abrdn Equity Income Trust

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Annual Financial Report

RNS Number : 5366G

Aberdeen Standard Equity Income Tst

26 November 2020

ABERDEEN STANDARD EQUITY INCOME TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2020

Legal Entity Identifier (LEI): 21380015XPT7BZISSQ74

HIGHLIGHTS

Net asset value total return per Ordinary share{A}		Share price total return per Ordinary share{A}		FTSE All-Share Index total return
Year ended 30 September 2020	-25.7%	Year ended 30 September 2020	-29.4%	Year ended 30 September 2020	-16.6%
Year ended 30 September 2019	-10.8%	Year ended 30 September 2019	-15.1%	Year ended 30 September 2019	+2.7%

Discount to net asset value{A}		Revenue return per Ordinary share		Ongoing charges ratio{A}
As at 30 September 2020	12.5%	Year ended 30 September 2020	15.61p	Year ended 30 September 2020	0.87%
As at 30 September 2019	7.4%	Year ended 30 September 2019	21.74p	Year ended 30 September 2019	0.91%

{A} Considered to be an Alternative Performance Measure.

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

Results

I am sorry that in my last report to you as Chairman I have to discuss what has been a most challenging year for our Company, whose portfolio has, for a second year in succession, produced a very disappointing result. Net Asset Value fell by 30.1%, much worse than the 19.2% fall in the FTSE All-Share Index, and also worse than nearly all our peers in the UK Equity Income peer group of investment trusts. In Total Return terms the comparison is similar, with our negative return of 25.7% worse than the index's 16.6%. Unlike last year, when we had an even poorer relative outcome in capital terms but earned enough to increase the dividend by 6.8% while adding £750,000 to revenue reserves, our dividend income suffered a decline of 26.3% as over half of our portfolio holdings either cut or eliminated their dividends from March onwards. Earnings per share were 15.61p, a decline of 28.2% from the previous year, substantially less than our dividend per share of 20.6p.

The principal reason for this poor outcome is the impact of the Covid-19 pandemic, which was no more than a cloud as small as a man's hand at the time of the 2019 AGM held in late January. At that point, the general assumption, which proved to be horribly misplaced, was that this new virus would prove no more damaging to the world economy than SARS had been in 2003. In the event Covid-19, although much less lethal than its predecessor, has proved to be far more infectious and it was not possible to confine it to a relatively small part of the world, as happened 17 years ago.

The Portfolio Manager's Review contains a more detailed explanation of the particular reasons for the portfolio's poor relative performance, but the overriding factor was that our heavy exposure to domestically orientated mid and small capitalisation stocks, discussed in last year's Annual Report, meant that our portfolio suffered very badly in an environment where the UK's response to the medical crisis was at least as ineffective as that of most comparable countries but our mortality rate has been one of the highest in Europe. Overall, the UK experienced one of the biggest falls in GNP among the OECD countries in the middle part of the year.

Board response

As you would expect, the savage drawdown which the portfolio experienced in the period from late February to the end of March has led the Board to conduct an intensive review of the management of the Company and how a lasting recovery in its fortunes can be achieved. This review covered all the possible options available, ranging from carrying on as we are to winding the company up. We were assisted in this review by our stockbrokers, JPMorgan Cazenove, as well as by Aberdeen Standard Investments ("ASI"), our Managers.

Our basic assumption has been that our shareholders are interested above all in the dividends they can expect from their investment in the Company, bearing in mind that the Company's stated objective is, and has always been since its launch in 1991, "To provide shareholders with an above average income from their equity investment, while also providing real growth in capital and income". It seems to us that today, when interest rates available on bank deposits are tiny to non-existent, and on government and corporate debt the lowest ever recorded, the high income the Company currently provides has never been more valuable. Our discussions with ASI have reassured us as to the quality of their UK Equity department's personnel and processes. We noted in particular the detailed monitoring of the success, and otherwise, of research recommendations and the good results being achieved by other portfolios being managed by the department, including, notably, the three other equity income investment trusts, albeit that each of these has a different mandate to ours. It was clear from our discussions that any change of manager, management house or mandate, or a merger with another investment trust, whether managed by ASI or another house, all options which we examined, would involve a reduction, and very probably a substantial one, in the dividends shareholders would receive, with no certainty of better future performance.

The Board and Manager also discussed the long-term impact of the Covid-19 crisis on the UK market and the likely shape of the recovery, both in terms of capital values and dividends. The conclusion was that while the outlook for capital growth was at best opaque, dividend prospects are becoming clearer, albeit at a lower rate than was the case 12 months ago. To this end the Board has encouraged the Manager to focus on narrowing the gap between projected earnings and our planned dividend for 2021. The Manager has confirmed that, given the divergent performance of value stocks over recent years, this can be achieved within the Focus on Change approach.

The conclusion of our discussions has been that for now we should carry on with the existing policy and management arrangements, utilising the revenue reserves which have been built up over the Company's almost 29 year life to maintain the dividend at its current level, and indeed, by making marginal increases, continue the now twenty year record of nominal increases, until dividends can again be covered by annual earnings. We expect that this position can be reached without exhausting revenue reserves given the combination of dividend reinstatements and portfolio adjustments made by the Manager designed to increase our revenues. If so, shareholders will have had an investment which has given them a yield of 6.9%, with the prospect of a rising dividend thereafter. In those circumstances, we would expect that the Company's shares would be trading at a significantly lower yield than today's, with a corresponding uplift in the share price having occurred.

It must be acknowledged that this scenario is by no means a certainty, and our earnings may not recover at the rate required to meet our target. With a second wave of the Covid-19 virus under way in many countries, particularly in Europe, economic prospects for 2021 are doubtful. The precedent of the Spanish flu a century ago does, however, give some ground for optimism, as it was followed by a strong worldwide recovery in the 1920s.

The Board may also be wrong in its understanding of shareholder expectations as to dividends. We have, through our brokers, attempted to ascertain the views of the wealth managers whose clients hold our shares, but no clear consensus emerged from these consultations. Just over half our shares are held by named individuals or via platforms, many of them specified as Execution Only. The Board has no way of ascertaining the views of these shareholders other than by direct contact at AGMs or via correspondence. Despite our poor performance, I have received correspondence from only two shareholders this year and, as noted below, we expect that our forthcoming AGM will have to be held virtually.

In coming to our decision as to strategy over the next few years, the Board has borne in mind that shareholders will have the opportunity to vote on the Company's continuation at the AGM to be held in fourteen months' time, in February 2022. By then the likelihood of the strategy I have outlined above being successful should have become at least a little clearer, and shareholders will have the opportunity to decide whether or not they feel it is worth continuing along the path I have set out above.

In the meantime, we would welcome any feedback which shareholders may care to give us on our plan and the rationale behind it.

Dividend

Against that backdrop, and as suggested in the Company's Half Yearly Report to 31 March 2020, the Board announces a fourth interim dividend of 5.0 pence per share which will be paid on 30 December 2020 to shareholders on the Register on 4 December 2020, with an associated ex-dividend date of 3 December 2020. This takes the total dividend for the year to 20.6 per share, which is a 0.5% increase on the dividend in 2019 and the 20th consecutive annual dividend increase paid by the Company.

Other Corporate Activity

Other corporate activity undertaken by the Board during the year included the renegotiation of the Company's Revolving Credit Facility with Banco Santander S.A. London Branch. The facility was reduced from £40million to £20million as a result of the reduction of the value of the portfolio. The Board is responsible for arranging this facility and the Manager for deploying it. The Board understands that borrowing will enhance returns to shareholders when the portfolio is rising in value but that when values are falling the borrowing works to exacerbate declines.

The Board was also active in buying back shares. The Board monitors the discount of the share price to the cum-income NAV in both absolute terms and relative to the discount of other UK equity income investment trusts. During the year the Company bought back 593,168 Ordinary shares, or 1.2% of the issued share capital, largely in June and September, as the discount widened as market sentiment moved against the UK in the wake of the Covid-19 crisis and concerns about the outcome of Brexit negotiations. The buyback of shares has increased the NAV per share by 0.41 pence.

Annual General Meeting

This year's Annual General Meeting will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Friday, 5 February 2021 at 11:30am.

In light of the current Government Guidelines surrounding the Covid-19 pandemic, and current and expected future social distancing requirements, it is likely that only the formal business set out in the Notice of the Meeting will be considered, with no presentation by the Investment Manager and no refreshments. At the time of writing, it is likely that shareholders will be restricted from attending the AGM in person or by attorney or by corporate representative. Therefore, the Board encourages all shareholders to exercise their votes in respect of the meeting in advance to ensure that your votes are registered and counted at the meeting.

The Board welcomes questions from our shareholders and, given the format and prevailing circumstances, I would ask shareholders to submit questions to the Board prior to the AGM, and in any event before Monday, 1 February 2021. The Board or the Investment Manager will respond to all questions received. You may submit questions to the Board by email to [email protected].

The Board will continue to monitor Government Guidelines around social distancing in relation to Covid-19 and will update shareholders on any changes to the arrangements for the AGM. Should it be possible to host the AGM through traditional methods, the Board will do so and will notify shareholders via an announcement on the London Stock Exchange.

Articles of Association

At the Company's Annual General Meeting, one of the resolutions being proposed relates to a change to the Company's Articles of Association ("the Articles"). The change will enable the Company to hold virtual and hybrid general meetings (including annual general meetings) in the future. This is in response to the challenges posed by government restrictions on social interactions as a result of Covid-19, which have made it impossible for shareholders to attend physical general meetings.

The Board is committed to ensuring that future general meetings (including AGMs) incorporate a physical meeting when law and regulation permits and where shareholders can meet with the Board face to face. The potential to hold a general meeting through wholly electronic means is intended as a solution to be adopted as a contingency to ensure the continued smooth operation of the Company in extreme operating circumstances where physical meetings are prohibited. The Company has no present intention of holding a wholly electronic general meeting but wants to be prepared for the future.

Outlook

Despite the number of startling and often unforeseen political and economic developments that have occurred during the almost 48 years that I have spent in the investment world, not to mention the severe and even frightening financial crises that I have lived through, I don't remember a time when it has been more difficult than now to work out what is likely to happen over the next year or two.

The immediate issue facing investors in nearly every part of the world is how severe the effects of the pandemic are going to be over the northern winter and how much more damage is going to be done to economies and companies in the meantime. The very recent news on successful vaccine trials is most encouraging, but with the best will in the world it will be quite a number of months until vaccines can be distributed in sufficient volume to allow more or less normal life to resume. However, there is no doubt that this is the best news that investors, and citizens generally, have had this year. The failure of President Trump to win re-election has been generally welcomed outside the United States, but whether it proves to have much significance for investors in the London market is doubtful. Much more important to them, and us as shareholders of ASEIT , will be the outcome of the Brexit negotiations, whose terms, astonishingly, are still to be agreed with less than six weeks to go till the existing arrangements expire. Whatever is decided, there are bound to be winners and losers both in the UK and the EU and no doubt quite a bit of sand in the gears until the new arrangements, whatever they turn out to be, bed in. However, the Brexit issue has been a debilitating issue for this country and its stockmarket for a number of years now and its final resolution will come as a relief to almost everyone. It has been a contributory factor to the relatively poor performance of the British market this century, as described in the Portfolio Manager's Review, and to that extent our having finally left the EU trading bloc removes a huge uncertainty and should enable investors to form a clearer view of how the UK' s economy and companies might develop in the years ahead.

It does appear likely that whatever else happens, extremely low interest rates at all maturities will continue, at least into the medium term. This should provide firm support for asset prices in general and ordinary shares in particular, and gives me hope that our Company will produce much better results than it has done recently.

Conclusion

I shall be retiring from the Board at the AGM , having been a Director for fourteen years and Chairman for just over six. It has to be said that my period as Chairman has not been a particularly successful one for the Company, as the share price was 399p on the day I took up the position and is, as you will all know only too well, substantially less than that today. On the other hand , the dividend has risen by nearly half in that time. I am very hopeful that my successor, Mark White, to whom I wish every success, will have a better story to tell you when his turn to hand over comes around.

Richard Burns

Chairman

25 November 2020

STRATEGIC REPORT

Business Model

The Company is an investment trust with a premium listing on the London Stock Exchange.

Investment Objective

The Company's objective is to provide shareholders with an above average income from their equity investment, while also providing real growth in capital and income.

Investment Policy

The Directors set the investment policy, which is to invest in a diversified portfolio consisting mainly of quoted UK equities which will normally comprise between 50 and 70 individual equity holdings.

In order to reduce risk in the Company without compromising flexibility:

- no holding within the portfolio should exceed 10% of total assets at the time of acquisition; and

- the top ten holdings within the portfolio will not exceed 50% of net assets.

