Share Name Share Symbol Market Type Share ISIN Share Description
Aberdeen Smaller Companies Income Trust Plc LSE:ASCI London Ordinary Share GB0008063728 ORD 50P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 267.00 264.00 270.00 267.00 267.00 267.00 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 2.8 2.2 10.0 26.8 59

Aberdeen Smaller Co's Inc Tst PLC Half Yearly Results

17/09/2020 7:00am

UK Regulatory (RNS & others)

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RNS Number : 2208Z

Aberdeen Smaller Co's Inc Tst PLC

17 September 2020

Aberdeen Smaller Companies Income Trust PLC

Half Yearly Financial Report for the six months to 30 June 2020


The objective of the Company is to provide a high and growing dividend and capital growth from a portfolio invested principally in the ordinary shares of smaller UK companies and UK fixed income securities.


Numis Small Cap Index excluding Investment Trusts (total return) - effective from 1 January 2020;

FTSE Small Cap Index excluding Investment Trusts (total return) - up to 31 December 2019


The Company's alternative investment fund manager is Aberdeen Standard Fund Managers Limited ("ASFML" or "the Manager") (authorised and regulated by the Financial Conduct Authority). The Company's portfolio is managed on a day-to-day basis by Aberdeen Asset Managers Limited ("AAML" or "the Investment Manager") by way of a delegation agreement in place between ASFML and AAML.


 Net asset value total      Numis Smaller Companies     Share price total return{A} 
        return{A}              ex Inv Trust Index 
  Six months ended 30         Six months ended 30         Six months ended 30 June 
        June 2020                  June 2020                         2020 
         -16.9%                     -25.0%                         -21.8% 
 Year ended 31 December     Year ended 31 December         Year ended 31 December 
      2019: +34.4%                2019: +25.2%                   2019: +57.7% 
 Earnings per Ordinary       Discount to net asset             Net gearing{A} 
     share (revenue)                value{A} 
  Six months ended 30         As at 30 June 2020             As at 30 June 2020 
        June 2020 
         2.03p                       13.8%                          8.1% 
 Year ended 31 December     As at 31 December 2019:        As at 31 December 2019: 
       2019: 9.98p                    8.3%                           7.5% 
 {A} Considered to be an Alternative Performance Measure. Further details 
  can be found below. 
                                         30 June   31 December         % 
                                            2020          2019    change 
 Equity shareholders' funds (GBP'000)     67,686        82,660     -18.1 
 Net asset value per Ordinary share      306.14p       373.86p     -18.1 
 Share price (mid-market)                264.00p       343.00p     -23.0 
 Discount to net asset value per 
  Ordinary share{A}                        13.8%          8.3% 
 Net gearing{A}                             8.1%          7.5% 
 Ongoing charges ratio{A}                  1.24%         1.20% 
 {A} Considered to be an Alternative Performance Measure. Further 
  details can be found below. 


                                  Six months     1 year    3 years    5 years 
                                       ended      ended      ended      ended 
                                     30 June    30 June    30 June    30 June 
                                        2020       2020       2020       2020 
 Share price{A}                       -21.8%      -5.5%     +24.5%     +39.5% 
 Net asset value per Ordinary 
  share{A}                            -16.9%      -5.4%     +10.7%     +34.3% 
 Composite benchmark{B}               -25.0%     -16.8%     -19.2%      +0.0% 
 {A} Considered to be an Alternative Performance Measure. Further 
  details can be found on page 34. 
 {B} Comprises the Numis Smaller Companies (exc Inv Trusts) from 1 
  January 2020 and the FTSE SmallCap Index (exc Inv Trusts) up to 31 
  December 2019. 
 Source: ASFML, Morningstar & Factset. 



The first six months of 2020 have been challenging, with global markets dominated by the development of the Covid-19 pandemic.

Both the UK markets and smaller companies have found life particularly difficult and the Numis Smaller Companies ex-Investment Trusts index, the Trust's new benchmark, returned -25% in the six month period to the end of June 2020. Our Trust performed more strongly, returning -16.9%.

Strong relative performance does not, of course, compensate for capital decline and we are disappointed to have to report such. The long term NAV performance over 3 and 5 years is, however, robust with returns of 10.7% and 34.3% respectively and the Company has out-performed its composite benchmark by 29.9% and 34.3% respectively.

The Company's share price decreased during the period by 23% but we are encouraged by the recovery we have seen since the lows of March 2020, which has seen the share price come back by 42% since that time.

The discount also widened since the year end, sitting at 30 June 2020 at 13.8%, compared to 8.3% at the end of December 2019.

Trust Gearing and Debt

The Trust has a 5 year GBP5m fixed rate loan facility and a 3 year GBP5m revolving credit facility, which expire in 2021 and 2023 respectively, of which a total of GBP7m is currently drawn down. Portfolio gearing stood at 8.1% at the end of June 2020, compared with gearing of 7.5% at the end of December 2019.


For the first and second quarters of this year, the Board announced dividends of 2.06p each (2019 - 1.95p each), an increase on last year's equivalent figures of 5.6%. This compares to an increase in the CPI for the first six months of this year of 0.07%.

The Board has always regarded a key purpose of the Company as the generation of income for our shareholders. The economic uncertainty arising from the COVID pandemic outbreak has resulted in many quoted companies cutting or eliminating their dividends. We have added significantly to our revenue reserves over recent years and we prefer to utilise these reserves, at least this year, to alleviate the decline of dividend income elsewhere in the market which we believe to more valuable to shareholders than conservatively mirroring market improvement over time. We shall of course continue to monitor this situation each quarter although do not expect much clarity about the outlook for 2021 until the fourth quarter of this year. We may have to take a different decision, once greater clarity emerges on the outlook for 2021 and 2022.

With the news that a number of companies have cut or cancelled their dividends, the Manager has been working hard during this period to ensure that it continues to invest in companies who will continue to pay dividends or look to re-commence payment later in the year. More information on this can be found in the Manager's report.

The Company's revenue reserves remain healthy and the Board is optimistic that the Company will be able to continue to deliver attractive income to its shareholders.

The Manager

With the Country placed into lockdown in the middle of March 2020, resulting in 100% of the Manager's UK workforce working from home, the Board is pleased to advise there was no impact to the service provided by the Manager, who has kept us fully informed on their own operations as a result of working from home, as well as those of the Company's other service providers.

Both Board meetings and company engagements have continued in a virtual setting and continue to operate effectively.


At the AGM held on 26 June 2020 all resolutions were duly passed by shareholders, including the Company's five-yearly continuation vote. Access to the AGM had to be severely restricted to the minimum legal requirements in response to the Government guidance and measures in place on gatherings and social distancing due to the COVID pandemic. As the normal format of the AGM was not able to take place as planned, the Manager subsequently recorded an AGM presentation and a podcast which are available on the Company's website for shareholders to access.

The Board

It was intended that Barry Rose would leave the Board during the current financial year and that I should do the same in 2021, both of us having completed our nine year terms. The Board did not feel comfortable recruiting without being able to meet candidates in person and also felt that Board stability was important during extreme times. Accordingly, and subject to shareholder support, we intend to effect these changes in 2021 and 2022, twelve months later than planned.


I can remember no period of greater uncertainty than that on which we are now reporting and the challenges will remain for considerable time to come. The fund manager has throughout stuck to the processes which have historically brought excellent relative performance and the Board believes that this is the best way to generate a resilient income stream in uncertain times.

Robert Lister,


16 September 2020


Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has identified the principal risks and uncertainties facing the Company together with a description of the mitigating actions it has taken. These can be summarised under the following headings:

   -     Investment and Market 
   -     Investment Portfolio Management 
   -     Gearing 
   -     Income and Dividend 
   -     Operational 


Details of these risks are provided in detail on pages 16 and 17 of the 2019 Annual Report.

In addition to these risks, there are also a large number of international political and economic uncertainties which could have an impact on the performance of global markets. The outbreak of the COVID-19 virus has resulted in business disruption and stockmarket volatility across the world. The extent of the effect of the virus, including its long term impact, remains uncertain. The Manager has undertaken a detailed review of the investee companies in the Company's portfolio to assess the impact of COVID-19 on their operations such as employee absence, reduced demand, reduced turnover and supply chain breakdowns and will continue to review carefully the composition of the Company's portfolio and will be pro-active where necessary. In addition the Manager has implemented extensive business continuity procedures and contingency arrangements to ensure that they are able to continue to service their clients, including investment trusts.

