Annual Financial Report

RNS Number : 4894A

Shires Income PLC

02 June 2021

SHIRES INCOME PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MARCH 2021

Legal Entity Identifier (LEI): 549300HVCIHNQNZAYA89

The Company

Shires Income PLC (the "Company") is an investment trust. Its Ordinary shares are listed on the premium segment of the London Stock Exchange.

Investment Objective

The Company's investment objective is to provide shareholders with a high level of income, together with the potential for growth of both income and capital from a diversified portfolio substantially invested in UK equities but also in preference shares, convertibles and other fixed income securities.

Benchmark

The Company's benchmark is the FTSE All-Share Index (total return).

Website

Up to date information can be found on the Company's website: www.shiresincome.co.uk

COMPANY OVERVIEW - FINANCIAL HIGHLIGHTS

Net asset value per Ordinary share total return ^A		Share price total return ^A		Benchmark index total return
2021	+34.0%	2021	+31.2%	2021	+26.7%
2020	-18.0%	2020	-21.2%	2020	-18.5%

Earnings per share (revenue)		Dividends per Ordinary share		Dividend yield ^A
2021	12.33p	2021	13.20p	2021	5.3%
2020	12.98p	2020	13.20p	2020	6.6%

^A Alternative Performance Measure

For further information, please contact:

Scott Anderson

Aberdeen Standard Fund Managers Limited

0131 222 1863

COMPANY OVERVIEW - CHAIRMAN'S STATEMENT

At the time of my Chairman's Statement last year, we were about to embark on an unprecedented journey as Covid-19 took its hold across the globe. This year, I am encouraged that we have seen both a market recovery in UK equities and some progress made in combatting the catastrophic effects of the virus, with the introduction of a number of effective vaccines, which means I write to you this year with a more positive outlook.

In spite of such a turbulent period, I am pleased to report that your Company generated strong positive returns during the year ended 31 March 2021 as well as outperforming its benchmark, the FTSE All-Share Index, with a net asset value ("NAV") total return of 34.0% and a share price total return of 31.2%, versus a benchmark return of 26.7%.

Three and five-year performance figures are also positive, with NAV total returns of 14.2% and 46.9%, versus benchmark returns of 9.9% and 35.7% respectively.

The impact of Covid-19 dominated the global economic landscape during the year, and also had a significant impact on financial markets. Equity markets ultimately benefitted from the significant stimulus measures from governments and central banks as well as the rapid development and then deployment of effective vaccines, the first ones being approved in November 2020. Other events during the year seemed to take a back seat, with, for example, the resolution of the UK's departure from the EU at the end of 2020 having a limited impact on equity markets.

Further details of performance and portfolio activity for the year are contained in the Investment Manager's Review.

Earnings

The Company's revenue return for the year was 12.33p per share, compared to 12.98p per share for the previous year, a decrease of 5.0%. The level of investment income fell by 6.1% during the year, significantly better than the market as a whole in the UK where, during the course of 2020, dividends fell by around 50%. As explained in the Investment Manager's Review, despite these challenging times, a number of your Company's holdings grew their dividends during the year. Furthermore, the preference share portfolio demonstrated its resilience and continued to deliver a reliable level of income.

Dividend

The Board is proposing a final dividend of 4.2p per Ordinary share (2020 - 4.20p), which will be paid on 30 July 2021 to shareholders on the register on 9 July 2020. This final dividend brings total Ordinary share dividends for the year to 13.2p per share, unchanged from the previous year. Based on the year end share price of 248.0p, this equates to a dividend yield of 5.3%.

As it was last year, the dividend is again not fully covered by current year earnings, however, given the significant level of its revenue reserves, the Company remains in a strong position to pay the dividend proposed. Following the payment of the final dividend, revenue reserves will still stand at 1.06 times the current annual Ordinary share dividend cost. The Company also has the flexibility to pay dividends from its realised capital reserves, although the Board has no current intention of making use of this flexibility. The Board is aware of the importance that shareholders attach to the level of dividends and these factors, together with growing evidence of economic and corporate recovery, will be taken into account at the time of future dividend decisions. Subject to unforeseen circumstances, it is proposed to continue during this financial year to pay three quarterly interim dividends of 3.0p each per Ordinary share and, as in previous years, the Board will decide on next year's final dividend having reviewed the full year results, taking into account the general outlook for the portfolio's investment income at that time.

Discount/Premium

At the end of the year, the Company's Ordinary shares were trading at a discount of 5.5% to the NAV per share (including income) compared to a discount of 3.3% at the end of the previous year. During the course of the year, despite the difficult backdrop, the shares did trade at a premium for a period of time and, as a result of this, in response to investor demand, the Company was able to issue 25,000 new Ordinary shares on a non-dilutive basis.

The Board and Manager monitor the discount/premium of the Company's shares on an ongoing basis and the Board will seek to renew the appropriate share issuance and share buyback authorities at the Annual General Meeting.

Gearing

The Company's gearing level (net of cash) was 16.5% as at 31 March 2021 compared to 23.7% at the end of the previous year. There were no changes to the Company's borrowing arrangements during the course of the year, with £19 million of the Company's £20 million facility being drawn down at the year end.

£9 million of this amount continues to be drawn down on a short-term basis through a revolving credit facility and can be repaid without incurring any financial penalties. The facility matures in September 2022. Further details are set out in note 13 to the financial statements. As in previous years, the Board takes the view that the borrowings are notionally invested in the less volatile fixed income part of the portfolio which generates a high level of income giving the Investment Manager greater ability to invest in a range of equity stocks with various yields. This combination means that the Company can achieve a high level of dividend but also deliver some capital appreciation to shareholders.

Board Composition

Following Jane Pearce's appointment to the Board in January 2020 as an independent non-executive Director, and Andrew Robson's retirement at the AGM in July 2020, there have been no further changes to Board composition. The Board is well balanced, with comprehensive and diverse skills and backgrounds, currently consisting of two males and two females.

In accordance with the AIC Code of Corporate Governance, all Directors are standing for re-appointment at this year's Annual General Meeting.

Environmental, Social and Governance

The Investment Manager has provided some further information in this year's Annual Report on its approach to Environmental, Social and Governance ("ESG") issues, including climate change, and how they are taken into account in the investment decision-making process. The Board is supportive of the approach taken by the Investment Manager in this area, being based upon active and regular engagement with companies in order to drive changes in behaviour and hence improvements in shareholder returns, rather than adopting any form of exclusions based upon certain criteria. The Board believes that the approach adopted gives the Investment Manager greater freedom to identify good risk adjusted investment opportunities and then bring about positive change to the benefit of our shareholders.

Annual General Meeting

The Company's Annual General Meeting ("AGM") will take place at 9.00am on Wednesday 7 July 2021 at 6 St Andrew Square, Edinburgh EH2 2BD.

Although there is the possibility of some easing of Covid-19 Government guidelines before the date of the AGM, consideration still needs to be given at this time to public safety, given that we believe social distancing measures will continue to be in place. With this in mind, we intend to again hold a functional meeting, as we did last year, to consider only the formal business of the meeting.

Arrangements will therefore be made by the Company to ensure that the minimum number of shareholders required to form a quorum are in attendance at the meeting, in order that the meeting may proceed and the business of the meeting be concluded. There will be no formal presentation from the Investment Manager at this meeting and no refreshments will be offered but we would greatly appreciate your proxy voting support for all the resolutions proposed at the meeting.

In order to encourage interaction with our shareholders, we will be hosting an Online Shareholder Presentation, which will be held at 10.00 am on Wednesday 23 June 2021. At this event you will receive a presentation from the Investment Manager and have the opportunity to ask live questions of the Chairman, the Chairman of the Audit Committee and the Investment Manager. You will also be able to submit questions in advance at the following email address: shires.income@aberdeenstandard.com . Please include "SHIRES AGM" in the subject heading. The online presentation is being held ahead of the AGM to allow shareholders to submit their proxy votes prior to the meeting and we would encourage all shareholders to lodge their votes in advance. Full details on how to register for the online event can be found at: www.workcast.com/register?cpak=4434827810503617 . Details are also contained on the Company's website.

Should you be unable to attend the online event, the Investment Manager's presentation will be made available to shareholders on the Company's website shortly after the presentation. The Company's AGM results will also be published on our website. We do hope that this is the last year in which we will need to take these measures and that we will be able to meet shareholders in person at the AGM in 2022.

In the meantime, the Board strongly encourages all shareholders to exercise their votes in respect of the AGM in advance, and to appoint the Chairman of the meeting as their proxy, by completing the enclosed form of proxy form, or letter of direction for those who hold shares through the Aberdeen Standard Investments savings plans. This should ensure that your votes are registered.

Outlook

While Covid-19 still continues to have an impact across the world, your Investment Manager's long-term approach to investment and its continued focus on investing in, and holding, quality companies, which have been able to withstand the effects of the pandemic and its impact on their operations, has served your Company well.

The current year is likely to be very different to 2020 in economic and financial market terms. The introduction of a number of effective vaccines and some easing of restrictions has seen financial markets respond positively, which is an encouraging sign and a trend we hope will continue throughout 2021. An improvement in the economy, both here and abroad, as we move through the year should translate into better profitability and cash flows for companies across many sectors in the UK market. In turn, we should expect to see dividends recover after a difficult year in 2020. This should increase opportunities for your Investment Manager to find attractive companies that can deliver both growing income and capital appreciation over time.

At the start of 2021, we saw the market rise rapidly based upon growing optimism for economic growth in the year. Investors have recently favoured many of the businesses that were most adversely impacted by the significant economic shock of the pandemic last year. This has seen what are categorised as value and recovery stocks perform far better than growth companies and the 'lockdown' winners of 2020. Historically, and in line with our Investment Manager's well established investment approach, the Company has tended to experience less downside when the equity market declines, and can lag slightly when it rises sharply in a short period of time. That reflects the Investment Manager's preference for holdings in quality companies that tend to deliver less volatility and exhibit more resilient results when times are difficult. Indeed, over the long term, this approach has worked well for the Company and has resulted in outperformance of the benchmark over many time periods. So, while there may be increasing excitement currently regarding the shorter-term economic prospects, there remains uncertainty regarding the longer-term growth and inflation outlook, and therefore the focus of the Investment Manager will continue to be on finding those stocks which it thinks can outperform over the longer term irrespective of the economic cycle. The commitment to focus on quality companies, with strong market positions, capable management teams, sound finances, and the ability to deliver high and sustainable returns remains, supporting the aim of the Company to continue to deliver resilient income and capital growth to shareholders over time.

Robert Talbut,

Chairman
1 June 2021

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Business Model

The business of the Company is that of an investment company which qualifies as an investment trust for tax purposes. The Directors do not envisage any change in this activity in the foreseeable future.

Investment Objective

Investment Policy

In pursuit of its objective, the Company's policy is to invest principally in the ordinary shares of UK quoted companies, and in preference shares, convertibles and other fixed income securities with above average yields.

The Company generates income primarily from ordinary shares, preference shares, convertibles and other fixed income securities. It also achieves income by writing call and put options on shares owned, or shares the Company would like to own. By doing so, the Company generates premium income.

Risk Diversification

In order to ensure adequate diversification, the Board sets absolute limits on maximum holdings and exposures in the portfolio from time to time. These limits do not form part of the investment policy and can be changed or over-ridden with Board approval. The current limits are disclosed under the heading "Board Investment Limits" below.

Gearing

The Directors are responsible for determining the gearing strategy of the Company. Gearing is used with the intention of enhancing long-term returns. Gearing is subject to a maximum equity gearing level of 35% of net assets at the time of draw down. Any borrowing, except for short-term liquidity purposes, is used for investment purposes.

Delivering the Investment Policy

The Directors are responsible for determining the investment objective and investment policy of the Company, although any significant changes are required to be approved by shareholders at a general meeting. Day-to-day management of the Company's assets has been delegated, via the Alternative Investment Fund Manager (the "AIFM"), to the Investment Manager.

Board Investment Limits

In order to ensure adequate diversification, the Board has set absolute limits on maximum holdings and exposures in the portfolio at the time of acquisition. These can only be over-ridden with Board approval. The current limits include the following:

- Maximum 10% of total assets invested in the equity securities of overseas companies;

- Maximum 7.5% of total assets invested in the securities of one company (excluding Aberdeen Smaller Companies Income Trust PLC);

- Maximum 5% of quoted investee company's ordinary shares (excluding Aberdeen Smaller Companies Income Trust PLC); and

- Maximum 10% of total assets invested directly in AIM holdings.

The Board assesses on a regular basis with the Manager the applicability of these investment limits, the use of gearing and risk diversification, whilst aiming to meet the overall investment objectives of the Company.

Preference Shares

The Company also invests in preference shares, primarily to enhance the income generation of the Company. The majority of these investments are in large financial institutions. Issue sizes are normally relatively small and the underlying securities are relatively illiquid by comparison with the equity component of the portfolio. A maximum of 7.5% of total assets may be invested in the preference shares of any one company. In addition, the Company cannot hold more than 10% of any investee company's preference shares.

Traded Options Contracts

The Company enters into traded option contracts, primarily to enhance the income generation of the Company. The risks associated with these option contracts are managed through the principal guidelines below, which operated in the year under review:

- Call options written to be covered by stock;

- Put options written to be covered by net current assets/borrowing facilities;

- Call options not to be written on more than 10% of the equity portfolio; and

- Put options not to be written on more than 10% of the equity portfolio.

Benchmark

In assessing its performance, the Company compares its returns with the returns of the FTSE All-Share Index (total return).

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.

Key Performance Indicators ("KPIs")

The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determining the progress of the Company in pursuing its investment policy. The main KPIs identified by the Board in relation to the Company, which are considered at each Board meeting, are shown in the table below:

KPI	Description
Performance of NAV	The Board considers the Company's NAV total return figures to be the best indicator of performance over time and this is therefore the main indicator of performance used by the Board.
Revenue return per Ordinary share	The Board monitors the Company's net revenue return (earnings per share).
Dividend per share	The Board monitors the Company's annual dividends per Ordinary share and the extent to which dividends are covered by current net revenue and revenue reserves.
Performance against benchmark index	The Board measures performance over the medium to long-term, on a total return basis against the benchmark index - the FTSE All-Share Index (total return).
Share price performance	The Board monitors the performance of the Company's share price on a total return basis.
Discount/premium to NAV	The discount/premium relative to the NAV per share represented by the share price is closely monitored by the Board. The Board also monitors trading activity in the Company's shares on a regular basis.
Ongoing charges	The Board monitors the Company's operating costs carefully. Some of the operating costs are fixed whilst the most significant cost, being the investment management fee, is variable depending on the net asset value of the Company.