The Company may invest in convertible preference shares, convertible loan stocks, gilts and corporate bonds.

The Directors set the gearing policy within which the portfolio is managed. The parameters are that the portfolio should operate between holding 5% net cash and 15% net gearing. The Directors have delegated responsibility to the Manager for the operation of the gearing level within the above parameters.

Delivering the Investment Objective

The Board delegates investment management services to Aberdeen Standard Investments ("ASI"), the investment division of Standard Life Aberdeen PLC. The team within ASI managing the Company's portfolio of investments has been headed up by Thomas Moore since 2011.

The portfolio is invested on an index-agnostic basis. The process is based on a bottom-up stock-picking approach where sector allocations are a function of the sum of the stock selection decisions, constrained only by appropriate risk control parameters. The aim is to Focus on Change by evaluating changing corporate situations and identifying insights that are not fully recognised by the market.

Idea Generation and Research

The vast majority of the investment insights are generated from information and analysis from one-on-one company meetings. Collectively, more than 3,000 company meetings are conducted annually across ASI. These meetings are used to ascertain the company's own views and expectations of its future prospects and the markets in which it operates. Through actively questioning the senior management and key decision makers of companies, the portfolio managers and analysts look to uncover the key changes affecting the business and the materiality of their impact on company fundamentals within the targeted investment time horizon.

Investment Process in Practice

The index-agnostic approach ensures that the weightings of holdings reflect the conviction levels of the investment team, based on an assessment of the management team, the strategy, the prospects and the valuation metrics. The process recognises that some of the best investment opportunities come from under-researched parts of the market, where the breadth and depth of the analyst coverage that the Portfolio Manager can access provides the scope to identify a range of investment opportunities.

The consequence of this is that the Company's portfolio often looks very different from other investment vehicles providing their investors with access to UK equity income. This is because the process focuses on conviction levels rather than index weightings. This means that the Company may provide a complementary portfolio to the existing portfolios of investors who like to make their own decisions and manage their ISAs, SIPPs and personal dealing accounts themselves. Currently 58% (2019: over 60%) of the Company's portfolio is invested in companies outside the FTSE 100 Index.

The index-agnostic approach further differentiates the portfolio because it allows the Portfolio Manager to take a view at a thematic level, concentrate the portfolio's holdings in certain areas and avoid others completely. The effect of this approach is that the weightings of the portfolio can be expected to differ significantly from that of any index, and the returns generated by the portfolio may reflect this divergence, particularly in the short term.

Promoting the Success of the Company

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

Key Performance Indicators ("KPIs")

The Board assesses the performance of the Company against the range of KPIs shown below over a variety of timeframes, but has particular focus on the long term, which the Board considers to be at least five years.

KPI	Description
Net Asset Value ("NAV") Total Return relative to the FTSE All-Share Index	While the Manager does not manage the portfolio with direct reference to any particular index, the Board does review the performance against that of the FTSE All-Share Index to provide context for the performance delivered. The Company's NAV Total Return relative to the FTSE All Share Index since 2012, the first full year Mr Moore took over the role of Portfolio Manager, is set out in the Annual Report.
Premium or discount to NAV compared to the unweighted average of the discount of the peer group	The Board compares the discount of the Company's share price to its NAV when compared to the unweighted average discount of the other investment trusts in the UK Equity Income sector. The discount at the year end and at the end of the previous year, and the narrowest and widest discounts during the year, for the Company and the peer group, are shown in the Annual Report.
Dividend growth compared to the Retail Price Index ("RPI")	Since 2012, the dividend growth of the portfolio has exceeded inflation, as measured by the RPI, indicating that shareholders have received real growth in the dividends paid by the Company. However, during the financial year to 30 September 2020, and as set out in the Chairman's Statement, the Company's income generation was impacted by the Covid-19 pandemic. The Board took the decision to increase the dividend by 0.1 pence per share, which means that dividends relating to the financial year to 30 September 2020 lag RPI growth of 1.1%. The Company's dividend growth compared with RPI since 2012 is set out in the Annual Report.
Ongoing charges ratio relative to comparator investment vehicles	The Board monitors the Company's ongoing charges ratio against prior years and other similar sized companies in the peer group. The Ongoing Charges Ratio for the year is 0.87%, based on average net assets over the year (2019: 0.91%). The successional renegotiation of the Company's management fee as well as the reduction in average net assets were significant contributors but this was offset by an increase in the marketing spend as the Company joined the Manager's marketing programme.

KPI

Description

Net Asset Value ("NAV") Total Return relative to the FTSE All-Share Index

While the Manager does not manage the portfolio with direct reference to any particular index, the Board does review the performance against that of the FTSE All-Share Index to provide context for the performance delivered.

The Company's NAV Total Return relative to the FTSE All Share Index since 2012, the first full year Mr Moore took over the role of Portfolio Manager, is set out in the Annual Report.

Premium or discount to NAV compared to the

unweighted average of the discount of the peer group

The Board compares the discount of the Company's share price to its NAV when compared to the unweighted average discount of the other investment trusts in the UK Equity Income sector.

The discount at the year end and at the end of the previous year, and the narrowest and widest discounts during the year, for the Company and the peer group, are shown in the Annual Report.

Dividend growth compared to the Retail Price Index ("RPI")

Since 2012, the dividend growth of the portfolio has exceeded inflation, as measured by the RPI, indicating that shareholders have received real growth in the dividends paid by the Company. However, during the financial year to 30 September 2020, and as set out in the Chairman's Statement, the Company's income generation was impacted by the Covid-19 pandemic. The Board took the decision to increase the dividend by 0.1 pence per share, which means that dividends relating to the financial year to 30 September 2020 lag RPI growth of 1.1%.

The Company's dividend growth compared with RPI since 2012 is set out in the Annual Report.

Ongoing charges ratio relative to comparator investment vehicles

The Board monitors the Company's ongoing charges ratio against prior years and other similar sized companies in the peer group.

The Ongoing Charges Ratio for the year is 0.87%, based on average net assets over the year (2019: 0.91%). The successional renegotiation of the Company's management fee as well as the reduction in average net assets were significant contributors but this was offset by an increase in the marketing spend as the Company joined the Manager's marketing programme.

Principal Risks and Uncertainties

The Board and Audit Committee carry out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks. The Board also identifies emerging risks which might affect the Company. During the year, the most significant risk was the emergence of the Covid-19 virus during the first part of 2020 which has impacted dramatically on public health and mobility, but has also had a significant impact on global financial markets and the future economic outlook. The impact of Covid-19 on the Company's investment performance is set out in the Chairman's Statement and Portfolio Manager's Review.

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 ou a robust assessment of the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation.

The principal risks and uncertainties faced by the Company are reviewed by the Audit Committee in the form of a risk matrix and the Committee also gives consideration to the emerging risks facing the Company.

The principal risks currently facing the Company, together with a description of the mitigating actions the Board has taken, are set out in the table below.

The principal risks associated with an investment in the Company's shares are published monthly in the Company's factsheet and they can be found in the pre-investment disclosure document ("PIDD") published by the Manager, both of which are available on the Company's website.

Risk	Mitigating Action
Strategy - the Company's objectives or the investment trust sector as a whole become unattractive to investors, leading to a fall in demand for the Company's shares.	Through regular updates from the Manager, the Board monitors the discount/ premium at which the Company's shares trade relative to the net asset value. It also holds an annual strategy meeting and receives feedback from the Company's broker and updates from the Manager's investor relations team at Board meetings. The Board has sought specific feedback from shareholders following the Company's recent performance.
Investment Performance - the Board recognises that market risk is significant in achieving performance and it reviews investment guidelines to ensure that they are appropriate. The Board regularly reviews the impact of geopolitical instability and change on market risk.	The Board meets the Manager on a regular basis and keeps investment performance under close review. As set out in the Chairman's Statement, the Board carried out an intensive review of the management of the Company during the financial year. The Board sets and monitors the investment restrictions and guidelines and regular reports are received from the Investment Manager on stock selection, asset allocation, gearing, revenue forecasts and the costs of running the Company. The Board determines the Company's dividend policy and approves the level of dividends payable to shareholders. Representatives of the Manager attend all Board meetings and a detailed formal appraisal of the Manager is carried out by the Management Engagement Committee on an annual basis.
Exogenous risks such as health, social, financial, economic and geopolitical - the effects of instability or change arising from these risks could have an adverse impact on stock markets and the value of the investment portfolio. Political risks include the terms of the UK's exit from the European Union, any regulatory changes resulting from a different political environment, and wider geo-political issues.	The Board discusses current issues with the Manager. During the year under review, such issues have included the terms on which the UK might leave the EU and a possible second Scottish independence referendum and the steps the Manager has taken or might take to limit their impact on the portfolio and the operations of the Company. This year the major issue of this type which has concerned the Board has been the impact of Covid-19 on the UK's financial markets. As set out in the Chairman's Statement, the Board considers that this is a risk that could have further implications for global financial markets, revenue generation, economies and on the operating environment of the Company, the impact of which is difficult to predict at the current time. During this period, the Board liaised closely with the Manager to receive updates on performance and to obtain confirmations that the operations of the Manager and those of other third party service providers were operating effectively.
Operational Risk - in common with most investment trusts, the Board delegates the operation of the business to third parties, the principal delegate being the Manager. Failure of internal controls and poor performance of any service provider could lead to disruption, reputational damage or loss to the Company.	The Audit Committee receives reports from the Manager on its internal controls and risk management (including an annual ISAE Report) and receives assurances from all its other significant service providers on at least an annual basis, including on matters relating to business continuity and cyber security. Written agreements are in place with all third party service providers. The Manager monitors closely the control environments and quality of services provided by third parties, including those of the Depositary, through service level agreements, regular meetings and key performance indicators. A formal appraisal of the Company's main third party service providers is carried out by the Management Engagement Committee on an annual basis. The Company's operations have been severely tested during the Covid-19 pandemic. However, the increased use of online communication and out of office working have, to date, proved to be robust.
Governance Risk - the Directors recognise the impact that an ineffective board, unable to discuss, review and make decisions, could have on the Company and its shareholders.	The Board is aware of the importance of effective leadership and board composition. The Board regularly reviews its own performance and, at least annually, formally reviews the performance of the Board and Chairman through its performance evaluation process.
Discount / Premium to NAV - a significant share price discount or premium to net asset value per share could lead to high levels of uncertainty for shareholders.	The Board keeps the level of the Company's discount / premium under review. During the financial year, shares have been bought back at a discount by the Company. The Company participates in the Manager's investment trust promotional programme where the Manager has an annual programme of meetings with institutional shareholders and reports back to the Board on these meetings.
Financial obligations - inadequate controls over financial record keeping and forecasting, the setting of an inappropriate gearing strategy or the breaching of loan covenants could result in the Company being unable to meet its financial obligations, losses to the Company and its ability to continue trading as a going concern.	At each Board meeting, the Board reviews management accounts and revenue forecasts. The Board sets gearing limits and monitors the level of gearing and compliance with the main financial covenants at Board meetings. The Company's annual financial statements are audited by the independent auditor.
Legal and Regulatory Risks - the Company operates in a complex legal and regulatory environment. As a UK company with shares publicly quoted on the London Stock Exchange, as an alternative investment fund and an investment trust, there are several layers of risk of this nature.	The actions the Board takes to mitigate these extensive risks are to ensure that there is breadth and depth of expertise within the Board and the organisations to which the Company has delegated. There are also authorities whereby the Board or individual Directors can take further advice by employing experts should that ever be considered necessary.

Promotional Activities

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by ASI on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by ASI. The Company also supports ASI's investor relations programme which involves regional roadshows, promotional and public relations campaigns. ASI's promotional and investor relations teams report to the Board on a quarterly basis giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make up of that register.

The purpose of the promotional and investor relations programmes is both to communicate effectively with existing shareholders and to gain new shareholders, with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key. Part of the promotional programme includes commissioning independent paid for research on the Copany, most recently from Kepler Trust Intelligence Research Limited. A copy of the latest research note is available from the Latest News section of the Company's website.

Board Diversity Policy

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins, or disability in considering the appointment of its Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and the Board does not therefore consider it appropriate to set measurable objectives in relation to its diversity.

At 30 September 2020, there were three male and two female Directors on the Board.

Modern Slavery Act

Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Environmental, Social and Human Rights Issues

The Company has no employees as the Board has delegated the day to day management and administrative functions to the Manager. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is set out below.

Environmental, Social and Governance ("ESG") Investing

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

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

Active Engagement

Through engagement and exercising voting rights, the Manager actively works with companies to improve corporate standards, transparency and accountability. By making ESG central to its investment capabilities, the Manager looks to deliver robust outcomes as well as actively contributing to a fairer, more sustainable world.