The outcome and potential impact of Brexit remains an economic risk for the Company, principally in relation to the potential impact of Brexit on UK companies within the portfolio and on the Manager's operations. Whilst most of the portfolio holdings are UK-based companies, many have operations overseas with broad and geographically diverse earnings streams. Aberdeen Standard Investments has a significant Brexit program in place aimed at ensuring that they can continue to satisfy their clients' investment needs post Brexit. In addition, the uncertainty surrounding Brexit could impact investor sentiment and could lead to increased or reduced demand for the Company's shares, which would be reflected in a narrowing or widening of the discount at which the Company's shares trade relative to their net asset value.

The Board will continue to monitor developments as they occur.

In all other respects, the Company's principal risks and uncertainties have not changed materially since the year end, nor are they expected to change in the second half of the financial year ended 31 December 2019.

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014, the Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist principally of equity shares in companies listed on the London Stock Exchange and in most circumstances are realisable within a short timescale.

The Directors have a reasonable expectation that the Company has adequate financial resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of this Half Yearly Report. Given that the Company's portfolio comprises primarily "Level One" assets (listed on a recognisable exchange and realisable within a short timescale), and the Company's relatively low level of gearing, the Directors believe that adopting a going concern basis of accounting remains appropriate.

Directors' Responsibility Statement

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

- the condensed set of Financial Statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'

- the Interim Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year)

- the Interim Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

The Half Yearly Financial Report for the six months to 30 June 2020 comprises the Interim Board Report and a condensed set of financial statements.

For and on behalf of the Board of Aberdeen Smaller Companies Income Trust PLC

Robert Lister,


16 September 2020



In the half year to the end of June 2020, the Company's NAV returned -16.9% versus the benchmark return of -25.0% which was a pleasing relative performance, however it is disappointing to see negative returns. Through the period, and particularly in March where the harshest market impacts were felt, the Company has held up well on a relative basis. Long term performance remains very favourable over 3 and 5 year time periods, with 3 years NAV growth of +10.7% vs benchmark of -19.2%, and 5 year NAV growth of 34.3% vs a benchmark of 0.0%.

We started the year with the economy on a solid footing; economic growth was perhaps slowing, but still felt resilient. The unemployment rate was at a 50 year low, housing starts and global PMI's were moving higher, volatility was moderate and it the outlook was for a year of positive market returns and moderate economic expansion. There was however, likely to remain some volatility associated with further Brexit discussions and the US elections.

The first quarter of 2020 was a strong period of performance for the Trust in what were supportive market conditions. The environment changed quickly in March as we faced a combination of a global health crisis and an economic crisis. As Governments around the world implemented restrictions to slow the spread of the Covid-19 virus, we saw the quickest decline ever into a very volatile bear market. The sharp decline was followed by a very rapid recovery, as governments and central banks adopted a 'whatever it takes' approach to policy to provide support. There were signs that the global economy bottomed in mid-April; the apple mobility index data, retail sales data, manufacturing and service sector indices all turned higher in May showing that the worst of the economic decline was over. Crucially, market levels globally also recovered sharply. As economies around the world reopened, the economic consequences of social distancing were devastating. Q2 global GDP will be very weak in historic terms, with UK GDP contracting -20.4%. After a -2.2% decline in Q1, this officially put the UK in recession. From here on, much debate remains around the shape of markets, and how this may differ globally. While Monetary and fiscal policy won't solve the root of the problem, perhaps only a vaccine and complementary drugs can, but policy may well help to make the forthcoming recession shorter and less painful. The labour market will remain impacted for much longer and the damage to employment will be staggering. The UK Government's rapid response with the furlough scheme may well be a sticking plaster as the furloughed become the unemployed. There remains uncertainty about how impacted some industries will be, what structural changes this might bring, and the speed of recovery to pre-Covid levels.

In terms of style in the market, we saw the strongest performance from Quality, with Value really underperforming. This was very supportive of our investment process. In a period of high volatility and uncertainty, it was encouraging to see the market look to quality businesses for resilience. Across size categories we saw the following total return performances: FTSE 100 -16.8%, FTSE 250 -25.0%, FTSE Small Cap exc Inv Trusts -20.9%, and Numis Smaller Companies exc Inv Trusts -25.0%. Broadly the larger market cap indices have held up better, partly a sector bias as well as companies being seen as broader, perhaps more mature and resilient. Sentiment to large market cap companies is also aided by the view that the Government cannot afford to let them fail.

The companies we own are diverse with global operations. We engaged in regular dialogue with management teams over the period, which provided critical insights, and together with information from our colleagues based around the globe we were able to build a picture of what was happening in different parts of the world. At the company specific level, those who had operations deemed essential and remained open, traded well. Sectors with direct relevance to the pandemic such as technology also thrived, where they benefitted from demand for products and services for remote working. On the flip side however there are names in sectors such as travel and leisure that will remain challenged for longer. Property stocks, healthcare related companies, and food producers are examples of areas which by nature were resilient through the period, and shares held up strongly accordingly. We also saw trends accelerate around digitalisation and sustainability. The sharp recovery in markets despite the plunge in earnings estimates means the market is looking through short term impacts of the pandemic and expects earnings growth to come through in 2021.

Due to the uncertainty around the duration of lockdown and the wider ramifications, most UK companies who normally paid dividends looked to conserve cash, therefore cancelling or delaying dividend pay outs. This was often irrespective of quality and current trading. There was also industry pressure if you benefitted from government schemes, to not be paying out dividends. The FCA had also asked companies to delay reporting results, to ease pressure on people and auditors. It became normal and acceptable to cancel dividends. In the aftermath of the financial crisis, just two fifths of companies cut or cancelled pay outs. This time the majority cancelled immediately.

A smaller proportion reduced the pay out, but we were pleased to see some investments increase their dividend, highlighting their resilience and confidence in outlook. Not surprisingly discretionary special dividends have all but disappeared.

This is obviously an issue for any income focused portfolio. We are confident that the quality dynamic of our investment process will ensure we have exposure to a strong contingent of companies who continue to pay dividends though the Covid-19 crisis, or look to reinstate dividends later this year. We have analysed the sustainability of future dividends for businesses, to ensure confidence that future income stream is sustainable and strongly funded. Our focus on strong balance sheets and profitability through the cycle means we expect, where dividends have been cut or cancelled, most will reinstate the dividend to where it was pre-Covid in the next year or two.

The initial stages of Covid-19 produced an information vacuum. No one knew how long lockdown would last or what the consequences would be and many companies withdrew guidance. Visibility improved towards the end of Q2. Forecasts slowly returned to the market through the second quarter, and companies began to give guidance. It became clearer which companies were more resilient, and we were able to assess more accurately those names who could continue to pay dividends and those who would not. Across the market many companies reinstated the dividend and some even repaid furlough money to the Government, which was an encouraging sign of confidence.

This year will see the biggest hit to dividends in generations, but given the specific driver of 2020's issues, investors should look beyond this. Many companies have experienced sharp earnings declines this year, and whilst the rebasing of dividend expectations is painful in the short term, in the long run it should create sustainable income streams with better dividend cover. This resetting, together with the economic damage, means forecasts for dividends are gloomy overall in the market. Link Group dividend monitors caution that it could take until 2026 for UK dividends to return to their 2019 level. We believe, because of our process and the focus on quality, that the companies we own will fare better than this. In addition, given the strong revenue reserve of the Company, even in a tougher income environment we feel well positioned to provide a supportive income stream for our shareholders. Almost half of the companies in the portfolio paid dividends in H1 2020, which in the context of the cuts seen across the market was a strong outcome. Dividend growth in the market is likely to be more challenging near term, but our portfolio continues to focus on companies where we feel over the medium to long term there is strong dividend growth potential, driven by earnings growth.

Companies with strong ESG credentials have also shone through. High quality management teams are generally more cautionary over capital allocation, and retain strong balance sheets. Experienced management teams who have managed their businesses through downturns before have been extremely valuable. We have seen senior management pay cuts and bonuses deferred, to help support cost bases and more junior employees. This is the behaviour of management teams incentivised for the long term. Businesses have strived to protect the morale and mental health of their workforce with online support to keep people engaged, training and development programmes, and worked to support their return to work. The sense of employee loyalty generated has been impressive. The pandemic has cost lives; but businesses have sought to look after families where possible, with the employees the heart of their businesses. This theme will continue as workplaces being to adapt to new working practices, with a strong focus on quality of life improvements where possible.

While we don't take macroeconomic driven decisions or time the cycle, the past 6 months has been challenging to navigate, and we have continued to focus on company specific decision making. The pandemic has accelerated change; often we heard the phrase 'we have done 8 month's work in 3 weeks'. Strategies, business models and investments based on steady changes were thrown into chaos in a short period of time. We are mindful of the direct impacts, namely lower interest rates for longer, more government debt and pressure on profit margins. We have been having conversations with our companies around efficient capital allocation, and management of cost bases. Many companies have had to invest to position themselves strongly for the changes and challenges they face. A focus on sustainability has also increased in management strategies.

