Annual Financial Report

RNS Number : 1910V

Aberdeen Standard Equity Income Tst

10 December 2021

 

ABERDEEN STANDARD EQUITY INCOME TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2021

Legal Entity Identifier (LEI): 21380015XPT7BZISSQ74

HIGHLIGHTS

Net asset value total return per Ordinary share{A}			Share price total return per Ordinary share{A}			FTSE All-Share Index total return
Year ended 30 September 2021			Year ended 30 September 2021			Year ended 30 September 2021
+39.9%			+47.1%			+27.9%
Year ended 30 September 2020	-25.7%		Year ended 30 September 2020	-29.4%		Year ended 30 September 2020	-16.6%
Discount to net asset value{A}			Revenue return per Ordinary share			Ongoing charges ratio{A}
As at 30 September 2021			Year ended 30 September 2021			Year ended 30 September 2021
8.4%			20.06p			0.93%
As at 30 September 2020	12.5%		Year ended 30 September 2020	15.61p		Year ended 30 September 2020	0.92%
{A} Considered to be an Alternative Performance Measure. Further details can be found in the Annual Report.

STRATEGIC REPORT

CHAIR'S STATEMENT

 

It is a great pleasure to present a full year report to you for the first time as Chair, having assumed the role following the retirement of Richard Burns in February 2021. As I said in the half yearly report, we have been through extraordinary times which have made navigating financial markets unusually difficult. However, the success of the vaccination programme has enabled a degree of normality to return to the economy albeit a normality punctuated by significant supply disruptions which are producing more inflationary conditions. This has led investors to focus more closely on fundamentals, rather than momentum, which has broadly been to our advantage.

Results

In the year to 30 September 2021, the Net Asset Value ("NAV") total return of the Company was 39.8%. The share price total return was higher at 47.1%. By contrast the reference index for the Company, the FTSE All-Share Index, delivered a total return of 27.9% which put the Company among the top quartile of investment trusts in the UK Equity Income peer group for the financial year. 

The performance numbers are impressive both in absolute terms and relative to the index. Thomas Moore took over responsibility for managing the portfolio 10 years ago, in November 2011, adopting the Focus on Change investment approach applied in an index-agnostic manner. In absolute terms, this year's NAV total return is the largest that the Company has generated in those 10 years and it has only been bettered once in relative terms. The absolute return has been driven by the powerful market recovery following the unprecedented intervention of Central Banks with unorthodox monetary policies and Governments with fiscal stimuli. It is also pleasing to note that the portfolio significantly outperformed relative to the market and most of its peers. 

The Focus on Change investment approach looks to identify those companies which the Manager believes are not correctly priced by the market. There is no requirement or expectation that the portfolio will mirror the weightings of the reference index and consequently the performance of the portfolio can diverge significantly from it. As my predecessor explained in his Chair's Statement last year, the Board reviewed a wide range of options available to the Company including the investment approach in light of the impact of Covid-19 on equity markets in 2020. We concluded that we should continue with the existing policy as we believed that the investment approach remained sound and the underperformance in 2020 was due to extraordinary market conditions which would pass. I am happy to conclude that the performance this year has vindicated that decision.

Earnings

Earnings per share for the year were 20.06p, an increase of 28.5%from the previous year.  This is an encouraging increase but still leaves us below pre-pandemic levels. However, it is gratifying to see the rapid progress that has been made in restoring earnings to their former level driven, in part, by the focus that the Investment Manager has placed on ensuring that the portfolio has a significant bias towards companies with sustainable dividend policies. We would not have dared to hope that the recovery in earnings would have been as swift as this, twelve months ago. The Portfolio Manager's Review provides more detail on the sources of the performance and income.

Dividend

The Board has determined that the Company should announce a fourth interim dividend of 5.6 pence per share which will be paid on 21 January 2022 to shareholders on the Register on 24 December 2021, with an associated ex-dividend date of 23 December 2021.  This takes the total dividend for the year to 21.2 pence per share, which is a 2.9% increase on the dividend declared for the 2020 financial year and the 21st consecutive annual dividend increase paid by the Company. The Board recognises that this increase is not fully covered by the net earnings of the portfolio, but has concluded that given the strength of the recovery in the Company's earnings in the last 12 months following the Covid-19 pandemic and the confidence that the Manager has in the sustainability of the revenue account into 2022 and beyond, that this significant increase was appropriate.  The Manager expects that earnings will continue to recover from here and are likely to exceed the cost of the projected dividend distributions in 2022.

Buybacks

The Company bought back 294,486 Ordinary Shares or 0.61% of the issued share capital during the year. The buy backs increased the NAV per share by 0.18 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

When I assumed the role of Chair earlier this year, I relinquished the Chair of the Remuneration Committee in line with accepted good governance practice. I am delighted that Caroline Hitch has agreed to succeed me in this role.

Following the retirement of Richard Burns we concluded that a Board of four Directors was better suited to the size of the Company.  It has resulted in a reduction in non-executive directors' fees.  The Board is currently of the view that the four Directors have sufficient experience to provide effective leadership and governance to the Company.  This will be kept under review.

Annual General Meeting ("AGM")

This year's Annual General Meeting ("AGM") will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Friday, 4 February 2022 at 11:30 am. It is our intention to hold the meeting in person.  We will be monitoring Government Guidelines covering meetings of this sort.  In the event that the arrangements have to be changed, we will make an announcement on the London Stock Exchange and publish the information on the Company's website at aberdeenstandardequityincometrust.com

Continuation Vote

In coming to our decision on the Company's strategy last year, the Board bore in mind that shareholders have the opportunity to vote on the Company's continuation at this year's AGM. According to the articles, this resolution is tabled every five years to establish whether shareholders believe the Company should continue.

The Board believes that over the last decade your Company has established a clearly differentiated position relative to the many other investment companies in the UK Equity Income sector by using the Focus on Change investment approach applied in an index agnostic manner. With almost 60% of the portfolio coming from outside the FTSE 100, it provides shareholders with exposure to income-generating companies from across the size spectrum.  The Company's yield is now over 6% and the Board and Manager are confident that the income underpinning this yield is sustainable.

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 Thursday 20 January 2022. At this event there will be a presentation from the Investment Manager followed by an opportunity to ask live questions of the Chair, Senior Independent Director and the Investment Manager. 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.aberdeenstandardequityincometrust.com/

Outlook

This time last year we had only just received news of the successful vaccine trials that offered the prospect of an eventual return to more normal life. A year on, we have seen tremendous strides in this direction with the vaccine rollout in the UK representing one of the Government's successes in their response to the pandemic.  A number of major uncertainties remain. On the one hand, there is the possibility that new variants will set back the recovery while on the other there is concern that strong demand in the face of supply side constraints and energy shortages will cause more permanent inflationary conditions.

Notwithstanding these continuing challenges at the macro level, the Board shares our Manager's confidence that the portfolio is well positioned to deliver further growth in dividend income together with capital appreciation in the coming year. In light of this, we have felt confident enough to draw modestly on our reserves for a second year in order to resume meaningful dividend growth at a time of rising inflation. We will look to start to add to the reserves once our income is again sufficient to cover dividend distributions and enable them to keep pace with inflation.

Conclusion

Your Company has established a clearly differentiated position within the UK Equity Income sector with strong performance over the long term and excellent dividend growth in real terms. Given the positive outlook for the portfolio and the very attractive yield we would urge you to join us in voting in favour of continuation at the forthcoming AGM. 

For Aberdeen Standard Equity Income Trust plc

Mark White

Chair
9 December 2021

STRATEGIC REPORT

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 like to make their own decisions and manage their ISAs, SIPPs and personal dealing accounts themselves. Currently 58% (2020: 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.

Promoting the Success of the Company

The Board's statement below describes how the Directors have discharged their duties and responsibilities over the course of the financial year under section 172 (1) of the Companies Act 2006 and how they have promoted the success of the Company. That statement forms part of the Strategic Report.

Key Performance Indicators ("KPIs")

The Board assesses the performance of the Company against the range of KPIs shown below over a variety of timeframes, 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.
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 below
Dividend growth compared to the Retail Price Index ("RPI")	Since 2012, the dividend growth of the portfolio exceeded inflation, as measured by the RPI, indicating that shareholders have received real growth in the dividends paid by the Company. The income generated by the portfolio was significantly affected by dividend cuts made by investee companies during 2020 and the Manager is working hard to rebuild the revenue account. The Board has taken the decision to draw on revenue reserves in order to increase the dividend by 2.9%. It remains the objective of the Board to deliver real dividend growth from the income generated by the portfolio.
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 is 0.93%, based on average net assets over the year (2020: 0.92%).