The primary goal of the Manager is to generate the best long-term outcomes for the Company in order to fulfil fiduciary responsibilities to shareholders and this fits with one of the Manager's core principles as a business in how it evaluates investments. The Manager sees ESG factors as being financially material and impacting corporate performance. The Manager focuses on understanding the ESG risks and opportunities of investments alongside other financial metrics to make better investment decisions.

Responsible Investment

The Board is aware of its duty to act in the interests of the Company. The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and has noted the Manager's policy on social responsibility. The Manager considers social, environmental and ethical factors which may affect the performance or value of the Company's investments as part of its investment process. In particular, the Manager encourages companies in which investments are made to adhere to best practice in the areas of ESG stewardship. The Manager believes that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies.

The Company's objective is to deliver above average income, while also providing real growth in capital and income, on its investments for its shareholders which the Board and Manager believes will be produced on a sustainable basis by investments in companies which adhere to best practice in ESG. Accordingly, the Manager will seek to favour companies which pursue best practice.

Stewardship

The Company is committed to the UK's Stewardship Code, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. 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 and its group, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company's behalf.

The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources.

Viability Statement

The Board considers that the Company is a long-term investment vehicle and, for the purposes of this statement, has decided that three years is an appropriate period over which to consider its viability. The Board considers this to be an appropriate period for an investment trust company with a portfolio of equity investments based on the cycle for the continuation vote, and the financial position of the Company.

Taking into account the Company's current financial position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report.

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

- The principal risks and uncertainties detailed above, including the potential impact of Brexit, and the steps taken to mitigate these risks.

- All of the Company's investments are traded on major stock exchanges and there is a spread of investments held.

- The Company is closed ended in nature and therefore it is not required to sell investments when shareholders wish to sell their shares.

- The Company's main liability is its bank loan of £20million (2019: £30 million), which represents 12.7% (2019: 13.1%) of the Company's investment portfolio. This is a £20 million (2019: £40 million) revolving credit facility with Banco Santander S.A., London Branch. £20 million was drawn at the end of the financial year at a weighted average interest and commitment fee cost of 1.39%.

- The Company's cash balance, including money market funds, at 30 September 2020 amounted to £1.2 million (2019: £1.7 million).

- The relatively low level of ongoing charges.

- Current market conditions caused by the global spread of Covid-19. In particular, the Board has considered the ability of the Company's operations to continue in the current environment, which has been impacted by the global Covid-19 pandemic and the ability of the key third-party suppliers to continue to provide essential services to the Company. The Board has been flexible and continued to meet as normal, hosting meetings virtually. The increased use of online communication and out of office working for the Manager and service providers have, to date, also proved to be robust.

When considering the risks, the Board reviewed the impact of stress testing on the portfolio, including the effects of any substantial future falls in investment values. The Board has also had regard to matters such as the ongoing significant economic and stock market volatility arising from the Covid-19 pandemic, a substantial reduction in the liquidity of the portfolio or changes in investor sentiment, all of which could have an impact on the Company's prospects and viability in the future. The results of the stress tests have given the Board comfort over the viability of the Company.

Despite the challenging short-term performance, and the ongoing economic impact of the Covid-19 pandemic, the Directors consider the Company's future prospects to be positive.

In assessing the Company's future viability, the Board has assumed that investors will wish to continue to have exposure to the Company's activities, in the form of a closed ended entity, and the Company will continue to have access to sufficient capital. Although the Board acknowledges that the Company's short-term investment performance has been extremely disappointing, it believes that the Focus on Change investment approach and process will deliver good returns over the long term. The Board has also acknowledged that investors will have the opportunity to vote on the continuation of the Company at its five yearly continuation vote in 2022.

Future Strategy

The Board intends to maintain the strategic policies set out in the Strategic Report for the year ending 30 September 2020 as it is believed that these are in the best interests of shareholders.

On behalf of the Board

Richard Burns

Chairman

25 November 2020

PROMOTING THE SUCCESS OF THE COMPANY

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

The Board is required to describe to the Company's shareholders how the Directors have discharged their duties and responsibilities over the course of the financial year under Section 172 (1) of the Companies Act 2006 (the "Section 172 Statement"). This statement provides an explanation of how the Directors have promoted the succes of the Company for the benefit of its members as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with all stakeholders and the impact of the Company's operations on the environment.

The Board takes its role very seriously in representing the interests of the Company's shareholders. The Board, which at the year end, comprised five independent non-executive Directors has a broad range of skills and experience across all major functions that affect the Company. The Board is responsible for taking all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's service providers.

The Board ensures that the Company operates in a transparent culture where all parties are treated with respect and provided with the opportunity to offer practical challenge and participate in debate to achieve the expectations of shareholders and other stakeholders alike. The Board works very closely with the Manager in reviewing how issues are handled, ensuring good governance and responsibility in managing the Company's affairs, as well as visibility and openness in how the affairs are conducted.

The importance of giving due consideration to the Company's shareholders is not a new requirement and is of particular prominence in the Board's thinking and decision making. However, as this has been a particularly challenging year for the Company, the interests of our shareholders have been of paramount importance during every decision taken by the Board.

Consideration of Shareholder Interests during the Year

Portfolio and Dividend

As set out in the Chairman's Statement and Portfolio Manager's Review, the Company's portfolio has been materially impacted by the adverse economic conditions stemming from the Covid-19 pandemic. The Board conducted an intensive review of the management of the Company and how a lasting recovery in its fortunes can be achieved. As the Chairman states above, the Board's basic assumption has been that shareholders are interested above all in the dividends they can expect from their investment in the Company. Having consulted with major shareholders, the Board agreed that it would carry on with its existing policy and management arrangements, and would utilise the revenue reserves which have been built up to maintain the dividend at its current level. At the start of the financial year the Board had planned to pay a dividend which would be higher than that paid in the previous year by an amount greater than the increase in the RPI for the 12 month period. In the event, it decided it should not pay a dividend increased by that amount and instead has declared a full year dividend of 20.6 pence per share, an increase of 0.1 pence on the payment of 2019. During its discussions, the Board has encouraged the Manager to focus on narrowing the gap between projected earnings and the likely dividend payout in 2021.

The Board reminds shareholders that they will have the opportunity to vote on the Company's continuation at the AGM to be held in February 2022. In the meantime, as set out in the Chairman's Statement, the Board welcomes feedback from shareholders.

Loan Facility

During the year, the Board reduced its revolving credit facility with Banco Santander S.A. London Branch from £40million to £20 million. The Board decision to reduce the facility was driven by the reduction of the value of the portfolio in March 2020. The Board agreed amendments to the loan covenants which now require that the Company's gross assets will not be less than £100 million (previously £150 million). The Board is responsible for arranging this facility and the Manager for deploying it. The Board reminds shareholders that borrowing will enhance returns to shareholders when the portfolio is rising in value but that when values are falling the borrowing works to exacerbate declines. The Board believes that it is advantageous for the Company to have gearing but acknowledges that gearing has contributed to negative returns for shareholders during the financial year.

Share Buy Backs

During the year the Company bought back 593,168 Ordinary shares to be held in treasury, providing a small accretion of 0.41 pence to the NAV per share and a degree of liquidity to the market at times when the discount to the NAV per share has widened. The Company was most active in June and September 2020, as the discount widened as market sentiment moved against the UK in the wake of the Covid-19 crisis and concerns about the outcome of the Brexit negotiations. The Board believes that the selective use of share buybacks is in the best interest of all shareholders.

Directorate

The Board considered its succession plans during the year. Richard Burns has announced his intention to retire from the Board at the AGM in 2021 and will be succeeded as Chairman by Mark White. Josephine Dixon retired from the Board on 23 January 2020 and was succeed as Audit Committee Chair by Sarika Patel. Further details are provided in the Directors' Report.

Following Richard Burns' retirement, the Board does not intend to recruit a replacement fifth Director in the short to medium term. The Board believes that the remaining four Directors have sufficient experience to guide the Company through its current challenges. A Board of four Directors is also better suited to the size of the Company and will result in a reduction in bon-executive directors' fees.

How the Board Engages with Stakeholders

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

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

Stakeholder	How We Engage
Shareholders	Shareholders are key stakeholders and the Board places great importance on communication with them. The Board welcomes all shareholders' views and aims to act fairly to all shareholders. The Manager and the Company's broker regularly meet with current and prospective shareholders to discuss performance and shareholder feedback is discussed by the Directors at Board meetings. In addition, Directors meet shareholders at the Annual General Meeting. The Company subscribes to ASI's investor relations programme in order to maintain communication channels with the Company's shareholder base. Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, Company announcements, including daily net asset value announcements, and the Company's website. The Company's Annual General Meeting usually provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Manager. Typically, the Board encourages as many shareholders as possible to attend the Company's Annual General and to provide feedback on the Company. This year, due to the uncertainties caused by the Covid-19 pandemic and, in particular, the restrictions on public gatherings and requirements to socially distance, it is likely that the Annual General Meeting will be held on a functional only basis, satisfying the minimum legal requirements. Instead, shareholders are encouraged to submit questions to the Board and the Manager. Further details can be found in the Chairman's Statement.
Manager	The Portfolio Manager's Review details the key investment decisions taken during the year. The Manager has continued to manage the Company's assets in accordance with the mandate provided by shareholders, with oversight provided by the Board. The Board regularly reviews the Company's performance against its investment objective and the Board undertakes an annual strategy review meeting to ensure that the Company is positioned well for the future delivery of its objective for its stakeholders. The Board receives presentations from the Manager at every Board meeting to help it to exercise effective oversight of the Investment Manager and the Company's strategy. The Board, through the Remuneration & Management Engagement Committee, formally reviews the performance of the Manager at least annually.
Service Providers	The Board seeks to maintain constructive relationships with the Company's suppliers either directly or through the Manager with regular communications and meetings. The Remuneration & Management Engagement Committee conducts an annual review of the performance, terms and conditions of the Company's main service providers to ensure they are performing in line with Board expectations, carrying out their responsibilities and providing value for money.
Investee Companies	Responsibility for monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues. Through engagement and exercising voting rights, the Manager actively works with companies to improve corporate standards, transparency and accountability. . The Board monitors investments made and divested and questions the rationale for investment and voting decisions made.
Debt Providers	On behalf of the Board, the Manager maintains a positive working relationship with Banco Santander S.A., London Branch, the provider of the Company's loan facility, and provides regular updates on business activity and compliance with its loan covenants.
Environment and Community	The Board and Manager are committed to investing in a responsible manner and the Investment Manager embeds Environmental, Social and Governance ("ESG") considerations into the research and analysis as part of the investment decision-making process,

KEY FINANCIAL HIGHLIGHTS

Total return for periods to 30 September 2020

	30 September 2020	30 September 2019	% change
Capital
Net asset value per Ordinary share	288.0p	411.8p	-30.1%
Ordinary share price	252.0p	381.5p	-33.9%
Benchmark capital return	3,282.3	4,061.7	-19.2%
Discount of Ordinary share price to net asset value{A}	12.5%	7.4%
Total assets	£159.5m	£235.3m	-32.2%
Shareholders' funds	£139.2m	£201.5m	-30.9%
Gearing
Net gearing{A}	13.3%	13.7%
Earnings and Dividends
Revenue return per Ordinary share	15.61p	21.74p	-28.2%
Total dividends for the year	20.60p	20.50p	0.5%
Dividend yield{A}	8.2%	5.4%
Expenses
Ongoing charges{A}	0.87%	0.91%
{A} Considered to be an Alternative Performance Measure.

PERFORMANCE (TOTAL RETURN)

	1 year	3 years	5 years	10 years
30 September 2020	%	%	%	%
Net asset value{A}	-25.7	-30.7	-18.5	47.1
Share price{A}	-29.4	-35.8	-27.6	36.8
FTSE All-Share Index	-16.6	-9.3	18.6	63.9

{A} Considered to be an Alternative Performance Measure.
Source: Aberdeen Standard Investments/Morningstar/Factset

INVESTMENT MANAGER'S REPORT

UK Market Review

The UK stock market ended the 12 month period sharply lower, in contrast to other major markets, some of which produced a positive return. The Covid-19 pandemic was the dominant driver of returns, having a pronounced impact on the UK market from mid February. The considerable divergence in returns by country primarily reflected the sector composition of individual markets. The UK market has a very heavy weighting in traditional sectors that were particularly badly affected by the pandemic, whereas other markets, such as the US, have much heavier weightings in growth sectors such as Technology which actually benefited from the lockdown. The UK's best known index, the FTSE 100, closed at 5,866 on 30 September 2020, a level it first hit in March 1998.

