or on the expiry of 15 months from the passing of this resolution, whichever is the earlier,

unless previously revoked, varied, extended or renewed by the Company in a general meeting, save that the

Company may at any time prior to the expiry of this authority make an offer or enter into an agreement which

would or might require Securities to be allotted or granted after the expiry of such authority and the Directors shall

be entitled to allot or grant Securities in pursuance of such an offer or agreement as if such authority had not

expired.

To consider and, if thought fit, to pass resolutions 13 to 15 (inclusive) as special resolutions:

13. That, subject to the passing of resolution 12 set out above, and in substitution for any existing power but without

prejudice to the exercise of any such power prior to the date of the passing of this resolution, the Directors of the

Company be and they are hereby generally empowered, pursuant to sections 570 and 573 of the Companies Act

2006 (the ‘Act’), to allot equity securities (within the meaning of section 560(1) of the Act), for cash pursuant to the

authority given by resolution 12 above, and to sell treasury shares for cash, as if Section 561(1) of the Act did not

apply to any such allotment or sale provided that this power:

Notice of Annual General Meetin

98 abrdn Equity Income Trust plc

a) expires at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution

or on the expiry of 15 months from the passing of this resolution, whichever is the earlier, unless previously

revoked, varied, extended or renewed by the Company in a general meeting, save that the Company may, at

any time prior to the expiry of this authority, make an offer or enter into an agreement which would or might

require equity securities to be allotted or sold out of treasury after such expiry and the Directors may allot or sell

out of treasury equity securities in pursuance of any such offer or agreement as if the power conferred hereby

had not expired; and

b) shall be limited to the allotment, or sale out of treasury, of equity securities up to an aggregate nominal value of

£1,184,288, being approximately 10% of the nominal value of the issued share capital of the Company

(excluding treasury shares), as at the date of this notice.

14. That, in substitution for any existing authority, but without prejudice to the exercise of any such authority prior to the

date of the passing of this resolution, the Company be and is hereby generally and, subject as hereinafter appears,

unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the “Act”) to make market

purchases (within the meaning of Section 693(4) of the Act) of Ordinary shares of 25p each in the capital of the

Company (the “Shares”) either for retention as treasury shares for future reissue, resale or transfer, or for

cancellation provided always that:

a) the maximum number of Shares hereby authorised to be purchased shall be 7,100,991, or, if less, the number

representing approximately 14.99% of the Company’s issued share capital (excluding shares held in treasury) at

the date of the passing of this resolution;

b) the minimum price (exclusive of expenses) which may be paid for each Share shall be 25p;

c) the maximum price (exclusive of expenses) which may be paid for a Share is the higher of (i) 105% of the

average of the middle market quotations (as derived from the Daily Official List of the London Stock Exchange)

for the Shares over the five business days immediately preceding the date of purchase and (ii) the higher of the

last independent trade and the highest current independent bid on the trading venue which the purchase is

carried out; and

d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the

Company after the passing of this resolution or on the expiry of 15 months from the passing of this resolution,

whichever is earlier, unless previously revoked, varied, extended or renewed by the Company in a general

meeting, save that the Company may, at any time prior to the expiry of this authority, enter into a contract to

purchase shares under such authority which will or might be completed or executed wholly or partly after the

expiration of such authority and may make a purchase of Shares pursuant to any such contract.

15. That a general meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice.

By order of the Board

abrdn Holdings Limited

Company Secretary

30 November 2022

Registered Office

Bow Bells House

1 Bread Street

London EC4M 9HH

Notice of Annual General Meetin

Continued

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Notes

i. A shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak

and vote instead of him/her or on his/her behalf at the meeting. A proxy need not be a shareholder. A shareholder

may appoint more than one proxy, provided that each proxy is appointed to attend, speak and vote in respect of a

different share or shares. If you wish your proxy to speak on your behalf at the meeting, you will need to appoint your

own choice of proxy (not the Chair of the meeting) and give instructions directly to them. Appointing a proxy will not

prevent a shareholder from attending in person and voting at the meeting. A proxy form which may be used to

make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form and

believe that you should, or if you would like to appoint more than one proxy, please contact the Company’s

Registrar, Computershare Investor Services PLC on 0370 707 1150. In the case of joint holders, the vote of the first

named in the register of members of the Company who tenders a vote, whether in person or by proxy, shall be

accepted to the exclusion of the votes of other joint holders.

ii. To be valid, the appointment of a proxy, and the original or duly certified copy of the power of attorney or other

authority, if any, under which it is signed or authenticated, should be sent to the Company’s Registrar,

Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ so as to arrive not less than

48 hours (excluding non-working days) before the time fixed for the meeting.

iii. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those

shareholders registered in the register of members of the Company at close of business on 31 January 2023 (or, if

the meeting is adjourned, 48 hours (excluding non-working days) before the time fixed for the adjourned meeting)

shall be entitled to attend or vote at the meeting in respect of the number of Ordinary shares registered in their

name at that time. In each case, changes to entries on the register of members of the Company after that time shall

be disregarded in determining the rights of any person to attend or vote at the meeting.

iv. Any shareholder holding 3% or more of the total voting rights of the Company who appoints a person other than the

Chair of the meeting as his or her proxy(ies) will need to ensure that both he or she and his/her proxy(ies) comply

with their respective disclosure obligations under the FCA Disclosure Guidance and Transparency Rules.

v. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service

may do so for the meeting and any adjournment(s) thereof by utilising the procedures described in the CREST

Manual and/or by logging in to the website www.euroclear. com/CREST. CREST personal members or other CREST

sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to

their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

vi. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST

Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International Limited’s (“EUI”)

specifications and must contain the information required for such instructions, as described in the CREST Manual.