Certain sectors may see structural change. Changes in behaviour may persist; the way we work and spend our leisure time may permanently change. The furlough scheme may have kept workers in jobs in sectors where demand won't return. Commercial property already knew that online retail and flexible working were important trends for their businesses; now those trends have accelerated faster than they had planned for. A recovery to pre-Covid times will also need confidence in public health, and household finances to improve in order for demand to return, whilst balance sheets will take time to repair. All of this will create both scars and opportunities for smaller companies.

Our process has not changed, we'll see new companies emerge and new jobs replacing those destroyed by the virus. We continue to focus on identifying businesses we believe have the levers and ability to grow in a sustainable manner independent of external environments. We will be fascinated to see how businesses evolve. We have been very pleased with the amount of interaction we have had with management teams over this period, we believe even more so than in pre-Covid times.

The strong companies we own have become stronger. In difficult market environments and times when economic growth slows, quality is a characteristic that comes into even more focus. Quality businesses with healthy balance sheets, management teams with a strong pedigree, good corporate governance and strong competitive positions, means they have the ability to be resilient through more difficult periods, and even improve their positioning when peers may be struggling.

Equity Portfolio

Games Workshop continues to feature again as one of the strongest contributors to the Company's performance. The shares have had an outstanding run since the new CEO was appointed in 2016 and we believe there is still more to come. The vertically integrated business is rich with IP and exclusive product, and is increasingly internationalising. New management have made many operational improvements, sharpening price points and regularly innovate with new high quality products. An increased marketing drive, together with better customer interactions through social media, has resonated with existing customers, attracted new ones and reactivated lapsed ones.

Following the Government announcement of full lockdown restrictions, all stores, factories and workshops were closed. Trading short term was impacted, but management made the necessary changes in their warehouses to meet social distance requirements, and began to make trades sales across Europe and America. Online orders restarted in May, with stores following depending on Government guidelines. Although the business effectively stopped trading for a period, the level of customer interaction improved strongly throughout lockdown due to improvements made to customer engagement in recent years. Games Workshop are pushing more content to customers, increasing the number of articles on, more videos, daily content and improved interactions with the community. They innovated with virtual vouchers to offer attractive discounts and to explore new areas of the hobby, and flexed delivery options. All of this meant that they navigated the lockdown period exceptionally well and the shares responded accordingly when they updated the market.

In early June we had a strong trading update noting that the recovery since reopening was better than expected and the management team raised guidance. Although this only in part reversed the initial Covid-19 associated downgrade, the rapid recovery reflects their loyal customer base and momentum.

The strong performance was in contrast to other retailers. Management class their product as 'leisure goods' rather than traditional retail, and recent performance shows the model is differentiated. They design and manufacture their own products and despite having 500 stores globally they are much more of a wholesaler than direct to consumer retailer. It's these characteristics of their business model that have allowed to them to survive and thrive against the Covid-19 back drop, where other 'retailers' have suffered.

During this period we saw a further licencing agreement, with Frontier Developments, for a real time strategy game based on Warhammer Age of Sigmar. The shares again reacted well, as this further demonstrates the broadening of IP monetisation, and is a high margin revenue line.

Games Workshop is a great example of our process in action. We will continue to run this winner despite the share price strength to date. We are confident that the quality of the business and the top line growth opportunity will continue to support earnings upgrades. We expect the company will return to dividend payments as the business trading normalises, and strong earnings growth in coming years will drive attractive dividend growth.

XP Power ("XPP") is a manufacturer and supplier of power converters to the industrial, semiconductor, and technology markets. Their core AC-DC product converts alternating current from the mains to direct current; this is required for virtually all electrical equipment. The market had worried XPP would see a sharp fall in revenue & profits due to Covid-19 as some of their competitors and industrials generally warned of supply chain disruptions and facility closures. XPP released a strong trading update demonstrating they were more resilient than the market feared, as demand for their products remained robust. Given the critical nature of some of their customer's products, they were able to continue to manufacture throughout the crisis. The healthcare division saw unprecedented demand and the recovery in semiconductor continued aided by structural growth drivers. Lots of credit is due to the management team who navigate their operations well in what could have been a challenging period for this sort of business. Management are investing for growth and moving into higher-voltage, higher-power applications through acquisitions and their own product development strategy. A step up in R&D spend, upgraded Enterprise Resource Planning (ERP) system and a new facility in Vietnam further support the next leg of growth. This growth will continue to fund dividend growth over coming years.

Games Workshop, and XP Power in contrast to their peers in these sectors were both rewarded for their more resilient performances. This demonstrates the benefits again of our focus on quality, and ability to identify businesses with the best models, resilient operations, and growth opportunities in their end markets.

As a beneficiary of the increase in demand for food consumption in the home, we saw a good contribution from Hilton Foods in the period. Hilton's update confirmed a benefit from increased volumes, though there was somewhat offset by increased operating costs as they worked to meet the higher demand, whilst ensuring the safety of their staff. This was clearly a period of operational pressure for management who managed demand incredibly well under the obstacles of increased safety protocols and social distancing. They also successfully adapted supply chains and fulfilled customer demands in fast changing environments, with no significant impact on sourcing or supply of raw materials. As such, all divisions and all markets traded well. Such performance is credited to the fact that Hilton is a high quality operator. Looking forward, many strategic growth channels remain, whilst their strong balance sheet and attractive cash generation will support such growth ambitions, whilst also enabling them to pay healthy growing dividends.

We saw a strong contribution from Liontrust . This year they have delivered strong monthly flows, whilst Q1 reporting was impressive given both flows and fund performance numbers. Liontrust is demonstrating that they are taking share from peers that lack the focus, brand, and investment performance they demonstrate. Fund investors do want active management and are willing to pay for it where they believe value is being added. Liontrust has an expanded range of funds with appeal to investors, and is delivering the benefits of consistently applied investment processes with strong monthly flows. During the 2(nd) half of the period we had an update from the company showing extremely resilient inflows despite the expected Covid-19 AUM hit from markets. The net inflows achieved in an extremely difficult quarter show the resilience of the business and the quality of the product offering, brand and distribution. The Sustainable Investments and Economic Advantage teams saw high levels of net inflows and investment performance remains top quartile for a majority of their funds over 1, 3 and 5 years. The shares reacted positively to the continued momentum in flows and the payment of the dividend.

Across the portfolio, we saw our investment in a number of defensively positioned businesses contribute positively to performance. Assura, the owner of GP practices, delivered a secure revenue and profit performance, with rent heavily secured by the government. They continued to pay dividends given their confident outlook and resilience. Chesnara, the manager of life and pensions policies, showed another strong period of performance, with the market confident they could continue to pay dividends. Kesko, the Finish food retail business and Scandinavian home improvements retailer was well positioned, with both end markets both seeing demand through the crisis. Consumers were reliant on operational strength of food retailers to fulfil their increased demand for food at home, whilst many consumers looked to DIY spend as an activity to fill spare time provided by lockdown, and the eagerness to improve living conditions when now increased time was being spent in the home and garden. AJ Bell continued to take market share through the period, with their increasing brand reputation. The strong culture of the business ensures a solid transition to work from home environments, and a support network was developed for colleagues through this period.

There were more concerns in the market for industrial exposed businesses through this period, but we were very pleased with the performance from a number of our holdings in this space. Aveva, a long term holding in the portfolio, delivered strong results, despites its exposure to the weak oil and gas end markets. Aveva provides critical software, which helps improve efficiency and productivity within their customer's assets. Their revenue model meant they saw a very resilient income stream, and the benefits of their enhanced product suite and customer base since the Schneider merger continue. Strix, the manufacturer of safety critical components for kettles and complimentary products, also had a strong trading period and paid their dividend. Operationally they adjusted for supply chain issues when the Covid pandemic first hit China, and since then have used the strength of their relationship with customers to deliver a solid performance. Lastly, Discoverie also reported a robust performance. Their focus on target end markets, where there are structural growth drivers and regulatory support meant they were able to continue to grow through these tough times.

Hollywood Bowl detracted from performance in the period. This business traded consistently well before the pandemic thanks to their strategy of constantly investing in the customer proposition. They raised some capital, which we supported, to continue to allow them to invest at the same pace post Covid19, without making large scale redundancies or compromising the offer. Bowling was subject to a delay in reopening because they had been included in 'close proximity' venues such as nightclubs and soft-play areas which was a disappointing delay. Thanks to the capital raise they have sufficient liquidity for the next 12 months. We hold the management team in high regard, they have a comprehensive opening strategy, are diversifying the business into mini golf, and we believe Covid-19 does not impact their longer term growth potential. Given the headwinds they have faced, there may not be the special dividends we had hoped for in the short term; longer term the business should return to its attractive dividend payouts.