Principal and Emerging Risks and Uncertainties

The Board carries out a regular review of the risk environment in which the Company operates, changes to that environment and to individual risks. The Board also identifies emerging risks which might impact on the Company. During the year, the most significant risk was the continuing effect of the Covid-19 virus which, in addition to the dramatic impact on public health, created significant economic uncertainty and volatility in global stock markets.

There are a number of other risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has carried out a robust assessment of the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation and has endeavoured to find means of mitigating those risks, wherever practical.

The principal and emerging risks and uncertainties faced by the Company are reviewed by the Audit Committee in the form of a risk matrix. The assessment of risks and their mitigation continues to be an area of significant focus for the Audit Committee.

The principal risks and uncertainties facing the Company at the current time, together with a description of the mitigating actions the Board has taken, are set out in the table below. The Board has included exogenous risks, which include the Covid-19 pandemic, over which the Company has no control.

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.

Description	Mitigating Actions
Strategic objectives and investment policy - a lack of demand for the Company's shares due to its objectives becoming unattractive to investors, or a negative perception of investment trusts, could result in a widening of the discount of the share price to its underlying NAV and a fall in the value of its shares.	The Board formally reviews the Company's objectives and strategies for achieving them on an annual basis, or more regularly if appropriate. The Board is cognisant of the importance of regular communication with shareholders and knowledge of what encourages investment in the Company. Directors attend meetings with shareholders where practical, host the Annual General Meeting as a forum for shareholder contact and regularly discuss shareholder investment behaviour with the Manager, including trends on investment platforms and shareholder themes. The Board reviews shareholder feedback through reports provided by the Manager's Investor Relations team and also receives feedback from the Company's stockbroker. The Board and Manager keep the level of discount under constant review, as well as changes to the Company's shareholder register.
Investment performance - performance of the portfolio when measured against the benchmark.	The Board meets the Manager on a regular basis and keeps investment performance under close review. This includes performance attribution by sector and stock, and liquidity analysis, as well as the degree of diversification in the portfolio and income sustainability through examination of forward income projections. Representatives of the Investment Manager attend all Board meetings and a detailed formal appraisal of the Standard Life Aberdeen Group is carried out annually by the Management Engagement Committee. The Board sets, and monitors, the investment restrictions and guidelines, and receives regular reports which include performance reporting on the implementation of the investment policy, the investment process, risk management and application of the guidelines. Investment risk within the portfolio is managed in four ways: - Adherence by the Investment Manager to the investment process in order to minimise investments in poor quality companies and/or overpaying for investments. - Diversification of investment - seeking to invest in a wide variety of companies with strong balance sheets and the earnings power to pay increasing dividends. In addition, investments are diversified by sector in order to reduce the risk of a single large exposure. The Company invests mainly in equities, preference shares and convertibles. - Adherence by the Investment Manager to the investment limits set by the Board. - Examination of changes to the portfolio and emerging investment themes, including relative to benchmark constituents. Investment in UK smaller companies Rather than holding a number of smaller companies' shares, the Company invests indirectly into this part of the equity market through one holding in Aberdeen Smaller Companies Income Trust PLC, which is also managed by the Manager. Given its size (representing 10.3% of the Company's portfolio) the Directors regularly review this holding, including its liquidity. All of the directors of Aberdeen Smaller Companies Income Trust PLC are independent of Shires Income PLC. The Manager does not charge any management fee in respect of the amount of the Company's assets attributable to this holding. Investment in preference shares The Company has longstanding holdings in a number of preference shares with no fixed redemption dates (representing 27.2% of the Company's portfolio). The Directors regularly review these investments, which are held primarily to enhance the income generation of the Company. By their nature, their price movements will be subject to a number of factors and, in normal market conditions, will tend to respond less to pricing movements in equity markets. Issue sizes of these preference shares are normally relatively small and with associated low secondary market liquidity by comparison with the equity component of the portfolio. The Board also considers the long-term nature of these investments and the impact of any potential changes on duration on the portfolio and its returns, as well as the sustainability of the dividends paid.
Failure to maintain, and grow the dividend over the longer term - the level of the Company's dividends and future dividend growth will depend on the performance of the underlying portfolio.	The Directors review detailed income forecasts at each Board meeting and discuss the Investment Manager's outlook for dividends. The Company has revenue reserves which it can draw upon should there be a shortfall in revenue returns in a year, and also has the ability to pay dividends from realised capital reserves. The Board regularly reviews forward net revenue projections and takes into account revenue reserves in setting quarterly dividend levels.
Widening of discount - a number of factors including the setting of an unattractive strategic investment proposition, changing investor sentiment and investment underperformance may lead to a decrease in demand for the Company's shares and a widening of the difference between the share price and the net asset value per share.	The Board monitors the Company's Ordinary share price relative to the net asset value per share and keeps the level of discount or premium at which the Company's shares trade under review. The Board also keeps the investment objective and policy under review and holds an annual strategy meeting where it reviews investor relations reports and updates from the Manager and the Company's stockbroker. The Directors are updated at each Board meeting on the composition of, and any movements in, the shareholder register, which is retail investor dominated. The Board annually agrees a marketing programme and budget with the Manager, and receives updates regularly on both marketing and investor relations. The Board has a close focus on investor platform activity which has been the dominant change over recent years in how retail investors choose to acquire and hold their shares. This includes contact with the platform operators through the Manager.
Gearing - a fall in the value of the Company's investment portfolio could be exacerbated by the impact of gearing. It could also result in a breach of loan covenants and the forced sale of investments.	The Board sets the gearing limits within which the Investment Manager can operate. Gearing levels and compliance with loan covenants are monitored on an ongoing basis by the Manager and at regular Board meetings, or between scheduled Board meetings if required. In the event of a possible impending covenant breach, appropriate action would be taken to reduce borrowing levels. The financial covenants attached to the Company's borrowings currently provide for significant headroom. The maximum equity gearing level is 35% of net assets at the time of draw down, which constrains the amount of gearing that can be invested in equities which are more volatile than the fixed interest part of the portfolio. The use of gearing has been an important facilitator of the income returns from the portfolio, particularly in financing the high yield preference share proportion of the portfolio which has historically provided significant dividend income for the Company. The Company's gearing includes a revolving credit facility which can be reduced without any significant financial penalties for early repayment and at relatively short notice.
Regulatory obligations - failure to comply with relevant laws and regulations could result in fines, loss of reputation and potentially loss of an advantageous tax regime.	The Board and Manager monitor changes in government policy and legislation which may have an impact on the Company, and the Audit Committee monitors compliance with regulations by reviewing internal control reports from the Manager. The Board is kept aware of proposed changes to laws and regulations, considers the changes and applies them as appropriate, if they are not already being met. From time to time the Board employs external advisers to advise on specific regulatory and governance matters.
Operational - the Company is dependent on third parties for the provision of all systems and services (in particular, those of the Standard Life Aberdeen Group) and any control failures and gaps in their systems and services, including in relation to cyber security, could result in a loss or damage to the Company.	The Board receives reports from the Manager on its internal controls and risk management processes and receives assurances from all its other significant service providers on at least an annual basis, including on matters relating to operational resilience 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 and Custodian, through service level agreements, regular meetings and key performance indicators. The operational requirements of the Company, including its service providers, have been subject to rigorous testing during the Covid-19 pandemic, including increased use of online communication and out of office working and reporting, which to date have proven robust. The Board reviews management accounts and forecast revenue and expense statements at each Board meeting and the Audit Committee is closely involved in the financial reporting of the Company. Financial records are subject to an annual audit and the Audit Committee receives reports from the Manager on internal controls and is advised of any control breaches or reporting errors.
Exogenous risks such as health, social, financial, economic and geo-political - the financial impact of such risks, associated with the portfolio or the Company itself, could result in losses to the Company.	At any given time, the Company has sufficient cash resources to meet its operating requirements. In common with most commercial operations, exogenous risks over which the Company has no control are always a risk. The Company does what it can to address these risks where possible, not least operationally, and to try and meet the Company's investment objectives. Political and economic risks include the response to the Covid-19 pandemic and the implications of UK's exit from the European Union, including any regulatory changes resulting from a different political environment, and wider geo-political issues. In addition, the Board has been and remains acutely conscious of the impact on financial markets caused by the outbreak of the Covid-19 virus around the world over the past year. The Board considers that Covid-19 could have further and persistent implications for financial markets, economies and on the operating environment of the Company, the impact of which is difficult to predict for the medium to longer term. The Board is supportive of the Investment Manager's approach to environmental, social and governance ("ESG") risks and welcomes its active engagement with company management. Through this activity, the Investment Manager aims to identify and manage the exposure to such risks over time. The financial and economic risks associated with the Company include market risk, liquidity risk and credit risk, all of which the Investment Manager seeks to mitigate. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in note 18 to the financial statements.

External Agencies

In addition to the services provided to the Company by the Standard Life Aberdeen Group, the Board has contractually delegated to external agencies certain services, including: depositary services (which include the safekeeping of the Company's assets) (BNP Paribas Securities Services, London Branch) and share registration services (Equiniti Limited). Each of these services was entered into after full and proper consideration by the Board of the quality and cost of services offered. In addition, day-to-day accounting and administration services are provided, through delegation by the Manager, by BNP Paribas Securities Services.

Promotional Activities

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the rating of the Company's shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by Aberdeen Standard Investments on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by Aberdeen Standard Investments. The Company also supports Aberdeen Standard Investments' investor relations programme which involves regional roadshows, promotional and public relations campaigns. During the Covid-19 pandemic, a number of events that are usually held physically have been substituted with virtual events. Aberdeen Standard Investments' 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. The promotional programme includes commissioning independent paid for research on the Company, most recently from Marten & Co. A copy of the latest research note is available from the Latest News section of the Company's website.

Board Diversity

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 of, 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, with the aim of retaining a small, cohesive board with the requisite skills and experience to acquit the Board's responsibilities well.

At 31 March 2021, there were two male Directors and two female Directors.

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 or environmental matters.

Modern Slavery Act

Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it 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 Governance ("ESG") Matters

The Board is supportive of the Investment Manager's approach to ESG issues, including climate change, and welcomes its active engagement with company management.

The UK Stewardship Code and Proxy Voting

The Company supports the UK Stewardship Code, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. Standard Life Aberdeen 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, 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

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Viability Statement

The Board considers the Company, with no fixed life, to be a long-term investment vehicle but, for the purposes of this viability statement, has decided that three years is an appropriate period over which to report, irrespective of any exogenous risks that the Company may face. The Board considers that this period reflects a balance between a longer-term investment horizon, the inherent uncertainties within equity markets and the specifics of a closed-ended investment company where its central purpose is different from other listed commercial and industrial companies.

In assessing the viability of the Company over the review period, the Directors have focused upon the following factors:

- The principal risks and uncertainties detailed above and the steps taken to mitigate these risks.

- The ongoing relevance of the Company's investment objective.

- The liquidity of the Company's portfolio. The majority of the portfolio is invested in readily realisable listed securities.

- The level of ongoing expenses. The Company's annual expenses, excluding the cost of the dividend, are expected to continue to be more than covered by annual investment income.

- The level of gearing. This is closely monitored and the financial covenants attached to the Company's borrowings provide for significant headroom. The Company has a £20 million loan facility which matures in September 2022. £9 million of this amount is drawn down on a short-term basis through a revolving credit facility and can be repaid without incurring any financial penalties.

- Regulatory or market changes.

- The robustness of the operations of the Company's third party suppliers, which have been subject to rigorous testing during the Covid-19 pandemic, particularly for operational resilience.

- Exogenous risks such as those currently impacting global economies and stock markets.

In making its assessment, the Board has considered that there are other matters that could have an impact on the Company's prospects or viability in the future, including the medium to longer-term unknown economic impact of the Covid-19 pandemic, economic shocks, significant stock market volatility, and changes in regulation or investor sentiment, including on income propensities.

Taking into account the Company's current position and the potential impact of its principal risks and uncertainties and emerging risks, 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 approval of this Report.

Outlook

The Board's view on the general outlook for the Company can be found in the Chairman's Statement whilst the Investment Manager's views on the outlook for the portfolio are included in the Investment Manager's Review.

On behalf of the Board

Robert Talbut

Chairman

1 June 2021

STRATEGIC REPORT - 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"). The Board provides below 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, amongst other things, the likely long-term consequences of decisions, the need to foster business relationships with all stakeholders and the impact of the Company's operations on the environment.

The Purpose of the Company and Role of the Board

The purpose of the Company is to act as an investment vehicle to provide, over time, financial returns (both income and capital) to its shareholders. Investment trusts, such as the Company, are long-term investment vehicles and are typically externally managed, have no employees, and are overseen by an independent non-executive board of directors.

The Board, which, at the year end, comprised four independent non-executive Directors with a broad range of skills and experience across all major functions that affect the Company, retains responsibility for taking all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's service providers.

The Board's philosophy is that the Company should operate in a transparent culture where all parties are treated with respect and provided with the opportunity to offer practical challenge and participate in positive debate which is focused on the aim of achieving the expectations of shareholders and other stakeholders alike. The Board reviews the culture and manner in which the Manager and Investment Manager operate at its regular meetings and receives regular reporting and feedback from the other key service providers. The Board is very conscious of the ways it promotes the Company's culture and ensures as part of its regular oversight that the integrity of the Company's affairs is foremost in the way that the activities are managed and promoted. The Board works very closely with the Manager and Investment Manager in reviewing how stakeholder issues are handled, ensuring good governance and responsibility in managing the Company's affairs, as well as visibility and openness in how the affairs are conducted.

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

How the Board Engages with Stakeholders

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

During the Covid-19 pandemic, direct interaction with stakeholders has been more challenging, and a number of shareholder events that are usually held physically have been substituted with virtual events. However, the Board, through the Manager and its other agents, has endeavoured to maintain close contact and to analyse feedback, particularly from shareholders, given the potential changes in their aspirations in these challenging economic times.