Economic recession became inevitable after governments announced draconian national lockdowns in an attempt to limit the spread of the virus. The UK Government announced its national lockdown on 23 March 2020, by which time the market had already priced in the full negative impact of the pandemic. For the three months to the end of March, the FTSE All-Share Index was down by 22% on a total return basis - its most significant quarterly decline since the Black Monday sell-off in 1987. Subsequent months saw a spate of profit warnings, dividend cuts and calls for additional capital by companies.

From the lows of late March, equity markets staged a recovery, helped by the announcement of a range of accommodative fiscal and monetary measures from governments and central banks to counter the economic effects of lockdown. Slowing infection rates allowed the UK economy to reopen for business, resulting in a sharp rebound in housing transactions, retail sales activity and purchasing managers' indices. Despite this improved economic data, the recovery in the UK stock market was choppy, rallying sharply in the quarter to June before retracing some of these gains in the quarter to September due to concerns about a second wave of the virus. Investor nervousness over the sustainability of the economic recovery was reflected in the outperformance of defensive quality growth stocks during this period. The worst-affected sectors over the period were those where social interaction is fundamental to the business and which were consequently most directly affected by the lockdown and which saw an almost total collapse in the revenues, such as Travel & Leisure and General Retailers. Oil stocks fell as the oil price collapsed on lower demand, while Banks fell on fears of a spike in loan impairments.

Political events were also important drivers of the UK market during the period. The landslide Conservative General Election victory in December 2019 drove a brief period of sharp outperformance of stocks with exposure to the UK domestic economy. The United Kingdom's withdrawal from the European Union took effect on 31 January 2020. Since that time negotiations aimed at agreeing the new relationship - including a trade deal - have been ongoing. This has been a source of anxiety driving the renewed outperformance of overseas earning stocks.

Portfolio Performance

Covid-19 was the dominant driver of the portfolio's performance in the 12 month period. After outperforming in the quarter to December 2019, the portfolio underperformed materially in the quarter to March 2020 and then slightly outperformed the index in the six months to September 2020. The net result was a very poor outcome, which was entirely concentrated in a six week period between mid-February and late-March.

Covid-19 was a particularly challenging event for our Focus on Change investment process. Following the election euphoria of December 2019, we went into Covid-19 with too much exposure to economically-sensitive stocks and not enough exposure to defensive stocks and growth stocks. As a result, the portfolio's performance deteriorated markedly in mid-February as the full consequences of the pandemic became apparent. We took decisive action early on, selling stocks with structural concerns and redeploying the proceeds of these sales into more robust companies with a better dividend outlook. However, our subsequent NAV recovery has been choppy as market leadership has been retained by highly-valued growth stocks which tend not to fit our investment process. We seek to identify companies whose change potential has not been priced in by the wider market. This process has struggled during the recent macro turmoil, as investors have been attracted to stocks with the most visible growth prospects, regardless of the extent to which this growth has been priced in. We believe that our investment process is set to work again, as it has in the past, and in the outlook section we outline the catalysts that we expect to drive an improvement in the Company's performance.

The key drivers of our performance relative to the FTSE All-Share Index can be summarised as follows:

1. The gearing position, averaging 13% over the year, cost just over 3% of relative performance.

2. Heavy exposure to economically-sensitive sectors significantly detracted from performance. Consumer Discretionary was the single largest detractor to performance by sector, costing nearly 3% of relative performance. Our holdings in travel and leisure companies directly impacted by the lockdown, including TUI, Cineworld and National Express, hit performance particularly hard.

3. Insufficient exposure to defensive sectors also detracted from our performance as the recession took hold. Our underweight positions in Healthcare and Consumer Staples cost around 3% of relative performance, in particular not owning Unilever and Reckitt Benckiser and the underweight position in AstraZeneca.

4. Financials was by far the largest positive contributor to our relative performance. We benefited from strong stock selection, in particular CMC Markets which soared by +210% on persistent revenue upgrades and Hastings which increased by +28% after receiving a bid approach. Not owning mainstream banks such as Lloyds Banking Group also helped our relative performance.

Revenue Account

Dividends distributed by companies in the portfolio in the 12 month period were £8.7million, which was 26.3% less than the £11.8 million received at the same time last year. While this is a heavy decline, it compares favourably to the FTSE All-Share Index whose dividends declined by 34.9% over the same period. Dividend cuts were widespread across the UK market following the onset of Covid-19, with three quarters of companies cutting their dividends payable in the quarter to June and two thirds cutting their dividends payable in the quarter to September. Our index-agnostic approach was not favourable to the revenue account during this period. Mid-cap stocks fared worse than large cap stocks in terms of dividends, reflecting their respective sectoral and geographical tilt. However, we continue to believe that running heavy weightings in mid and small-cap stocks will prove beneficial to the revenue account over the course of the cycle given their superior growth prospects.

During the period, 93% of the dividend income came from recurring rather than special dividends. Special dividends increased in the first six months of the period year on year, but fell away sharply on the advent of Covid-19.

The portfolio achieved a dividend yield of 5.5% based on the income generated by the portfolio over the year divided by the average portfolio value, representing a significant premium to the effective dividend yield of the FTSE All-Share Index of 3.8% for the same period.

We have undertaken a line by line review of the portfolio, weighing the income prospects of our holdings based on their trading and balance sheet outlook. In the wake of the pandemic we took action by adding to existing holdings or buying new holdings in companies with the most resilient dividend prospects. Conversely we sold some holdings in companies that appeared unlikely to be able to restore the dividend in the foreseeable future.

We have classified stocks into three key categories - "resilient income", "resumed income" and "interrupted income". By these classifications, just under 70% of the stocks in the portfolio are classified as "resilient income" stocks, which we expect to continue to pay dividends continuously throughout the crisis. Just over 10% are classified as "resumed income" stocks which have announced that they have returned to the dividend list and just under 20% are classified as "interrupted income" stocks which have put their dividends on hold until the outlook brightens.

Looking ahead, we expect the revenue account to recover strongly in the coming months for two key reasons:

1. We expect more of our holdings to resume dividends as earnings visibility improves.

2. We have added to attractively valued stocks with resilient dividend prospects, switching out of stocks with a weaker income outlook.

It is becoming clearer that the worst of the storm has now passed. In their Q3 2020 Dividend Monitor, Link Group forecasts that UK dividends will grow by between 6% and 15% in 2021, after declining by 45% in the calendar year 2020. We are particularly encouraged by the growing number of our holdings that are announcing that they will resume their dividends after pausing them for precautionary reasons due to the pandemic. Six of our holdings that had halted dividend payments due to the pandemic have since resumed their dividends (Direct Line Insurance, Sabre Insurance, Mondi, BAE Systems, Persimmon and Close Brothers). Most notable of these is Close Brothers, which on 22 September 2020 became the first UK bank to announce that it would resume its dividend. We expect further dividend resumptions in the coming months and we expect this to be a key driver of the share prices of our holdings.

Activity

Purchases

In response to the changed environment post-Covid, we took action by adding to attractively valued stocks with robust dividend prospects. This will help to increase our portfolio income and should also underpin our capital performance. We bought a holding in insurance company Direct Line Insurance whose strong profitability has boosted its capital position, allowing it to resume its dividend payments. We bought shares in paper and packaging business Mondi whose consistently high returns are a function of its low cost of production and high quality assets. We bought into bottling company Coca-Cola Hellenic which offers strong long-term growth prospects with rising disposable income driving consumption per capita in many of the developing markets in which it operates. We also added to mega-caps Rio Tinto and Legal & General, both of which are industry leaders with a significant cost advantage over their peers.

Sales

We recognised that Covid-19 would have a short-term impact on companies' profitability and balance sheets, a well as a long-term impact on companies' business models as people's habits change, with increased e-commerce, working from home and government intervention. We acted decisively where the investment thesis has changed radically and where we judged that the recovery would be too slow to justify waiting - on this basis, we sold out of Saga, TUI, Cineworld and NewRiver. We received bids for three of our holdings during the period - real estate company Hansteen, insurance administrator Charles Taylor and insurance underwriter Hastings. All three bids underlined the attractive valuations of neglected UK small and mid-cap stocks. We also sold a number of industrial stocks whose full valuations appeared to offer limited upside potential, especially in the context of weakening order trends. These included ventilation business Volution, engineering business IMI and heat treatment business Bodycote. We also moderated our financials weighting by selling our holdings in insurance businesses Prudential and Aviva which risked being impacted by a widening in corporate credit spreads.

Outlook

This was a uniquely challenging period during which our performance was heavily impacted by Covid-19. In addition to the impact on those holdings that were directly hit by the lockdown, we were hit by a relentless style shift from attractively valued yield stocks towards expensively valued quality growth stocks. It would be hard to imagine a set of conditions that could have been less benign for our Focus on Change investment process which seeks to identify stocks whose fundamentals have been mispriced by the wider market.

Covid-19 has amplified valuation dispersion within the UK market, stretching the gap between cheap and expensive stocks to levels unseen since the TMT bubble in 2000. Our holdings are highly attractive on valuation metrics such as Price/Book Value, Free Cash Flow yield, Dividend Yield and Price/Earnings, suggesting significant scope to re-rate. Style analysis highlights that the past 12 months have been a very bad period for stocks exhibiting these characteristics, while stocks with strong Momentum, Quality and Growth characteristics have soared as investors have gravitated towards a narrow selection of trending stocks whose valuations are often very expensive relative to the wider market. Having stuck to our Focus on Change investment process, we would now expect our portfolio to benefit from an unwinding of the concentration of investor positioning in these stocks. We see the elastic as very stretched, increasing the probability of a sharp snapback in favour of our holdings.

Valuation dispersion is an important pre-requisite for a shift in market leadership, but we recognise that it is not sufficient. For the valuations of our holdings to re-rate, catalysts are required.

(A) Potential for triggers that will result in a shift in market leadership:

We see a range of possible imminent catalysts for a shift in market leadership to take place, benefiting our portfolio:

1. Vaccine announcement - The announcement of a successful vaccine has vastly improved the prospects for the global economy in 2021, allowing herd immunity to be achieved far sooner than the market had expected. This will allow investors to lengthen their time horizons beyond the "here and now". The pronounced impact of this announcement on the share prices of our holdings is a reminder of how quickly sentiment can change. Given that investors are forward-looking, they are likely to look through the logistical challenge of manufacturing and distributing the vaccine and focus on the normalisation of economic activity. This is set to drive a shift in market leadership which we would expect to favour our positioning.

2. US fiscal boost - After the political gridlock of the past four years, there is potential for greater bipartisan agreement on fiscal spending that has a high multiplier effect, such as fixing the roads and bridges. Although the Democrats are unlikely to control the Senate, President-Elect Biden appears well placed to master the art of working with a Congress that is controlled by the other party. This creates the potential for sharply higher US government spending.

3. Brexit clarity - In the weeks ahead, we will know the outcome of Brexit negotiations. It is not unusual for the EU to sign deals at the 11th hour. Our House View is that both sides are highly incentivised to compromise in order to clinch a narrow trade deal. This would help provide some certainty for individuals and corporates. It would also encourage investors to look afresh at the bargains available among the domestically orientated stocks which have been spurned since mid-2016.

4. Global economic recovery - Economists expect 2021 to be a recovery year for economic growth, forecasting real GDP growth of between 5% and 6% in 2021. Nominal GDP growth is forecast to be between 8% and 9%. This has the potential to drive a change in market leadership. Higher economic growth, inflation and bond yields could help drive a rotation towards cyclicals and financials. Meanwhile a weaker dollar could have the effect of spurring on commodity prices.

5. Coordinated fiscal response - Governments around the world have shown that they will do what it takes to combat the effects of the pandemic. There will be no repeat of the austerity that followed the Global Financial Crisis in 2008. The Chancellor of the Exchequer, Rishi Sunak, has made clear that he will be pragmatic in extending government support schemes if necessary, reducing the risk of a cliff-edge at the end of a scheme. Policymakers are aware that the least painful way to pay down the resultant debt will be to allow inflation to run at higher levels, eroding the value of hat debt.

(B) Potential for stronger than expected company results from cheaply valued stocks:

We have focused the portfolio on stocks with the potential to surprise the market positively when they report results. The latest earnings season has produced evidence of the underlying resilience of our holdings. Having been cast aside for macro reasons, many of our stocks have produced very positive results, resulting in positive share price reactions. Recent highlights have included OneSavings Bank, Diversified Gas & Oil, GVC, Tyman and DFS Furniture.

Extreme market conditions have resulted in a level of pessimism that we believe will turn out to be unfounded. This has created an abundance of stocks whose valuations do not price in the robust fundamentals that we expect. The reluctance of many investors to contemplate investing across a broad range of unloved UK sectors provides unusually attractive rewards for those, like us, who are remaining alert to the potential for mispricing resulting from such an extreme event as a global pandemic. If institutional shareholders do not take advantage of these valuation opportunities, then we can expect corporate bidders to step in. It was announced that three of our holdings, Hastings, Hansteen and Charles Taylor, were acquired during the period. The cheap valuations of our holdings make it likely that others will follow suit.