Cineworld was a detractor from performance given the weak news flow around cinema attendance numbers particularly in the US early in 2020. We were concerned that lower revenue growth would slow the de-levering of the balance sheet, and therefore exited the holdings on quality and growth concerns early in the period.

Workspace provides flexible work space to SME's. It wasn't surprising that Covid-19 led to a significant slowdown in enquires and the need to offer the vast majority of their tenants discounts. Short term the business will be collecting a reduced percentage of the normal rent. The outlook also remains uncertain and they remain vulnerable to vacancy risk and changing working practices, which could alter space requirements. We don't yet have visibility on whether businesses will increasingly use home working to reduce costs and what the reduction in demand driven by an economic down turn might be, however both are likely to result in a decrease in office space requirements. Conversely, they could be a beneficiary of tenants looking for more flexible space rather than large permanent office solutions. For these reasons the shares fell sharply and detracted from performance, despite the payment of the dividend. Workspace customers are diversified by number and sector but without clarity about the future, the shares under performed. The business remains in a strong financial position, and the continuation of dividend payments through this period highlights their confidence in the outlook.

Fixed Income Portfolio

The Fixed Income exposure within the portfolio made a small positive contribution to performance over the period. Fixed income markets were extremely volatile over the period with the COVID-19 pandemic having a dramatic impact on these markets also. Government bond yields fell further over the period and, despite a spike in March during the worst of the crisis, the UK 10 year fell from almost 1% at the start of the period to a low of 0.17% at the end of the period. These moves were mirrored in other major markets and reflect the uncertain macro-economic backdrop, low inflation and the central bank responses in terms of extremely low policy rates and bond buying programmes. Such actions do imply that inflation risks will pick up in the future but for the time being yields appear anchored at low levels.

Credit spreads - the risk premium over government bonds - moved sharply wider in March creating some significant losses for investors in corporate bonds. Markets struggled to price in the economic impact and liquidity dried up as the crisis deepened. The responses from central banks and governments to the crisis did restore some order and spreads tightened throughout the second quarter. Investors returned to the market aggressively, emboldened perhaps by bond buying programmes such as the Bank of England's GBP10 billion scheme. Most impacted sectors in the first quarter sell off and beneficiaries in the subsequent recovery were the highest risk areas of the market. Retail, energy and transportation sectors all saw their credit spreads widen aggressively before gradually recovering. There are on-going challenges for all these sectors and credit selection will remain the key to good performance.

The fixed income portfolio was expanded over the period. Wider spreads and the greater certainty of income generation that is provided by bonds were the catalysts driving the increased allocation. Bonds issued by UK financial institutions Close Brothers and HSBC, National Grid, Scottish and Southern and Heathrow Airport were all added to the portfolio in April at attractive levels. All these issuers are investment grade and are expected to remain so for the foreseeable future and all have delivered strong returns in the market recovery. Further market volatility would allow some further expansion of the bond component.

Portfolio activity

A number of new holdings were added to the portfolio; quality growth businesses, scoring highly on our stock screening tool "The Matrix", and delivering supportive and growing income streams.

We started a new position in Primary Health Properties ("PHP"), the peer to Assura which we also hold in the portfolio. PHPs' update highlighted resilient rent collection, and continuation of dividends. Its income stream is one of most defensive in property, 90% rent backed by the Government, with average lease length of 13 years. It was trading at a 10% discount to Assura when we initiated the position. The balance sheet remains strong, and it has a 3.7% dividend yield.

We also added a holding in Target Healthcare REIT. This should prove a resilient quality business which provides income, with a dividend yield of 6.5%. Target is a property company, focused on the care home industry. Target own the assets; they are not operators so have no operating risk themselves. The market fundamentals are robust with an ageing population and care burden. Their homes are also larger asset sizes which allow operators greater economies of scale, and they can charge premium rental values due to the high quality of accommodation, which can produce better profitability for operators. 55% of their occupancy is private pay and 45% public pay. Dividend growth is linked to EPS growth. Earnings growth is supported by underlying operational improvements, as well as asset expansion.

We added positions in the bond issued by Close Brothers (CBG 2021) and a longer dated SSE (SSE LN 3.625% 22/perp) issue to the Company, taking advantage of market conditions. We also added an HSBC, 6.5%, 2024 issue and Heathrow 5.225% 2023 bonds. Along with the existing position in Barclays and SSE, we feel this gives us good diversification within the fixed income portfolio of the Company. These fixed income holdings also provide a secure income stream, particularly helpful in an environment equity dividend streams were collapsing.

We added a new position in Gateley. Recognising that the traditional broad base partner profit share models don't function effectively, Gateley was the first law firm to IPO and convert to a salary structure in 2015. The business is well diversified in service line and location. EPS is forecast to grow at 3yr Compound Annual Growth Rate (CAGR) of 6%, and we believe that this rate could double with acquisitions. Gateley exhibits many quality characteristics, is capital light, delivers high returns, and has a strong track record. Shares yield 4% with a policy to pay out 70% of earnings.

We also added a new position in Tatton Asset Management and have been topping it up over the period. Tatton is a founder run Discretionary Fund Management business and is an independent challenger low cost model with very good investment performance. The offer addresses the market and regulator's concerns about fee levels and transparency, through its simple and competitive fee structure. With a capital light model, and clear opportunity to grow revenues we believe the 19% forecast EPS CAGR is likely to be driven further upwards. We have confidence this business can deliver a strongly growing dividend.

We exited the small residual in Robert Walters, with a view that lower economic growth globally would be a challenging environment for them to succeed. This was a company we feared would also not be in a position to pay their dividend in 2020.

We also exited the residual in Cineworld, with potential site closures looking increasingly likely due to the impact of Coronavirus. Cash generation was becoming increasingly challenged where forced closures were likely, making the balance sheet position look more stretched, and the dividend less likely to be paid.


ESG is embedded in all our research and investment decisions. ASI has a well-resourced ESG investment team, with whom we work closely. When analysing the ESG credentials of business, we are looking for both risks and opportunities. As a long term shareholder many companies are keen to engage with us, where we can use our in-house ESG expertise to help provide them with advice. The large AUM we manage in UK smaller companies delivers us excellent engagement opportunities with management teams, and the ability to help those companies to improve both their ESG qualities but also how they demonstrate those to the market. Where we can help a company to improve their ESG credentials, this is beneficial as it may lead to a higher stock rating, and can also reduce the risk of that investment. ESG is at the core of our process, and fits strongly within the Quality aspect of our investment style.

We engaged with Intermediate Capital ("ICG") on a number of ESG topics. Diversity is high on their agenda, with gender diversity one of their strategic drivers and our meeting reinforced to us how important this is to the management team. Through increasing accessibility with policies and initiatives, they hope to increase diversity whilst broadening the talent pool in what is a highly competitive industry. ICG have a robust framework, ensuring full ESG integration within investment decisions. This helps their position in responsible investing, whilst minimising any risk to the brand reputation from negative media associated with portfolio companies. They look to lead the sector in their attitude towards climate change risks in their investments, and are implementing 20-30 year scenarios looking long term. Their latest Annual Report should help to share some of the positive steps they are making in their work on ESG.

The management of MJ Gleeson have been actively engaged with us for advice as ESG specialists. We have explored the key material risk and opportunities for the sector, such as health and safety, labour management, environmental impact and build quality, and highlighted links to strategy, KPIs, risk management and executive remuneration. Management will look to engage with ESG scoring providers such as MSCI & Sustainalytics to understand what they would require for disclosure to improve their ratings. They are doing positive things internally, but want to understand how best to communicate with shareholders on ESG. It's positive to see the company taking these steps and being pro-active to discuss them with us as a trusted shareholder.


It's clear that recessionary times are coming globally. The UK economy will suffer materially and unemployment will be at unprecedented levels. Whilst government pledges to do what it can with areas like VAT cuts & stamp duty changes, we are yet to see how demand returns and what shape the recovery will be. This recession will certainly be more Main Street than Wall Street; stock markets have already recovered to high levels whilst the scenes on the high street, consumer spending and potential unemployment levels remain gloomy. There is a risk now there is a disconnect between some stock market valuations and the outlook for economic growth.

The effects of Covid19 will be deep and widespread. Poorly capitalised companies and those with limited runway are at risk of failure as the support schemes end. Other risks in the market going forward come from a second wave of infections, the US elections in November and escalating US/China trade wars. Currently there is little evidence of a meaningful second wave post the lifting of lockdowns across Asia and Europe, with breakouts being controlled at local level. In the event of true second wave, most countries are now better placed to manage it in terms of healthcare capacity and treatment. The news on a vaccine is also promising although that might not be this year. The US elections are close to call so will become a bigger focus next quarter, whilst Trump may well see negativity towards China as his best chance of winning.