The message must be transmitted so as to be received by the issuer’s agent (ID number 3RA50) by 11:30 am on 31

January 2023 (or, if the meeting is adjourned, 48 hours (excluding non-working days) before the time fixed for the

adjourned meeting). For this purpose, the time of receipt will be taken to be the time (as determined by the

timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve

the message by enquiry to CREST in the manner prescribed by CREST.

vii.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does

not make available special procedures in CREST for any particular messages. Normal system timings and limitations

will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member

concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed

a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as

shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In

this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are

referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system

and timings.

100 abrdn Equity Income Trust plc

viii. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of

the Uncertificated Securities Regulations 2001.

ix. A person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to

enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder

by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for

the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may,

under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.

The statements of the rights of members in relation to the appointment of proxies in Notes (i) and (ii) above do not

apply to a Nominated Person. The rights described in those Notes can only be exercised by registered members of

the Company.

x. The terms of appointment of the Directors of the Company are available for inspection on any day (except

Saturdays, Sundays and bank holidays) from the date of this notice until the date of the meeting during usual

business hours at the registered office of the Company and will, on the date of the meeting, be available for

inspection at the venue of the meeting from 15 minutes before the meeting until the conclusion of the meeting.

xi. Shareholders are advised that, unless otherwise stated, any telephone number, website or email address which

may be set out in this notice of Annual General Meeting or in any related documents (including the proxy form or

form of direction) is not to be used for the purposes of serving information or documents on, or otherwise

communicating with, the Company for any purposes other than those expressly stated.

xii. Following the meeting, the results of the voting at the meeting and the numbers of proxy votes cast for and against

and the number of votes actively withheld in respect of each of the resolutions will be announced via a Regulatory

Information Service and placed on the Company’s website: abrdnequityincome.com.

xiii. It is possible that, pursuant to requests made by members of the Company under Section 527 of the Companies Act

2006, the Company may be required to publish on a website a statement setting out any matter relating to: (i) the

audit of the Company’s accounts (including the Auditor’s report and the conduct of the audit) that are to be laid

before the meeting: or (ii) any circumstances connected with an auditor of the Company ceasing to hold office

since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the

Companies Act 2006. The Company will be required to do so once it has received such requests either from

members representing at least 5% of the voting rights of the Company or from at least 100 members who have a

relevant right to vote and hold shares in the Company on which there has been paid up an average sum per

member of at least £100. Such requests must be made in writing and must state the member’s full name and

address and be sent to the Company’s registered office. The Company may not require the members requesting

any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006.

xiv. As at 6pm on 29 November 2022 (being the latest practicable date prior to publication of this notice) the

Company’s issued share capital comprised 47,371,522 Ordinary shares of 25p each. Each Ordinary share (other

than any Ordinary shares held in treasury) carries the right to one vote at a general meeting of the Company.

Accordingly, the total number of voting rights in the Company as at 29 November 2022 was 47,371,522.

xv. If you wish to attend the meeting in person, there will be a members’ register for you to sign on arrival. Under section

319A of the Companies Act 2006, the Company must answer any question relating to the business being dealt with

at the meeting put by a member attending the meeting unless:

a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of

confidential information;

b) the answer has already been given on a website in the form of an answer to a question; or

c) it is undesirable in the interests of the Company or the good order of the meeting that the question be

answered.

xvi. Information regarding the Annual General Meeting, including information required by Section 311A of the

Companies Act 2006, is available from the Company’s website: abrdnequityincome.com.

Notice of Annual General Meetin

Continued

abrdn Equity Income Trust plc 101

Directors

Mark White (Chair)

Caroline Hitch

Mark Little

Sarika Patel

Jeremy Tigue

Registered Office

Bow Bells House

1 Bread Street

London

EC4M 9HH

Registered Number

Registered in England & Wales No. 2648152

Alternative Investment Fund Manager

abrdn Fund Managers Limited

1 George Street

Edinburgh

EH2 2LL

abrdn Investments Customer Services

Department, Investment Plan for Children,

Share Plan and ISA enquiries

abrdn Investment Trusts

PO Box 11020

Chelmsford

Essex

CM99 2DB

Freephone: 0808 500 0040

(open Monday to Friday, 9.00 a.m. to 5.00 p.m., excluding

public holidays in England and Wales)

Email: inv.trusts@abrdn.com

Website Address:

www.abrdnequityincome.com

Company Secretary

abrdn Holdings Limited

1 George Street

Edinburgh

EH2 2LL

Independent Auditor

KPMG LLP

Saltire Court

20 Castle Terrace,

Edinburgh

EH1 2EG

Solicitor

Dickson Minto W.S.

16 Charlotte Square

Edinburgh

EH2 4DF

Depositary and Custodian

BNP Paribas Trust Corporation UK Limited

10 Harewood Avenue

London

NW1 6AA

Lender

The Royal Bank of Scotland International, London Branch

Floor

440 Strand

London

WC2R 0QS

Stockbroker

J.P.Morgan Cazenove

29th Floor

25 Bank Street

London

E14 5JP

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Telephone: 0370 707 1150

Contact Addresses

For more information visit abrdnequityincome.com

abrdn.com