With the confluence of supportive macro and micro factors, against the backdrop of valuations being as extreme as they were at the time of the TMT bubble in 2000, we see the potential for a decisive shift in favour of our portfolio. We have positioned the portfolio carefully to benefit from this environment:

1. The portfolio's cyclical and financial holdings should benefit from gradually increasing confidence in the economic outlook, potentially driving the earnings growth of these stocks to levels unseen since the recovery from the Global Financial Crisis in 2009. We would expect their share prices to respond to a combination of earnings upgrades and valuation re-rating. This will be further bolstered by the resumption of dividends. It is a myth that all cyclical stocks are at risk of disruption - we are finding plenty of stocks that are not susceptible to disruption, such as stocks linked to the housing market and beneficiaries of increased fiscal largesse.

2. The portfolio's higher yield defensive stocks should benefit from valuation re-rating, having lagged during the recent period of quality growth outperformance. Many of our larger cap holdings offer yields in excess of 5% despite robust fundamentals. Examples include National Grid, Rio Tinto, BHP and British American Tobacco. These dividend yields are well supported by free cash flow, with inflation hedging characteristics. These stocks' high dividend yields do not make them "dividend traps" in our view. Instead, their high yields can be explained by heightened caution towards both UK equities as an asset class and value/income as a style. The gap between dividend yields and bond yields is eye-catching. These yields could easily compress meaningfully, driving a period of sharp outperformance.

As ever, it is important to look forward and position the portfolio for what is to come, rather than what has just happened. Covid-19 caused the revenue account to take a hit but we have built up significant reserves thanks to the strength of our earnings growth in the past decade. We expect portfolio income to recover strongly in the coming months as we add to resilient income stocks and more of our holdings resume their dividend payments. We are focused on lifting the revenue account with a view to narrowing the gap between earnings and dividends. We have presented to the Board our plans on how we intend to do so. Given that market conditions have caused many robust higher yield stocks to trade at unusually low valuations, we are confident that that this will be possible while staying true to our Focus on Change investment process.

We see significant capital growth potential in the portfolio as the underlying strengths of our holdings become more fairly reflected in share prices. We have shown in the past that our investment process can be very powerful in delivering meaningful outperformance, particularly when investor sentiment stabilises in the wake of periods of macro turmoil. Having outperformed our peer group in five years out of seven under my tenure between FY12 and FY18, the past two years have been a deeply frustrating period for shareholders and I am absolutely determined to put this right.

Thomas Moore

Portfolio Manager

Aberdeen Standard Investments

25 November 2020

TEN LARGEST INVESTMENTS

As at 30 September 2020

John Laing	Rio Tinto
John Laing Group originates and invests in infrastructure projects including transportation, social and environmental infrastructure.	Rio Tinto is a leading global mining group that focuses on finding, mining and processing mineral resources.

CMC Markets	Close Brothers
CMC Markets is a financial derivatives dealer offering online trading in spread betting, contracts for difference and foreign exchange.	Close Brothers is a specialist financial service group which provides loans, trades securities and provides advice and investment management solutions.

GlaxoSmithKline	National Grid
GlaxoSmithKline develops, manufactures and markets vaccines, prescription and over the counter medicines as well as health-related consumer products.	National Grid owns gas and electricity transmission and distribution assets in the UK and United States.

British American Tobacco	Diversified Gas & Oil
British American Tobacco sells cigarettes and other tobacco products in approximately 180 markets around the world.	Diversified Gas & Oil is engaged in conventional natural gas and crude oil production in the Appalachian Basin of the United States.

BHP	SSE
BHP Group is a diversified resources group with a global portfolio of high quality assets particularly iron ore and copper.	SSE engages in the generation, transmission, distribution and supply of electricity and the production, storage, distribution and supply of gas.

PORTFOLIO OF INVESTMENTS

As at 30 September 2020
		Valuation as at		Valuation as at
		30 September 2020	Weight	30 September 2019
Stock	Key Sector	£'000	%	£'000
John Laing	Financial Services	7,451	4.8	10,182
CMC Markets	Financial Services	6,978	4.4	3,076
GlaxoSmithKline	Pharmaceuticals & Biotechnology	6,951	4.4	7,594
British American Tobacco	Tobacco	5,955	3.8	6,732
BHP	Mining	5,813	3.7	5,797
Rio Tinto	Mining	5,067	3.2	2,991
Close Brothers	Banks	4,893	3.0	6,753
National Grid	Gas Water & Multiutilities	4,497	2.8	4,459
Diversified Gas & Oil	Oil & Gas Producers	4,429	2.8	4,658
SSE	Electricity	4,212	2.7	3,854
Top ten investments		56,246	35.6
BAE Systems	Aerospace & Defense	4,144	2.6	5,080
Chesnara	Life Insurance	4,010	2.5	3,727
Imperial Brands	Tobacco	4,006	2.5	4,041
Randall & Quilter	Non-life Insurance	3,735	2.4	4,278
MJ Gleeson	Household Goods & Home Construction	3,412	2.2	4,327
Vistry	Household Goods & Home Construction	3,090	2.0	-
Phoenix	Life Insurance	3,013	1.9	3,031
GVC	Travel & Leisure	2,943	1.9	6,238
BP	Oil & Gas Producers	2,689	1.7	8,062
Premier Miton	Financial Services	2,672	1.7	-
Top twenty investments		89,960	57.0
River & Mercantile	Financial Services	2,652	1.7	4,283
DFS Furniture	General Retailers	2,599	1.7	2,694
Equiniti	Support Services	2,585	1.6	3,665
Glencore	Mining	2,564	1.6	3,899
Royal Dutch Shell	Oil & Gas Producers	2,561	1.6	9,885
Playtech	Travel & Leisure	2,560	1.6	-
Tyman	Construction & Materials	2,518	1.6	3,922
Ashmore	Financial Services	2,446	1.6	5,817
OneSavings Bank	Financial Services	2,405	1.5	654
Hastings	Non-life Insurance	2,182	1.4	1,774
Top thirty investments		115,032	72.9
Direct Line Insurance	Non-life Insurance	2,175	1.4	-
Speedy Hire	Support Services	2,161	1.4	2,202
Zegona Communications	Fixed Line Telecommunications	2,094	1.3	1,803
Sabre Insurance	Non-life Insurance	1,927	1.2	1,645
Coca-Cola Hellenic	Beverages	1,831	1.2	-
Legal & General	Life Insurance	1,603	1.0	-
Real Estate Investors	Real Estate Investment & Services	1,573	1.0	3,146
Centamin	Mining	1,520	1.0	-
Contour Global	Electricity	1,472	0.9	-
Litigation Capital	Financial Services	1,430	0.9	1,636
Top forty investments		132,818	84.2
Urban Exposure	Financial Services	1,423	0.9	1,556
London Metric	Real Estate Investment Trusts	1,411	0.9	-
Mondi	Forestry & Paper	1,409	0.9	-
Polar Capital	Financial Services	1,366	0.9	1,581
DWF Group	Support Services	1,339	0.9	2,383
Quilter	Financial Services	1,309	0.8	2,442
National Express	Travel & Leisure	1,286	0.8	5,285
Vodafone	Mobile Telecommunications	1,280	0.8	-
WM Morrison Supermarkets	Food & Drug Retailers	1,151	0.7	-
AstraZeneca	Pharmaceuticals & Biotechnology	1,100	0.7	-
Top fifty investments		145,892	92.5
RELX	Media	1,098	0.7	-
Assura	Real Estate Investment Trusts	1,096	0.7	-
AFH Financial	Financial Services	1,079	0.7	1,774
M&G	Life Insurance	1,076	0.6	-
Moneysupermarket.com	Media	996	0.6	-
TP ICAP	Financial Services	937	0.6	2,326
Persimmon	Household Goods & Home Construction	936	0.5	-
Galliford Try	Construction & Materials	802	0.5	4,270
Energean Oil & Gas	Oil & Gas Producers	725	0.5	2,881
International Personal Finance	Financial Services	712	0.5	1,700
Top sixty investments		155,349	98.4
Anglo American	Mining	674	0.4	-
Unite Group	Real Estate Investment & Services	641	0.4	-
Naked Wines	General Retailers	580	0.4	1,418
Countryside Properties	Household Goods & Home Construction	555	0.4	-
Total Portfolio		157,799	100.0

All investments are equity investments.

DIRECTORS' REPORT (EXTRACT)

The Directors present their report and the audited financial statements of the Company for the year ended 30 September 2020.

Results and Dividends

The financial statements for the year ended 30 September 2020 are contained below. Interim dividends of 5.2 pence per share were paid in March, June and September 2020. The Board has declared that a fourth interim dividend for the year to 30 September 2020 of 5.0 pence per share is payable on 30 December 2020 to shareholders on the register on 4 December 2020. The ex-dividend date is 3 December 2020.

Principal Activity and Status

The Company is registered as a public limited company in England and Wales under company number 2648152. The Company is an investment company within the meaning of Section 833 of the Companies Act 2006, carries on business as an investment trust and is a member of the Association of Investment Companies.

The Company has applied for and has been accepted as an investment trust under Sections 1158 and 1159 of the Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory Instrument 2011/2999. This approval relates to accounting periods commencing on or after 1 October 2012. The Directors are of the opinion that the Company has conducted its affairs so as to be able to retain such approval.

The Company intends to manage its affairs so that its Ordinary shares continue to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account.

Capital Structure and Voting Rights

The Company's issued share capital at 30 September 2020 consisted of 48,327,960 Ordinary shares of 25 pence each (2019: 48,921,128) and there were 850,807 Ordinary shares held in treasury (2019: 257,639), representing 1.76% of the issued share capital as at that date.

During the year, 593,168 Ordinary shares were bought back into treasury. The Company did not issue any new shares, or shares from treasury, during the year.

There has been no changes to the Company's capital structure or voting rights since the year end.

Each Ordinary shareholder is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary share held.

Management Agreement

The Company has appointed Aberdeen Standard Fund Managers Limited ("ASFML"), a wholly-owned subsidiary of Standard Life Aberdeen plc, as its alternative investment fund manager (the "Manager"). ASFML has been appointed to provide investment management, risk management, administration and company secretarial services, and promotional activities to the Company. The Company's portfolio is managed by Standard Life Investments Limited (the "Investment Manager") by way of a group delegation agreement in place between ASFML and the Investment Manager. In addition, ASFML has sub-delegated administrative and secretarial services to Aberdeen Asset Management PLC since 6 September 2019. Prior to that date these services were provided by Maven Capital Partners UK LLP.

With effect from 1 October 2019, the management fee is calculated as 0.65% per annum of net assets up to £175million and at a rate of 0.55% of net assets above this threshold. The Manager also receives a separate fee for the provision of promotional activities to the Company.

Further details of the fees payable to the Manager are shown in notes 3 and 4 to the financial statements.

The management agreement is terminable on not less than six months' notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

External Agencies

The Board has contractually delegated to external agencies, including the Manager and other service providers, certain services including: the management of the investment portfolio, the day-to-day accounting and company secretarial requirements, the depositary services (which include the custody and safeguarding of the Company's assets) and the share registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered in so far as they relate to the affairs of the Company. In addition, ad hoc reports and information are supplied to the Board as requested.

Substantial Interests

Information provided to the Company by major shareholders pursuant to the FCA's Disclosure, Guidance and Transparency Rules are published by the Company via a Regulatory Information Service.

The table below sets out the interests in 3% or more of the issued share capital of the Company, of which the Board was aware as at 30 September 2020.

Shareholder	Number of Ordinary shares	% held
Interactive Investor	6,595,325	13.7
Hargreaves Lansdown, stockbrokers	5,634,528	11.7
Charles Stanley	4,799,703	10.0
Saunderson House	3,097,498	6.4
Rathbones	2,751,833	5.7
Brewin Dolphin	2,710,173	5.6
Fidelity (platform)	1,547,641	3.2

On 3 November 2020, Brewin Dolphin notified the Company that it had sold shares in the capital of the Company and now holds 5.0% of the issued share capital.

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

Directors

Biographies of the Directors of the Company are shown in the Annual Report. Sarika Patel was appointed to the Board on 1 November 2019 and stood for election at the Annual General Meeting on 23 January 2020. Josephine Dixon retired as a Director on 23 January 2020.

Richard Burns is the Chairman and Jeremy Tigue is the 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 Nomination and Remuneration & Management Engagement Committees, 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.