Stakeholder	How We Engage
Shareholders	Shareholders are key stakeholders and the Board places great importance on communication with them. The Board welcomes all shareholders' views and aims to act fairly between all shareholders. The Company's shareholder register is retail dominated and the Manager and Company's stockbroker regularly meet with current and prospective shareholders to discuss performance. Shareholder feedback is discussed by the Directors at each Board meeting. The Company subscribes to Aberdeen Standard Investments' investor relations programme in order to maintain communication channels with shareholders. Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, Company announcements, including daily net asset value announcements, and through 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. The Board encourages as many shareholders as possible to attend the Company's Annual General Meeting and to provide feedback on the Company (but see comments in Chairman's Statement regarding arrangements for the Annual General Meeting this year and the separate Online Shareholder Presentation). The Board welcomes contact with shareholders and has put in place ways of receiving shareholder questions and responding to them, particularly where there has been limited opportunity for direct interaction during the Covid-19 pandemic. During the year, t he Investment Manager held remote meetings with a number of the Company's larger shareholders to update them on the Company and to hear any feedback or concerns.
Manager/ Investment Manager	The Investment Manager's Review details the key investment decisions taken during the year. The Investment Manager has continued to manage the Company's assets in accordance with the mandate provided by shareholders, with the oversight of the Board. The Board regularly reviews the Company's performance against its investment objective and the Board undertakes an annual strategy review meeting to ensure that the Company is positioned well for the future delivery of its objective for its shareholders. The Board receives presentations from the Investment Manager at every Board meeting to help it to exercise effective oversight of the Investment Manager and the Company's strategy. The Board, through the Management Engagement Committee, formally reviews the performance of the Manager at least annually.
Service Providers	The Board seeks to maintain constructive relationships with the Company's suppliers either directly or through the Manager with regular communications and meetings. The Management Engagement Committee conducts an annual review of the performance, terms and conditions of the Company's main service providers to ensure they are performing in line with Board expectations, performing their responsibilities and providing value for money.
Investee Companies	Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues. Through engagement and exercising voting rights, the Investment Manager actively works with companies to improve corporate standards, transparency and accountability. The Board monitors investments made and divested and questions the rationale for investment and voting decisions made.
Debt Provider	On behalf of the Board, the Manager maintains a positive working relationship with Scotiabank, 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 its research and analysis as part of the investment decision-making process.

Specific Examples of Stakeholder Consideration During the Year

The Board is fully engaged in both oversight and the general strategic direction of the Company. During the year, the Board's main strategic discussions focussed around income management, with a portfolio consisting of various parts, including equities, fixed interest securities, options and exposure to UK smaller companies through Aberdeen Smaller Companies Income Trust PLC, a closed-ended investment company.

Factored into this have been the implications of the Covid-19 virus since it first emerged at the beginning of 2020 as a significant medical, social, economic and financial threat, and where protection of stakeholders' interests has been prominent in the Board trying to fulfil obligations to them. There has also been continuous assessment of what shareholders are likely to consider as most important in the positioning of the Company, particularly as regards provision and sustainability of dividend income.

While the importance of giving due consideration to the Company's stakeholders is not a new requirement, and is considered during every Board decision, the Directors were particularly mindful of stakeholder considerations during the following decisions undertaken during the year ended 31 March 2021.

Management of the Portfolio

The Investment Manager's Review details the key investment decisions taken during the year. The overall shape and structure of the investment portfolio is an important factor in delivering the Company's stated investment objective.

During the year, the focus was in trying to ensure that the Company operated as best as it could in testing conditions where the portfolio value was subject to significant fluctuations and there was a threat to the income level that the Company might receive in the future.

The Board was pleased that, despite these exceptional circumstances, all operations of the Manager and other third party service providers were conducted without any deterioration in standards.

As explained in more detail below, during the year, the Management Engagement Committee decided that the continuing appointment of the Manager was in the best interests of shareholders.

Dividend

Following the payment of the final dividend for the year, of 4.2p per Ordinary share, total dividends for the year will amount to 13.2p per Ordinary share, representing a dividend yield of 5.3% based on the share price of 248.0p at the end of the financial year. This is in accordance with the Company's objective to provide shareholders with a high level of income.

In deciding on the level of dividend for the year, the Board took into account the revenue earnings per Ordinary share for the year, forecast revenues for subsequent years and the level of revenue reserves.

At the Annual General Meeting on 14 July 2020, shareholders approved a change to the Articles of Association to permit the Company to pay dividends out of realised capital profits. Given the size of the Company's revenue reserves, the Board does not have any current intention to pay dividends out of realised capital profits. However, this change, which has been adopted by many other investment trusts, will provide flexibility to do so in the future.

Through meetings with shareholders and feedback from the Manager and the Company's stockbroker, the Board remains conscious of the importance that shareholders place on the level of dividends paid by the Company.

Share Ownership

The Board met with a third-party platform provider during the course of the year and attention was given to how to best communicate with shareholders whose interests are held on platforms. This is an ongoing exercise, with the Manager's assistance, as investor platforms, including Aberdeen Standard Investments' own platform, are increasingly important to investors.

Online Shareholder Presentation

As explained in the Chairman's Statement, given the risks posed by the spread of the Covid-19 virus, the Annual General Meeting on 7 July 2021 is anticipated to be a functional only meeting. If the law or Government guidance so requires at the time of the meeting, the Chairman will limit, in his sole discretion, the number of individuals in attendance at the meeting. Should Government measures be relaxed by the time of the meeting, the Company may still impose entry restrictions on certain persons wishing to attend the Annual General Meeting in order to ensure the safety of those attending the meeting.

Therefore, to encourage and promote interaction and engagement with the Company's shareholders, the Board has decided to hold an interactive Online Shareholder Presentation which will be held at 10.00am on Wednesday 23 June 2021. At the presentation, shareholders will receive updates from the Chairman and Investment Manager and there will be the opportunity for an interactive question and answer session. The online presentation is being held ahead of the AGM so as to allow shareholders to submit their proxy votes prior to the meeting.

On behalf of the Board

Robert Talbut

Chairman
1 June 2021

STRATEGIC REPORT - RESULTS

Financial Summary

	31 March 2021	31 March 2020	% change
Total assets	£99,856,000	£82,862,000	+20.5
Shareholders' funds	£80,857,000	£63,864,000	+26.6
Market capitalisation ^A	£76,371,000	£61,694,000	+23.8
Net asset value per Ordinary share ^B	262.41p	207.39p	+26.5
Share price	248.00p	200.50p	+23.7
Discount to NAV (cum-income) ^C	5.5%	3.3%
Net gearing ^C	16.5%	23.7%
Dividend and earnings
Revenue return per share ^D	12.33p	12.98p	-5.0
Dividend per share ^E	13.20p	13.20p	-
Dividend cover ^C	0.93	0.98
Revenue reserves ^F	£6,517,000	£6,770,000
Operating costs
Ongoing charges ratio ^C	1.21%	1.16%^G

^A Represents the number of Ordinary shares in issue in the Company multiplied by the Company's share price.
^B Net asset value per Ordinary share is calculated after the repayment of the capital paid up on Cumulative Preference shares.
^C Considered to be an Alternative Performance Measure.
^D Measures the revenue earnings for the year divided by the weighted average number of Ordinary shares in issue (see Statement of Comprehensive Income).
^E The figures for dividend per share reflect the years in which they were earned.
^F The revenue reserve figure does not take account of payment of the third interim or final dividend amounting to £2,217,000 (2020 - £2,215,000) combined.
^G Revised from 0.96% to include costs associated with holding collective investment schemes, in accordance with current AIC guidance.

PERFORMANCE (TOTAL RETURN)

	1 year	3 year	5 year
	% return	% return	% return
Net asset value ^A	+34.0	+14.2	+46.9
Share price ^A (based on mid-market)	+31.2	+11.6	+59.7
FTSE All-Share Index	+26.7	+9.9	+35.7

^A Considered to be an Alternative Performance Measure.
All figures are for total return and assume re-investment of net dividends excluding transaction costs.
Source: Aberdeen Standard Investments, Morningstar & Factset

DIVIDENDS

	Rate per share	XD date	Record date	Payment date
First interim dividend	3.00p	1 October 2020	2 October 2020	23 October 2020
Second interim dividend	3.00p	7 January 2021	8 January 2021	29 January 2021
Third interim dividend	3.00p	8 April 2021	9 April 2021	30 April 2021
Proposed final dividend	4.20p	8 July 2021	9 July 2021	30 July 2021
	_______
2020/21	13.20p
	_______
First interim dividend	3.00p	3 October 2019	4 October 2019	25 October 2019
Second interim dividend	3.00p	2 January 2020	3 January 2020	24 January 2020
Third interim dividend	3.00p	2 April 2020	3 April 2020	24 April 2020
Final dividend	4.20p	2 July 2020	3 July 2020	24 July 2020
	_______
2019/20	13.20p
	_______

TEN YEAR FINANCIAL RECORD

Year to 31 March	2012	2013	2014	2015	2016	2017	2018	2019	2020*	2021*
Revenue available for ordinary dividends (£'000)	3,615	3,556	3,789	3,877	3,617	3,925	4,106	3,920	3,961	3,796
Per share (p)
Net revenue earnings	12.2	11.9	12.6	12.9	12.1	13.1	13.7	13.1	13.0	12.3
Net dividends paid/proposed	12.00	12.00	12.00	12.25	12.25	12.75	13.00	13.20	13.20	13.20
Net total earnings	7.4	53.5	26.0	23.1	(17.8)	54.5	9.4	10.3	(45.4)	68.2
Net asset value	192.9	234.4	248.4	259.5	229.4	271.6	268.2	265.5	207.4	262.4
Share price (mid-market)	194.5	233.0	252.3	252.0	202.0	243.3	260.0	267.0	200.5	248.0
	____	_____	____	_____	____	____	____	____	____	_____
Shareholders' funds (£m)	57.3	70.3	78.7	77.8	68.8	81.5	80.5	80.1	63.9	80.9
	____	_____	____	_____	____	____	____	____	____	_____

* Net asset value per share is calculated after the repayment of the capital paid up on Cumulative Preference shares.

CUMULATIVE PERFORMANCE ^A

As at 31 March	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
Net asset value	100.0	97.7	118.7	125.8	131.4	116.2	137.6	135.9	134.5	105.0	132.9
Net asset value total return ^A	100.0	104.2	134.5	150.0	164.5	153.0	190.4	196.8	204.6	167.7	224.7
Share price performance	100.0	102.4	122.6	132.8	132.6	106.3	128.0	136.8	140.5	105.5	130.5
Share price total return ^A	100.0	109.3	139.0	158.5	166.2	140.6	179.2	201.1	217.1	171.1	224.5
Benchmark performance	100.0	97.9	110.2	115.9	119.4	110.7	130.1	126.9	129.7	101.3	124.9
Benchmark total return ^A	100.0	101.4	118.4	128.8	137.3	131.9	160.9	162.9	173.2	141.3	179.0

NAV figures are based on Company only values following the dissolution of the subsidiaries in May 2011.
^A Total return figures are based on reinvestment of net income.

STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW

Highlights

- NAV total return of +34.0% compared to the benchmark total return of +26.7%

- Equity portfolio and preference share portfolio both outperformed the benchmark index

- Revenue return per share fell by 5.0% to 12.33p per share

- Strong NAV outperformance over one, three and five years

Portfolio Strategy

We take a long term approach to investing, believing that whilst there might be volatility in the short and even medium term, share prices will ultimately reflect the fundamental value of a company. Consequently, there has been no change to our approach to the construction of the portfolio during the year under review. The Company's investment portfolio is invested in equities and preference shares. At the year-end 72.8% of the portfolio was invested in equities and 27.2% was invested in preference shares.

Equity Market Review

The last 12 month period has been dominated by the Covid-19 pandemic. It has impacted our society more than any other single event in recent history, changing the way we live and work. The impact on financial markets has also been significant and it has been the main driver behind the direction and nature of equity markets over the past year. Indeed, the year can be roughly split into two periods: the period from April to October 2020 when there was a high degree of uncertainty around the duration of the pandemic; and the period from the first vaccine trial results in November during which markets have taken a markedly positive turn.

Overall, however, this has been a year of recovery and, despite the volatility, the FTSE All-Share Index produced a total return of almost 27%. That return reflects mostly the fact that the year started close to the lows in the early days of the pandemic (the market actually troughed on 23 March 2020) and has recovered from there. For context, the Index at the end of March 2021 was still 10% below the high point of January 2020. Nevertheless, the performance of equity markets has been very resilient through the pandemic, with values rebounding quickly from the lows and continuing to move higher. The same pattern has been seen globally: the S&P 500 increased in value by 54% over the year, the MSCI Europe Index by 33% and the MSCI World Index by 52%.

What has caused this resilience? The rapid development and deployment of effective vaccines have clearly helped, allowing investors to look forward to a point when the virus is under control and earnings and cash flows for most companies can normalise. However, this is only part of the story, with half of the gains for global equities coming in the period before vaccine trial results were released. The other major factor helping equities was action taken by governments and central banks which was both decisive and unprecedented in scale. The UK is a good example, with the furlough scheme, payment holidays, stamp duty cut and government-backed corporate loans all acting to support the economy through a very difficult period. For equities, government intervention acted in two obvious ways. Firstly, risk was passed from companies and individuals to the government. It has been striking how low loan losses have been for UK banks for example. Secondly, there has been a very clear message that central banks will keep interest rates low to stimulate the economy until any recovery is complete. This outlook for low rates and low bond yields has helped to support asset valuations, although we are starting to see these trends reverse as bond yields rise.

All other events over the course of the year have been of limited importance to equity markets. Even the resolution of the UK's exit from the EU at the very end of 2020 had limited impact, despite dominating news-flow for the period beforehand. In the end, the deal agreed was limited and failed to cover some important areas of the economy. However, the avoidance of a hard Brexit and creation of a framework agreement has removed a significant overhang on UK domestic companies. Indeed, in 2021, we have seen Sterling rally and UK domestic companies perform better, with the UK's position outside the EU perhaps being a factor in its ability to deliver a much more effective vaccine programme.

Although markets rose fairly consistently throughout the year, sector performance was more mixed. Looking at individual sectors shows the real change in direction that markets experienced in November when the first vaccine results were released. Up to this point it was the decline in interest rates and bond yields that drove equity values higher, with the market led by the more stable growth sectors such as consumer staples, healthcare and software. However, the vaccine results led to a change in market leadership and allowed for a rally in many of the value weighted sectors that were most impacted by the pandemic. In the last six months the best performing sectors have been energy, materials, consumer discretionary and financials. Conversely, more defensive sectors such as healthcare, utilities and consumer staples have lagged notably. Over the full 12 months it has been the more cyclical, value weighted sectors, that have performed best; miners were up 77%, consumer discretionary up over 50% and industrials up 45%.

Despite the positive direction of markets throughout the year, one aspect has remained challenging for equity investors and that has been the generation of income. The initial stages of the pandemic saw many companies cut dividends or suspend them completely. Over the 2020 calendar year, 45% of listed UK companies suspended payments and the total of dividends available from UK equities was down by around 50%. As we have moved into 2021 we have seen a clear increase in confidence amongst the companies we invest in, but dividends are only returning slowly. Uncertainty about the pace and shape of the recovery remains for many sectors, and many companies have taken on debt in the past year and need to go through a period of balance sheet repair. Although expectations for 2021 distributions have increased by 15% since the start of the year, they remain around 30% lower than at the start of 2020.