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 as an emerging risk which it considers is likely to become more relevant for the Company in the future, the implications for the Company's investment portfolio of a changing climate.  The Board will continue 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 has discussed climate change with the Manager.  In November 2021, abrdn announced a target to reduce the carbon intensity of its assets by 50% by 2030 against a 2019 baseline as part of its climate change strategy focused on Net Zero Directed Investing ("NZDI"). abrdn intends to achieve its goal via three pillars of action: 1) decarbonisation: namely to continue to incorporate carbon analysis into the investment process and support credible transition leaders and climate solutions; 2) increase the proportion of assets flowing into NZDI solutions across all asset classes; and 3) active ownership, whereby abrdn will continue its established practice of engaging with its investee companies and voting in order to drive change and transition to real assets. abrdn has indicated that it will look to divest from companies where, after two years, it considers insufficient progress has been made against the transition milestones set. abrdn will provide detail on the practical implementation of its carbon intensity reduction targets in a future publication. Additionally, abrdn has announced its own target of net zero in its operations by 2040.

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 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.	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 has sought specific feedback from shareholders in view of the forthcoming continuation vote.
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.	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.
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 terms of the UK's exit from the European Union, any regulatory changes resulting from a different political environment, and wider geo-political issues.	The Board discusses current issues with the Manager. During the year under review, such issues included Covid-19, the UK's exit from the European Union, a possible second referendum on Scottish independence, and the steps that the Manager has taken or might take to limit their impact on the portfolio and the operations of the Company. During this financial year, the Board liaised closely with the Manager to receive updates on performance and to obtain confirmations that the operations of the Manager and those of other third party service providers were operating effectively.  The Manager is in regular communication with investee entities and the wider market to determine impact on the portfolio.  The Manager also engages with other Service Providers to ensure operations continue as expected.
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.	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 have been 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.	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 value per share could lead to high levels of uncertainty for shareholders.	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 Company. 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.	At each Board meeting, the Board reviews management accounts and revenue forecasts. The Board sets gearing limits and monitors the level of gearing and compliance with the main financial covenants at Board meetings. 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.	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.

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 2021, there were two 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.

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.

Environmental, Social and Governance ("ESG") Investing

ESG considerations underpin all investment activities. Whilst the management of the Company's investments is not undertaken with any specific instructions to exclude or include certain types of companies, the Manager embeds ESG considerations into the research and analysis of each company as part of the investment decision-making process.  Where applicable, active engagement and other stewardship activities such as voting in line with best practices, with the goal of improving the performance of companies held around the world, is also an important part of the Manager's approach.

The Manager aims to make the best possible investments for the Company, by understanding the whole picture of the investments - before, during and after an investment is made. That includes understanding the ESG risks and opportunities they present, and how these could affect longer-term performance.  With more than 1,000 investment professionals, the Manager is able to take account of ESG factors in its company research, stock selection and portfolio construction, supported by more than 50 asset class specific ESG specialists around the world.

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. 

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 based on the cycle for the continuation vote, 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 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 £25 million (2020: £20 million), which represents 12.1% (2020: 12.7%) of the Company's investment portfolio.  This is a £30 million (2020: £20million) revolving credit facility with The Royal Bank of Scotland International Limited, London Branch.

-  The Company's cash balance, including money-market funds, at 30 September 2021 amounted to £3.5 million (2020: £1.2 million).

-  The Company has a relatively low level of ongoing charges.

-  The engagement with investors and expectation that the Company's continuation vote resolution will pass successfully at the forthcoming AGM, as set out in the Chair's Statement. 

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 significant economic and stock market volatility, 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 2024.

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.  The Board has also acknowledged that investors will have the opportunity to vote on the continuation of the Company at its five yearly continuation vote at the forthcoming AGM of the Company.

Future Strategy

The Board intends to maintain the strategic policies set out in the Strategic Report for the year ending 30 September 2021 as it is believed that these are in the best interests of shareholders.

On behalf of the Board

Mark White

Chair
9 December 2021

PROMOTING THE SUCCESS OF THE COMPANY

 

How the Board Meets its Obligations under Section 172 of the Companies Act

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 four 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 Directors were particularly mindful of stakeholder considerations in reaching the following decisions during the year ended 30 September 2021.

Portfolio and Dividend

The strategy for promoting the Company has had to adapt to be Covid compliant, particularly in relation to meeting current and prospective investors. The Board has noted that the Manager has provided regular updates to investors on the Company's website and has been regularly kept informed of any feedback from all conversations with shareholders.

The Board intends to host an online shareholder event early in 2022, ahead of the Annual General Meeting on 5 February 2022. Further details are provided in the Chair's Statement.  In the expectation that restrictions are being relaxed the Board hopes that the AGM will be in person and there will be more opportunities to meet shareholders face to face in 2022.

Loan Facility

During the year, the Board agreed to cancel and repay the £20 million revolving credit facility with Banco Santander S.A. London Branch.  It was replaced with a £30 million revolving credit facility with The Royal Bank of Scotland International Limited, London Branch which has a maturity date of 25 June 2023.  The Board is responsible for arranging this facility and the Manager for deploying it. The Board reminds shareholders that borrowing will enhance returns to shareholders when the portfolio is rising in value but that when values are falling the borrowing works to exacerbate declines.  The Board believes that it is advantageous for the Company to have gearing and during the year gearing contributed just over 3% of relative performance.

Continuation Vote

In the run up to the Company's five yearly continuation vote and Manager have continued to raise the Company's profile and increased engagement with investors.  We will be hosting an Online Shareholder Presentation, which will be held at 11:00 am on Thursday 20 January 2022. At this event there will be a presentation from the Investment Manager followed by an opportunity to ask live questions of the Chair, Senior Independent Director and the Investment Manager. 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.aberdeenstandardequityincometrust.com/

Share Buy Backs

During the year the Company bought back 294,486 Ordinary shares to be held in treasury, providing a small accretion of 0.2 pence to the NAV per share and a degree of liquidity to the market at times when the discount to the NAV per share has widened.  The Company announced on 8 September 2021 its intention to publish details of its share buyback powers which it renews annually and that until the AGM, to be held on 4 February 2022 that it has the authority to repurchase a maximum of 7,244,361 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. 

Following the retirement of Richard Burns it was considered that a Board of four Directors was appropriate for the size of the Company and has resulted in a reduction in non-executive directors' fees.  The Board currently believes that the four Directors have sufficient experience to provide effective leadership and governance to the Company.  This will be kept under review.

During the year the Board determined that there was no need to have a standalone Nomination Committee.  The Nomination Committee was therefore wound up and the Board fulfils the role of the Nomination Committee.

How the Board Engages with Stakeholders

The Company's main stakeholders have been identified as its shareholders, the Manager, service providers, investee companies, debt providers and the community at large and the environment.

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

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 usually provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Manager. Typically, the Board encourages as many shareholders as possible to attend the Company's Annual General Meeting and to provide feedback on the Company.  Due to the uncertainties caused by the Covid-19 pandemic and, in particular, the restrictions on public gatherings and requirements to socially distance, the 2021Annual General Meeting was held on a functional only basis, satisfying the minimum legal requirements. Shareholders were encouraged to submit questions to the Board and the Manager.  At the date of this report it is intended to hold the 2022 meeting in person.
Manager	The Portfolio Manager's Review 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.
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. 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.

THE INVESTMENT MANAGER'S APPROACH TO ESG

Introduction

The Board relies on its Investment Manager to apply appropriate Environment, Social and Governance ("ESG") principles to how the portfolio is constructed and managed within the confines of its investment objective and policy.  The Company's objective is to provide shareholders with an above average income from their equity investment which means that the Company's holdings will typically be recognised for their dividend policies and will frequently trade on a high yield. This means the portfolio can be expected to have exposure to older industries such as energy and consumables. ESG principles are applied in deciding on a specific investment within these more mature industries as it is evident that the possibility of engagement by the Investment Manager can lead to radical changes to their business models to account for social and environmental responsibilities, irrespective of government interventions.

Although ESG factors are not the over-riding criteria in relation to the investment decisions taken by the Investment Manager, significant prominence is placed on ESG and climate-related factors throughout the investment process.  The following highlights the way that ESG and climate change are considered by the Investment Manager.  These processes are reviewed regularly and liable to change and the latest information will be available for download on the Company's website.

Core beliefs: Assessing Risk, Enhancing Value

The Company does not exclude any sectors from the investible universe. Consideration of ESG factors is a fundamental part of the Investment Manager's process and has been so for over 30 years. It is one of the key criteria on which the Investment Manager assesses the investment case for any company in which it invests for three key reasons as set out in the table below.

Responsible Investing - Integration of ESG into the Investment Manager's Process

"By embedding ESG factors into our active equity investment process, we aim to reduce risk, enhance potential value for our investors and foster companies that can contribute positively to the world." abrdn

Financial Returns	ESG factors can be financially material - the level of consideration they are given in a company will ultimately have an impact on corporate performance, either positively or negatively. Those companies that take their ESG responsibilities seriously tend to outperform those that do not.
Fuller Insight	Systematically assessing a company's ESG risks and opportunities alongside other financial metrics allows the Investment Manager to make better investment decisions.
Corporate Advancement	Informed and constructive engagement helps foster better companies, protecting and enhancing the value of the Company's investments.