More generally we feel that economic cycles will be shorter, sharper & more volatile. The last bull market was extended and settled. The market has had a strong bounce so we fear valuations aren't braced for further bad news. There are many risks in the current environment but also opportunities for smaller companies.

As far as the outlook for dividends for the names we hold in the portfolio we are optimistic our income will fare better than the broader market given our Quality Growth focus, and the evidence we are seeing directly from investments to date. We were pleased that almost half the companies in the portfolio paid dividends during this challenging period.

Our investment focus continues to be driven by stock specific decision making, identifying quality growth businesses. In tougher economic times and with volatility and uncertainty likely in markets, we look to invest in businesses that have the quality aspect to prove resilient. Our process identifies smaller companies who have a number of growth levers to pull, allowing them the ability to grow and gain market share even when facing external headwinds and where peers may be struggling.

We are pleased to have delivered relative outperformance over this challenging period, adding to the attractive long term track record of the Company. The recent fall in market driven by Covid is however disappointing for shareholder returns. With a strong revenue reserve and a strong proportion of investments paying or likely to return to paying dividends, we are also confident that we can deliver a resilient income outcome for our shareholders this year and looking forwards.

Aberdeen Asset Managers Limited

16 September 2020

Distribution of Assets and Liabilities

As at 30 June 2020

 As at 30 June 2020 
                                Valuation at         Movement during the period        Valuation at 
                                 31 December                             (Losses)/        30 June 
                                    2019          Purchases      Sales       gains         2020 
                              GBP'000         %     GBP'000    GBP'000     GBP'000   GBP'000         % 
 Listed investments 
 Equity investments            87,930     106.4       9,460   (12,185)    (38,567)    71,008     104.9 
 Corporate bonds                  878       1.1       1,250          -           9     2,137       3.2 
                              _______   _______     _______    _______     _______   _______   _______ 
                               88,808     107.5      10,710   (12,185)    (38,558)    73,145     108.1 
                              _______   _______     _______    _______     _______   _______   _______ 
 Current assets                 1,074       1.3                                        1,803       2.6 
 Other current liabilities      (235)     (0.3)                                        (273)     (0.4) 
 Loans                        (6,987)     (8.5)                                      (6,989)    (10.3) 
                              _______   _______                                      _______   _______ 
 Net assets                    82,660     100.0                                       67,686     100.0 
                              _______   _______                                      _______   _______ 
 Net asset value per 
  Ordinary share              373.86p                                                306.14p 
                              _______                                                _______ 

Condensed Statement of Comprehensive Income

                                                          Six months ended 
                                                            30 June 2020 
                                                   Revenue     Capital       Total 
                                        Notes      GBP'000     GBP'000     GBP'000 
 (Losses)/gains on investments 
  at fair value                                          -    (14,188)    (14,188) 
 Currency losses                                         -           -           - 
 Dividend income                          2            705           -         705 
 Interest income from investments         2             31           -          31 
 Other income                             2              2           -           2 
                                                 _________   _________   _________ 
                                                       738    (14,188)    (13,450) 
                                                 _________   _________   _________ 
 Investment management fee                            (78)       (183)       (261) 
 Other administrative expenses                       (184)           -       (184) 
 Finance costs                                        (28)        (65)        (93) 
                                                 _________   _________   _________ 
 Profit/(loss) before tax                              448    (14,436)    (13,988) 
                                                 _________   _________   _________ 
 Taxation                                 3              -           -           - 
                                                 _________   _________   _________ 
 Profit/(loss) attributable to 
  equity holders                                       448    (14,436)    (13,988) 
                                                 _________   _________   _________ 
 Return per Ordinary share (pence)        5           2.03     (65.29)     (63.26) 
                                                 _________   _________   _________ 
 The total column of this statement represents the Company's Statement 
  of Comprehensive Income, prepared in accordance with IFRS. The 
  supplementary revenue and capital columns are both prepared under 
  guidance published by the Association of Investment Companies 
  (AIC). All items in the above statement derive from continuing 
 The Company does not have any income or expense that is not included 
  in profit for the period, and therefore the "Profit/(loss) attributable 
  to equity holders" is also the "Total comprehensive income attributable 
  to equity holders" as defined in IAS 1 (revised). 
 The accompanying notes are an integral part of these condensed 
  financial statements. 

Condensed Statement of Comprehensive Income


                                                 Six months ended                    Year ended 
                                                   30 June 2019                   31 December 2019 
                                                    (unaudited)                       (audited) 
                                           Revenue    Capital      Total    Revenue    Capital      Total 
                                  Notes    GBP'000    GBP'000    GBP'000    GBP'000    GBP'000    GBP'000 
 (Losses)/gains on investments 
  at fair value                                  -     10,297     10,297          -     19,661     19,661 
 Currency losses                                 -       (10)       (10)          -       (12)       (12) 
 Dividend income                    2        1,546          -      1,546      2,700          -      2,700 
 Interest income from 
  investments                       2           22          -         22         46          -         46 
 Other income                       2            5          -          5          8          -          8 
                                           _______    _______    _______    _______    _______    _______ 
                                             1,573     10,287     11,860      2,754     19,649     22,403 
                                           _______    _______    _______    _______    _______    _______ 
 Investment management 
  fee                                         (80)      (186)      (266)      (163)      (380)      (543) 
 Other administrative 
  expenses                                   (194)          -      (194)      (314)          -      (314) 
 Finance costs                                (33)       (76)      (109)       (61)      (142)      (203) 
                                           _______    _______    _______    _______    _______    _______ 
 Profit/(loss) before 
  tax                                        1,266     10,025     11,291      2,216     19,127     21,343 
                                           _______    _______    _______    _______    _______    _______ 
 Taxation                           3          (8)          -        (8)       (10)          -       (10) 
                                           _______    _______    _______    _______    _______    _______ 
 Profit/(loss) attributable 
  to equity holders                          1,258     10,025     11,283      2,206     19,127     21,333 
                                           _______    _______    _______    _______    _______    _______ 
 Return per Ordinary share 
  (pence)                           5         5.69      45.34      51.03       9.98      86.51      96.49 
                                           _______    _______    _______    _______    _______    _______ 

Condensed Balance Sheet

                                                    As at          As at          As at 
                                                  30 June        30 June    31 December 
                                                     2020           2019           2019 
                                              (unaudited)    (unaudited)      (audited) 
                                     Notes        GBP'000        GBP'000        GBP'000 
 Non-current assets 
 Equities                                          71,008         72,600         87,930 
 Convertible preference shares                          -            936              - 
 Corporate bonds                                    2,137            881            878 
 Preference shares                                      -          3,514              - 
                                             ____________   ____________   ____________ 
 Securities at fair value                          73,145         77,931         88,808 
                                             ____________   ____________   ____________ 
 Current assets 
 Cash                                               1,582          2,166            780 
 Other receivables                                    221            611            294 
                                             ____________   ____________   ____________ 
                                                    1,803          2,777          1,074 
                                             ____________   ____________   ____________ 
 Current liabilities 
 Bank loan                                        (2,000)        (2,000)        (2,000) 
 Trade and other payables                           (273)          (250)          (235) 
                                             ____________   ____________   ____________ 
                                                  (2,273)        (2,250)        (2,235) 
                                             ____________   ____________   ____________ 
 Net current (liabilities)/assets                   (470)            527        (1,161) 
                                             ____________   ____________   ____________ 
 Total assets less current 
  liabilities                                      72,675         78,458         87,647 
 Non-current liabilities 
 Bank loan                                        (4,989)        (4,985)        (4,987) 
                                             ____________   ____________   ____________ 
 Net assets                                        67,686         73,473         82,660 
                                             ____________   ____________   ____________ 
 Share capital and reserves 
 Called-up share capital                           11,055         11,055         11,055 
 Share premium account                             11,892         11,892         11,892 
 Capital redemption reserve                         2,032          2,032          2,032 
 Capital reserve                                   39,650         44,984         54,086 
 Revenue reserve                                    3,057          3,510          3,595 
                                             ____________   ____________   ____________ 
 Equity shareholders' funds                        67,686         73,473         82,660 
                                             ____________   ____________   ____________ 
 Net asset value per Ordinary 
  share (pence)                        6           306.14         332.31         373.86 
                                             ____________   ____________   ____________ 
 The accompanying notes are an integral part of these condensed 
  financial statements. 