The Directors attended scheduled Board and Committee meetings during the year ended 30 September 2020 as follows (with their eligibility to attend the relevant meetings in brackets):

	Board Meetings	Audit Committee Meetings	Remuneration & Management Engagement Committee Meetings	Nomination Committee Meetings
Richard Burns	5 (5)	2 (2)	1 (1)	2 (2)
Josephine Dixon ^A	2 (2)	1 (1)	- (-)	- (-)
Caroline Hitch	5 (5)	2 (2)	1 (1)	2 (2)
Sarika Patel	5 (5)	2 (2)	1 (1)	2 (2)
Jeremy Tigue	5 (5)	2 (2)	1 (1)	2 (2)
Mark White	5 (5)	2 (2)	1 (1)	2 (2)

^A retired from the Board on 23 January 2020.

The Board meets more frequently when business needs require, and met an additional five times during the financial year.

Caroline Hitch, Sarika Patel, Jeremy Tigue and Mark White will retire and, being eligible, will offer themselves for re-election at the Annual General Meeting. As set out in the Chairman's Statement, Richard Burns will retire from the Board at the Annual General Meeting and will not offer himself for re-election. At that point, the Board will reduce to four Directors. The Board does not have any immediate plans to appointment a fifth Director to the Board.

The Board believes that all the Directors seeking re-election remain independent of the Manager and free from any relationship which could materially interfere with the exercise of their judgement on issues of strategy, performance, resources and standards of conduct. The biographies of each of the Directors are shown in the Annual Report, setting out their range of skills and experience as well as length of service and their contribution to the Board during the year. The Board believes that, collectively, it has the requisite high level and range of business, investment and financial experience to enable it to provide clear and effective leadership and proper governance of the Company. Following formal performance evaluations, each Director's performance continues to be effective and demonstrates commitment to the role, and their individual performances contribute to the long-term sustainable success of the Company. The Board therefore recommends the re-election of each of the Directors at the Annual General Meeting.

Board's Policy on Tenure

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

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

Directors' and Officers' Liability Insurance

The Company's Articles of Association provide for each of the Directors to be indemnified out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

Management of Conflicts of Interest

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, each Director prepares a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his or her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential, or actual, conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

No Director has a service contract with the Company although all Directors are issued with letters of appointment. There were no contracts during, or at the end of the year, in which any Director was interested.

The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company's circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager's anti-bribery and corruption policies are available on its website.

In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.

Financial Instruments

The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 14 to the financial statements.

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code as published in July 2018 (the "UK Code"), which is available on the Financial Reporting Council's (the "FRC") website: frc.org.uk.

The Board has also considered the principles and provisions of the AIC Code of Corporate Governance as published in February 2019 (the "AIC Code"). The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company. The AIC Code is available on the AIC's website: theaic.co.uk. It includes an explanation of how the AIC Code adapts the principles and provisions set out in the UK Code to make them relevant for investment companies.

The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the FRC, provides more relevant information to shareholders.

The Board confirms that, during the year, the Company complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to:

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

- the role and responsibility of the chief executive (provisions 9 and 14);

- the chair shall not be a member of the audit committee (provision 24);

- previous experience of the chairman of a remuneration committee (provision 32); and

- executive directors' remuneration (provisions 33 and 36 to 40).

The Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

The full text of the Company's Corporate Governance Statement can be found on its website.

Board Committees

The Board has appointed a number of Committees, as set out below. Copies of their terms of reference, which clearly define the responsibilities and duties of each Committee, are available on the Company's website, or upon request from the Company. The terms of reference of each of the Committees are reviewed and re-assessed by the Board for their adequacy on an ongoing basis.

Remuneration & Management Engagement Committee

The Remuneration & Management Engagement Committee comprises the full Board and is chaired by Mark White. The main responsibilities of the Committee include:

- monitoring and evaluating the performance of the Manager;

- reviewing at least annually the continued retention of the Manager;

- reviewing, at least annually, the terms of appointment of the Manager including, but not limited to, the level and method of remuneration and the notice period of the Manager;

- reviewing the performance and remuneration of the other key service providers to the Company; and

- determines the Directors' remuneration policy and level of remuneration.

The Committee met once during the year to 30 September 2020 and, as set out in the Chairman's Statement, conducted an intensive review of the management of the Company in light of the poor performance. Following the conclusion of the performance review, the Committee, recommended to the Board that the continuing appointment of the Manager was in the best interests of the shareholders and the Company as a whole. The reasons for this decision are set out in the Chairman's Statement.

Nomination Committee

The Nomination Committee comprises the full Board and is chaired by Mark White. The main responsibilities of the Committee include:

- regularly reviewing the structure, size and composition (including the skills, knowledge, experience, diversity and gender) of the Board;

- undertaking succession planning, taking into account the challenges and opportunities facing the Company and identifying candidates to fill vacancies;

- recruiting new Directors, undertaking open advertising or engaging external advisers to facilitate the search, as appropriate, with a view to considering candidates from a wide range of backgrounds, on merit, and with due regard for the benefits of diversity on the Board, taking care to ensure that appointees have enough time available to devote to the position;

- ensuring that new appointees receive a formal letter of appointment and suitable induction and ongoing training;

- arranging for annual Board performance evaluations to ensure that Directors are able to commit the time required to properly discharge their duties;

- making recommendations to the Board as to the position of Chairman, Senior Independent Director and Chairs of the Nomination, Audit and Remuneration & Management Engagement Committees;

- assessing, on an annual basis, the independence of each Director; and

- approving the re-election of any Director, subject to the UK Code, the AIC Code, or the Articles of Association, at the Annual General Meeting, having due regard to their performance, ability to continue to contribute to the Board in the light of the knowledge, skills and experience required and the need for progressive refreshing of the Board.

Going Concern

The Company's assets consist mainly of equity shares in companies listed on recognised stock exchanges and are considered by the Board to be realisable within a short timescale under normal market conditions. The Board has set overall limits for borrowing and reviews regularly the Company's level of gearing, cash flow projections and compliance with banking covenants, when applicable. The Board has also performed stress testing and liquidity analysis.

The Company's Articles require that, at every fifth Annual General Meeting, the Directors shall propose an Ordinary Resolution to effect that the Company continues as an investment trust. An Ordinary Resolution approving the continuation of the Company for the next five years was passed at the AGM on 15 December 2016. The next continuation vote will take place at the AGM expected to be held in February 2022.

As at 30 September 2020, the Company had a £20million (2019: £40million) revolving credit facility with Banco Santander S.A., London Branch. £20million was drawn at the end of the financial year at a weighted average interest and commitment fee cost of 1.39%.

The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report and they believe that the Company has adequate financial resources to continue its operational existence for a period of not less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that the Company's diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term funding requirements were they to arise, including in current market conditions caused by the Covid-19 pandemic. They have also reviewed the revenue and ongoing expenses forecasts for the coming year. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Accountability and Audit

The respective responsibilities of the Directors and the Independent Auditor in connection with the financial statements appear below.

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's Auditor is unaware; and each Director has taken all the steps that he/ she ought to have taken as a Director to make himself/ herself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Independent Auditor

Shareholders approved the re-appointment of KPMG LLP as the Company's Independent Auditor at the AGM on 23 January 2020 and resolutions to approve its re-appointment for the year to 30 September 2021 and to authorise the Directors to determine its remuneration will be proposed at the AGM on 5 February 2021.

Relations with Shareholders

The Directors place a great deal of importance on communications with shareholders. Shareholders and investors may obtain up to date information on the Company through its website and the Manager's Customer Services Department.

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (including the Company Secretary or the Manager) in situations where direct communication is required, and representatives from the Manager meet with major shareholders on at least an annual basis in order to gauge their views, and report back to the Board on these meetings. In addition, the Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds personally as appropriate.

The Company's Annual General Meeting normally provides a forum for communication primarily with private shareholders and is attended by the Board. The Manager normally makes a presentation to the meeting and all shareholders have the opportunity to put questions to both the Board and the Manager at the meeting. However, as set out below, it is likely that the Annual General Meeting will be on a functional only basis this year, satisfying the minimum legal requirements.

The Manager also hosts a regular 'Meet the Manager' session each year at which members of the Board are present and to which all shareholders are invited. Due to Covid-19, it was not possible to host a 'Meet the Manager' session during the financial year. The Board and Manager look forward to hosting a session as soon as possible after the Covid-19 restrictions have been lifted.

The notice of the Annual General Meeting is sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Manager at the meeting.

Additional Information

Where not provided elsewhere in the Directors' Report, the following provides the additional information required to be disclosed by Part 15 of the Companies Act 2006.

There are no restrictions on the transfer of Ordinary shares in the Company issued by the Company other than certain restrictions which may from time to time be imposed by law (for example, the Market Abuse Regulation). The Company is not aware of any agreements between shareholders that may result in a transfer of securities and/or voting rights.

The rules governing the appointment of Directors are set out in the Directors' Remuneration Report in the Annual Report. The Company's Articles of Association may only be amended by a special resolution passed at a general meeting of shareholders.

The Company is not aware of any significant agreements to which it is a party that take effect, alter or terminate upon a change of control of the Company following a takeover. Other than the management agreement with the Manager, the Company is not aware of any contractual or other agreements which are essential to its business which could reasonably be expected to be disclosed in the Directors' Report.

Annual General Meeting

The Annual General Meeting will be held on Friday, 5 February 2021.

This year, due to the uncertainties caused by the Covid-19 pandemic and, in particular, the restrictions on public gatherings and requirements to socially distance, it is likely that the Annual General Meeting will be held on a functional only basis, satisfying the minimum legal requirements. Instead, shareholders are encouraged to submit questions to the Board and the Manager. Further details can be found in the Chairman's Statement.

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

1 George Street

Edinburgh EH2 2LL

25 November 2020

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

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 'The Financial Reporting Standard Applicable in the UK and Republic of Ireland'.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgments and estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that to the best of their knowledge:

- the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

- the Annual Report taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's position and performance, business model and strategy; and

- the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.

On behalf of the Board

Richard Burns

Chairman

25 November 2020

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2020

		2020			2019
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Net losses on investments at fair value	9	-	(56,722)	(56,722)	-	(35,337)	(35,337)
Currency losses		-	(30)	(30)	-	(9)	(9)
Income	2	8,730	-	8,730	11,791	-	11,791
Investment management fee	3	(310)	(722)	(1,032)	(461)	(1,076)	(1,537)
Administrative expenses	4	(473)	-	(473)	(424)	-	(424)
		_______	_______	_______	_______	_______	_______
Net return before finance costs and taxation		7,947	(57,474)	(49,527)	10,906	(36,422)	(25,516)

Finance costs	5	(142)	(333)	(475)	(179)	(417)	(596)
		_______	_______	_______	_______	_______	_______
Return before taxation		7,805	(57,807)	(50,002)	10,727	(36,839)	(26,112)

Taxation	6	(191)	-	(191)	(40)	-	(40)
		_______	_______	_______	_______	_______	_______
Return after taxation		7,614	(57,807)	(50,193)	10,687	(36,839)	(26,152)
		_______	_______	_______	_______	_______	_______
Return per Ordinary share	8	15.61p	(118.51p)	(102.90p)	21.74p	(74.95p)	(53.21p)
		_______	_______	_______	_______	_______	_______

The total column of this statement represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
The notes below are an integral part of the financial statements.

STATEMENT OF FINANCIAL POSITION

As at 30 September 2020

		2020	2019
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	9	157,799	229,277

Current assets
Debtors	10	524	4,411
Money-market funds		872	1,262
Cash and short-term deposits		307	389
		_______	_______
		1,703	6,062

Current liabilities
Creditors: amounts falling due within one year
Bank loan	11	(19,899)	(29,867)
Other creditors	11	(407)	(4,000)
		_______	_______
		(20,306)	(33,867)
Net current liabilities		(18,603)	(27,805)
		_______	_______
Net assets		139,196	201,472
		_______	_______
Capital and reserves
Called-up share capital	12	12,295	12,295
Share premium account		52,043	52,043
Capital redemption reserve		12,616	12,616
Capital reserve		53,494	112,940
Revenue reserve		8,748	11,578
		_______	_______
Equity shareholders' funds		139,196	201,472
		_______	_______
Net asset value per Ordinary share	13	288.02p	411.83p
		_______	_______

STATEMENT OF CHANGES IN EQUITY

For the year ended 30 September 2020

For the year ended 30 September 2020
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2019		12,295	52,043	12,616	112,940	11,578	201,472
Return after taxation		-	-	-	(57,807)	7,614	(50,193)
Purchase of own shares for treasury		-	-	-	(1,639)	-	(1,639)
Dividends paid	7	-	-	-	-	(10,444)	(10,444)
		______	______	______	______	______	______
Balance at 30 September 2020		12,295	52,043	12,616	53,494	8,748	139,196
		______	______	______	______	______	______

For the year ended 30 September 2019
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2018		12,295	52,043	12,616	150,675	10,820	238,449
Return after taxation		-	-	-	(36,839)	10,687	(26,152)
Purchase of own shares for treasury		-	-	-	(896)	-	(896)
Dividends paid	7	-	-	-	-	(9,929)	(9,929)
		______	______	______	______	______	______
Balance at 30 September 2019		12,295	52,043	12,616	112,940	11,578	201,472
		______	______	______	______	______	______

The capital reserve at 30 September 2020 is split between realised gains of £83,702,000 and unrealised losses of £30,208,000 (30 September 2019: realised gains of £118,671,000 and unrealised losses of £5,731,000).
The revenue and capital reserves represent the amount of the Company's reserves distributable by way of dividend.
The notes below are an integral part of the financial statements.