"We believe that the market systematically undervalues the importance of ESG factors. We believe that in-depth ESG analysis is part of both fundamental company research and portfolio construction and will lead to better client outcomes." abrdn

Researching Companies: Deeper Company Insights for Better Investor Outcomes

The Investment Manager conducts extensive and high-quality fundamental and first-hand research to gain a detailed understanding of the investment case for every company in its global universe. A key part of the Investment Manager's research involves focusing its extensive resources on analysis of ESG issues. The table below details how the Investment Manager's portfolio managers, ESG equity analysts and central ESG Investment Team collaborate to generate a deep understanding of the ESG risks and opportunities associated with each company. Stewardship and active engagement with every company are also fundamental to the investment process, helping to produce positive outcomes that lead to better risk-adjusted returns.

Global ESG Infrastructure

The Investment Manager has around 150 equity professionals globally. Each systematically analyses ESG risks and opportunities as part of the research output for each company. Its central team and ESG equity analysts support the Investment Manager's first-hand company analysis, producing research into specific themes (e.g. labour relations or climate change), sectors (e.g. forestry) and ESG topics to understand and highlight best practice. Examples of thematic and sector research can be found on the Manager's website at: abrdn.com/en/uk/investor/responsible-investing

Portfolio Managers	All of the Investment Manager's equity portfolio managers seek to engage actively with companies to gain insight into their specific risks and provide a positive ongoing influence on their corporate strategy for governance, environmental and social impact.
ESG Equity Analysts	The Investment Manager has dedicated and highly-experienced ESG equity analysts located across the UK, US, Asia and Australia. Working as part of individual investment teams, rather than as a separate department, these specialists are integral to pre-investment due diligence and post-investment ongoing company engagement. They are also responsible for taking thematic research produced by the central ESG Investment Team (see below), interpreting and translating it into actionable insights and engagement programmes for its regional investment strategies.
ESG Investment Team	This central team of more than 20 experienced specialists based in Edinburgh and London provides ESG consultancy and insight for all asset classes. Taking a global approach both identifies regions, industries and sectors that are most vulnerable to ESG risks and identifies those that can take advantage of the opportunities presented. Working with portfolio managers, the team is key to the Investment Manager's active stewardship approach of using shareholder voting and corporate engagement to drive positive change.

Climate Change

Climate change is one of the most significant challenges of the 21st century and has big implications for all investors. The energy transition is underway in many parts of the world, and policy changes, falling costs of renewable energy, and a change in public perception are happening at a rapid pace. Assessing
the risks and opportunities of climate change is a core part of the investment process. In particular, the Investment
Manager considers:

-  Transition risks and opportunities

Governments could take robust climate change mitigation actions to reduce emissions and transition to a low-carbon economy. This is reflected in targets, policies and regulation and can have a considerable impact on high-emitting companies.

-  Physical risks and opportunities

Insufficient climate change mitigation action will lead to more severe and frequent physical damage. This results in financial implications, including damage to crops and infrastructure, and the need for physical adaptation such as flood defences.

The Investment Manager has been a signatory to the United Nations' Principles for Responsible Investment ("UNPRI") - an initiative to promote responsible investment as a way of enhancing returns and better managing risk and has aligned its approach with that advocated by its investor agenda UNPRI provides an intellectual framework to steer the massive transition of financial capital towards low-carbon opportunities. It also encourages fund managers to demonstrate climate action across four areas: investments; corporate engagement; investor disclosure; and policy advocacy as explained below:

	FOCUS	OBJECTIVE	AIM
Investments	Research & Data	Provide high quality climate-change insights and thematic research across asset classes and regions. This includes using climate-related data as an input into the investment process.	Provide relevant high-quality data and insights on climate-change trends, risks and opportunities that are fully integrated into our decision making and drive positive outcomes for our clients
	Investment Integration	Understand the potential impacts of climate-change risks and opportunities across regions and sectors, integrate these into our investment decisions and understand the implications for our portfolios.
	Client Solutions	Understand client needs in relation to climate change and low-carbon product demand. Develop innovative climate-related client solutions and products across all asset classes.
Corporate Engagement	Investee Engagement & Voting	Better understands investee exposure and management of climate change risks and opportunities. Influence investee companies on management of climate change risks and opportunities via engagement and voting. Highlight expectation to apply the Task Force on Climate-related Financial Disclosures ("TCFD") framework when reporting on climate-related data.
Policy Advocacy	Collaboration & Influence	Collaborate with climate-change-related industry associations and participate in relevant initiatives. Engage with peers and policymakers to drive industry developments and best practice.
Investor Disclosure	Disclosure	Disclose climate-change-related data using the TCFD reporting framework across the four pillars: governance, strategy, risk management, metrics and targets.

From Laggards to Best in Class: Rating Company ESG Credentials

A systematic and globally-applied approach to evaluating stocks allows the Investment Manager to compare companies consistently on their ESG credentials - both regionally and against their peer group.

The Investment Manager captures the findings from its research and company engagement meetings in formal research notes.

Some of the key questions include:

-  Which ESG issues are relevant for this company, how material are they, and how are they being addressed?

-  What is the assessment of the quality of this company's governance, ownership structure and management?

-  Are incentives and key performance indicators aligned with the company's strategy and the interests of shareholders?

Having considered the regional universe and peer group in which the company operates, the Investment Manager's equity team then allocates it an ESG rating between one and five (see below). This is applied across every stock that the Investment Manager covers globally.

The Investment Manager also uses a combination of external and proprietary in-house quantitative scoring techniques to complement and cross-check analyst-driven ESG assessments. ESG analysis is peer-reviewed within the equities team, and ESG factors impacting both sectors and stocks are discussed as part of the formal sector reviews. To be considered 'best in class', the management of ESG factors must be a material part of the company's core business strategy. It must provide excellent disclosure of data on key risks. It must also have clear policies and strong governance structures, among other criteria.

1. Best in class	ESG considerations are a material part of the company's core business strategy. Excellent disclosure. Makes opportunities from strong ESG risk management.
2. Leader	ESG considerations are not market-leading. Disclosure is good, but not best in class. Governance is generally very good.
3. Average	ESG risks are considered in the normal course of the company's business. Disclosure in line with regulatory requirements. Governance is generally of a high standard but some minor concerns.
4. Below average	Evidence of some financially material controversies. Poor governance or limited oversight of key ESG issues. Some issues in treating minority shareholders poorly.
5. Laggard	Many financially material controversies. Severe governance concerns. Poor treatment of minority shareholders.

Working with Companies: Staying Engaged, Driving Change

Once the Investment Manager invests in a company, it is committed to helping that company maintain or raise its ESG standards further, using the Investment Manager's position as a shareholder to press for action as needed. The Investment Manager actively engages with the companies in which it invests to maintain ESG focus and encourage improvement.

The Investment Manager sees this programme of regular engagement as a necessary fulfilment of its duty as a responsible steward of clients' assets. It is also an opportunity to share examples of best practice seen in other companies and to use its influence to effect positive change. The Investment Manager's engagement is not limited to the company's management team. It can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company's clients. What gets measured gets managed, so the Investment Manager strongly encourages companies to set clear targets or key performance indicators on all material ESG risks.

The investment process consists of four interconnected and equally important stages.

Monitor	Contact	Engage	Act
Ongoing due diligence Business performance Company financials Corporate governance Company's key risks and opportunities	Frequent dialogue Senior executives Board members Heads of departments and specialists Site visits	Exercise rights Attend AGM/EGMs Always vote Explain voting decisions Maximise influence to drive positive outcomes	Consider all options Increase or decrease shareholding Collaborate with other investors Take legal action if necessary

KEY FINANCIAL HIGHLIGHTS

Total return for periods to 30 September 2021

					30 September 2021	30 September 2020	% change
Capital
Net asset value per Ordinary share					380.8p	288.0p	32.2%
Ordinary share price					349.0p	252.0p	38.5%
Reference Index capital return					4,059.0	3,282.3	23.7%
Discount of Ordinary share price to net asset value{A}					8.4%	12.5%
Total assets					£207.9m	£159.1m	30.7%
Shareholders' funds					£182.9m	£139.2m	31.4%
Gearing
Net gearing{A}					13.5%	13.3%
Earnings and Dividends
Revenue return per Ordinary share					20.06p	15.61p	28.5%
Total dividends for the year					21.20p	20.60p	2.9%
Dividend yield{A}					6.1%	8.2%
Expenses
Ongoing charges ratio{AB}					0.93%	0.92%
{A} Considered to be an Alternative Performance Measure. Further details can be found on pages 83 and 84 of the Annual Report.
{B} 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.

	PERFORMANCE (TOTAL RETURN)
		1 year		3 years	5 years	10 years
30 September 2021		%		%	%	%
Net asset value{A}		39.9		-7.3	12.5	119.9
Share price{A}		47.1		-11.9	9.4	100.6
Reference Index{B}		27.9		9.5	29.8	119.2
{A} Considered to be an Alternative Performance Measure.
{B} FTSE All-Share Index.
Source: abrdn/Morningstar/Factset

 

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 {A}	price	Discount {AB}	Charges {BC}	(cash) {B}	funds	Reserves {D}
30 September	£'000	£'000	p	p	p	p	%	%	%	£m	(£m)
2012	4,715	4,189	13.53	12.75	314.2	294.0	6.4	0.99	5.7	119.3	6.56
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{E}	459.6	4.8	0.87	9.9	235.3{E}	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
{A} Diluted for the effect of Subscription shares in issue for the year ended 30 September 2012 to 30 September 2016.
{B} Considered to be an Alternative Performance Measure.
{C} 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.
{D} 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.
{E} 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.