Condensed Statement of Changes in Equity

 Six months ended 30 June 
  2020 (unaudited) 
                                         Share      Capital 
                               Share   premium   redemption    Capital   Revenue 
                             capital   account      reserve    reserve   reserve      Total 
                             GBP'000   GBP'000      GBP'000    GBP'000   GBP'000    GBP'000 
 As at 31 December 2019       11,055    11,892        2,032     54,086     3,595     82,660 
 (Loss)/profit for the 
  period                           -         -            -   (14,436)       448   (13,988) 
 Dividends paid in the 
  period                           -         -            -          -     (986)      (986) 
                              ______    ______       ______     ______    ______     ______ 
 As at 30 June 2020           11,055    11,892        2,032     39,650     3,057     67,686 
                              ______    ______       ______     ______    ______     ______ 
 Six months ended 30 June 
  2019 (unaudited) 
                                         Share      Capital 
                               Share   premium   redemption    Capital   Revenue 
                             capital   account      reserve    reserve   reserve      Total 
                             GBP'000   GBP'000      GBP'000    GBP'000   GBP'000    GBP'000 
 As at 31 December 2018       11,055    11,892        2,032     34,959     3,114     63,052 
 Profit for the period             -         -            -     10,025     1,258     11,283 
 Dividends paid in the 
  period                           -         -            -          -     (862)      (862) 
                              ______    ______       ______     ______    ______     ______ 
 As at 30 June 2019           11,055    11,892        2,032     44,984     3,510     73,473 
                              ______    ______       ______     ______    ______     ______ 
 Year ended 31 December 
  2019 (audited) 
                                         Share      Capital 
                               Share   premium   redemption    Capital   Revenue 
                             capital   account      reserve    reserve   reserve      Total 
                             GBP'000   GBP'000      GBP'000    GBP'000   GBP'000    GBP'000 
 As at 31 December 2018       11,055    11,892        2,032     34,959     3,114     63,052 
 Profit for the year               -         -            -     19,127     2,206     21,333 
 Dividends paid in the 
  year                             -         -            -          -   (1,725)    (1,725) 
                              ______    ______       ______     ______    ______     ______ 
 As at 31 December 2019       11,055    11,892        2,032     54,086     3,595     82,660 
                              ______    ______       ______     ______    ______     ______ 
 The accompanying notes are an integral part of these condensed financial 

Condensed Cash Flow Statement

                                          Six months    Six months          Year 
                                               ended         ended         ended 
                                             30 June       30 June   31 December 
                                                2020          2019          2019 
                                         (unaudited)   (unaudited)     (audited) 
                                             GBP'000       GBP'000       GBP'000 
 Cash flows from operating activities 
 Dividend income received                        823         1,381         2,730 
 Interest income received                          2             4            47 
 Other income received                             -             -             8 
 Investment management fee paid                (276)         (254)         (523) 
 Other cash expenses                           (204)         (167)         (308) 
                                         ___________   ___________   ___________ 
 Cash generated from operations                  345           964         1,954 
 Interest paid                                  (91)         (100)         (194) 
 Overseas taxation suffered                      (9)          (15)          (10) 
                                         ___________   ___________   ___________ 
 Net cash inflows from operating 
  activities                                     245           849         1,750 
                                         ___________   ___________   ___________ 
 Cash flows from investing activities 
 Purchases of investments                   (10,642)      (12,645)      (23,291) 
 Sales of investments                         12,185        11,763        20,987 
                                         ___________   ___________   ___________ 
 Net cash inflows/(outflows) from 
  investing activities                         1,543         (882)       (2,304) 
                                         ___________   ___________   ___________ 
 Cash flows from financing activities 
 Equity dividends paid                         (986)         (862)       (1,725) 
                                         ___________   ___________   ___________ 
 Net cash outflows from financing 
  activities                                   (986)         (862)       (1,725) 
                                         ___________   ___________   ___________ 
 Net increase/(decrease) in cash 
  and cash equivalents                           802         (895)       (2,279) 
                                         ___________   ___________   ___________ 
 Analysis of changes in cash and cash equivalents 
  during the period 
 Opening balance                                 780         3,071         3,071 
 Currency losses                                   -          (10)          (12) 
 Increase/(decrease) in cash and 
  cash equivalents as above                      802         (895)       (2,279) 
                                         ___________   ___________   ___________ 
 Cash and cash equivalents at 
  the end of the period                        1,582         2,166           780 
                                         ___________   ___________   ___________ 
 The accompanying notes are an integral part of these condensed 
  financial statements. 