Investment Performance

Over the year the Company's net asset value ("NAV") delivered a total return of 34.0% per share, including dividends reinvested. That compares to the benchmark, the FTSE All-Share Index, which returned 26.7%, representing a 7.3% outperformance. The share price total return for the year was 31.2%, also comfortably ahead of benchmark. The Company has also delivered superior performance over the longer term, with returns 4.3% ahead of benchmark over three years and 11.2% over five years.

Over the period the equity portfolio produced a total return of 27.8%, 1.1% ahead of the benchmark. The preference shares, despite being more defensive, also performed very well, producing a total return of 29.2% over the 12 months. The remainder of the relative performance is explained by the use of gearing, which allowed the Company to outperform in a rising market despite maintaining a more defensive position, and protecting income during a period when many companies cut dividends.

The positions that delivered the most positive relative returns for the portfolio were weighted towards more cyclical sectors. The largest single contributor to outperformance was the holding in Aberdeen Smaller Companies Income Trust PLC, which produced a share price total return of 48%. This reflects a narrowing of that company's discount during the year and also a strong recovery in the valuations for smaller companies.

On an individual stock basis, the greatest return came from our position in Entain. The online gambling operator traded exceptionally well through the period and continues to make progress with its expansion into the US market. At the start of the year, the company was subject to a bid from its US partner, MGM. This was rejected by management, but continued positive trading updates have seen the shares reach new highs and over the twelve months they have increased in value by 163%.

BHP also performed well, with its shares rising in value by 79%. The mining sector in general has been very strong, with an increase in demand from China leading to sustained high iron ore prices and exceptional cash flow generation from companies. BHP is well exposed to this and should continue to deliver attractive cash flows even if the iron ore price normalises.

The next highest contributor was our position in M&G. The fund manager was under pressure at the start of the year, with doubts about whether it would be able to sustain its dividend through the pandemic. It has managed to do so and the rebound in asset valuations has helped performance to improve. Its shares increased in value by 127% in the twelve months.

Other notable positive contributors were Inchcape and Countryside Properties. Both have cyclical exposure via the auto and housing end markets and both increased in value by around 75% over the year. Countryside Properties is also an example of a UK domestic company that has benefited from the rally in Sterling in 2021 to date.

The positions that detracted from performance were primarily those where valuations are negatively correlated to bond yields and for which valuations of stable, long term, cash flows have lagged the market in a recovery phase. John Laing, Assura, Chesnara, Telecom Plus and National Grid are all examples. However, it should be noted that of these names, only Assura saw its share price decline by more than 10%. These remain high quality companies that provide resilient income to the Company and, although, they lagged a rising market, they would likely prove very defensive should the market value move lower.

Gearing and Preference Share Portfolio

Gearing decreased during the year from 23.7% to 16.5% (net of cash). The gearing is notionally invested in the preference share portfolio. At the year end these securities had a value of £27.2 million, materially in excess of net indebtedness which stood at £13.3 million. This part of the portfolio provides a core level of high income and would, in normal conditions, be expected to be more resilient than equities in the event of a fall in the market.

As stated above, the preference share portfolio produced a total return of 29.2% during the year. This level of growth in value reflected the fact that the majority of issuers of the preference shares in the portfolio are in the banking and life insurance sectors, both of which rallied over the twelve months. Valuations have also been supported by continued low bond yields. We would not usually expect significant capital growth from the preference shares and the main reason for their position in the portfolio is the generation of a high, predictable level of income. This has proven to be invaluable through the last year, providing significant support to the income of the Company and ensuring it has not been affected to the same extent as the benchmark index.

Revenue Account

Revenue earnings per share decreased by 5.0% over the year to 12.33p. This reflects the backdrop of significant dividend cuts in the equity market and the decline should be seen in the context of a 50% cut in dividends in the UK market through the calendar year of 2020. The Company aims to invest in companies with the ability to grow dividends over time and, despite a very difficult environment for income, a number of holdings delivered dividend growth during the period.

The following table details the Company's main sources of income over the last five years.

	2021	2020	2019	2018	2017
	%	%	%	%	%
Ordinary dividends	57.2	60.0	58.5	59.1	54.0
Preference dividends	33.2	31.0	34.4	33.0	35.8
Aberdeen Smaller Companies	5.7	5.4	4.9	4.4	4.6
Fixed interest and bank interest	-	0.3	0.2	0.1	0.1
Traded option premiums	3.9	3.3	2.0	3.4	5.5
	_______	_______	_______	_______	_______
Total	100.0	100.0	100.0	100.0	100.0
	_______	_______	_______	_______	_______
Total income (£'000s)	4,529	4,807	4,712	4,916	4,695
	_______	_______	_______	_______	_______

Portfolio Activity

The majority of activity in the financial year was driven by the need to protect the Company's income during a period when many companies had to cut dividends. Through the summer of 2020 we took action to increase weightings in those companies where we believed dividends would be secure through the pandemic. Although this resulted in giving up some exposure to the recovery, the delivery of resilient income to investors remains a key priority for the Company, and our activity has reflected this. Early in the year we added to holdings in BHP, Direct Line Insurance, British American Tobacco, Fortum, GlaxoSmithKline, AstraZeneca, SSE and Telenor, where we saw dividends as safe or likely to resume quickly in the case of Direct Line Insurance. In general, we saw these as internationally exposed companies with resilient cash flows which were unlikely to come under regulatory or political pressure to withhold dividend payments to shareholders. Throughout the year, we continued to add to companies with secure dividends and other companies such as M&G where dividend resumption was ahead of expectations.

However, portfolio activity was not all about protecting income. At the same time, we have been careful to maintain exposure to more cyclical sectors with the potential to rally on a recovery. We added to Energean Oil & Gas on weakness in mid-2020 and to Countryside Properties when it raised capital in June. As confidence in the recovery has improved, we have added exposure to more cyclical names exposed to the UK domestic economy, including Morgan Sindall and Marshalls.

During the year we initiated ten new positions and exited nine, and we detail the reasons for these changes below.

Early in the year we introduced a position in Direct Line Insurance. The business delivers a high yield and our view was that this would not be impacted by the pandemic given a high level of reserves and robust margins. We also started a position in United Utilities. The water company trades at a discount to peers despite a very good operating track record and offers a secure dividend.

In May the Company took part in a capital raise for Londonmetric Property, starting a new position in the portfolio. The company owns and operates warehouse properties and has committed to a 4.5% dividend yield, with a significant drop in rents required to jeopardise payment of dividends. Our view was that real estate assets should continue to benefit from the low discount rate, provided they are in resilient sectors. Londonmetric's exposure is to industrial and logistics property where demand has remained strong in recent years.

In May 2020, we initiated a position in WH Smith. The company was added to our team's conviction list of top 20 ideas. Although the business had been severely impacted by the pandemic, with sales dependent on national and international travel, we expected this to recover over the medium term and the company to emerge stronger as the market consolidated and it secured improved rental terms. As explained below, the holding was subsequently sold later in the year.

In order to diversify our exposure to the energy sector, we also initiated a position in Total. The French oil major has successfully maintained its dividend through the pandemic, making it the highest yielder in the sector and it is also ahead of peers in its transition to low carbon energy. We funded the purchase with a sale of Royal Dutch Shell where we expected the dividend to be cut - in the event it was lowered by two thirds so the switch enhanced income effectively.

During June we initiated a new position in Dechra Pharmaceuticals. The company develops and markets animal pharmaceutical products, a market which has shown steady growth and where there are high barriers to entry. Over time it has grown through sensible acquisitions and delivers high returns and we expected it to deliver long term growth, independent of the macro outlook.

Early in December we initiated a new position in Softcat, a provider of IT infrastructure to companies and the public sector. In our view, Softcat's culture, customer relationships and broad offering will allow it to outperform a fragmented market. The company estimates that it has 3% market share by value and an average 15% wallet share with existing customers. These can be increased materially on a multi-year view, to deliver above market growth in revenue. The current yield of 2.5% is attractive for the IT sector and for the growth potential of the business

As mentioned above, in 2021 we have added some more cyclicality into the portfolio. The first example of this was a new position in Schroders (non-voting shares), where the discount to the voting shares, at 54%, is at a very high level and creates an attractive opportunity with a yield at 5%. Schroders remains a high quality fund management business with diversification and strong distribution. Operating margins should be resilient and fund flows are positive and improving, especially in its mutual fund range which is a higher revenue margin.

The next new position was in Morgan Sindall . The company is good value at only ten time earnings, but is interesting now due to its exposure to the office refit space where it has a strong market position. With companies adjusting to a new way of working, the company is likely to see a high level of activity. The construction part of the business is lower quality but adds some cyclical exposure to the portfolio and its partnership model is a positive. Other quality measures (balance sheet, management) score highly and management have highlighted the potential for margin improvement. A headline yield of 4% is expected for this year as dividends resume with growth expected in future years. Pre-Covid, the company had a very good track record of delivering dividend growth, something we look for in the portfolio.

Finally, in March, we initiated a new position in Marshalls. The company sell materials for landscaping and drainage to be used in public and commercial projects. While that activity sounds low margin, the company has been very successful at finding ways to add value through its products, delivering above market growth and margins over time. After a sharp slowdown in activity in 2020, we expect to see construction and investment in the UK pick up in the next few years. Marshall s offers a high quality way to gain exposure to this sector given its dominant position in landscaping products, where it has a 55% market share.

Exits from the portfolio reflected either a view that there was limited chance for income from the investment or that the valuation was full. We sold out of our position in HSBC in May. Although the bank has an enviable position in its home market in Hong Kong and delivers a higher return than other banks in the UK market, this is reflected in the valuation. The dividend ban by the Prudential Regulation Authority ("PRA") in the UK and a weaker capital position meant that our dividend expectations for HSBC were more limited and we chose to move on to better opportunities.

Abcam is an example of an excellent quality company which performed very well but one where we felt the valuation was full. As a company in the portfolio which did not pay a meaningful dividend, it was also a source of funds to invest in other companies that would deliver income to the portfolio. Guidance from management for rising investment costs over the next few years also pushed back the likelihood of any income from the investment.

Similarly, London Stock Exchange had performed well for the portfolio, but with its valuation looking full and a period of integration ahead after the purchase of Refinitiv we chose to take profits. St James' Place had also been a good performer but we retain some concerns around regulatory risks for the business and the ability for it to grow sustainably with the current fee structure.

Cineworld , which we sold in June has, unfortunately, been a very poor performer, with the pandemic coming at the wrong time for a business that had just taken on a large volume of debt in order to make two acquisitions in the US and Canada. With uncertainty over the future appeal of cinemas, even after lockdown restrictions end, and limited visibility on dividend resumption, we took the painful decision to move on. Cineworld is an example of a very well run business with very strong cash flow generation pre-crisis, but one that was not set up for such a significant shock, with all operations shut down for over six months

We exited Equiniti in October. The company had suffered headwinds from lower interest rates and we felt that management quality had downgraded, so chose to move on given limited prospects for dividend growth.

Another disposal was IWG, which operates temporary office accommodation. The shares have recovered very well from lows earlier in the year but the Company does not pay a dividend and our view is that further upside relies on a franchising model that is yet to be proven outside of a small number of economies.

Despite purchasing WH Smith earlier in the year, it was also an exit from the portfolio in March. The company has recovered well since the initial shock of the pandemic as travel was restricted last year and its valuation now looks fair given the uncertainty the business still faces. It is a low yielder, so we chose to move on to other higher yielding ideas given the need to continue to support income for shareholders.

Finally, we sold out of Assura in March. The company operates property for healthcare services in the UK. It has delivered a good return in recent years due to the highly dependable, defensive, nature of its rental cash flows. However, growth is well understood and its valuation depends on bond yields and the implied discount rate. As we see bond yields beginning to rise, we see less support for a high valuation and have limited difference to the consensus view on the company.

Stewardship and ESG

We believe that, as long term owners of the businesses in which we are invested, it is not sufficient merely to seek out assets that we believe to be undervalued. It is also incumbent upon us to take a proactive approach to our stewardship of these companies. Therefore, we engage extensively with our investee companies. We have attended a range of meetings with chairmen, non-executive directors and other stakeholders. Topics covered have included the composition of the board, environmental and social issues, and remuneration. Risk is a very broad subject that is interpreted in varying manners by different companies. However, by engaging on this subject we secure a deeper understanding of how the boards of our investee companies perceive and seek to manage these issues. Such interactions also enable us to push for improved disclosure and better management practices and on occasion different decisions where appropriate. We have had conversations regarding companies' financing choices. We find that it is always worthwhile communicating our preference for conservatively structured balance sheets that place a company's long term fortunes ahead of possible short term share price gains. Such activity is by its nature time consuming but we regard it as an integral aspect of our role as long term investors.

Consideration of Environmental, Social and Governance ("ESG") factors form an important part of our process. Whilst the management of the Company's investments is not undertaken with any specific instructions to exclude particular sectors or activities, we embed ESG considerations into the portfolio and sector specific research on all positions as part of the investment process.

Outlook

After a volatile 2020, equity markets have made a very strong start in 2021. Despite a worrying rise in Covid-19 cases globally, and especially in some emerging markets, investors continue to look through the near term risks. In the UK, this optimism is supported by a vaccine programme that continues to deliver and by a gradual lifting of restrictions. The leisure sector has already seen the benefit of this, with early evidence pointing to an increase in consumer spending through the Spring. Importantly, there is not yet any evidence to change the timeline for a significant increase in personal freedoms by the end of June. We expect to see the pace of the recovery increase at that point.

This dynamic means that performance across the market has been led by consumer discretionary companies and by more cyclical industrials, although other sectors have also performed well in a broad-based recovery. The nature of the performance reflects the fact that equity valuations, along with other asset classes, are being moved higher by government stimulus packages (as signed in the US in March) and increasing money supply globally. In this environment, with rising bond yields and, for a short time potentially, higher inflation, it is possible that we will continue to see value outperformance in equity markets. With a longer term view, however, we maintain a more balanced outlook. There remain many deflationary forces at work and the pace of recovery is unlikely to be consistent. Even if things are getting better today, how the virus develops through another winter season will be crucial to maintaining current optimism.

We should note the defensive nature of the Company. In recent years it has outperformed the benchmark throughout the cycle, but has delivered most strongly in periods when market valuations have fallen. In a recovery period such as the one we have seen in the first quarter of 2021, that may mean performance lags the market. The position in preference shares, for example, is unlikely to benefit to the same extent as equities from a rapid increase in earnings. However, in periods like this it is important to remember the reason the portfolio is structured as it is and the long term benefit of the preference shares and more defensive equity holdings. They provide a high level of income, with secure yields and the defensive nature of such investments helps to deliver an overall outcome that prioritises resilient income and long term capital growth. They also allow us to take on more risk elsewhere in the portfolio to maintain exposure to more value weighted names.