 

INVESTMENT MANAGER'S REPORT

 

UK Market Review

UK equities rose sharply over the 12 month period as investors responded to improved economic data following the successful vaccine roll-out and consequent easing of Covid-19 related restrictions. This improved backdrop drove upgrades of UK economic growth, with the Office of Budget Responsibility forecasting 6.5% growth in 2021 (2.4 percentage points faster than they predicted in March 2021). Consumer demand recovered progressively as activity picked up following "Freedom Day" in July 2021, with households drawing upon savings built up during the pandemic. The pace of the demand recovery took many by surprise, causing supply chains to come under stress as companies struggled to ramp up production, causing widespread delays in the delivery of goods. The rush to hire people was evident from labour market data showing record vacancies (over 1 million jobs) and accelerating wage growth (7.2% year on year). This supply-side disruption coincided with a spike in energy prices, resulting in a pick-up in inflation to over 3%, well above the Bank of England's 2% target. This inflation data in turn caused a dramatic move higher in interest rate expectations towards the end of the financial year; a move that was further fuelled by hawkish commentary from various Monetary Policy Committee members, raising the prospect of an early rate hike.

Within the UK market, sector performance ebbed and flowed during the year under review. Rising investor confidence in the first half of the 12 month period resulted in a rotation out of quality growth stocks into cyclical stocks that would benefit from the economic recovery. This trend reversed in the second half due to a rebound in the number of Covid-19 cases, although nervousness eased once it became clearer from the data that vaccines had broken the link between cases and deaths, reducing the risk of future lockdowns. Over the financial year the FTSE Small Cap and FTSE 250 indices outperformed the FTSE 100.

Portfolio Performance

The portfolio outperformed the Company's reference index, the FTSE All-Share Index (the "Index"), significantly in the financial year. This underlines the potential of our Focus on Change investment process to deliver for shareholders in more normal market conditions, following the intensity of the market reaction to Covid-19 in the previous financial year.

Looking back at the year under review, the key drivers of our performance relative to the FTSE All-Share Index can be summarised as follows:

1. We benefited from heavy exposure to economically-sensitive sectors which contributed strongly to performance. Consumer Discretionary was the largest contributor to performance by sector, adding around 2.5% of relative performance. Our holdings in housebuilder Vistry and sofa retailer DFS were particularly helpful as consumer demand rebounded so sharply. Financials also contributed strongly, adding around 1.0% of relative performance. Premier Miton and Close Brothers rose sharply, as investors observed improving market conditions.

2. We also benefited from limited exposure to defensive sectors which helped our performance as confidence in the economic recovery caused these stocks to fall out of favour. Our underweight positions in Healthcare and Consumer Staples added around 2.4% of relative performance, in particular not owning Unilever or Reckitt Benckiser.

3. The gearing position, averaging 11.7% over the 12 month period, contributed just over 3% of relative performance.

4. The main detractors to performance at the stock level were companies that produced results that were disappointing relative to market expectations, notably gold mining business Centamin, spread-betting business CMC Markets and motor insurance business Sabre Insurance.  Between them, these three stocks cost 1.7% of relative performance.

Revenue Account

Dividends distributed by our portfolio holdings in the financial year were £10.6 million, which was 22% more than the £8.7 million received in the same 12 month period last year. This compares favourably to the FTSE All-Share Index whose dividends grew by 9.2% over the same timeframe. During the 12 month period, over 94% of the dividend income came from recurring rather than special dividends. This does illustrate the recurring nature of the earnings but it is also the result of a sharp reduction in the number of special dividends being paid in the wake of the pandemic.

We are reporting an increase of 27.3% in net revenue to £9.7 million as other expenses, interest and tax were lower in this financial year than they were 12 months ago.  Management fees were higher, but this is a function of the increase in the value of the portfolio. Total expenditure by the portfolio, including all fees and charges, interest and tax was 15% lower in the year under review than in 2020.

The portfolio achieved an underlying dividend yield of 6.6% based on the income generated by the portfolio over the financial year divided by the average portfolio value, representing a significant premium to the effective monthly average dividend yield of the FTSE All-Share Index of 3.3% for the same 12 month period.

Portfolio income recovered dramatically in the second half of the 12 month period. This resulted from the reinstatement of dividends by companies that had cut dividends during the pandemic and continued dividend growth from companies that had maintained their dividends throughout the pandemic. The portfolio saw widespread strengthening in dividend momentum. Among large cap sectors, the highlights were Mining and Oil & Gas, both of which saw cash flows surge thanks to higher commodity prices and disciplined capital management. The revenue account also benefited from a revival in dividends among mid and small cap stocks that offer superior longer term growth prospects. We continue to believe that using an index-agnostic approach to build a differentiated portfolio will help us to deliver on our objectives through the cycle.

For some years, investors have worried about the sustainability of UK dividends. Investors have come to see higher yield stocks as value traps.  Sure enough, some companies used Covid-19 as an excuse to cut their dividends. For the UK equity market in aggregate, dividend cover is set to increase from 1.5x in 2020 to 1.9x in 2021 as a function of both the numerator (dividends having been cut) and the denominator (earnings recovering rapidly).  The outlook for UK dividends is now transformed as we believe that virtually all the companies that needed to cut have now cut.  As more and more companies have reinstated their dividends, our investable universe of dividend paying stocks has broadened. While the economic recovery will not be linear, we are increasingly confident in the fundamentals of our holdings and consequently the potential of our portfolio to deliver dividend growth in this financial year and beyond.

Activity

Purchases

In an inflationary environment, we are finding a wide range of cheaply valued stocks with the ability to pass on rising input costs and benefit from rising prices. Improving external conditions and self-help actions are driving operational gearing, as revenues grow faster than costs. This makes us confident that our portfolio is well placed to help insulate our shareholders against inflation. We are using the flexibility to be able to invest across the UK market, positioning the portfolio in stocks that offer an attractive dividend outlook.

Our transactions during the 12 month period reflect our focus on portfolio income, driving a rapid return towards full dividend coverage, while simultaneously seeking to maximise our capital growth prospects by increasing exposure to cheaply valued stocks with improving operating momentum.

Our largest purchases can be grouped into the following categories:

1.  We bought larger cap stocks whose earnings are benefiting from the rebounding global economy and disciplined capital management, allowing generous dividends to be paid - these include Resource stocks BP, Royal Dutch Shell and Anglo American and Financials Barclays and Standard Chartered.

2.  We bought domestic cyclical stocks that are set to benefit from the improving UK economy as confidence levels recover - these include housebuilders Persimmon and Bellway.

3.  We bought faster-growing small and mid-cap stocks that have attractive market positions in growing markets, offering the prospect of prolonged dividend growth - these include online gaming business 888, private markets business Petershill and fuel distributor Vivo Energy.

Sales

Our largest sales can be grouped into the following categories:

1.  We received the proceeds of four bid situations - John Laing, Equiniti, Hastings and AFH Financial. We believe that the high incidence of bid situations underlines the intrinsic value within the portfolio.

2.  We took some profits in CMC Markets following a significant rally in the share price. The stock has since had a profit warning due to a period of slower activity.

3.  We reduced some lower-yielding stocks - these include housebuilder MJ Gleeson and transport operator National Express.

4.  We trimmed some defensive mega-cap stocks whose earnings and dividend growth outlook appears more muted than other opportunities available in the market - these include GlaxoSmithKline and National Grid.

Outlook

A year ago, I set out how we had positioned the portfolio in stocks whose valuations did not price in the robust fundamentals that we anticipated. I laid out the macro catalysts that would enable these stocks to perform, alongside our confidence in their earnings delivery.  The strong performance we subsequently achieved has been possible because we stayed alert to mispriced opportunities across a wide range of stocks that other investors appeared to be ignoring in the haze of macro uncertainty. 

The past 12 months have strengthened my conviction in our ability to achieve our income and capital objectives while staying true to our Focus on Change investment process. A surge in portfolio income in the second half of the 12 month period has driven a sharp recovery in the revenue account, allowing shareholders to feel confident in our ability to return to above 1x dividend cover sooner rather than later. At the same time, the portfolio has enjoyed strong capital growth, well in excess of our peer group and Reference Index. The income and capital objectives go hand in hand in this market environment, given the number of higher-yielding stocks experiencing positive change in their underlying corporate fundamentals.