 1.   Accounting policies 
      Basis of preparation. The condensed financial statements have 
       been prepared in accordance with International Financial Reporting 
       Standards ('IFRS') 34 - 'Interim Financial Reporting', as adopted 
       by the International Accounting Standards Board ('IASB'), and 
       interpretations issued by the International Financial Reporting 
       Interpretations Committee ('IFRIC') of the IASB. They have 
       been prepared using the same accounting policies applied for 
       the year ended 31 December 2019 financial statements, which 
       received an unqualified audit report. 
      The financial statements have been prepared on a going concern 
       basis. In accordance with the Financial Reporting Council's 
       guidance on 'Going Concern and Liquidity Risk' the Directors 
       have undertaken a review of the Company's assets which principally 
       consist of equity shares in companies listed on the London 
       Stock Exchange. 
 2.    Income 
                                            Six months    Six months           Year 
                                                 ended         ended          ended 
                                               30 June       30 June    31 December 
                                                  2020          2019           2019 
                                               GBP'000       GBP'000        GBP'000 
       Income from investments 
  Dividend income from UK equity 
   securities                                      573         1,212          2,086 
  Dividend income from overseas 
   equity securities                                27           215            355 
  Property income distribution                     105           119            259 
                                           ___________   ___________    ___________ 
                                                   705         1,546          2,700 
  Interest income from investments                  31            22             46 
                                           ___________   ___________    ___________ 
                                                   736         1,568          2,746 
       Other income                        ___________   ___________    ___________ 
  Bank interest                                      2             5              8 
                                           ___________   ___________    ___________ 
  Total revenue income                             738         1,573          2,754 
                                           ___________   ___________    ___________ 
 3.   Taxation. The tax expense reflected in the Condensed Statement 
       of Comprehensive Income represents irrecoverable withholding 
       tax suffered on overseas dividend income. 
 4.    Dividends. The following table shows the revenue for each period 
        less the dividends declared in respect of the financial period 
        to which they relate. 
                                    Six months      Six months            Year 
                                         ended           ended           ended 
                                       30 June         30 June     31 December 
                                          2020            2019            2019 
                                       GBP'000         GBP'000         GBP'000 
  Profit attributable                      448           1,258           2,206 
       Dividends declared             (911){A}        (862){B}      (1,825){C} 
                                   ___________     ___________     ___________ 
                                         (463)             396             381 
                                   ___________     ___________     ___________ 
  {A} Dividends declared relate to first two interim dividends 
   (both 2.06p each) declared in respect of the financial year 
  {B} Dividends declared relate to first two interim dividends 
   (both 1.95p each) declared in respect of the financial year 
  {C} Dividends declared relate to the four interim dividends 
   declared in respect of the financial year 2019 totalling 8.25p. 
 5.    Return per Ordinary share 
                                         Six months    Six months           Year 
                                              ended         ended          ended 
                                            30 June       30 June    31 December 
                                               2020          2019           2019 
                                                  p             p              p 
  Revenue return                               2.03          5.69           9.98 
  Capital return                            (65.29)         45.34          86.51 
                                        ___________   ___________    ___________ 
  Net return                                (63.26)         51.03          96.49 
                                        ___________   ___________    ___________ 
       The returns per Ordinary share are based on the following figures: 
                                         Six months    Six months           Year 
                                              ended         ended          ended 
                                            30 June       30 June    31 December 
                                               2020          2019           2019 
                                            GBP'000       GBP'000        GBP'000 
  Revenue return                                448         1,258          2,206 
  Capital return                           (14,436)        10,025         19,127 
                                        ___________   ___________    ___________ 
  Net return                               (13,988)        11,283         21,333 
                                        ___________   ___________    ___________ 
  Weighted average number of 
   shares in issue                       22,109,765    22,109,765     22,109,765 
                                        ___________   ___________    ___________ 
 6.    Net asset value per Ordinary share. The net asset value per 
        Ordinary share and the net asset values attributable to Ordinary 
        shareholders at the period end calculated in accordance with 
        the Articles of Association were as follows: 
                                                   As at          As at         As at 
                                                 30 June        30 June   31 December 
                                                    2020           2019          2019 
                                             (unaudited)    (unaudited)     (audited) 
  Attributable net assets (GBP'000)               67,686         73,473        82,660 
  Number of Ordinary shares in 
   issue                                      22,109,765     22,109,765    22,109,765 
  Net asset value per Ordinary 
   share (p)                                      306.14         332.31        373.86 
 7.    Transaction costs. During the period expenses were incurred 
        in acquiring or disposing of investments classified as fair 
        value. These have been expensed through capital and are included 
        within (losses)/gains on investments at fair value in the Condensed 
        Statement of Comprehensive Income. The total costs were as 
                                Six months          Six months                Year 
                                     ended               ended               ended 
                                   30 June             30 June         31 December 
                                      2020                2019                2019 
                                   GBP'000             GBP'000             GBP'000 
  Purchases                             41                  55                  98 
  Sales                                  9                   7                  15 
                               ___________         ___________         ___________ 
                                        50                  62                 113 
                               ___________         ___________         ___________ 
 8.    Analysis of changes 
        in net debt 
                                        At                                                     At 
                               31 December       Currency       Cash    Non-cash          30 June 
                                      2019    differences      flows   movements             2020 
                                   GBP'000        GBP'000    GBP'000     GBP'000          GBP'000 
  Cash and short 
   term deposits                       780              -        802           -            1,582 
  Debt due within 
   one year                        (2,000)              -          -           -          (2,000) 
  Debt due after 
   more than one 
   year                            (4,987)              -          -         (2)          (4,989) 
                                __________     __________   ________    ________         ________ 
                                   (6,207)              -        802         (2)          (5,407) 
                                __________     __________   ________    ________         ________ 
                                        At                                                     At 
                               31 December       Currency       Cash    Non-cash          30 June 
                                      2018    differences      flows   movements             2019 
                                   GBP'000        GBP'000    GBP'000     GBP'000          GBP'000 
  Cash and short 
   term deposits                     3,071           (10)      (895)           -            2,166 
  Debt due within 
   one year                        (2,000)              -          -           -          (2,000) 
  Debt due after 
   more than one 
   year                            (4,983)              -          -         (2)          (4,985) 
                                __________     __________   ________    ________         ________ 
                                   (3,912)           (10)      (895)         (2)          (4,819) 
                                __________      _________   ________    ________         ________ 
                                     At 31       Currency       Cash    Non-cash   At 31 December 
                                      2018    differences      flows   movements             2019 
                                   GBP'000        GBP'000    GBP'000     GBP'000          GBP'000 
  Cash and short 
   term deposits                     3,071           (12)    (2,279)           -              780 
  Debt due within 
   one year                        (2,000)              -          -           -          (2,000) 
  Debt due after 
   more than one 
   year                            (4,983)              -          -         (4)          (4,987) 
                                __________     __________   ________    ________         ________ 
                                   (3,912)           (12)    (2,279)         (4)          (6,207) 
                                __________     __________   ________    ________         ________ 
  A statement reconciling the movement in net funds to the net 
   cash flow has not been presented as there are no differences 
   from the above analysis. 
 9.    Fair value hierarchy. Under IFRS 13 'Fair Value Measurement' 
        an entity is required to classify fair value measurements using 
        a fair value hierarchy that reflects the significance of the 
        inputs used in making measurements. The fair value hierarchy 
        has the following levels: 
       Level 1: quoted prices (unadjusted) in active markets for identical 
        assets or liabilities; 
       Level 2: inputs other than quoted prices included within Level 
        1 that are observable for the assets or liability, either directly 
        (i.e. as prices) or indirectly (i.e. derived from prices); 
       Level 3: inputs for the asset or liability that are not based 
        on observable market data (unobservable inputs). 
       The financial assets measured at fair value in the Condensed 
        Balance Sheet are grouped into the fair value hierarchy as 
                                                    Level     Level     Level     Total 
                                                        1         2         3 
       At 30 June 2020 (unaudited)        Note    GBP'000   GBP'000   GBP'000   GBP'000 
       Financial assets at fair value 
        through profit or loss 
  Quoted equities                    a)            71,008         -         -    71,008 
  Quoted bonds                       b)                 -     2,137         -     2,137 
                                                  _______   _______   _______   _______ 
                                                   71,008     2,137         -    73,145 
                                                  _______   _______   _______   _______ 
                                                    Level     Level     Level     Total 
                                                        1         2         3 
       At 30 June 2019 (unaudited)        Note    GBP'000   GBP'000   GBP'000   GBP'000 
       Financial assets at fair value 
        through profit or loss 
  Quoted equities                    a)            72,600         -         -    72,600 
  Quoted bonds                       b)                 -     5,331         -     5,331 
                                                  _______   _______   _______   _______ 
                                                   72,600     5,331         -    77,931 
                                                  _______   _______   _______   _______ 
                                                    Level     Level     Level     Total 
                                                        1         2         3 
       At 31 December 2019 (audited)      Note    GBP'000   GBP'000   GBP'000   GBP'000 
       Financial assets at fair value 
        through profit or loss 
  Quoted equities                    a)            87,930         -         -    87,930 
  Quoted bonds                       b)                 -       878         -       878 
                                                  _______   _______   _______   _______ 
                                                   87,930       878         -    88,808 
                                                  _______   _______   _______   _______ 
  a) Quoted equities. The fair value of the Company's investments 
   in quoted equities has been determined by reference to their 
   quoted bid prices at the reporting date. Quoted equities included 
   in Fair Value Level 1 are actively traded on recognised stock 
  b) Quoted bonds. The fair value of the Company's investments 
   in quoted convertibles, bonds and preference shares has been 
   determined by reference to their quoted bid prices at the reporting 
   date. Investments categorised as Level 2 are not considered 
   to trade in active markets. 
  There have been no transfers of assets between levels of the 
   fair value hierarchy during any of the periods covered in this 
 10.   Related party transactions. There were no related party transactions 
        during the period. 
 11.   Transactions with the Manager. The Company has agreements 
        with Aberdeen Standard Fund Managers Limited ("ASFML" or "the 
        Manager") for the provision of investment management, secretarial, 
        accounting and administration and promotional activities. 
       The management fee is calculated at an annual rate of 0.75% 
        of the net assets of the Company, calculated and paid monthly. 
        During the period GBP261,000 (30 June 2019 - GBP266,000; 31 
        December 2019 - GBP543,000) of investment management fees 
        were payable to the Manager, with a balance of GBP85,000 (30 
        June 2019 - GBP92,000; 31 December 2019 - GBP100,000) being 
        payable to ASFML at the period end. There were no commonly 
        managed funds held in the portfolio during the period to 30 
        June 2020 (30 June 2019 and 31 December 2019 - none). The 
        management fee is chargeable as follows:- 30% to revenue and 
        70% to capital. 
       During the period expenses of GBP22,000 (30 June 2019 - GBP32,000; 
        31 December 2019 - GBP39,000) were payable to the Manager 
        in connection with the promotion of the Company. The balance 
        outstanding at the period end was GBP11,000 (30 June 2019 
        - GBP32,000; 31 December 2019 - GBP33,000). 
 12.   Segmental information. The Company is engaged in a single 
        segment of business, which is to invest in equity securities 
        and debt instruments. 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. 
 13.   Publication of non-statutory accounts. The financial information 
        contained in this Half Yearly Financial Report does not constitute 
        statutory accounts as defined in Sections 434 - 436 of the 
        Companies Act 2006. The financial information for the six 
        months ended 30 June 2020 and 30 June 2019 has not been audited. 
       The information for the year ended 31 December 2019 has been 
        extracted from the latest published audited financial statements 
        which have been filed with the Registrar of Companies. The 
        report of the auditors on those accounts contained no qualification 
        or statement under Section 498 (2), (3) or (4) of the Companies 
        Act 2006. 
 14.    This Half Yearly Financial Report was approved by the Board 
         on 15 September 2020. 