Overall however, the market feels more balanced than it has done for some time. After an extended period of declining bond yields and growth outperformance, the winners and losers are being determined much more by stock specific factors and by companies' ability to be resilient through difficult times and to capture upside during the recovery. We therefore aim to continue to stick to our principles when investing, by seeking exposure to quality companies that can produce resilient cash flows and where we see upside to the valuation or underappreciated growth over the long term. It should be a good time for stock specific, fundamental investing. It should also be a better time for income investing. 2020 was a difficult year, with unprecedented cuts to income. It will take time for dividends to recover to previous highs, but we are seeing encouraging progress. Companies are increasing in confidence and the return of dividends across the market will increase opportunities for the Company.

Iain Pyle and Charles Luke

Aberdeen Asset Managers Limited

1 June 2021

INVESTMENT PORTFOLIO - ORDINARY SHARES

AS AT 31 MARCH 2021

		Valuation	Total	Valuation
		2021	portfolio	2020
Company	FTSE All-Share Index Sector	£'000	%	£'000
Aberdeen Smaller Companies Income Trust	Equity Investment Instruments	9,611	10.3	6,647
Prudential	Life Insurance	2,755	2.9	2,093
AstraZeneca	Pharmaceuticals & Biotechnology	2,711	2.9	2,431
BHP	Industrials, Metals and Mining	2,521	2.7	1,093
British American Tobacco	Tobacco	2,105	2.2	1,913
SSE	Electricity	2,033	2.2	1,702
GlaxoSmithKline	Pharmaceuticals & Biotechnology	1,981	2.1	2,209
Rio Tinto	Industrials, Metals and Mining	1,964	2.1	1,315
BP	Oil, Gas and Coal	1,836	2.0	2,141
Total	Oil, Gas and Coal	1,801	1.9	-
Ten largest investments		29,318	31.3
Vodafone	Telecommunications Service Providers	1,751	1.9	1,500
Diversified Gas & Oil	Oil, Gas and Coal	1,642	1.8	1,162
National Grid	Gas Water & Multiutilities	1,635	1.7	1,791
Entain	Travel & Leisure	1,608	1.7	1,276
Chesnara	Life Insurance	1,577	1.7	1,866
John Laing	Investment Banking and Brokerage Services	1,501	1.6	1,761
Sirius Real Estate	Real Estate Investment Services	1,406	1.5	-
Close Brothers	Banks	1,395	1.5	1,134
Diageo	Beverages	1,393	1.5	946
Royal Dutch Shell 'B'	Oil, Gas and Coal	1,375	1.5	2,595
Twenty largest investments		44,601	47.7
Telecom Plus	Telecommunications Service Providers	1,336	1.4	1,301
Unilever	Personal Care, Drug and Grocery Stores	1,334	1.4	1,506
Direct Line Insurance	Nonlife Insurance	1,306	1.4	-
Energean	Oil, Gas and Coal	1,236	1.3	589
M&G	Investment Banking and Brokerage Services	1,205	1.3	425
Inchcape	Industrial Support Services	1,192	1.3	686
Standard Chartered	Banks	1,098	1.2	980
Imperial Brands	Tobacco	1,081	1.2	1,084
Telenor	Telecommunications Service Providers	1,078	1.1	418
Countryside Properties	Household Goods & Home Construction	954	1.0	1,137
Thirty largest investments		56,421	60.3
Bodycote	Industrials, Metals and Mining	898	1.0	740
Mondi	General Industrials	891	1.0	666
Assura	Real Estate Investment Trusts	877	0.9	1,500
Fortum	Electricity	782	0.8	355
Novo-Nordisk	Pharmaceuticals & Biotechnology	769	0.8	1,407
Howden Joinery	Retailers	740	0.8	660
AXA	Nonlife Insurance	714	0.8	392
Euromoney Institutional Investor	Industrial Support Services	701	0.7	283
Ashmore	Investment Banking and Brokerage Services	687	0.7	382
Schroders	Investment Banking and Brokerage Services	557	0.6	-
Forty largest investments		64,037	68.4
United Utilities	Gas Water & Multiutilities	527	0.6	-
Avast	Software & Computer Services	526	0.6	454
Coca-Cola	Beverages	499	0.5	375
Londonmetric Property	Real Estate Investment Trusts	432	0.5	-
Wood Group	Oil, Gas and Coal	431	0.5	248
Softcat	Software & Computer Services	428	0.5	-
Dechra Pharmaceuticals	Pharmaceuticals & Biotechnology	408	0.4	-
Morgan Sindall	Construction & Materials	405	0.4	-
Marshalls	Construction & Materials	346	0.4	-
Experian	Industrial Support Services	19	-	535
Total equity investments		68,058	72.8

Purchases and/or sales of portfolio holdings effected during the year result in 2021 and 2020 values not being directly comparable.

INVESTMENT PORTFOLIO - OTHER INVESTMENTS

AS AT 31 MARCH 2021

	Valuation	Total	Valuation
	2021	portfolio	2020
Company	£'000	%	£'000
Preference shares ^A
Ecclesiastical Insurance Office 8 5/8%	6,487	6.9	5,342
Royal & Sun Alliance 7 3/8%	5,394	5.8	4,481
General Accident 7.875%	4,754	5.1	3,619
Santander 10.375%	4,402	4.7	3,505
Standard Chartered 8.25%	3,746	4.0	2,936
R.E.A. Holdings 9%	704	0.7	529
	_______	_______	_______
Total Preference shares	25,487	27.2
	_______	_______
Total Investments	93,545	100.0
	_______	_______

^A None of the preference shares listed above have a fixed redemption date.
Purchases and/or sales of portfolio holdings effected during the year result in 2021 and 2020 values not being directly comparable.

DISTRIBUTION OF ASSETS AND LIABILITIES

			Movement during the year
	Valuation at				Gains/	Valuation at
	31 March 2020		Purchases	Sales	(losses)	31 March 2021
	£'000	%	£'000	£'000	£'000	£'000	%
Listed investments
Equities	57,499	90.0	10,272	(12,141)	12,428	68,058	84.2
Convertibles	490	0.8	-	(500)	10	-	-
Preference shares	20,412	32.0	-	-	5,075	25,487	31.5
	______	______	______	______	______	______	______
Total investments	78,401	122.8	10,272	(12,641)	17,513	93,545	115.7
Current assets	4,744	7.4				6,642	8.2
Current liabilities	(9,283)	(14.5)				(9,331)	(11.5)
Non current liabilities	(9,998)	(15.7)				(9,999)	(12.4)
	______	______				______	______
Net assets	63,864	100.0				80,857	100.0
	______	______				______	______
Net asset value per Ordinary share	207.4p					262.4p
	______					______

DIRECTORS' REPORT (EXTRACT)

The Directors present their report and audited financial statements for the year ended 31 March 2021.

Results and Dividends

The financial statements for the year ended 31 March 2021 are contained below. Dividends paid and proposed for the year amounted to 13.2p per Ordinary share.

First, second and third interim dividends for the year, each of 3.0p per Ordinary share, were paid on 23 October 2020, 29 January 2021 and 30 April 2021 respectively. The Directors recommend a final dividend of 4.2p per Ordinary share, payable on 30 July 2021 to shareholders on the register on 9 July 2021. The ex-dividend date is 8 July 2021. Under International Accounting Standards the third interim and final dividends will be accounted for in the financial year ended 31 March 2022. A resolution in respect of the final dividend will be proposed at the forthcoming Annual General Meeting.

Investment Trust Status

The Company is registered as a public limited company (registered in England and Wales No. 00386561) and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as an investment trust subject to it continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 April 2012. The Directors are of the opinion that the Company has conducted its affairs for the year ended 31 March 2021 so as to enable it to comply with the ongoing requirements for investment trust status.

Individual Savings Accounts

The Company satisfies the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.

Capital Structure

During the year the Company issued 25,000 Ordinary shares of 50p each under its non pre-emptive allotment authority, raising £59,000 in aggregate on a non-dilutive basis. The issued Ordinary share capital at 31 March 2021 consisted of 30,794,580 Ordinary shares of 50p each and 50,000 3.5% Cumulative Preference Shares of £1 each.

Voting Rights

Each Ordinary and Cumulative Preference share carries one vote at general meetings of the Company. The Cumulative Preference shares carry a right to receive a fixed rate of dividend and, on a winding up of the Company, to the payment of such fixed cumulative preferential dividends to the date of such winding up and to the repayment of the capital paid up on such shares in priority to any payment to the holders of the Ordinary shares.

The Ordinary shares, excluding any treasury shares, carry a right to receive dividends and, on a winding up or other return of capital, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.

There are no restrictions on the transfer of Ordinary or Cumulative Preference shares in the Company other than certain restrictions which may from time to time be imposed by law.

Management Agreement

The Company has appointed Aberdeen Standard Fund Managers Limited ("ASFML"), a wholly owned subsidiary of Standard Life Aberdeen plc, as its alternative investment fund manager. ASFML has been appointed to provide investment management, risk management, administration, company secretarial services and promotional activities to the Company. The Company's portfolio is managed by Aberdeen Asset Managers Limited ("AAML") by way of a group delegation agreement in place between ASFML and AAML. In addition, ASFML has sub-delegated administrative and company secretarial services to Aberdeen Asset Management PLC and promotional activities to AAML. Details of the management fee and fees payable for promotional activities are shown in notes 4 and 5 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.

Substantial Interests

As at 31 March 2021, the following interests in the issued Ordinary share capital of the Company had been disclosed in accordance with the requirements of the FCA's Disclosure Guidance and Transparency Rules:

Shareholder	Number of Ordinary shares held	% of Ordinary shares held
Aberdeen Asset Managers Limited Retail Plans^A	5,880,281	19.1

^A Non-beneficial interest

There have been no changes notified to the Company between the year end and the date of approval of this Report.

Directors

At the end of the year the Board comprised four non-executive Directors, each of whom is considered by the Board to be independent of the Company and the Manager.

Andrew Robson retired as a Director on 14 July 2020.

The Directors attended scheduled Board and Committee meetings during the year ended 31 March 2021 as follows (relevant meetings in brackets):

Director	Board	Audit Committee	Management Engagement Committee	Remuneration Committee
Robert Talbut	5 (5)	2 (2)	1 (1)	1 (1)
Robin Archibald	5 (5)	2 (2)	1 (1)	1 (1)
Marian Glen	5 (5)	2 (2)	1 (1)	1 (1)
Jane Pearce	5 (5)	2 (2)	1 (1)	1 (1)
Andrew Robson	2 (2)	1 (1)	- (-)	- (-)

The Board meets more frequently when business needs require and has regular dialogue between formal board meetings, including with the Manager. Following the outbreak of the Covid-19 pandemic in 2020 the Board held additional meetings and was in close contact with the Manager to receive updates on performance and the operation of its business and those of external suppliers.

Under the terms of the Company's Articles of Association, Directors must retire and be subject to appointment at the first Annual General Meeting after their appointment by the Board, and be subject to re-appointment every three years thereafter. Directors with more than nine years' service are subject to annual re-appointment. However, the Board has decided that all Directors will seek annual re-appointment. Accordingly, Messrs Archibald and Talbut and Ms Glen and Pearce will seek re-appointment at the Annual General Meeting.

The Board believes that all the Directors seeking re-appointment 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 each Director has the requisite high level and range of business, investment and financial experience which enables the Board to provide clear and effective leadership and proper governance of the Company.

Following formal performance evaluations, the performance of each of the Directors seeking re-appointment continues to be effective. Each Director has demonstrated commitment to the role and the Board is satisfied that their individual performances contribute to the long-term sustainable success of the Company. All of the Directors have demonstrated that they have sufficient time and commitment to fulfil their directorial roles with the Company. The Board therefore recommends the re-appointment 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.

It is the Board's policy that the Chairman of the Board will not normally serve as a Director beyond the Annual General Meeting following the ninth anniversary of his appointment to the Board. However, this may be extended in certain circumstances including the facilitation of 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 Chairman clearly set out.

The Role of the Chairman and Senior Independent Director

The Chairman 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 Chairman facilitates the effective contribution and encourages active engagement by each Director. In conjunction with the Company Secretary, the Chairman ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chairman 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 Chairman and acts as an intermediary for other directors, when necessary. Working closely with the other Directors, the Senior Independent Director takes responsibility for an orderly succession process for the Chairman, and leads the annual appraisal of the Chairman's performance. The Senior Independent Director is also available to shareholders to discuss any concerns they may have.

Directors' and Officers' Liability Insurance

The Company maintains insurance in respect of Directors' and Officers' liabilities in relation to their acts on behalf of the Company. In addition, the Company has entered into a separate deed of indemnity with each of the Directors reflecting the scope of the indemnity in the Articles of Association. Under the Articles of Association, each Director is entitled to be indemnified out of the assets of the Company to the extent permitted by law against any loss or liability incurred by him or her in the execution of his or her duties in relation to the affairs 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, which may be amended from time to time to reflect regulatory and other changes. Other than the deeds of indemnity referred to above and the Directors' 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.

Corporate Governance

The Company is committed to high standards of corporate governance and the Board is accountable to the Company's shareholders for good governance. The Board has 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 Corporate Governance Code as published by the FRC in July 2018 (the "UK Code"), as well as setting out additional provisions on issues that are of specific relevance to investment trusts.

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 than if it had adopted the UK Code. 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 trusts.

The Board confirms that, during the year, the Company complied with the principles and provisions of the AIC Code.

Further details of the Company's compliance with the AIC Code can be found on its website.

Going Concern

The Company's assets consist mainly of equity shares in companies listed on the London Stock Exchange. The Board has performed stress testing and liquidity analysis on the portfolio and considers that, in most circumstances, including in the current market environment caused by the Covid-19 pandemic, the Company's investments are realisable within a short timescale .

The Board has set limits for borrowing and regularly reviews actual exposures, cash flow projections and compliance with banking covenants, including the headroom available. The Company has a £20 million loan facility which matures in September 2022. £9 million of this amount is drawn down on a short-term basis through a revolving credit facility and can be repaid without incurring any financial penalties.

Having taken these factors into account, as well as the impact on the Company of the Covid-19 pandemic, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for the period to 30 June 2022, which is at least twelve months from the date of approval of this Report. For these reasons, they continue to adopt the going concern basis of accounting in preparing the financial statements.

Accountability and Audit

Each Director confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and they have taken all the steps that they could reasonably be expected to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Independent Auditor

The Company's Auditor, Ernst & Young LLP, has indicated its willingness to remain in office. The Board will place resolutions before the Annual General Meeting to re-appoint Ernst & Young LLP as Auditor for the ensuing year and to authorise the Directors to determine its remuneration.

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 information service.