Looking ahead, reasons for confidence in the outlook can be summarised as follows:

1.  The abundance of stocks with a combination of positive operating revisions and low valuation: We expect company results to act as a key catalyst for the market to recognise the robust fundamentals and low valuations of our holdings. Our Matrix quant model helps us to identify stocks with positive operating revisions, indicating companies that are generating results that are outstripping market expectations, which should support their ability to deliver a growing stream of dividends. Many of these stocks are also trading at low valuation multiples, indicating that we are not over-paying. Three sectors stand out as particularly well positioned in the current environment - Consumer Discretionary (notably housebuilders which look set to deliver record unit volumes and selling prices, driving positive operational gearing even in a rising interest rate environment), Financials (notably lenders which are seeing a pick-up in loan growth, rising interest margins and improving credit quality) and Resources (cash-generative businesses that should act as excellent inflation hedges, benefiting from rising demand and capex discipline, potentially helping to deliver a new super-cycle). These three sectors represent just over three quarters of the portfolio, underlining our conviction in their prospects.

2.  The prospect of further incoming M&A, if valuations remain this low: Many of our holdings offer free cash flow yields in excess of 10%, underlining the potential for their valuations to expand once investors become more convinced in the outlook. In last year's report, I suggested that we should expect corporate bidders to step in if institutional shareholders did not take advantage of these valuation opportunities. The portfolio saw its fair share of corporate activity this financial year, with proceeds coming in from four bid situations. Since our year-end, two more holdings, Playtech and Vivo Energy, have announced incoming bids, at a premium to their closing share prices of 58% and 25% respectively. Given how cheap valuations are, we would not be surprised if others follow suit.

3.  The potential for an inflection in macro conditions, such as a spike in inflation, to drive a market rotation in favour of our portfolio: Our primary focus remains at the stock level, but we are also conscious of the macro environment in which we are picking stocks. The market's immediate focus is on the pace of transmission of new strains of the virus. However, under the surface, we are observing a stealthy change in the macro backdrop, namely an increase in inflation expectations, which we see as potentially beneficial for our portfolio. Between mid-2018 and mid-2020, US 10 year Treasury yields slumped from over 3% to 0.5%, driven in large part by the central bank policy of quantitative easing. This was thedominant driver of markets, including equities, during this period. The bull market in government bonds drove a bull market in quality growth stocks, resulting in many of these stocks reaching eye-watering valuations. Many cash-generative dividend-paying stocks got left behind, creating the valuation opportunities that we now see.  As it becomes clearer that inflation is taking hold and monetary policy is set to tighten, investors are reappraising which assets they should hold. Investors looking for hedges against inflation are beginning to see the logic of owning stocks with the ability to pass on rising input costs and benefit from rising prices, meaning that their cash generation, and therefore dividends, can actually thrive during these inflationary periods. We believe that our portfolio is well positioned for this emergent landscape. In November 2020 bond yields spiked following the vaccine announcement, leading to a surge the performance of cyclical and financial stocks. This gave investors a taste of how sharply the market can rotate when the market backdrop changes. The arrival of the new variants such as Delta and Omicron have caused a hiatus in this trend, but the inflationary conditions that catalysed the original rotation are, if anything, even stronger now..

In last year's Annual Report, I wrote about my determination to deliver a significant improvement in performance and I explained the grounds for my confidence that this would happen.  It is gratifying to be able to report a very strong year, both in terms of capital and income. I am grateful to the Board for their encouragement and guidance, helping me to remain focused on my objectives through a turbulent period. By remaining committed to the investment process, scouring the UK market for attractively valued stocks with positive change, I am confident that the portfolio can continue to deliver for shareholders in the financial year ahead and beyond.

Thomas Moore

Portfolio Manager

abrdn
9 December 2021

 

TEN LARGEST INVESTMENTS

As at 30 September 2021

Close Brothers	Rio Tinto
Close Brothers is a specialist financial service group which provides loans, trades securities and provides advice and investment management solutions.	Rio Tinto is a leading global mining group that focuses on finding, mining and processing mineral resources, particularly iron ore and aluminium.
BHP	Royal Dutch Shell
BHP Group is a diversified resources group with a global portfolio of high quality assets particularly iron ore and copper.	Royal Dutch Shell explores, produces and refines petroleum. The Company produces fuels, chemicals, and lubricants, as well as operating gasoline filling stations.
BP	Vistry
BP is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals.	Vistry Group provides home construction services. The Company builds and sells single-family houses, apartments, retirement facilities and social housing units.
Glencore	SSE
Glencore is a diversified natural resources company. The Company operates in three groups; metals and minerals, energy products and agricultural products.	SSE engages in the generation, transmission, distribution and supply of electricity and the production, storage, distribution and supply of gas.
Premier Miton	Diversified Gas & Oil
Premier Miton operates as an asset management company. The Company offers a broad range of investment solutions covering multi-asset funds, global equity, investment trusts and fixed interest strategies.	Diversified Gas & Oil is engaged in conventional natural gas and crude oil production in the Appalachian Basin of the United States.

 

PORTFOLIO OF INVESTMENTS
As at 30 September 2021
		Valuation as at		Valuation as at
		30 September 2021	Weight	30 September 2020
Stock	Key Sector	£'000	%	£'000
Close Brothers	Banks	7,405	3.6	4,893
Rio Tinto	Industrial Metals and Mining	7,357	3.5	5,067
BHP	Industrial Metals and Mining	7,101	3.4	5,813
Royal Dutch Shell	Oil Gas and Coal	7,038	3.4	2,561
BP	Oil Gas and Coal	6,834	3.3	2,689
Vistry	Household Goods and Home Construction	6,646	3.2	3,090
Glencore	Industrial Metals and Mining	6,041	2.9	2,564
SSE	Electricity	6,026	2.9	4,212
Premier Miton	Investment Banking and Brokerage Services	5,556	2.7	2,672
Diversified Energy	Oil Gas and Coal	5,311	2.6	4,429
Top ten investments		65,315	31.5
Entain	Travel and Leisure	5,101	2.4	-
CMC Markets	Investment Banking and Brokerage Services	5,036	2.4	6,978
Tyman	Construction and Materials	4,971	2.4	2,518
Playtech	Travel and Leisure	4,441	2.1	2,560
British American Tobacco	Tobacco	4,403	2.1	5,955
OSB Group	Finance and Credit Services	4,312	2.1	-
Randall & Quilter	Non-life Insurance	4,300	2.1	3,735
DFS Furniture	Retailers	4,080	2.0	2,599
River & Mercantile	Investment Banking and Brokerage Services	3,953	1.9	2,652
Chesnara	Life Insurance	3,873	1.9	4,010
Top twenty investments		109,785	52.9
Legal & General	Life Insurance	3,778	1.8	1,603
BAE Systems	Aerospace and Defence	3,554	1.7	4,144
888 Holdings	Travel and Leisure	3,497	1.7	-
Vivo Energy	Retailers	3,390	1.6	-
Imperial Brands	Tobacco	3,285	1.6	4,006
Barclays	Banks	3,266	1.6	-
DWF Group	Industrial Support Services	3,111	1.5	1,339
Real Estate Investors	Real Estate Investment Trusts	2,993	1.5	1,573
Zegona Communications	Telecommunications Service Providers	2,908	1.4	2,094
Petershill Partners	Investment Banking and Brokerage Services	2,798	1.3	-
Top thirty investments		142,365	68.6
Ashmore	Investment Banking and Brokerage Services	2,751	1.3	2,446
Speedy Hire	Industrial Transportation	2,726	1.3	2,161
Direct Line Insurance	Non-life Insurance	2,680	1.3	2,175
Anglo American	Industrial Metals and Mining	2,651	1.3	674
Thungela Resources	Oil Gas and Coal	2,582	1.3	-
Litigation Capital	Investment Banking and Brokerage Services	2,436	1.2	1,430
Quilter	Investment Banking and Brokerage Services	2,323	1.1	1,309
International Personal Finance	Finance and Credit Services	2,307	1.1	712
Phoenix	Life Insurance	2,171	1.1	3,013
Smith (DS)	General Industrials	2,129	1.0	-
Top forty investments		167,121	80.6
Conduit Holdings	Non-life Insurance	2,086	1.0	-
Vodafone	Telecommunications Service Providers	1,953	0.9	1,280
Persimmon	Household Goods and Home Construction	1,943	0.9	936
GlaxoSmithKline	Pharmaceuticals and Biotechnology	1,926	0.9	6,951
Galliford Try	Construction and Materials	1,878	0.9	802
Sabre Insurance	Non-life Insurance	1,858	0.9	1,927
Hargreaves Lansdown	Investment Banking and Brokerage Services	1,840	0.9	-
Contour Global	Electricity	1,840	0.9	1,472
Bellway	Household Goods and Home Construction	1,832	0.9	-
MJ Gleeson	Household Goods and Home Construction	1,793	0.9	3,412
Top fifty investments		186,070	89.7
National Grid	Gas Water and Multi-utilities	1,574	0.8	4,497
Mondi	General Industrials	1,572	0.8	1,409
Polar Capital	Investment Banking and Brokerage Services	1,544	0.7	1,366
Go-Ahead	Travel and Leisure	1,499	0.7	-
CLS Holdings	Real Estate Investment and Services	1,410	0.7	-
Hays	Industrial Support Services	1,402	0.7	-
Intermediate Capital Group	Investment Banking and Brokerage Services	1,369	0.7	-
Industrials REIT	Real Estate Investment Trusts	1,351	0.6	-
Coca-Cola HBC	Beverages	1,325	0.6	1,831
Diageo	Beverages	1,297	0.6	-
Top sixty investments		200,413	96.6
AstraZeneca	Pharmaceuticals and Biotechnology	1,189	0.6	1,100
Bridgepoint	Investment Banking and Brokerage Services	1,176	0.6	-
LondonMetric	Real Estate Investment Trusts	1,129	0.5	1,411
Centamin	Precious Metals and Mining	1,021	0.5	1,520
Bodycote	Industrial Metals and Mining	970	0.5	-
Standard Chartered	Banks	919	0.4	-
TP ICAP	Investment Banking and Brokerage Services	601	0.3	937
Total Portfolio		207,418	100.0
All investments are equity investments.