NOTES

For the year ended 30 September 2020

1.	Accounting policies
	(a)	Basis of accounting. The Financial Statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in October 2019. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The Financial Statements have been prepared on a going concern basis.
		The Company's assets consist substantially of equity shares in companies listed on recognised stock exchanges and in most circumstances, including in the current market environment, are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews cash flow projections and compliance with banking covenants, including the headroom available. Having taken these factors into account as well as the impact of Covid-19 and having assessed the principal risks and other matters set out in the Viability Statement, the Directors believe that, after making enquiries, the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report. The next continuation vote will be held at the AGM in February 2022. The Directors have no reason to believe that the vote will not be in favour on continuation based on their assumption that investors will wish to continue to have exposure to the Company's activities, in the form of a closed ended entity. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Directors' Report (unaudited).
		As an investment fund the Company has the option, which it has taken, not to present a cash flow statement. A cash flow statement is not required when an investment fund meets all the following conditions: substantially all of the entity's investments are highly liquid, substantially all of the entity's investments are carried at market value, and the entity provides a Statement of Changes in Equity. The Directors have assessed that the Company meets all of these conditions .
		All values are rounded to the nearest thousand pounds (£'000) except where indicated otherwise.
	(b)	Valuation of investments. The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors. Accordingly, the Company classifies the investments 'at fair value through profit or loss'. They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income, and allocated to 'capital' at the time of acquisition). Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and the most liquid of the FTSE 250 constituents along with some other securities.
		Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
	(c)	Money market funds. Money market funds are used by the Company to provide additional short term liquidity. As they are not listed on a recognised exchange and due to their short term nature, they are recognised in the financial statements as a current asset and are included at fair value through profit or loss.
		The Company invests in a AAA-rated money-market fund, Aberdeen Standard Liquidity Fund, which is managed by Aberdeen Standard Fund Managers Limited. The share class of the money market fund in which the Company invests does not charge a management fee.
	(d)	Income. Income from equity investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are credited to revenue or capital according to the circumstances. Foreign income is converted at the exchange rate applicable at the time of receipt. Interest receivable on cash ant bank and in hand and on the money market fund is accounted for on an accruals basis.
	(e)	Expenses and interest payable. Expenses are accounted for on an accruals basis. Expenses are charged to capital when they are incurred in connection with the maintenance or enhancement of the value of investments. In this respect, the investment management fee and relevant finance costs are allocated between revenue and capital in line with the Board's expectation of returns from the Company's investments over the long term in the form of revenue and capital respectively (see notes 3 and 5).
		Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement of Comprehensive Income.
	(f)	Dividends payable. Interim dividends are accounted for when they are paid. Final dividends are accounted on the date that they are approved by shareholders.
	(g)	Capital and reserves
		Called-up share capital. Share capital represents the nominal value of Ordinary shares issued. This reserve is not distributable.
		Share premium account. The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs. This reserve is not distributable.
		Capital redemption reserve. The capital redemption reserve represents the nominal value of Ordinary shares repurchased and cancelled. This reserve is not distributable.
		Capital reserve. Gains or losses on realisation of investments and changes in fair values of investments are included within the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The part of this reserve represented by realised capital gains is available for distribution by way of a dividend and for the purpose of funding share buybacks.
		Revenue reserve. The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to shareholders as a dividend.
	(g)	Capital and reserves
		Called-up share capital. Share capital represents the nominal value of Ordinary shares issued. This reserve is not distributable.
		Share premium account. The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs. This reserve is not distributable.
		Capital redemption reserve. The capital redemption reserve represents the nominal value of Ordinary shares repurchased and cancelled. This reserve is not distributable.
		Capital reserve. Gains or losses on realisation of investments and changes in fair values of investments are included within the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The part of this reserve represented by realised capital gains is available for distribution by way of a dividend and for the purpose of funding share buybacks .
		Revenue reserve. The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to shareholders as a dividend.
	(h)	Taxation. The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
		Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the accounts.
		Owing to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	(i)	Cash and cash equivalents. Cash comprises bank balances and cash held by the Company. Cash equivalents are short-term, highly liquid investments including money-market funds that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
	(j)	Bank borrowings. Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds received, net of direct issue costs. They are subsequently measured at amortised cost. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
	(k)	Treasury shares. When the Company purchases its Ordinary shares to be held in treasury, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction from the capital reserve. When these shares are sold subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is transferred to the share premium account and any resulting deficit is transferred from the capital reserve.

2.	Income
		2020	2019
		£'000	£'000
	Income from investments
	UK investment income
	Ordinary dividends	6,742	9,032
	Special dividends	367	390
		_______	_______
	Stock dividends	-	361
		7,109	9,783

	Overseas and Property Income Distribution investment income
	Ordinary dividends	1,514	1,746
	Special dividends	89	209
		_______	_______
		1,603	1,955
		_______	_______
		8,712	11,738
		_______	_______
	Other income
	Money-market interest	18	43
	Underwriting commission	-	10
		_______	_______
		18	53
		_______	_______
	Total income	8,730	11,791
		_______	_______

3.	Investment management fee
		2020	2019
		£'000	£'000
	Charged to revenue reserve	310	461
	Charged to capital reserve	722	1,076
		_______	_______
		1,032	1,537
		_______	_______

	The Company has an agreement with Aberdeen Standard Fund Managers Limited ("ASFML") for the provision of management services. The contract is terminable by either party on not less than six months' notice.
	Following a review of management fee terms, on 22 October 2019, the Company announced that with effect from 1 October 2019, the fees payable to ASFML would be calculated at a rate of 0.65% per annum of net assets up to £175 million and at a rate of 0.55% per annum of net assets thereafter. Prior to this, the fee was calculated at a rate of 0.65% per annum on the first £250 million of total assets and at a rate of 0.55% thereafter. The fee is payable quarterly in arrears and is chargeable 30% to revenue and 70% to capital (see note 1(e) for further detail). The balance of fees due at the year end was £227,000 (2019 - £770,000).

4.	Administrative expenses
		2020	2019
		£'000	£'000
	Directors' fees	122	118
	Employers' National Insurance	7	7
	Fees payable to the Company's Auditor (excluding VAT):
	- for the audit of the annual financial statements	26	23
	Professional fees	21	47
	Depositary fees	37	46
	Other expenses	260	183
		_______	_______
		473	424
		_______	_______

	The Company has an agreement with ASFML for the provision of promotional activities. Fees paid under the agreement during the year were £111,000 (2019 - £49,000). At 30 September 2020, £32,000 was prepaid to ASFML (2019 - £49,000 due to ASFML).
	With the exception of fees payable to the Company's auditor, irrecoverable VAT has been included under the relevant expense line above. Irrecoverable VAT on fees payable to the Company's auditor is included within other expenses.
	The Company has no employees.

5.	Finance costs
		2020	2019
		£'000	£'000
	On bank loans and overdrafts:
	Charged to revenue reserve	142	179
	Charged to capital reserve	333	417
		_______	_______
		475	596
		_______	_______

	Finance costs are chargeable 30% to revenue and 70% to capital (see note 1(e)).

6.		Taxation
				2020						2019
				Revenue		Capital		Total		Revenue		Capital		Total
				£'000		£'000		£'000		£'000		£'000		£'000
	(a)	Analysis of charge for the year
		Overseas withholding tax		191		-		191		40		-		40
				_______		_______		_______		_______		_______		_______

	(b)	Factors affecting total tax charge for the year. The corporation tax rate was 19% (2019 - 19%). The total tax assessed for the year is higher (2019 - higher) than that resulting from applying the standard rate of corporation tax in the UK.
		A reconciliation of the Company's total tax charge is set out below:

			2020						2019
			Revenue		Capital		Total		Revenue		Capital		Total
			£'000		£'000		£'000		£'000		£'000		£'000
		Return before taxation	7,805		(57,807)		(50,002)		10,727		(36,839)		(26,112)
			_______		_______		_______		_______		_______		_______
		Corporation tax at a rate of 19% (2019 - 19%)	1,483		(10,983)		(9,500)		2,038		(6,999)		(4,961)
		Effects of:
		Non-taxable UK dividends	(1,365)		-		(1,365)		(1,718)		-		(1,718)
		Non-taxable overseas dividends	(243)		-		(243)		(397)		-		(397)
		Currency losses not relievable	-		6		6		-		2		2
		Losses on investments not relievable	-		10,777		10,777		-		6,714		6,714
		Expenses not deductible for tax purposes	3		-		3		1		-		1
		Excess management expenses and loan relationship losses	122		200		322		76		283		359
		Irrecoverable overseas withholding tax	191		-		191		40		-		40
			_______		_______		_______		_______		_______		_______
		Total taxation	191		-		191		40		-		40
			_______		_______		_______		_______		_______		_______

		At 30 September 2020, the Company had unutilised management expenses and loan relationship losses of £28,657,000 (2019 - £27,183,000). No deferred tax asset has been recognised on the unutilised management expenses and loan relationship losses as it is unlikely that the Company will generate suitable taxable profits in the future that these tax losses could be deducted against.

7.	Dividends on Ordinary shares
		2020	2019
		£'000	£'000
	Amounts recognised as distributions to equity holders in the year:
	Final dividend for 2019 of 5.80p per share (2018 - 5.50p)	2,837	2,704
	First interim dividend for 2020 of 5.20p per share (2019 - 4.90p)	2,544	2,409
	Second interim dividend for 2020 of 5.20p per share (2019 - 4.90p)	2,543	2,409
	Third interim dividend for 2020 of 5.20p per share (2019 - 4.90p)	2,520	2,407
		_______	_______
		10,444	9,929
		_______	_______

	The fourth interim dividend of 5.0p per Ordinary share, payable on 30 December 2020 to shareholders on the register on 4 December 2020 has not been included as a liability in the financial statements.
	The total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered, are set out below.

		2020	2019
		£'000	£'000
	First interim dividend for 2020 of 5.20p per share (2019 - 4.90p)	2,544	2,409
	Second interim dividend for 2020 of 5.20p per share (2019 - 4.90p)	2,543	2,409
	Third interim dividend for 2020 of 5.20p per share (2019 - 4.90p)	2,520	2,407
	Fourth interim dividend for 2020 of 5.00p per share (2019 - nil)	2,416	-
	Final dividend for 2019 of 5.80p per share	-	2,837
		_______	_______
		10,023	10,062
		_______	_______

8.	Return per Ordinary share
		2020		2019
		£'000	p	£'000	p
	Basic
	Revenue return	7,614	15.61	10,687	21.74
	Capital return	(57,807)	(118.51)	(36,839)	(74.95)
		_______	_______	_______	_______
	Total return	(50,193)	(102.90)	(26,152)	(53.21)
		_______	_______	_______	_______
	Weighted average number of Ordinary shares in issue{A}		48,776,939		49,152,006
			_________		_________
	Shares in issue		48,327,960		48,921,128
			_________		_________

	{A} Calculated excluding shares held in Treasury where applicable.