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 Board and Manager meet with major shareholders on at least an annual basis in order to gauge their views. 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 Chairman responds personally as appropriate.

Directors attend meetings with the Company's largest shareholders and meet other shareholders at the Annual General Meeting and, as explained in the Chairman's Statement, the Company will hold an online shareholder presentation in advance of the Annual General Meeting this year including the opportunity for an interactive question and answer session.

The notice of the Annual General Meeting is sent out at least 20 working days in advance of the meeting. All shareholders would normally have the opportunity to put questions to the Board and Manager at the meeting. Further details regarding the arrangements for this year's Annual General Meeting and separate Online Shareholder Presentation are set out in the Chairman's Statement.

Annual General Meeting

The Annual General Meeting will be held at the offices of Standard Life Aberdeen plc, 6 St Andrew Square, Edinburgh EH2 2BD on Wednesday 7 July 2021 at 9.00am.

Given the risks posed by the spread of the Covid-19 virus and in accordance Government guidance, physical attendance at the Annual General Meeting may not be possible. If the law or Government guidance so requires at the time of the meeting, the Chairman will limit, in his sole discretion, the number of individuals in attendance at the meeting. Should Government measures be relaxed by the time of the meeting, the Company may still impose entry restrictions on certain persons wishing to attend the Annual General Meeting in order to ensure the safety of those attending the meeting.

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

1 George Street

Edinburgh EH2 2LL

1 June 2021

STATEMENT OF COMPREHENSIVE INCOME

		Year ended			Year ended
		31 March 2021			31 March 2020
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments at fair value	11	-	17,514	17,514	-	(17,449)	(17,449)
Currency (losses)/gains		-	(5)	(5)	-	9	9

Income	3
Dividend income		4,278	-	4,278	4,428	-	4,428
Interest income		-	-	-	15	-	15
Stock dividends		75	-	75	206	-	206
Traded option premiums		176	-	176	158	-	158
		_______	_______	______	_______	_______	_______
		4,529	17,509	22,038	4,807	(17,440)	(12,633)
		_______	_______	______	_______	_______	_______
Expenses
Management fee	4	(189)	(190)	(379)	(206)	(206)	(412)
Administrative expenses	5	(358)	-	(358)	(420)	-	(420)
Finance costs	7	(132)	(132)	(264)	(185)	(185)	(370)
		_______	_______	______	_______	_______	_______
		(679)	(322)	(1,001)	(811)	(391)	(1,202)
		_______	_______	______	_______	_______	_______
Profit/(loss) before taxation		3,850	17,187	21,037	3,996	(17,831)	(13,835)

Taxation	8	(54)	-	(54)	(35)	-	(35)
		_______	_______	______	_______	_______	_______
Profit/(loss) attributable to equity holders of the Company		3,796	17,187	20,983	3,961	(17,831)	(13,870)
		_______	_______	______	_______	_______	_______
Earnings per Ordinary share (pence)	10	12.33	55.82	68.15	12.98	(58.42)	(45.44)
		_______	_______	______	_______	_______	_______

The Company does not have any income or expense that is not included in profit for the year, and therefore the "Profit for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised).
The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with International Accounting Standards in conformity with the Companies Act 2006. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.

BALANCE SHEET

		As at	As at
		31 March 2021	31 March 2020
	Notes	£'000	£'000
Non-current assets
Ordinary shares		68,058	57,499
Convertibles		-	490
Preference shares		25,487	20,412
		__________	__________
Securities at fair value	11	93,545	78,401
		__________	__________
Current assets
Other receivables	12	988	953
Cash at bank		5,654	3,791
		__________	__________
		6,642	4,744
		__________	__________
Creditors: amounts falling due within one year
Other payables		(331)	(283)
Short-term borrowings		(9,000)	(9,000)
		__________	__________
	13	(9,331)	(9,283)
		__________	__________
Net current liabilities		(2,689)	(4,539)
		__________	__________
Total assets less current liabilities		90,856	73,862

Non-current liabilities
Long-term borrowings	13	(9,999)	(9,998)
		__________	__________
Net assets		80,857	63,864
		__________	__________
Share capital and reserves
Called-up share capital	14	15,447	15,435
Share premium account		21,052	21,005
Capital reserve	15	37,841	20,654
Revenue reserve		6,517	6,770
		__________	__________
Equity shareholders' funds		80,857	63,864
		__________	__________
Net asset value per Ordinary share (pence)	16	262.41	207.39
		__________	__________

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

STATEMENT OF CHANGES IN EQUITY

Year ended 31 March 2021
		Share
	Share	premium	Capital	Revenue
	capital	account	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
As at 31 March 2020	15,435	21,005	20,654	6,770	63,864
Issue of Ordinary shares	12	47	-	-	59
Profit for the year	-	-	17,187	3,796	20,983
Equity dividends (see note 9)	-	-	-	(4,049)	(4,049)
	_______	_______	_______	_______	_______
As at 31 March 2021	15,447	21,052	37,841	6,517	80,857
	_______	_______	_______	_______	_______

Year ended 31 March 2020
		Share
	Share	premium	Capital	Revenue
	capital	account	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
As at 31 March 2019	15,127	19,626	38,485	6,819	80,057
Issue of Ordinary shares	308	1,379	-	-	1,687
(Loss)/profit for the year	-	-	(17,831)	3,961	(13,870)
Equity dividends (see note 9)	-	-	-	(4,010)	(4,010)
	_______	_______	_______	_______	_______
As at 31 March 2020	15,435	21,005	20,654	6,770	63,864
	_______	_______	_______	_______	_______

The Company has aggregate realised and distributable reserves of £31,193,000 as at 31 March 2021 (2020 - £33,805,000), comprising capital reserve - realised of £24,676,000 (2020 - £27,035,000) and a revenue reserve of £6,517,000 (2020 - £6,770,000).
The accompanying notes are an integral part of these financial statements.

CASH FLOW STATEMENT

	Year ended	Year ended
	31 March 2021	31 March 2020
	£'000	£'000
Net cash inflow from operating activities
Dividend income received ᴬ	4,105	4,643
Interest income received	-	16
Options premium received	172	162
Management fee paid	(281)	(413)
Other cash expenses	(353)	(400)
	_______	_______
Cash generated from operations	3,643	4,008

Interest paid	(252)	(367)
Loan breakage costs paid	-	(32)
Overseas tax paid	(58)	(59)
	_______	_______
Net cash inflows from operating activities	3,333	3,550
	_______	_______
Cash flows from investing activities
Purchases of investments ᴬ	(10,252)	(16,722)
Sales of investments	12,777	16,370
	_______	_______
Net cash inflow/(outflow) from investing activities	2,525	(352)
	_______	_______
Cash flows from financing activities
Equity dividends paid	(4,049)	(4,010)
Issue of Ordinary shares	59	1,687
Loan repayment	-	(10,000)
Loan drawdown	-	10,000
Loan arrangement fees	-	(6)
	_______	_______
Net cash outflow from financing activities	(3,990)	(2,329)
	_______	_______
Increase in cash and cash equivalents	1,868	869
	_______	_______
Reconciliation of net cash flow to movements in cash and cash equivalents
Increase in cash and cash equivalents as above	1,868	869
Net cash and cash equivalents at start of year	3,791	2,913
Effect of foreign exchange rate changes	(5)	9
	_______	_______
Net cash and cash equivalents at end of year	5,654	3,791
	_______	_______

ᴬ Non-cash dividends during the year comprised stock dividends of £75,000 (2020 - £219,000). The accompanying notes are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2021

1.	Principal activity. The Company is a closed-end investment company, registered in England and Wales No. 00386561, with its Ordinary shares listed on the London Stock Exchange.

2.	Accounting policies
	(a)	Basis of accounting. The financial statements of the Company have been prepared in accordance with International Accounting Standards ("IAS") in conformity with the Companies Act 2006.
		The Company's assets consist mainly of equity shares in companies listed on the London Stock Exchange. The Board has performed stress testing and liquidity analysis on the portfolio and considers that, in most circumstances, including in the current market environment caused by the Covid-19 pandemic, the Company's investments are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews actual exposures, cash flow projections and compliance with banking covenants, including the headroom available. The Company has a £20 million loan facility which matures in September 2022. £9 million of this amount is drawn down on a short-term basis through a revolving credit facility and can be repaid without incurring any financial penalties. Having taken these factors into account, as well as the impact on the Company of the Covid-19 pandemic, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for the period to 30 June 2022, which is at least twelve months from the date of approval of this Report. For these reasons, they continue to adopt the going concern basis of accounting in preparing the financial statements.
		The Company's financial statements are presented in sterling, which is also the functional currency as it is the currency in which shares are issued and expenses are generally paid. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
		Where presentational guidance set out in the Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ("AIC"), is consistent with the requirements of IAS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP issued in April 2021. Although the SORP is applicable for accounting periods beginning on or after 1 January 2021 early adoption is encouraged.
		Significant accounting judgements, estimates and assumptions. The preparation of financial statements requires the use of certain significant accounting judgements, estimates and assumptions which requires management to exercise its judgement in the process of applying the accounting policies and are continually evaluated. The area requiring most significant judgement and assumption in the financial statements is the determination of the fair value hierarchy classification of traded options which have been assessed as being Level 2 due to them not being considered to trade in active markets. The Directors do not consider there to be any significant judgement and estimates within the financial statements for the year ended 31 March 2021. Special dividends are assessed and credited to capital or revenue according to their circumstances.
		New and amended accounting standards and interpretations . At the date of authorisation of these financial statements, the following amendments to Standards and Interpretations were assessed to be relevant and are all effective for annual periods beginning on or after 1 January 2020:
		- IAS 1 and IAS 8 Amendments Definition of Material
		- IAS 1, 8, 34, 37, 38 and IFRS 2, 3, 6, 14 Amendments References to the Conceptual Framework
		- IFRS 3 Amendment Definition of a Business
		- IFRIC 12, 19, 20, 22 and SIC 32 Amendments References to the Conceptual Framework
		Future amendments to standards and interpretations. At the date of authorisation of these financial statements, the following amendments to Standards and Interpretations were assessed to be relevant and are all effective for annual periods beginning on or after 1 January 2021;
		- IAS 1 Amendments Classification of Liabilities as current or non-current
		- IAS 1 Amendments Disclosure of Accounting Policies
		- IAS 8 Amendments Definition of Accounting Estimates
		- IAS 41, IFRS 1, 9 and 16 Amendments Annual Improvements 2018-20 Cycle
		- IFRS 3 Amendments Reference to the Conceptual Framework
		- IFRS 4 Amendments Extension of IFRS 9 Deferral
		The Company intends to adopt the Standards and Interpretations in the reporting period when they become effective and the Board does not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Company's financial results in the period of initial application although there may be revised presentations to the Financial Statements and additional disclosures.
	(b)	Investments. The Company classifies its investments based on their contractual cash flow characteristics and the Company's business model for managing the assets. The business model, which is the determining feature for debt instruments, is such that the portfolio of investments is managed, and performance is evaluated, on a fair value basis. The Manager is also compensated based on the fair value of the Company's assets. Equity instruments are classified as FVTPL ("Fair Value Through Profit or Loss") because cash flows resulting from such instruments do not represent payments of principal and interest on the principal outstanding, and therefore they fail the contractual cash flows test. Consequently, all investments are measured at FVTPL.
		Investments are recognised and de-recognised at the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured at fair value. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange.
		Gains and losses arising from the changes in fair value are included in net profit or loss for the period as a capital item. Transaction costs are treated as a capital cost.
	(c)	Income. Dividend income from equity investments, which have a discretionary dividend, is recognised when the shareholders' rights to receive payment have been established, normally the ex-dividend date.
		If a scrip dividend is taken in lieu of a cash dividend, the net amount of the cash dividend declared is credited to the revenue account. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised as capital.
		Interest from deposits is dealt with on an accruals basis.
	(d)	Expenses. All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Statement of Comprehensive Income, all expenses have been presented as revenue items except those where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. Accordingly, the management fee and finance costs have been allocated 50% to revenue and 50% to capital, in order to reflect the Directors' expected long-term view of the nature of the future investment returns of the Company.
	(e)	Borrowings. Short-term borrowings, which comprise interest bearing bank loans are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. The finance costs, being the difference between the net proceeds of borrowings and the total amount of payments that require to be made in respect of those borrowings, are amortised over the life of the borrowings.
		Long-term borrowings are measured initially at the fair value of the consideration received, net of any issue expenses, and subsequently at amortised cost using the effective interest method.
	(f)	Taxation. The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company has no liability for current tax.
		Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. 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 temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise, using tax rates that are expected to apply at the date the deferred tax position is unwound.
	(g)	Foreign currencies. Monetary assets and liabilities, comprising current assets, current liabilities and non-current liabilities and non-monetary assets comprising non-current assets held at fair value which are denominated in foreign currencies are converted into sterling at the rate of exchange ruling at the reporting date. Transactions during the year in foreign currencies are converted at the rate of exchange ruling at the transaction date. Gains or losses on monetary assets and liabilities arising from a change in exchange rates subsequent to the date of a transaction are included as a currency gain or loss in revenue or capital column of the Statement of Comprehensive Income, depending on whether the gain or loss is of a revenue or capital nature. Gains or losses on non-monetary assets arising from a change in exchange rates subsequent to the date of a transaction are included as a gain or loss on investments in the capital column of the Statement of Comprehensive Income.
	(h)	Derivatives. The Company may enter into certain derivatives (e.g. traded options). Traded option contracts are restricted to writing out-of-the-money options with a view to generating income. Premiums received on traded option contracts are recognised as income evenly over the period from the date they are written to the date when they expire or are exercised or assigned. Losses on any movement in the fair value of open contracts at the year end and on the exercise of the contracts are recorded in the capital column of the Statement of Comprehensive Income as they arise.
	(i)	Cash and cash equivalents. Cash and cash equivalents comprise cash in hand and at banks and short-term deposits.
	(j)	Other receivables. Financial assets classified as loans and receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. As such they are measured at amortised cost. Other receivables do not carry any interest, they have assessed for any expected credit losses over their lifetime due to their short-term nature.
	(k)	Other payables. Payables are non-interest bearing and are stated at their undiscounted cash flows.
	(l)	Dividends payable. Final dividends are recognised from the date on which they are approved by shareholders. Interim dividends are recognised when paid.
	(m)	Nature and purpose of reserves
		Share premium account . The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 50p per share. This reserve is not distributable.
		Capital reserve. This reserve reflects any realised gains or losses in the period together with any unrealised increases and decreases that have been recognised in the Statement of Comprehensive Income. These include gains and losses from foreign currency exchange differences. Additionally, expenses, including finance costs, are charged to this reserve in accordance with (d) above.
		The capital reserve, to the extent that the gains are deemed realised, is distributable, including by way of dividend.
		Revenue reserve . This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve is distributable, including by way of dividend.
	(n)	Segmental reporting . The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment business. Consequently, no business segmental analysis is provided.