SECTOR DISTRIBUTION

	30 September 2021	30 September 2020
	Portfolio	Portfolio
	Weightings	Weightings
	%	%
Financials	34.0	39.5
Consumer Discretionary	16.4	12.7
Basic Materials	12.1	10.8
Energy	10.6	-
Industrials	10.3	8.5
Consumer Staples	4.9	8.3
Oil & Gas		6.6
Utilities	4.6	6.4
Real Estate	3.3
Telecommunications	2.3	2.1
Health Care	1.5	5.1
Total equity investments	100.0	100.0

 

INVESTMENT CASE STUDY

Centamin PLC Centamin PLC is a mining company with a focus on the extraction of gold. The company's main mine is a largescale modern gold mine in Egypt. Our engagement with the company formed part of a larger piece of thematic engagement with mining companies on approaches to human rights and community engagement. We noted that the company's CEO, Martin Horgan, has been in place for just over a year and questioned him on what steps had been taken since his arrival to ensure that sustainable standards are met. One of the CEO's first actions was to carry out a review of the company's approach to ESG to identify gaps and put appropriate measures in place. The company is formalising its approach to ESG by focusing on governance, management systems and standards. It is also developing goals, indicators and targets that capitalise on opportunities as well as mitigate risks. As part of this framework, we questioned the company on what external standards it would apply. We believe that the application of certain standards can add rigour to company practices and provide a level of assurance for investors. The company advised that it would apply the Responsible Gold Mining Principles and UN Guiding Principles on human rights to build frameworks into their management systems. It also advised that the International Finance Corporation (IFC) Performance Standards offered the most robust standards for its operational standards and would take guidance from these. We support these steps. We also asked the company to consider membership of the International Council on Mining and Metals (ICMM). We advised that the ICMM offers some reassurance to investors, given the rigorous assessment required in order to join. The company advised that it would consider membership, but we appreciate that a mining company of this size does not make up the typical membership of the group. We asked the company how these oversight mechanisms are being applied in relation to operations, specifically in relation to human rights, the impact on local communities and its supply chain. The company has established a human rights policy that is aligned with the UN guiding principles on human rights. It has three key areas of focus. Within its supply chain, it has developed a new contract template for suppliers and a detailed code of conduct. The company recognised that as a result of cultural differences, employees may be a reluctant to raise grievances. Support and training are being given to employees to encourage the use of grievance mechanisms when necessary. The company advised that its existing operations have a limited impact on local communities because of its location. However, it has created a detailed community engagement strategy that it believes will be vital if it expands into more densely populated areas. The company's view was that community engagement should be carried out from the start and throughout a project's lifecycle. This was a very positive meeting with the company. Although it does not have the equivalent footprint or level of resource of larger mining companies, it is ensuring that ESG standards remain a strategic part of its business and are applied throughout its operations. We will continue to monitor the company. It will be crucial to keep its ESG standards if the business expands its operations.

 

DIRECTORS' REPORT

The Directors present their report and the audited financial statements of the Company for the year ended 30
September 2021.

Results and Dividends

The financial statements for the year ended 30 September 2021 are contained below. Interim dividends of 5.2 pence per share were paid in March, June and September 2021.  The Board has declared that a fourth interim dividend for the year to 30 September 2021 of 5.6 pence per share is payable on 21 January 2022 to shareholders on the register on 24 December 2021. The ex-dividend date is 23 December 2021.

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 2021 consisted of 48,033,474 Ordinary shares of 25 pence each (2020: 48,327,960) and there were 1,145,293 Ordinary shares held in treasury (2020: 850,807), representing 2.4% of the issued share capital as at that date.

During the year, 294,486 Ordinary shares were bought back into treasury.  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 Aberdeen Standard Fund Managers Limited ("ASFML"), a wholly-owned subsidiary of abrdn plc, as its alternative investment fund manager (the "Manager"). ASFML 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 Standard Life Investments Limited (the "Investment Manager") by way of a group delegation agreement in place between ASFML and the Investment Manager.  In addition, ASFML has sub-delegated administrative and secretarial services to Aberdeen Asset Management PLC since 6 September 2019.

With effect from 1 October 2019, 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.

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 2021.

Shareholder	Number of Ordinary shares	% held
Interactive Investor	8,248,257	17.2
Hargreaves Lansdown	7,483,873	15.6
Charles Stanley	5,048,362	10.5
Rathbones	1,946,348	4.1
Brewin Dolphin	1,757,918	3.7
HSDL	1,755,894	3.7
AJ Bell	1,725,906	3.4

The Company has not been notified of any changes to these holdings as at the date of this Report.

Directors

Mark White succeeded Richard Burn as Chair on 5 February 2021.

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 having been appointed to the role on 5 February 2021.

Following the retirement of Richard Burns on 5 February 2021 the number of Directors reduced to four.  With no immediate plans to recruit an additional director the Board determined that there was no need to have a standalone Nomination Committee.  The Nomination Committee was therefore wound up and the Board fulfils the role of the Nomination Committee.

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 2021 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)
Sarika Patel	4 (4)	2 (2)	1 (1)
Jeremy Tigue	4 (4)	2 (2)	1 (1)
Richard Burns A	2 (2)	1 (1)	-

^A retired from the Board on 5 February 2021.

The Board meets more frequently when business needs require, and met additionally once during the financial year.

Caroline Hitch, Sarika Patel, Jeremy Tigue and Mark White will retire and, being eligible, will offer themselves for re-election at the Annual General Meeting.

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

Board's Policy on Tenure

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

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

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 14 to the financial statements.

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, except in respect of the winding up of the Nomination Committee and how the Board now carries out the work of the Nomination Committee as set out above.

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.

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.

The Committee met once during the year to 30 September 2021 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 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 Annual General Meeting, 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 15 December 2016.  The next continuation vote will take place at the AGM to be held on 4 February 2022, further details are set out in the Chair's Statement.

As at 30 September 2021, the Company had a £30 million (2020: £20 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.  The £20 million revolving credit facility with Banco Santander, S.A., London Branch was cancelled on 28 June 2021 and repaid.

The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report 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, including in current market conditions caused by the Covid-19 pandemic. They have also reviewed the revenue and ongoing expenses forecasts for the coming year. 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 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 5 February 2021. Resolutions to approve the re-appointment of KPMG LLP for the year to 30 September 2022 and to authorise the Directors to determine the remuneration of the Auditor will be proposed at the AGM on 4 February 2022.

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

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.

The Company's Annual General Meeting normally 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.  Due to the Covid-19 pandemic the 2021 AGM was held on a functional only basis, satisfying the minimum legal requirements.  However, at the date of this report it is intended to hold the 2022 meeting in person.

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.  Due to Covid-19, it was not possible to host these sessions during the year under review, or the previous financial year.  However, Thomas Moore has continued to provide updates to shareholders by video conference.  The Board intends to host an online shareholder event early in 2022, ahead of the Annual General Meeting on 4 February 2022 and further details are set out in the Chair's Statement.

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. 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, 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 Annual General Meeting will be held on Friday, 4 February 2022

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 December each year. Resolution 3 will seek shareholder approval for the dividend policy.

Continuation Vote

Resolution 10, which is an ordinary resolution, will, if approved, allow the Company to continue as an investment trust.

Issue of Ordinary Shares

Resolution 11, which is an ordinary resolution, will, if passed, renew the Directors' authority to allot new Ordinary shares up to 10% of the issued share capital of the Company (excluding treasury shares) as at the date of the passing of the resolution.

Resolution 12, 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 make limited allotments or sell shares from treasury of up to 10% of the total ordinary issued share capital, excluding treasury shares, as at the date of the passing of the resolution.

The authority to issue shares on a non pre-emptive basis includes shares held in treasury (if any) which the Company sells or transfers, including pursuant to the authority conferred by resolution 11.

New Ordinary shares will only be issued at prices representing a premium to the last published net asset value per share.

The authorities being sought under resolutions 11 and 12 shall expire at the conclusion of the Company's next AGM in 2023 or, if earlier, on the expiry of 15 months from the date of the passing of the resolutions, unless such authorities are renewed 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.

Purchase of the Company's Ordinary Shares

Resolution 13, 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. 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 2023 or, if earlier, on the expiry of 15 months from the date of the passing of the resolution unless such authority is renewed 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 14, 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 14 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 2023 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 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 105,465 Ordinary shares, representing 0.22%% of the issued share capital.