9.	Investments
		2020	2019
		£'000	£'000
	Fair value through profit or loss
	Opening book cost	235,008	237,840
	Opening fair value (losses)/gains on investments held	(5,731)	28,902
		_________	_________
	Opening fair value	229,277	266,742
	Movements in the year:
	Purchases at cost	47,523	67,648
	Sales - proceeds	(62,279)	(69,776)
	Losses on investments	(56,722)	(35,337)
		_________	_________
	Closing fair value	157,799	229,277
		_________	_________
	Closing book cost	188,007	235,008
	Closing fair value losses on investments held	(30,208)	(5,731)
		_________	_________
	Closing fair value	157,799	229,277
		_________	_________

	The Company received £62,279,000 (2019 - £69,776,000) from investments sold in the year. The book cost of these investments when they were purchased was £94,524,000 (2019 - £70,480,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
	Transaction costs. During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within losses on investments in the Statement of Comprehensive Income. The total costs were as follows:

		2020	2019
		£'000	£'000
	Purchases	213	285
	Sales	47	50
		_________	_________
	Total	260	335
		_________	_________

10.	Debtors: amounts falling due within one year
		2020	2019
		£'000	£'000
	Amounts due from brokers	191	3,672
	Net dividends and interest receivable	188	570
	Other debtors	145	169
		_______	_______
		524	4,411
		_______	_______

11.	Creditors: amounts falling due within one year
		2020	2019
		£'000	£'000
	Bank loan	20,000	30,000
	Unamortised loan arrangement expenses	(101)	(133)
		_______	_______
		19,899	29,867
		_______	_______
	Other creditors
	Amounts due to brokers	-	3,061
	Investment management fee payable	227	770
	Sundry creditors	180	169
		_______	_______
		407	4,000
		_______	_______

	The loan facility by Banco Santander S.A. London Branch consists of a five year revolving facility which has a maturity date of 20 November 2023.
	The facility agreement contains the following covenants:
	- The Company's gross assets will not be less than £100 million (2019 - £150 million) at any time.
	- The Company's total net debt will not exceed 25% of net asset value at any time.
	All covenants were complied with throughout the year.
	At 30 September 2020, £20 million had been drawn down, maturing on 27 October 2020 (30 September 2019 -£30 million) at an interest rate of 1.38725% (30 September 2019 - 1.714380%).
	Subsequent to the year end, the £20 million loan was rolled over until 27 January 2021 at an interest rate of 1.349%.

12.	Called up share capital
		£'000	£'000
	Issued and fully paid:
	Ordinary shares of 25p each
	Opening balance of 48,921,128 (2019 - 49,162,782) Ordinary shares	12,231	12,291
	Buyback of 593,168 (2019 - 241,654) Ordinary shares	(148)	(60)
		_______	_______
	Closing balance of 48,327,960 (2019 - 48,921,128) Ordinary shares	12,083	12,231
		_______	_______
	Treasury shares
	Opening balance of 257,639 (2019 - 15,985) Treasury shares	64	4
	Buyback of 593,168 (2019 - 241,654) Ordinary shares to Treasury	148	60
		_______	_______
	Closing balance of 850,807 (2019 - 257,639) treasury shares	212	64
		_______	_______
		12,295	12,295
		_______	_______

	During the year, 593,168 Ordinary shares (2019 - 241,654) were repurchased for a consideration of £1,639,000 (2019 - £896,000). The total shares held in Treasury is 850,807 (2019 - 257,639).
	There were no Ordinary shares issued in 2020 or 2019.

13.	Net asset value per share
	The net asset value per share and the net assets attributable to Ordinary shares at the end of the year calculated in accordance with the Articles of Association were as follows:

		2020	2019
	Basic
	Total shareholders' funds (£'000)	139,196	201,472
	Number of Ordinary shares in issue at year end{A}	48,327,960	48,921,128
	Net asset value per share	288.02p	411.83p

	{A} Excludes shares in issue held in treasury where applicable.

14.	Financial instruments
	Risk management. The Company's financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions for the purpose of managing currency and market risks arising from the Company's activities.
	The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.
	The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year.
	(i)	Market risk. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices.
		This market risk comprises three elements - interest rate risk, currency risk and other price risk.
		Interest rate risk
		Interest rate movements may affect:
		- the level of income receivable on cash deposits;
		- interest payable on the Company's variable rate borrowings.
		The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		It is the Company's policy to increase its exposure to equity market price risk through the judicious use of borrowings. When borrowed funds are invested in equities, the effect is to magnify the impact on Shareholders' funds of changes - both positive and negative - of revenue and capital returns.
		Interest rate profile
		The interest rate risk profile of the portfolio of financial assets and liabilities at the Statement of Financial Position date was as follows:

				Weighted average period for which rate is fixed		Weighted average interest rate		Fixed rate	Floating rate
		As at 30 September 2020		Years		%		£000	£000
		Assets
		Money market funds		-		0.17		-	872
		Cash deposits		-		-		-	307
				_______		_______		_______	_______
		Total assets		-		0.17		-	1,179
				_______		_______		_______	_______
		Liabilities
		Bank loans		-		1.39		19,899	-
				_______		_______		_______	_______
		Total liabilities		-		1.39		19,899	-
				_______		_______		_______	_______

		As at 30 September 2019
		Assets
		Money market funds		-		0.83		-	1,262
		Cash deposits		-		-		-	389
				_______		_______		_______	_______
		Total assets		-		0.83		-	1,651
				_______		_______		_______	_______
		Liabilities
		Bank loans		-		1.71		29,867	-
				_______		_______		_______	_______
		Total liabilities		-		1.71		29,867	-
				_______		_______		_______	_______

		The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans.
		The floating rate assets consist of money market funds and cash deposits on call earning interest at prevailing market rates.
		All financial liabilities are measured at amortised cost.
		Maturity profile. The Company did not hold any assets at 30 September 2020 or 30 September 2019 that had a maturity date. The £20 million loan drawn down had a maturity date of 27 October 2020 at the Statement of Financial Position date. (2019 - £30 million on 21 October 2019).
		Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates at the Statement of Financial Position date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
		If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Company's:
		- profit for the year ended 30 September 2020 would decrease/increase by £187,000 (2019 - decrease/increase by £282,000). This is mainly attributable to the Company's exposure to interest rates on its fixed rate borrowings and floating rate cash balances.
		Currency risk. All of the Company's investments are in Sterling. The Company can be exposed to currency risk when it receives dividends in currencies other than Sterling. The current policy is not to hedge this risk but this policy is kept under constant review by the Board.
		Other price risk. Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The Manager actively monitors market prices throughout the year and reports to the Board. The investments held by the Company are listed on the London Stock Exchange.
		Other price risk sensitivity. If market prices at the Statement of Financial Position date had been 10% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders and equity for the year ended 30 September 2020 would have increased/decreased by £15,780,000 (2019 - increase/decrease of £22,928,000). This is based on the Company's equity portfolio held at each year end.
	(ii)	Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
		Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdraft facilities (note 11).
	(iii)	Credit risk. This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
		The risk is not significant, and is managed as follows:
		- where the investment manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default;
		- investment transactions are carried out with a large number of brokers, whose credit-standing and credit rating is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker;
		- cash and money invested in AAA money market funds are held only with reputable institutions.
		None of the Company's financial assets are secured by collateral or other credit enhancements.
		Credit risk exposure. In summary, compared to the amount in the Statement of Financial Position, the maximum exposure to credit risk at 30 September was as follows:

			2020				2019
			Statement of				Statement of
			Financial Position		Maximum exposure		Financial Position		Maximum exposure
			£'000		£'000		£'000		£'000
		Current assets
		Debtors	524		524		4,411		4,411
		Money market funds (indirect exposure)	872		872		1,262		1,262
		Cash and short term deposits	307		307		389		389
			_______		_______		_______		_______
			1,703		1,703		6,062		6,062
			_______		_______		_______		_______

		None of the Company's financial assets is past due or impaired.
		Fair values of financial assets and financial liabilities. The fair value of borrowings is not materially different to the accounts value in the financial statements of £19,899,000 (note 11).

15.	Fair Value Hierarchy. FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following classifications:
	- Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
	- Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market date) for the asset or liability, either directly or indirectly.
	- Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
	All of the Company's investments are in quoted equities (2019 - same) that are actively traded on recognised stock exchanges, with their fair value being determined by reference to their quoted bid prices at the reporting date. The total value of the investments (2020: £157,799,000; 2019: £229,277,000) have therefore been deemed as Level 1.

16.	Capital management policies and procedures. The Company's capital management objectives are:
	-	to ensure that the Company will be able to continue as a going concern; and
	-	to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board normally seeks to limit gearing to 15% of net assets. At the year end the Company had gearing of 13.3 % of net assets (2019 - 13.7%).
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market and the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. Any year end positions are presented in the Statement of Financial Position.

17.	Contingent liabilities. As at 30 September 2020 there were no contingent liabilities (2019 - same).

18.

Segmental Information. The company is engaged in a single segment of business, which is to invest in equity securities. All of the Company's activities are interrelated and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

19.

Related Party Transactions and Transactions with the Manager. Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration Report. The balance of fees due to Directors at the year end was £29,000 (2019 - £29,000).

Aberdeen Standard Fund Managers Limited received fees for its services as investment manager and for the provision of promotional activities. Further details are provided in notes 3 and 4.

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 FRS 102 and the AIC SORP.
The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies. Where the calculation of an APM is not detailed within the financial statements, an explanation of the methodology employed is provided below:
Discount & premium. A discount is the percentage by which the market price of an investment trust is lower than the Net Asset Value ("NAV") per share. A premium is the percentage by which the market price per share of an investment trust exceeds the NAV per share.

			30 September 2020		30 September 2019
Share price			252.00p		381.50p
Net asset value per share			288.02p		411.83p
(Discount)/premium			(12.5%)		(7.4%)

Dividend yield. Dividend yield measures the dividend per share as a percentage of the share price per share.

			30 September 2020		30 September 2019
Share price			252.00p		381.50p
Dividend per share			20.60p		20.50p
Dividend yield			8.2%		5.4%

Net gearing. Net gearing measures the total borrowings less cash and cash equivalents divided by Shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due from and to brokers at the period end as well as cash and short-term deposits.

			30 September 2020		30 September 2019
			£'000		£'000
Total borrowings	a		19,899		29,867
Cash and short-term deposits			307		389
Investments in AAA-rated money-market funds			872		1,262
Amounts due from brokers			191		3,672
Amounts payable to brokers			-		(3,061)
			_______		_______
Total cash and cash equivalents	b		1,370		2,262
			_______		_______
Gearing (borrowings less cash & cash equivalents)	c=(a-b)		18,529		27,605
			_______		_______
Shareholders' funds	d		139,196		201,472
			_______		_______
Net gearing	e=(c/d)		13.3%		13.7%
			_______		_______

Ongoing charges ratio. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC, which is defined as the total of investment management fees and recurring administrative expenses and expressed as a percentage of the average net asset values throughout the period.

			30 September 2020		30 September 2019
			£'000		£'000
Investment management fees			1,032		1,537
Administrative expenses			473		424
Less: non-recurring charges{A}			(15)		(40)
			_______		_______
Ongoing charges	a		1,490		1,921
			_______		_______
Average net assets	b		171,981		210,698
			_______		_______
Ongoing charges ratio	c=(a/b)		0.87%		0.91%
			_______		_______

{A} Comprises professional fees not expected to recur.

The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes financing and transaction costs.
Total return. NAV and share price total returns show how the NAV and share price have performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to Shareholders. NAV total return involves reinvesting the net dividend paid by the Company back into the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
The table below provides information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the period and the resultant total return.
In order to calculate the total return for the year, returns are calculated on each key date for the period and then the return for the year is derived from the product of these individual returns. Dividends are reported on their ex-dividend date and are added back to the NAV or share price to calculate the return for that period.

		Dividend				Share
Year ended 30 September 2020		rate		NAV		price
30 September 2019				411.83p		381.50p
24 December 2019		5.80p		442.36p		421.00p
5 March 2020		5.20p		379.01p		358.00p
4 June 2020		5.20p		313.98p		277.00p
3 September 2020		5.20p		290.11p		259.00p
30 September 2020				288.02p		252.00p
				_______		_______
Total return				-25.7%		-29.4%
				_______		_______

		Dividend				Share
30 September 2019		rate (b)		NAV (a)		price (a)
30 September 2018				485.02p		473.00p
20 December 2018		5.50p		393.98p		402.50p
21 February 2019		4.90p		431.85p		413.50p
30 May 2019		4.90p		426.10p		411.00p
5 September 2019		4.90p		394.92p		360.00p
30 September 2019				411.83p		381.50p
				_______		_______
Total return				-10.8%		-15.1%
				_______		_______

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2020 or 2019 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the registrar of companies, and those for 2020 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006

The statutory accounts for the financial year ended 30 September 2020 have been approved by the Board and audited but will not be filed with the Registrar of Companies until after the Company's Annual General Meeting which will be held at 11:30am at Bow Bells House, 1 Bread Street, London EC4M 9HH on Friday, 5 February 2021.

The Annual Report will be posted to shareholders in December 2020 and copies will be available from the Manager or from the Company's website (www.aberdeenstandardequityincometrust.com).

For Aberdeen Standard Equity Income Trust plc

Aberdeen Asset Management PLC, Company Secretary

For further information please contact:

Evan Bruce-Gardyne

Client Director, Investment Trusts, Aberdeen Standard Investments

Tel: 07741 608 048

Andrea Ward

Deputy Head of Global Media Relations, Public Relations

Tel: 07876 178696

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