3.	Income
		2021	2020
		£'000	£'000
	Income from listed investments
	UK dividend income	3,884	4,115
	Overseas dividend income	394	313
	Stock dividends	75	206
		4,353	4,634
	Other income from investment activity
	Deposit interest	-	15
	Traded option premiums	176	158
		176	173
	Total income	4,529	4,807

4.	Management fees
		2021			2020
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Management fees	189	190	379	206	206	412
		_______	_______	_______	_______	_______	_______

	The management fee is based on 0.45% per annum up to £100 million and 0.40% over £100 million, by reference to the net assets of the Company and including any borrowings up to a maximum of £30 million, and excluding commonly managed funds, calculated monthly and paid quarterly. The fee is allocated 50% to revenue and 50% to capital. The management agreement is terminable on not less than six months' notice. The total of the fees paid and payable during the year to 31 March 2021 was £379,000 (2020 - £412,000) and the balance due to Aberdeen Standard Fund Managers Limited ("ASFML") at the year end was £195,000 (2020 - £97,000). The Company held an interest in a commonly managed investment trust, Aberdeen Smaller Companies Income Trust PLC, in the portfolio during the year to 31 March 2021 (2020 - same). The value attributable to this holding is excluded from the calculation of the management fee payable by the Company.

5.	Administrative expenses
		2021	2020
		£'000	£'000
	Directors' remuneration	122	121
	Auditor's remuneration:
	Fees payable to the Company's Auditor for the audit of the Company's annual accounts	37	31
	Promotional activities	49	49
	Professional fees	-	42
	Directors' & Officers' liability insurance	6	8
	Trade subscriptions	20	43
	Share plan costs	20	19
	Registrar's fees	41	36
	Printing, postage and stationery	27	28
	Other administrative expenses	36	43
		_______	_______
		358	420
		_______	_______

	The management agreement with ASFML also provides for the provision of promotional activities, which ASFML has delegated to Aberdeen Asset Managers Limited. The total fees paid and payable under the management agreement in relation to promotional activities were £49,000 (2020 - £49,000) inclusive of VAT. The Company's management agreement with ASFML also provides for the provision of company secretarial and administration services to the Company; no separate fee is charged to the Company in respect of these services, which have been delegated to Aberdeen Asset Management PLC.
	With the exception of Directors' remuneration and Auditor's remuneration for the statutory audit, all of the expenses above include irrecoverable VAT where applicable.

6.	Directors' remuneration. The Company had no employees during the year (2020 - nil). No pension contributions were paid for Directors (2020 - £nil). Further details on Directors' Remuneration can be found in the Directors' Remuneration Report.

7.	Finance costs
		2021			2020
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	On bank loans	132	132	264	185	185	370
		_______	_______	_______	_______	_______	_______

8.	Taxation
			2021			2020
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of the charge for the year
		Overseas tax	54	-	54	35	-	35
			_______	_______	_______	_______	_______	_______
		Total tax charge	54	-	54	35	-	35
			_______	_______	_______	_______	_______	_______

	(b)	Factors affecting the tax charge for the year. The tax assessed for the year is lower than the effective rate of corporation tax in the UK. The differences are explained in the reconciliation below:

			2021			2020
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Profit before taxation	3,850	17,187	21,037	3,996	(17,831)	(13,835)

		Corporation tax at an effective rate of 19% (2020 - 19%)	732	3,266	3,998	759	(3,388)	(2,629)
		Effects of:
		Non-taxable UK dividend income	(730)	-	(730)	(809)	-	(809)
		Excess management expenses not utilised	87	61	148	112	74	186
		Overseas withholding tax	54	-	54	35	-	35
		Non-taxable overseas dividends	(89)	-	(89)	(62)	-	(62)
		(Gains)/losses on investments not taxable	-	(3,328)	(3,328)	-	3,315	3,315
		Losses/(gains) on currency movements	-	1	1	-	(1)	(1)
			_______	_______	_______	_______	_______	_______
		Total tax charge	54	-	54	35	-	35
			_______	_______	_______	_______	_______	_______

		At 31 March 2021 the Company had surplus management expenses and loan relationship debits with a tax value of £5,288,000 (2020 - £5,140,000) in respect of which a deferred tax asset has not been recognised. This is because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses.

9.	Dividends
		2021	2020
		£'000	£'000
	Amounts recognised as distributions to equity holders in the period:
	Third interim dividend for 2020 of 3.00p (2019 - 3.00p) per share	923	905
	Final dividend for 2020 of 4.20p (2019 - 4.20p) per share	1,292	1,279
	First two interim dividends for 2021 totalling 6.00p (2020 - 6.00p) per share	1,848	1,836
	Refund of unclaimed dividends from previous periods	(16)	(12)
		_______	_______
		4,047	4,008
		_______	_______
	3.5% Cumulative Preference shares	2	2
	Total	4,049	4,010
		_______	_______

	The third interim dividend of 3.00p for the year to 31 March 2021, which was paid on 30 April 2021, and the proposed final dividend of 4.20p for the year to 31 March 2021, payable on 30 July 2021, have not been included as liabilities in these financial statements.
	Set out below are the total ordinary dividends payable 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:

		2021	2020
		£'000	£'000
	Three interim dividends for 2021 totalling 9.00p (2020 - 9.00p) per share	2,772	2,759
	Proposed final dividend for 2021 of 4.20p (2020 - 4.20p) per share	1,293	1,292
		_______	_______
		4,065	4,051
		_______	_______

	The amount reflected above for the cost of the proposed final dividend for 2021 is based on 30,794,580 Ordinary shares, being the number of Ordinary shares in issue at the date of this Report.

10.	Returns per share
		2021	2020
		£'000	£'000
	Returns per Ordinary share are based on the following figures:
	Revenue return	3,796	3,961
	Capital return	17,187	(17,831)
		_______	_______
	Total return	20,983	(13,870)
		_______	_______
	Weighted average number of Ordinary shares	30,788,210	30,521,561
		_________	_________

11.	Non-current assets - Securities at fair value
				2021	2020
				Listed	Listed
				investments	investments
				£'000	£'000
	Opening book cost			84,782	81,542
	Opening investment holdings (losses)/gains			(6,381)	13,429
				_______	_______
	Opening valuation			78,401	94,971
	Purchases			10,272	16,989
	Sales - proceeds			(12,641)	(16,111)
	Gains/(losses) on investments			17,513	(17,448)
				_______	_______
	Total investments held at fair value through profit or loss			93,545	78,401
				_______	_______

				2021	2020
				Listed	Listed
				investments	investments
				£'000	£'000
	Closing book cost			80,380	84,782
	Closing investment holdings gains/(losses)			13,165	(6,381)
	Total investments held at fair value through profit or loss			93,545	78,401
				_______	_______

				2021	2020
	Gains/(losses) on investments			£'000	£'000
	Net realised (losses)/gains on sales of investments ^A			(1,830)	2,531
	Cost of call options exercised			(203)	(169)
				_______	_______
	Net realised (losses)/gains on sales			(2,033)	2,362
	Movement in fair value of investments			19,555	(19,751)
	Cost of put options assigned			(9)	(59)
	Movement in appreciation of traded options held			1	(1)
				_______	_______
				17,514	(17,449)
				_______	_______

	^A Includes losses realised on the exercise of traded options of £212,000 (2020 - £228,000) which are reflected in the capital column of the Statement of Comprehensive Income.
	The cost of the exercising of call options and the assigning of put options is the difference between the market price of the underlying shares and the strike price of the options. The premiums earned on options expired, exercised or assigned of £176,000 (2020 - £158,000) have been dealt with in the revenue account.
	The movement in the fair value of traded option contracts has been calculated in accordance with the accounting policy stated in note 2(h) and has been charged to the capital reserve.
	The Company received £12,641,000 (31 March 2020: £16,111,000) from investments sold in the period. The book cost of these investments when they were purchased was £14,674,000 (31 March 2020: £13,749,000). 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.
	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 losses on investments in the Statement of Comprehensive Income. The total costs on purchases of investments in the year was £42,000 (2020 - £70,000). The total costs on sales of investments in the year was £5,000 (2020 - £6,000). The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.
	At 31 March 2021 the Company held the following investments comprising more than 3% of the class of share capital held:

						Class
		Country of	Number of	Class of		held
	Company	Incorporation	shares held	shares held		%
	Aberdeen Smaller Companies Income Trust PLC	Scotland	3,120,476	Ordinary		14.1
	Ecclesiastical Insurance Office	England	4,240,000	8 5/8% Cum Pref		4.0
	Royal & Sun Alliance	England	4,350,000	7 3/8% Cum Pref		3.5
	General Accident	Scotland	3,548,000	7.875% Cum Pref		3.2

12.	Other receivables
		2021	2020
		£'000	£'000
	Amount due from brokers	-	136
	Accrued income and prepayments	988	813
	Option contract premium	-	4
		_______	_______
		988	953
		_______	_______
	None of the above amounts are overdue.

13.	Current liabilities
		2021	2020
		£'000	£'000
	Short-term bank loans	9,000	9,000
	Amount due to brokers	-	55
	Option contracts	-	10
	Other creditors	331	218
		_______	_______
		9,331	9,283
		_______	_______

	Included above are the following amounts owed to ASFML for management and saving scheme services and for the promotion of the Company.

		2021	2020
		£'000	£'000
	Other creditors	225	134
		_______	_______

		2021	2020
	Non-current liabilities	£'000	£'000
	Long-term bank loan	10,000	10,000
	Loan arrangement fees	(1)	(2)
		_______	_______
		9,999	9,998
		_______	_______

	The Company has an agreement with Scotiabank Europe PLC to provide a loan facility until 20 September 2022 for up to £20,000,000. A £10,000,000 fixed rate loan was drawn down on 20 September 2019 at a rate of 1.706%. This rate is fixed until maturity on 20 September 2022. In addition, at the year end £9,000,000 had been drawn down at an all-in interest rate of 0.927%, maturing on 19 April 2021. At the date of signing this Report the amount drawn down was unchanged at £9,000,000 with an all-in interest rate of 0.95313%, maturing on 18 June 2021.
	The terms of the Scotiabank Europe PLC facility contain covenants that gross borrowings may not exceed one-third of adjusted net assets and that adjusted net assets may not be less than £37 million. The Company met these covenants during the year and until the date of this Report.
	The arrangement expenses incurred on the draw down of the loan are being amortised over the three year term of the loan resulting in a reduction to the carrying value of the loan drawn down being reduced by £1,000 (2020 - £2,000).

14.	Called up share capital
		2021		2020
		Number	£'000	Number	£'000
	Authorised
	Ordinary shares of 50 pence each	39,800,000	19,900	39,800,000	19,900
	3.5% Cumulative Preference shares of £1 each	100,000	100	100,000	100
		_______	_______	_______	_______
			20,000		20,000
			_______		_______
	Allotted, called up and fully paid Ordinary shares of 50 pence each:
	Balance brought forward	30,769,580	15,385	30,154,580	15,077
	Ordinary shares issued	25,000	12	615,000	308
		_______	_______	_______	_______
	Balance carried forward	30,794,580	15,397	30,769,580	15,385
	Allotted, called up and fully paid 3.5% Cumulative Preference shares of £1 each:
	Balance brought forward and carried forward	50,000	50	50,000	50
		_______	_______	_______	_______
			15,447		15,435
			_______		_______

	During the year the Company issued 25,000 (2020 - 615,000) Ordinary shares of 50p each for proceeds of £59,000 (2020 - £1,687,000).
	Each Ordinary and Cumulative Preference share carries one vote at general meetings of the Company. The Cumulative Preference shares carry a right to receive a fixed rate of dividend and, on a winding up of the Company, to the payment of such fixed cumulative preferential dividends to the date of such winding up and to the repayment of the capital paid up on such shares in priority to any payment to the holders of the Ordinary shares.
	The Ordinary shares, excluding any treasury shares, carry a right to receive dividends and, on a winding up or other return of capital, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.
	There are no restrictions on the transfer of Ordinary or Cumulative Preference shares in the Company other than certain restrictions which may from time to time be imposed by law.

15.	Capital reserve
		2021	2020
		£'000	£'000
	At 31 March 2020	20,654	38,485
	Net (losses)/gains on sales of investments during year	(2,033)	2,362
	Movement in fair value increases/(decreases) of investments	19,546	(19,810)
	Management fees	(190)	(206)
	Interest on bank loans	(132)	(185)
	Currency (losses)/gains	(5)	9
	Capital gains/(losses) on traded options	1	(1)
		_______	_______
	At 31 March 2021	37,841	20,654
		_______	_______

	The capital reserve includes gains of £13,165,000 (31 March 2020 - losses of £6,381,000), which relate to the revaluation of investments held at the reporting date.

16.	Net asset value per Ordinary share. The net asset value per share and the net assets attributable to the Ordinary shareholders at the year end were as follows:

		2021	2020
	Net assets per balance sheet	£80,857,000	£63,864,000
	3.5% Cumulative Preference shares of £1 each	£50,000	£50,000
		_______	_______
	Attributable net assets	£80,807,000	£63,814,000
		_________	_________
	Number of Ordinary shares in issue	30,794,580	30,769,580
	Net asset value per share	262.41p	207.39p

17.	Analysis of changes in financial liabilities during the year
		At				At
		31 March	Currency	Cash	Other	31 March
		2020	differences	flows	movements{A}	2021
	Financing activities	£'000	£'000	£'000	£'000	£'000
	Amounts relating issue of Ordinary shares	-	-	(59)	59	-
	Debt due within one year	(9,000)	-	-	-	(9,000)
	Debt due after more than one year	(9,998)	-	-	(1)	(9,999)
		_______	_______	_______	_______	_______
		(18,998)	-	(59)	58	(18,999)
		_______	_______	_______	_______	_______

		At				At
		31 March	Currency	Cash	Other	31 March
		2019	differences	flows	movements{A}	2020
	Financing activities	£'000	£'000	£'000	£'000	£'000
	Amounts relating to issue of Ordinary shares	-	-	(1,687)	1,687	-
	Debt due within one year	(9,000)	-	-	-	(9,000)
	Debt due after more than one year	(9,998)	-	3	(3)	(9,998)
		_______	_______	_______	_______	_______
		(18,998)	-	(1,684)	1,684	(18,998)
		_______	_______	_______	_______	_______

	^A The other movements column represents the proceeds from the issue of ordinary shares and the amortisation of the loan arrangement fees.