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

 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 IFRS and the AIC SORP. The Directors assess the 
  Company's performance against a range of criteria which are viewed 
  as particularly relevant for closed-end investment companies. 
 Total return. NAV and share price total returns show how the NAV 
  and share price has performed over a period of time in percentage 
  terms, taking into account both capital returns and dividends paid 
  to shareholders. NAV total return involves investing the net dividend 
  in the NAV of the Company with debt at fair value on the date on 
  which that dividend goes ex-dividend. Share price total return involves 
  reinvesting the net dividend in the share price of the Company on 
  the date on which that dividend goes ex-dividend. 
 The tables below provide information relating to the NAV and share 
  price of the Company on the dividend reinvestment dates during the 
  six months ended 30 June 2020 and the year ended 31 December 2019. 
                                                  Dividend                      Share 
 Six months ended 30 June 2020                        rate        NAV           price 
 31 December 2019                                      N/A    373.86p         343.00p 
 2 January 2020                                      2.40p    374.10p         341.50p 
 2 April 2020                                        2.06p    253.97p         216.00p 
 30 June 2020                                          N/A    306.14p         264.00p 
                                                             ________        ________ 
 Total return                                                  -16.9%          -21.8% 
                                                             ________        ________ 
                                                  Dividend                      Share 
 Year ended 31 December 2019                          rate        NAV           price 
 31 December 2018                                      N/A    285.18p         224.00p 
 3 January 2019                                      1.95p    282.14p         225.50p 
 4 April 2019                                        1.95p    319.23p         270.50p 
 4 July 2019                                         1.95p    334.38p         288.50p 
 3 October 2019                                      1.95p    312.35p         273.50p 
 31 December 2019                                      N/A    373.86p         343.00p 
                                                             ________        ________ 
 Total return                                                  +34.4%           57.7% 
                                                             ________        ________ 
 Discount to Net Asset Value per Ordinary share . The amount by 
  which the market price per Ordinary share of 264.00p (31 December 
  2019 - 343.00p) is lower than the net asset value per Ordinary share 
  of 306.14p (31 December 2019 - 373.86p), expressed as a percentage 
  of the net asset value per Ordinary share. 
 Net gearing. Net gearing measures the total borrowings of GBP6,989,000 
  (31 December 2019 - GBP6,987,000) less cash and cash equivalents 
  of GBP1,509,000 (31 December 2019 - GBP780,000) divided by shareholders' 
  funds of GBP67,686,000 (31 December 2019 - GBP82,660,000), expressed 
  as a percentage. Under AIC reporting guidance cash and cash equivalents 
  includes net amounts due to brokers at the period end of GBP73,000 
  (31 December 2019 - GBPnil) as well as cash of GBP1,582,000 (31 
  December 2019 - GBP780,000). 
 Ongoing charges. The ongoing charges ratio has been calculated 
  in accordance with guidance issued by the AIC as the total of investment 
  management fees and administrative expenses and expressed as a percentage 
  of the average net asset values with debt at fair value throughout 
  the year. The ratio for 30 June 2020 is based on forecast ongoing 
  charges for the year ending 31 December 2020. 
                                                              30 June     31 December 
                                                                 2020            2019 
 Investment management fees (GBP'000)                             515             543 
 Administrative expenses (GBP'000)                                361             314 
 Less: non-recurring charges (GBP'000)                           (22)               - 
                                                             ________        ________ 
 Ongoing charges (GBP'000)                                        854             857 
                                                             ________        ________ 
 Average net assets (GBP'000)                                  68,878          71,351 
                                                             ________        ________ 
 Ongoing charges ratio                                          1.24%           1.20% 
                                                             ________        ________ 
 The ongoing charges ratio provided in the Company's Key Information 
  Document is calculated in line with the PRIIPs regulations, which 
  includes amongst other things, financing and transaction costs. 
 Ten Largest Investments 
 As at 30 June 2020 
 Assura                                           Aveva Group 
 Assura is a long-term investor                   One of the world's leading engineering, 
  and developer of primary care property,          design and information management 
  working with general practitioners,              software providers to the process, 
  health professionals and National                plant and marine industries. 
  Health Services to deliver patient               Aveva's world-leading technology 
  care.                                            was originally developed and 
                                                   spun out of Cambridge University 
                                                   and today the business operates 
                                                   in 46 countries around the world. 
 discoverIE Group                                 XP Power 
 discoverIE Group is a supplier                   A power solutions business that 
  of niche electronic products, manufacturing      designs and manufactures power 
  customs designed and built electronics           convertors used by customers 
  to industrial and medical companies              to ensure their electronic equipment 
  across Europe and South Africa.                  can function both safely and 
                                                   efficiently. With over 5,000 
                                                   different products, XP Power 
                                                   can provide a full value add 
                                                   capability to its customers. 
 Liontrust Asset Management                       Intermediate Capital Group 
 UK based asset manager, managing                 Global alternative asset manager 
  assets across a range of asset                   in private debt, credit and equity. 
 Games Workshop                                   Hilton Food Group 
 Global retailer of hobbyist products,            Global food producer, with a 
  selling through own retail stores,               specialism in sourcing, preparing 
  online, and through trade partners.              and packaging food products in 
  Owner of the IP of Warhammer.                    particular meat and fish protein. 
 Telecom Plus                                     Morgan Sindall 
 Reseller of telecom and utilities                UK leading business in construction 
  service, under the Utility Warehouse             and regeneration work. 

Investment Portfolio - Equity

As at 30 June 2020

                                                                Valuation       Total 
                                                                     2020   portfolio 
 Company                       Sector Classification              GBP'000           % 
                               Real Estate Investment 
 Assura                         Trusts                              3,580         4.9 
                               Software & Computer 
 Aveva Group                    Services                            3,431         4.7 
                               Electronic & Electrical 
 discoverIE Group               Equipment                           3,315         4.5 
                               Electronic & Electrical 
 XP Power                       Equipment                           3,288         4.5 
 Liontrust Asset Management    Financial Services                   2,966         4.1 
 Intermediate Capital Group    Financial Services                   2,882         3.9 
 Games Workshop                Leisure Goods                        2,666         3.6 
 Hilton Food Group             Food Producers                       2,488         3.4 
 Telecom Plus                  Fixed Line Telecommunications        2,415         3.3 
                               Construction & Building 
 Morgan Sindall                 Materials                           2,091         2.9 
 Ten largest investments                                           29,122        39.8 
                               Software & Computer 
 Softcat                        Services                            2,086         2.9 
                               Real Estate Investment 
 Unite Group                    Trusts                              2,080         2.9 
 AJ Bell                       Financial Services                   2,053         2.8 
 Victrex                       Chemicals                            1,965         2.7 
 Ultra Electronics             Aerospace & Defence                  1,855         2.5 
 Hollywood Bowl                Travel & Leisure                     1,807         2.5 
 Chesnara                      Life Insurance                       1,682         2.3 
                               Real Estate Investment 
 Safestore Holdings             Trusts                              1,670         2.3 
 Moneysupermarket              Media                                1,634         2.2 
                               Electronic & Electrical 
 Strix Group                    Equipment                           1,492         2.0 
 Twenty largest investments                                        47,446        64.9 
                               Software & Computer 
 FDM                            Services                            1,445         2.0 
 Close Brothers                Banks                                1,414         1.9 
 Kesko{A}                      Food & Drug Retailers                1,307         1.8 
                               Pharmaceuticals & 
 Dechra Pharmaceuticals         Biotechnology                       1,307         1.8 
 Diploma                       Support Services                     1,287         1.8 
                               Real Estate Investment 
 Sirius Real Estate             Services                            1,279         1.7 
                               Household Goods & 
 MJ Gleeson                     Home Construction                   1,220         1.7 
 Fisher (James) & Sons         Industrial Transportation            1,202         1.6 
 Tatton Asset Management       Financial Services                   1,107         1.5 
 Marshalls                     Construction & Materials             1,019         1.4 
 Thirty largest investments                                        60,033        82.1 
 Midwich                       Support Services                     1,013         1.4 
 Alpha Financial Markets 
  Cons                         Support Services                     1,003         1.4 
 Greggs                        Food & Drug Retailers                  959         1.3 
                               Real Estate Investment 
 Target Health Care             Trusts                                958         1.3 
                               Real Estate Investment 
 Primary Health Properties      Trusts                                944         1.3 
 4Imprint Group                Media                                  822         1.1 
 Forterra                      Construction & Materials               796         1.1 
                               Real Estate Investment 
 Savills                        Services                              776         1.0 
                               Pharmaceuticals & 
 Abcam                          Biotechnology                         762         1.0 
 Paypoint                      Support Services                       706         1.0 
 Forty largest investments                                         68,772        94.0 
                               Real Estate Investment 
 Workspace Group                Trusts                                668         0.9 
 Somero Enterprises            Industrial Engineering                 593         0.8 
 Gateley Holdings              Support Services                       535         0.8 
 Rathbone Brothers             Financial Services                     440         0.6 
 Total Equity Investments                                          71,008        97.1 
 {A} All investments are listed on the London Stock Exchange (sterling 
  based), except those marked, which are listed on overseas exchanges 
  based in sterling. 

Investment Portfolio - Other Investments

As at 30 June 2020

                                                  Valuation           Total 
                                                       2020       portfolio 
 Company                                            GBP'000               % 
 Corporate Bonds 
 Barclays Bank 9% Perp{A}                               500             0.7 
 Close Brothers 3.875%{A}                               411             0.6 
 Heathrow Funding 5.225%{A}                             368             0.5 
 HSBC Holdings 6.5%{A}                                  322             0.4 
 SSE 3.625% Var{A}                                      300             0.4 
 SSE 3.875% Var Perp{A}                                 236             0.3 
                                                    _______         _______ 
 Total Corporate Bonds                                2,137             2.9 
                                                    _______         _______ 
 Total Investments                                   73,145           100.0 
                                                    _______         _______ 
 {A} All investments are listed on the London Stock Exchange (Sterling 

For further information please contact:-

Company Secretary

Aberdeen Standard Investments

Tel: 0131 372 2200

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