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

1 George Street

Edinburgh EH2 2LL

9 December 2021

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

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;

-  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; and

We consider that the Annual Report, taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Mark White

Chair
9 December 2021

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2021

		2021			2020
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Net gains/(losses) on investments at fair value	9	-	46,078	46,078	-	(56,722)	(56,722)
Currency losses		-	(2)	(2)	-	(30)	(30)
Income	2	10,642	-	10,642	8,730	-	8,730
Investment management fee	3	(342)	(799)	(1,141)	(310)	(722)	(1,032)
Administrative expenses	4	(373)	-	(373)	(473)	-	(473)
Net return before finance costs and taxation		9,927	45,277	55,204	7,947	(57,474)	(49,527)
Finance costs	5	(109)	(253)	(362)	(142)	(333)	(475)
Return before taxation		9,818	45,024	54,842	7,805	(57,807)	(50,002)
Taxation	6	(125)	-	(125)	(191)	-	(191)
Return after taxation		9,693	45,024	54,717	7,614	(57,807)	(50,193)
Return per Ordinary share	8	20.06p	93.18p	113.24p	15.61p	(118.51p)	(102.90p)
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 are an integral part of the financial statements.

STATEMENT OF FINANCIAL POSITION

As at 30 September 2021

			2021		2020
	Notes		£'000		£'000
Fixed assets
Investments at fair value through profit or loss	9		207,418		157,799
Current assets
Debtors	10		1,322		524
Money-market funds			3,408		872
Cash and short-term deposits			45		307
			4,775		1,703
Current liabilities
Creditors: amounts falling due within one year
Bank loan	11		(24,951)		(19,899)
Other creditors	11		(4,311)		(407)
			(29,262)		(20,306)
Net current liabilities			(24,487)		(18,603)
Net assets			182,931		139,196
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			97,491		53,494
Revenue reserve			8,486		8,748
Equity shareholders' funds			182,931		139,196
Net asset value per Ordinary share	13		380.84p		288.02p
The financial statements were approved by the Board of Directors and authorised for issue on 9 December 2021 and were signed on its behalf by:
Mark White
Chair
The accompanying notes are an integral part of the financial statements.

 

STATEMENT OF CHANGES IN EQUITY

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
For the year ended 30 September 2020
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2019		12,295	52,043	12,616	112,940	11,578	201,472
Return after taxation		-	-	-	(57,807)	7,614	(50,193)
Purchase of own shares for treasury		-	-	-	(1,639)	-	(1,639)
Dividends paid	7	-	-	-	-	(10,444)	(10,444)
Balance at 30 September 2020		12,295	52,043	12,616	53,494	8,748	139,196
The capital reserve at 30 September 2021 is split between realised gains of £81,939,000 and unrealised gains of £15,552,000 (30 September 2020: realised gains of £83,702,000 and unrealised losses of £30,208,000).
The revenue and capital reserves represent the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.

 

NOTES

For the year ended 30 September 2021

1.	Accounting policies
	(a)		Basis of accounting. 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 April 2021.  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 substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances, including in the current market environment, are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews stress testing of plausible downside scenarios and compliance with banking covenants, including the headroom available. The next continuation vote will be held at the AGM in February 2022. The Directors have no reason to believe that the vote will not be in favour on continuation based on their assumption that investors will wish to continue to have exposure to the Company's activities, in the form of a closed ended entity.
			Having taken these factors into account as well as the impact of Covid-19 and having assessed the principal risks and other matters set out in the Viability Statement, the Directors believe that, after making enquiries, the Company has adequate resources to continue in operational existence and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Directors' Report (unaudited) above.
			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.
			All values are rounded to the nearest thousand pounds (£'000) except where indicated otherwise.
	(b)		Valuation of investments. The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors. Accordingly, the Company classifies the investments 'at fair value through profit or loss'. They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income, and allocated to 'capital' at the time of acquisition). Subsequent to initial recognition, investments are valued at fair value through profit or loss. 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 FTSE 100 constituents and the most liquid of the FTSE 250 constituents along with some other securities.
			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.
	(c)		Money market funds. Money market funds are used by the Company to provide additional short 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 an AAA-rated money-market fund, Aberdeen Standard Liquidity Fund, which is managed by Aberdeen Asset Managers 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 ant 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.
		(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.

2.	Income
		2021	2020
		£'000	£'000
	Income from investments
	UK investment income
	Ordinary dividends	8,286	6,742
	Special dividends	600	367
		8,886	7,109
	Overseas and Property Income Distribution investment income
	Ordinary dividends	1,748	1,514
	Special dividends	5	89
		1,753	1,603
		10,639	8,712
	Other income
	Money-market interest	2	18
	Underwriting commission	1	-
		3	18
	Total income	10,642	8,730

3.	Investment management fee
		2021	2020
		£'000	£'000
	Charged to revenue reserve	342	310
	Charged to capital reserve	799	722
		1,141	1,032
	The Company has an agreement with Aberdeen Standard Fund Managers Limited ("ASFML") for the provision of management services, under which investment management services have been delegated to Standard Life Investments Limited. The contract is terminable by either party on not less than six months' notice.
	The fee payable to ASFML 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 £298,000 (2020 - £227,000).

4.	Administrative expenses
				2021	2020
				£'000	£'000
	Directors' fees			104	122
	Employers' National Insurance			6	7
	Fees payable to the Company's Auditor (excluding VAT):
	- for the audit of the annual financial statements			32	26
	Professional fees			(3)	21
	Depositary fees			25	37
	Other expenses			209	260
				373	473
	The Company has an agreement with ASFML for the provision of promotional activities. Fees paid under the agreement during the year were £95,000 (2020 - £111,000). At 30 September 2021, £63,000 was due to ASFML (2020 - £32,000 prepaid to ASFML).
	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
		2021	2020
		£'000	£'000
	On bank loans and overdrafts:
	Charged to revenue reserve	109	142
	Charged to capital reserve	253	333
		362	475
	Finance costs are chargeable 30% to revenue and 70% to capital (see note 1(e)).

6.		Taxation
			2021				2020
			Revenue		Capital	Total	Revenue	Capital	Total
			£'000		£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Overseas withholding tax	125		-	125	191	-	191
	(b)	Factors affecting total tax charge for the year. The corporation tax rate was 19% (2020 - 19%). The total tax assessed for the year is higher (2020 - higher) 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:
				2021		2020
				Revenue	Capital	Total	Revenue	Capital	Total
				£'000	£'000	£'000	£'000	£'000	£'000
		Return before taxation		9,818	45,024	54,842	7,805	(57,807)	(50,002)
		Corporation tax at a rate of 19% (2020 - 19%)		1,865	8,555	10,420	1,483	(10,983)	(9,500)
		Effects of:
		Non-taxable UK dividends		(1,686)	-	(1,686)	(1,365)	-	(1,365)
		Non-taxable overseas dividends		(273)	-	(273)	(243)	-	(243)
		Currency losses not relievable		-	-	-	-	6	6
		(Gains)/losses on investments not relievable		-	(8,755)	(8,755)	-	10,777	10,777
		Expenses not deductible for tax purposes		-	-	-	3	-	3
		Excess management expenses and loan relationship losses		94	200	294	122	200	322
		Irrecoverable overseas withholding tax		125	-	125	191	-	191
		Total taxation		125	-	125	191	-	191
		At 30 September 2021, the Company had unutilised management expenses and loan relationship losses of £30,202,000 (2020 - £28,657,000). 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
			2021		2020
			£'000		£'000
	Amounts recognised as distributions to equity holders in the year:
	Final dividend for 2019 of 5.80p per share		-		2,837
	Fourth interim dividend for 2020 of 5.00p per share (2019 - nil)		2,416		-
	First interim dividend for 2021 of 5.20p per share (2020 - 5.20p)		2,513		2,544
	Second interim dividend for 2021 of 5.20p per share (2020 - 5.20p)		2,513		2,543
	Third interim dividend for 2021 of 5.20p per share (2020 - 5.20p)		2,513		2,520
			9,955		10,444
	The fourth interim dividend of 5.60p per Ordinary share, payable on 21 January 2022 to shareholders on the register on 24 December 2021 has not been included as a liability in the financial statements.
	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.
		2021		2020
		£'000		£'000
	First interim dividend for 2021 of 5.20p per share (2020 - 5.20p)	2,513		2,544
	Second interim dividend for 2021 of 5.20p per share (2020 - 5.20p)	2,513		2,543
	Third interim dividend for 2021 of 5.20p per share (2020 - 5.20p)	2,513		2,520
	Fourth interim dividend for 2021 of 5.60p per share (2020 - 5.00p)	2,690		2,416
		10,229		10,023

8.	Return per Ordinary share
		2021		2020
		£'000	p	£'000	p
	Basic
	Revenue return	9,693	20.06	7,614	15.61
	Capital return	45,024	93.18	(57,807)	(118.51)
	Total return	54,717	113.24	(50,193)	(102.90)
	Weighted average number of Ordinary shares in issue{A}		48,320,851		48,776,939
	{A} Calculated excluding shares held in Treasury where applicable.