18.	Financial instruments
	Risk management. The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. 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 may from time to time use FTSE options for the purpose of income enhancement and portfolio management.
	Subject to Board approval, the Company also has the ability to enter into derivative transactions, in the form of traded options, for the purpose of enhancing income returns and portfolio management. During the year, the Company entered into certain derivative contracts. As disclosed in note 3, the premium received and fair value changes in respect of options written in the year were £176,000 (2020 - £158,000). Positions closed during the year realised a loss of £212,000 (2020 - £228,000). The largest position in derivative contracts held during the year at any given time was £70,000 (2020 - £108,000). The Company had no open positions in derivative contracts at 31 March 2021 (2020 - open positions in derivative contracts valued at a liability of £10,000) as disclosed in note 13.
	The Board has delegated the risk management function in relation to financial instruments to Aberdeen Standard Fund Managers Limited ("ASFML") under the terms of its management agreement with ASFML (further details of which are included under note 4). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such approach has been applied throughout the year and has not changed since the previous accounting period. The numerical disclosures exclude short-term debtors and creditors given their relatively low value.
	Risk management framework. The directors of ASFML collectively assume responsibility for ASFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.
	ASFML is a fully integrated member of the Standard Life Aberdeen Group (the "Group"), which provides a variety of services and support to ASFML in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to Aberdeen Asset Managers Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.
	The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group's CEO and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.
	The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the Group's CEO. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD").
	The Group's corporate governance structure is supported by several committees to assist the board of directors of Standard Life Aberdeen plc, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described on the committees' terms of reference.
	Risk management. The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.
	(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 fair value of the investments in convertibles and preference shares;
		- the level of income receivable on cash deposits; and
		- interest payable on the Company's variable rate borrowings.
		Management of the risk . The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current bank covenant guidelines state that the gross borrowings will not exceed one-third of adjusted net assets.
		The Board reviews on a regular basis the value of investments in preference shares.
		Interest rate profile. The interest rate risk profile of the portfolio of financial assets and liabilities (excluding ordinary shares) at the Balance Sheet date was as follows:

				Weighted
				average
				period		Weighted
				for which		average
				rate is		interest			Fixed		Floating
				fixed		rate			rate		rate
		As at 31 March 2021		Years		%			£'000		£'000
		Assets
		UK preference shares		-		8.48			25,487		-
		Cash and cash equivalents		-		0.01			-		5,654
									_______		_______
		Total assets							25,487		5,654
									_______		_______
		Liabilities
		Short-term bank loans		0.05		0.93			(9,000)		-
		Long-term bank loans		1.47		1.71			(9,999)		-
									_______		_______
		Total liabilities							(18,999)		-
									_______		_______

				Weighted
				average
				period		Weighted
				for which		average
				rate is		interest			Fixed		Floating
				fixed		rate			rate		rate
		As at 31 March 2020		Years		%			£'000		£'000
		Assets
		UK preference shares		-		8.47			20,412		-
		Cash and cash equivalents		-		0.53			-		3,791
									_______		_______
		Total assets							20,412		3,791
									_______		_______
		Liabilities
		Short-term bank loans		0.05		1.14			(9,000)		-
		Long-term bank loans		2.47		1.71			(9,998)		-
									_______		_______
		Total liabilities							(18,998)		-
									_______		_______

		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 cash assets consist of cash deposits on call earning interest at prevailing market rates.
		The UK preference shares assets have no maturity date.
		Short-term debtors and creditors (with the exception of bank loans) have been excluded from the above tables.
		Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the Balance Sheet date and 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 before tax for the year ended 31 March 2021 would increase/decrease by £57,000 (2020 - £38,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances. These figures have been calculated based on cash positions at each year end.
		- profit before tax for the year ended 31 March 2021 would increase/decrease by £1,644,000 (2020 - increase/decrease by £1,133,000). This is mainly attributable to the Company's exposure to interest rates on its investments in convertibles and preference shares.
		Currency risk. A small proportion of the Company's investment portfolio is invested in overseas securities whose values are subject to fluctuation due to changes in exchange rates.
		Management of the risk. The revenue account is subject to currency fluctuations arising on dividends received in foreign currencies and, indirectly, due to the impact of foreign exchange rates upon the profits of investee companies. The Company does not hedge this currency risk. The Company does not have any exposure to foreign currency liabilities. No currency sensitivity analysis has been prepared as the Company considers any impact to be immaterial to the financial statements.
		Price risk. Price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		Management of the risk. 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 allocation of assets to specific sectors and the stock selection process both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on recognised stock exchanges.
		Price sensitivity. If market prices at the Balance Sheet date had been 20% higher or lower while all other variables remained constant, the profit before tax attributable to Ordinary shareholders for the year ended 31 March 2021 would have increased/decreased by £13,612,000 (2020 - increase/decrease of £11,500,000). This is based on the Company's portfolio of Ordinary shares 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.
		Management of the risk. 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 facilities, details of which can be found in note 13. Under the terms of the loan facility, the Manager provides the lender with loan covenant reports on a monthly basis, to provide the lender with assurance that the terms of the facility are not being breached. The Manager will also review the credit rating of a lender on a regular basis.
		The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise a revolving loan facility and a fixed term loan facility. The Board has imposed a maximum equity gearing of 35% which constrains the amount of gearing that can be invested in equities which, in normal market conditions, are more volatile than the convertibles and preference shares within the portfolio. Details of borrowings at 31 March 2021 are shown in note 13.
		Maturity profile. The maturity profile of the Company's financial liabilities at the Balance Sheet date was as follows:

						Within		Within			More than
						1 year		1-5 years			5 years
		At 31 March 2021				£'000		£'000			£'000
		Trade and other payables				(327)		-			-
		Short-term bank loans				(9,021)		-			-
		Long-term bank loans				(174)		(10,086)			-
						_______		_______
						(9,522)		(10,086)			-
						_______		_______

						Within		Within			More than
						1 year		1-5 years			5 years
		At 31 March 2020				£'000		£'000			£'000
		Trade and other payables				(265)		-			-
		Short-term bank loans				(9,009)		-			-
		Long-term bank loans				(172)		(10,255)			-
						_______		_______
						(9,446)		(10,255)			-
						_______		_______

	(iii)	Credit risk. This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
		Management of the risk . The risk 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;
		- transactions involving derivatives are entered into only with investment banks, the credit rating of which 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 is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker;
		- the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a daily basis. In addition, both stock and cash reconciliations to the Custodian's records are performed on a daily basis to ensure discrepancies are investigated on a timely basis. The Standard Life Aberdeen Group's Compliance department carries out periodic reviews of the Custodian's operations and reports its findings to the Standard Life Aberdeen Group's Risk Management Committee and to the Board of the Company. This review will also include checks on the maintenance and security of investments held;
		- transactions involving derivatives and other arrangements wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest are subject to rigorous assessment by the Investment Manager of the credit worthiness of that counterparty. The Company's aggregate exposure to each such counterparty is monitored regularly by the Board; and
		- cash is held only with reputable banks with high quality external credit enhancements.
		It is the Investment Manager's policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties.
		None of the Company's financial assets is secured by collateral or other credit enhancements.
		Credit risk exposure. In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 March 2021 and 31 March 2020 was as follows:

			2021				2020
			Balance		Maximum		Balance			Maximum
			Sheet		exposure		Sheet			exposure
			£'000		£'000		£'000			£'000
		Non-current assets
		Quoted preference shares at fair value through profit or loss	25,487		25,487		20,902			20,902
		Current assets
		Trade and other receivables	-		-		140			140
		Accrued income	975		975		799			799
		Cash and cash equivalents	5,654		5,654		3,791			3,791
			_______		_______		_______			_______
			32,116		32,116		25,632			25,632
			_______		_______		_______			_______

		None of the Company's financial assets is past its due date.
		Fair value of financial assets and liabilities. The fair value of the long-term loan has been calculated at £10,001,000 as at 31 March 2021 (2020 - £10,003,000) compared to an accounts value in the financial statements of £9,999,000 (2020 - £9,998,000) (note 13). The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. The loan is considered to be classed as a Level 2 liability under IFRS 13. The carrying values of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. Traded options contracts are valued at fair value which have been determined with reference to quoted market values of the contracts. The contracts are tradeable on a recognised exchange. For all other short-term debtors and creditors, their book values approximate to fair values because of their short-term maturity.

19.	Fair value hierarchy. IFRS 13 'Financial Value Measurement' 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 has the following levels:
	Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
	Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
	Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
	The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy at 31 March 2021 as follows:

				Level 1	Level 2	Level 3	Total
			Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted investments		a)	93,545	-	-	93,545

	Financial liabilities at fair value through profit or loss
	Derivatives		b)	-	-	-	-
				_______	_______	_______	_______
	Net fair value			93,545	-	-	93,545
				_______	_______	_______	_______

				Level 1	Level 2	Level 3	Total
	As at 31 March 2020		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted investments		a)	78,401	-	-	78,401

	Financial liabilities at fair value through profit or loss
	Derivatives		b)	-	(10)	-	(10)
				_______	_______	_______	_______
	Net fair value			78,401	(10)	-	78,391
				_______	_______	_______	_______

	a)	Quoted investments. The fair value of the Company's quoted investments has been determined by reference to their quoted bid prices at the reporting date. Quoted investments included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Derivatives. The fair value of the Company's investments in Exchange Traded Options has been determined using observable market inputs on an exchange traded basis although not actively traded and therefore has been classed as Level 2.
		The fair value of the Company's investments in Over the Counter Options has been determined using observable market inputs other than quoted prices and included within Level 2.

20.	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 return to its equity shareholders through an appropriate balance of equity capital and debt.
	The capital of the Company consists of equity, comprising issued capital, reserves and retained earnings.
	The Board monitors and reviews the broad structure of the Company's capital. This review includes the nature and planned level of gearing, which takes account of the Investment 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 is not subject to any externally imposed capital requirements.

21.	Related party transactions
	Directors' fees and interests. Fees payable during the year to the Directors and their interests in shares of the Company are disclosed within the Directors' Remuneration Report.
	Transactions with the Manager. The Company has an agreement with Aberdeen Standard Fund Managers Limited for the provision of management, secretarial, accounting and administration services and for the carrying out of promotional activities in relation to the Company. Details of transactions during the year and balances outstanding at the year end are disclosed in notes 4 and 5.

ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures 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 IAS and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Total Return . Total return is considered to be an alternative performance measure. NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves a calculation that invests the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves a calculation that invests the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the year ended 31 March 2021 and 31 March 2020 and assumes reinvestment of net dividends excluding transaction costs (the "Adjustment factor").

	Dividend		Share
31 March 2021	rate	NAV	price
31 March 2020 (a)		207.39p	200.50p
2 April 2020	3.00p	199.79p	188.75p
2 July 2020	4.20p	234.93p	236.00p
1 October 2020	3.00p	225.94p	210.00p
7 January 2021	3.00p	266.11p	259.50p
31 March 2021 (b)		262.41p	248.00p
		_______	_______
Adjustment factor (c)=(d/b)		1.058645	1.060710
		_______	_______
31 March 2021 adjusted (d)=(b*c)		277.80p	263.06p
		_______	_______
Total return (d/a)-1		+34.0%	+31.2%
		_______	_______

	Dividend		Share
31 March 2020	rate	NAV	price
31 March 2019 (a)		265.49p	267.00p
4 April 2019	3.00p	264.94p	268.50p
4 July 2019	4.20p	273.51p	278.00p
3 October 2019	3.00p	260.40p	254.00p
2 January 2020	3.00p	290.26p	294.50p
31 March 2020 (b)		207.39p	200.50p
		_______	_______
Adjustment factor (c)=(d/b)		1.049466	1.049090
		_______	_______
31 March 2020 adjusted (d)=(b*c)		217.65p	210.34p
		_______	_______
Total return (d/a)-1		-18.0%	-21.2%
		_______	_______

Discount to net asset value per Ordinary share. The discount is the amount by which the share price of 248.00p (2020 - 200.50p) is lower than the net asset value per share of 262.41p (2020 - 207.39p), expressed as a percentage.
Dividend Cover . Revenue return per share of 12.33p (2020 - 12.98p) divided by dividends declared for the year per share of 13.20p (2020 - 13.20p) expressed as a ratio.
Dividend Yield. The annual dividend of 13.20p per Ordinary share (31 March 2020 - 13.20p) divided by the share price of 248.00p (31 March 2020 - 200.50p), expressed as a percentage.
Net Gearing. Net gearing measures the total borrowings of £18,999,000 (31 March 2020 - £18,998,000) less cash and cash equivalents of £5,654,000 (31 March 2020 - £3,872,000) divided by shareholders' funds of £80,857,000 (31 March 2020 - £63,864,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due from brokers at the year end nil (2020 - £81,000) as well as cash at bank of £5,654,000 (2020 - £3,791,000).
Ongoing Charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values throughout the year.

		2021	2020
Investment management fees (£'000)		379	412
Administrative expenses (£'000)		358	420
Less: non-recurring charges ^A (£'000)		-	(42)
Ongoing charges (£'000)		737	790
		_______	_______
Average net assets (£'000)		73,999	81,866
		_______	_______
Ongoing charges ratio (excluding look-through costs)		1.00%	0.96%
		_______	_______
Look-through costs ^B		0.21%	0.20%
		_______	_______
Ongoing charges ratio (including look-through costs)		1.21%	1.16%
		_______	_______

^A Comprises professional fees not expected to recur.
^B Costs associated with holdings in collective investment schemes as defined by the Committee of European Securities Regulators' guidelines on the methodology for the calculation of the ongoing charges figure, issued on 1 July 2010.

The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which amongst other things, includes the cost of borrowings and transaction costs.

Additional Notes to Annual Financial Report

The Annual General Meeting will be held at the offices of Standard Life Aberdeen plc, 6 St Andrew Square, Edinburgh EH2 2BD on Wednesday 7 July 2021 at 9.00am.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 March 2021 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 of the Companies Act 2006. The financial information for 2020 is derived from the statutory accounts for 220 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 June 2021 and copies will be available from the registered office of the Manager and on the Company's website, www.shiresincome.co.uk.*

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. Investors may not get back the amount they originally invested.

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

1 June 2021

* Neither the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

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Shires Income (SHRS)

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Annual Financial Report

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STRATEGIC REPORT - OVERVIEW OF STRATEGY

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The Board assesses on a regular basis with the Manager the applicability of these investment limits, the use of gearing and risk diversification, whilst aiming to meet the overall investment objectives of the Company.

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Investment in UK smaller companies

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Modern Slavery Act

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On behalf of the Board

Robert Talbut

Chairman 1 June 2021

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Substantial Interests

As at 31 March 2021, the following interests in the issued Ordinary share capital of the Company had been disclosed in accordance with the requirements of the FCA's Disclosure Guidance and Transparency Rules:

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Board's Policy on Tenure

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1 June 2021