9.	Investments
			2021		2020
			£'000		£'000
	Fair value through profit or loss
	Opening book cost		188,007		235,008
	Opening fair value losses on investments held		(30,208)		(5,731)
	Opening fair value		157,799		229,277
	Movements in the year:
	Purchases at cost		59,701		47,523
	Sales - proceeds		(56,160)		(62,279)
	Gains/(losses) on investments		46,078		(56,722)
	Closing fair value		207,418		157,799
	Closing book cost		191,866		188,007
	Closing fair value gains/(losses) on investments held		15,552		(30,208)
	Closing fair value		207,418		157,799
	The Company received £56,160,000 (2020 - £62,279,000) from investments sold in the year.  The book cost of these investments when they were purchased was £55,842,000 (2020 - £94,524,000).  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:
		2021		2020
		£'000		£'000
	Purchases	261		213
	Sales	44		47
	Total	305		260

10.	Debtors: amounts falling due within one year
		2021	2020
		£'000	£'000
	Amounts due from brokers	670	191
	Net dividends and interest receivable	611	188
	Other debtors	41	145
		1,322	524

11.	Creditors: amounts falling due within one year
		2021	2020
		£'000	£'000
	Bank loan	25,000	20,000
	Unamortised loan arrangement expenses	(49)	(101)
		24,951	19,899
	Other creditors
	Amounts due to brokers	3,823	-
	Investment management fee payable	298	227
	Sundry creditors	190	180
		4,311	407
	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 £20 million drawn down from the existing revolving credit facility with Banco Santander S.A. London Branch was repaid in full.
	The facility agreement contains the following covenants:
	- The Company's gross assets will not be less than £120 million (2020 - £100 million) at any time.
	- The Company's total net debt will not exceed 25% (2020 - 25%) of net asset value at any time.
	All covenants were complied with throughout the year.
	At 30 September 2021, and the date of signing this Report, £25 million had been drawn down, at an estimated interest rate of 1.15%. This is due to renew on 30 December 2021.

12.	Called-up share capital
		£'000	£'000
	Issued and fully paid:
	Ordinary shares of 25p each
	Opening balance of 48,327,960 (2020 - 48,921,128) Ordinary shares	12,083	12,231
	Buyback of 294,486 (2020 - 593,168) Ordinary shares	(74)	(148)
	Closing balance of 48,033,474 (2020 - 48,327,960) Ordinary shares	12,009	12,083
	Treasury shares
	Opening balance of 850,807 (2020 - 257,639) Treasury shares	212	64
	Buyback of 294,486 (2020 - 593,168) Ordinary shares to Treasury	74	148
	Closing balance of 1,145,293 (2020 - 850,807) treasury shares	286	212
		12,295	12,295
	During the year, 294,486 Ordinary shares (2020 - 593,168) were repurchased for a consideration of £1,027,000 (2020 - £1,639,000). The total shares held in Treasury is 1,145,293 (2020 - 850,807).

13.	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:
		2021	2020
	Basic
	Total shareholders' funds (£'000)	182,931	139,196
	Number of Ordinary shares in issue at year end{A}	48,033,474	48,327,960
	Net asset value per share	380.84p	288.02p
	{A} Excludes shares in issue held in treasury where applicable.

14.	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.
		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 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	-
			Weighted
			average			Weighted
			period for			average
			which			interest		Fixed	Floating
			rate is fixed			rate		rate	rate
		As at 30 September 2020	Years			%		£'000	£'000
		Assets
		Money market funds	-			0.17		-	872
		Cash deposits	-			-		-	307
		Total assets	-			0.17		-	1,179
		Liabilities
		Bank loans	-			1.39		19,899	-
		Total liabilities	-			1.39		19,899	-
		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.
		Maturity profile. The Company did not hold any assets at 30 September 2021 or 30 September 2020 that had a maturity date. The £25 million (2020 - £20 million) loan drawn down had a maturity date of 30 December 2021 (2020 - 27 October 2020) at the Statement of Financial Position date.
		Interest rate sensitivity. The sensitivity analyses 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 2021 would decrease/increase by £215,000 (2020 - decrease/increase by £187,000). 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 (i.e. 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 2021 would have increased/decreased by £20,742,000 (2020 - increase/decrease of £15,780,000). 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.
		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:
				2021			2020
				Statement of			Statement of
				Financial Position	Maximum exposure		Financial Position		Maximum exposure
				£'000	£'000		£'000		£'000
		Current assets
		Debtors		1,322	1,322		524		524
		Money market funds (indirect exposure)		3,408	3,408		872		872
		Cash and short term deposits		45	45		307		307
				4,775	4,775		1,703		1,703
		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 £24,951,000 (note 11).

15.	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 (i.e. developed using market date) for the asset or liability, either directly or indirectly.
	Level 3: inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
	All of the Company's investments are in quoted equities (2020 - 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 (2021 - £207,418,000; 2020 - £157,799,000) have therefore been deemed as Level 1.

16.	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 13.5% of net assets (2020 - 13.3%)
	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.

17.	Contingent liabilities. As at 30 September 2021 there were no contingent liabilities (2020 - same).

18.

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.

19.	Related party transactions and transactions with the Manager. 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. The balance of fees due to Directors at the year end was £nil (2020 - £29,000).
	Aberdeen Standard Fund Managers Limited received fees for its services as Manager. Further details are provided in notes 3 and 4.

 

ALTERNATIVE PERFORMANCE MEASURES

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 2021		30 September 2020
Share price			349.00p		252.00p
Net asset value per share			380.84p		288.02p
Discount			8.4%		12.5%
Dividend yield. Dividend yield measures the dividend per share as a percentage of the share price per share.
			30 September 2021		30 September 2020
Share price			349.00p		252.00p
Dividend per share			21.20p		20.60p
Dividend yield			6.1%		8.2%
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 2021		30 September 2020
			£'000		£'000
Total borrowings	a		24,951		19,899
Cash and short-term deposits			45		307
Investments in AAA-rated money-market funds			3,408		872
Amounts due from brokers			670		191
Amounts payable to brokers			(3,823)		-
Total cash and cash equivalents	b		300		1,370
Gearing (borrowings less cash & cash equivalents)	c=(a-b)		24,651		18,529
Shareholders' funds	d		182,931		139,196
Net gearing	e=(c/d)		13.5%		13.3%
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 net asset values throughout the period.
			30 September 2021		30 September 2020
			£'000		£'000
Investment management fees			1,141		1,032
Administrative expenses			373		473
Less: non-recurring charges{A}			(2)		(15)
Ongoing charges	a		1,512		1,490
Average net assets	b		173,473		171,981
Ongoing charges ratio (excluding look-through costs)	c=(a/b)		0.87%		0.87%
Look-through costs{B}	d		0.06%		0.05%
Ongoing charges ratio (including look-through costs)	e=c+d		0.93%		0.92%
{A} Comprises professional fees not expected to recur.
{B} 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.
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.
Total return. NAV and share price total returns show how the NAV and share price have performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to Shareholders. NAV total return involves reinvesting the net dividend paid by the Company back into 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.
The table below provides information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the period and the resultant total return.
In order to calculate the total return for the year, returns are calculated on each key date for the period and then the return for the year is derived from the product of these individual returns. Dividends are reported on their ex-dividend date and are added back to the NAV or share price to calculate the return for that period.
		Dividend				Share
Year ended 30 September 2021		rate		NAV		price
30 September 2020				288.02p		252.00p
3 December 2020		5.00p		335.95p		306.50p
4 March 2021		5.20p		353.57p		326.00p
3 June 2021		5.20p		389.78p		369.00p
2 September 2021		5.20p		383.86p		354.50p
30 September 2021				380.84p		349.00p
Total return				+39.9%		+47.1%
		Dividend				Share
Year ended 30 September 2020		rate		NAV		price
30 September 2019				411.83p		381.50p
24 December 2019		5.80p		442.36p		421.00p
5 March 2020		5.20p		379.01p		358.00p
4 June 2020		5.20p		313.98p		277.00p
3 September 2020		5.20p		290.11p		259.00p
30 September 2020				288.02p		252.00p
Total return				-25.7%		-29.4%

For Aberdeen Standard Equity Income Trust plc

Aberdeen Asset Management PLC, Company Secretary

Additional Notes to the Annual Financial Report

The Annual General Meeting will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Friday, 4 February 2022 at 11:30 am.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 September 2021 have been agreed with the auditor and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2020 and 2021 statutory accounts received unqualified reports from the Company's auditor and did not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006. The financial information for 2020 is derived from the statutory accounts for 2020 which have been delivered to the Registrar of Companies. The 2021 accounts will be filed with the Registrar of Companies in due course.

The Annual Report and Accounts will be posted to shareholders in December 2021. Copies will be available during normal business hours from the Secretary, Aberdeen Asset Management PLC, 1 George Street, Edinburgh EH2 2LL or from the Company's website, www.aberdeenstandardequityincometrust.com.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

9 December 2021

For further information please contact:

Evan Bruce-Gardyne

Client Director, Investment Trusts, abrdn

Tel: [phone]

 

END

 

 

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