Aberforth Smaller Companies Trust plc
Annual Report and Financial Statements
31 December 2022
Contents
Strategic Report
Investment Performance, Portfolio and Historical Returns
The Company and Investment Objective 1
Financial Highlights over the Year 1
Key Performance Indicators 2
Chairman’s Statement 4
Managers’ Report 7
Stewardship and Environmental, Social and Governance 13
Thirty Largest Investments 16
Investment Portfolio and Portfolio Information 17
Historical Information 21
Business Model and Company Matters
Company Status 22
Investment Policy, Strategy and Dividend Policy 22
Directors’ Duty to Promote the Success of the Company 23
Principal Risks 24
Viability Statement 26
Other Information 26
Governance Report
Board of Directors 27
Directors’ Report 28
Corporate Governance Report 32
Audit Committee Report 36
Directors’ Remuneration Policy 39
Directors’ Remuneration Report 40
Directors’ Responsibility Statement 42
Financial Report
Independent Auditor’s Report 43
Income Statement 49
Reconciliation of Movements in Shareholders’ Funds 50
Balance Sheet 51
Cash Flow Statement 52
Notes to the Financial Statements 53
Notice of the Annual General Meeting 62
Shareholder Information & Glossary 64
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action
you should take, you are recommended to seek your own independent financial advice from your stockbroker, bank
manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets
Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have
sold or otherwise transferred all your ordinary shares in Aberforth Smaller Companies Trust plc, please forward this
document, together with the accompanying documents, immediately to the purchaser or transferee, or to the stockbroker,
bank or agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
Investor Disclosure Document
The EU Alternative Investment Fund Managers Directive ("AIFMD") requires certain information to be made available to
investors prior to their investment in the shares of the Company. The Company’s Investor Disclosure Document, which is
available for viewing at www.aberforth.co.uk, contains details of the Company’s investment objective, policy and strategy,
together with leverage and risk policies.
Strategic Report
The Board presents the Strategic Report on pages 1 to 26 which incorporates the Chairman’s Statement and Managers’ Report.
The Company
Aberforth Smaller Companies Trust plc (“the Company” or “ASCoT”) is an investment trust. Its ordinary shares are listed on
the premium segment of the Official List of the Financial Conduct Authority and traded on the London Stock Exchange.
The Company has appointed Aberforth Partners LLP as the investment managers ("the Managers"). The Managers adhere to a
value investment philosophy in managing the Company’s investments in small UK quoted companies as described on page 22.
Investment Objective
The investment objective of the Company is to achieve a net asset value total return (with dividends reinvested) greater
than that of the Numis Smaller Companies Index (excluding Investment Companies) (“NSCI (XIC)” or “benchmark”) over
the long term.
Financial Highlights over the Year
31 December 31 December %
2022 2021 Change
Total Returns for the year
Net Asset Value per Ordinary Share2 -10.4% 32.5% n/a
Numis Smaller Companies Index (excluding Investment Companies) -17.9% 21.9% n/a
Ordinary Share Price2 -7.3% 20.3% n/a
Asset Values
Shareholders’ Funds1 £1,251m £1,473m -15.1
Net Asset Value per Ordinary Share1 1,465.67p 1,674.35p -12.5
Share Price
Market Capitalisation2 £1,128m £1,288m -12.4
Ordinary Share price2 1,322.00p 1,464.00p -9.7
Ordinary Share discount2 9.8% 12.6% n/a
Returns and Dividends for the year
Revenue Return per Ordinary Share1 55.64p 36.76p 51.4
Dividends per Ordinary Share (excluding special dividends) 1 39.00p 35.20p 10.8%
Dividends per Ordinary Share (including special dividends) 1 47.30p 35.20p 34.4%
Total Return per Ordinary Share1 -181.00p 415.19p n/a
Actual Gearing employed1 5.7% 5.6% n/a
Ongoing Charges2 0.80% 0.75% n/a
Portfolio Turnover2 18.4% 25.6% n/a
1 UK GAAP Measure 2 Alternative Performance Measure (refer to glossary on page 66) Source: Aberforth Partners LLP
Cumulative Performance over past year
(figures are total returns and have been rebased to 100 at 31 December 2021)
100
95
90
85
80
75
70
ASCoT NAV Benchmark ASCoT Share Price
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
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Aberforth Smaller Companies Trust plc 1
Key Performance Indicators
The Board assesses the Company’s performance in meeting its objective against the following key performance indicators (also
referred to as Alternative Performance Measures): net asset value total return; share price total return; relative performance;
dividend growth and share price discount to net asset value. Information on the Company’s performance is provided in the
Chairman’s Statement and Managers’ Report and a record of these measures is shown below and in the Historical Information
on page 21. In addition to the above, the Board considers the share price discount against its investment trust peer group. A
glossary of these Alternative Performance Measures can be found on page 66 and the Company's objective is on page 1.
Cumulative Performance (Total Returns)
Periods to 31 December 2022 1 Year 3 Years 5 Years 10 Years
Since inception
(10 December 1990)
Net Asset Value per Ordinary Share1 -10.4% 0.5% 7.8% 132.3% 3,562.8%
Numis Smaller Companies Index
(excluding Investment Companies) -17.9% -4.2% 1.5% 100.4% 1,817.7%
Ordinary Share Price1 -7.3% -6.8% 14.9% 149.1% 3,319.2%
Annualised Performance (Total Returns)
Periods to 31 December 2022 1 Year 3 Years 5 Years 10 Years
Since inception
(10 December 1990)
Net Asset Value per Ordinary Share1 -10.4% 0.2% 1.5% 8.8% 11.9%
Numis Smaller Companies Index
(excluding Investment Companies) -17.9% -1.4% 0.3% 7.2% 9.6%
Ordinary Share Price1 -7.3% -2.3% 2.8% 9.6% 11.6%
1 Alternative Performance Measure (refer to glossary on page 66) Source: Aberforth Partners LLP
Cumulative Performance over 10 years
(figures are total returns and have been rebased to 100 at 31 December 2012)
300
250
200
150
100
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
ASCoT NAV Benchmark ASCoT Share Price
2 Strategic Report
Aberforth Smaller Companies Trust plc
Key Performance Indicators (continued)
Ten Year Summary
Relative Performance (figures are total returns and have been rebased to 100 at 31 December 2012)
130
120
110
100
90
80
NAV v Benchmark Share Price v Benchmark
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Dividends and CPI Growth (figures have been rebased to 100 at 31 December 2012)
180
170
160
150
140
130
120
110
100
CPI Dividends (excluding special dividends)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Premium/Discount (being the difference between Share Price and NAV)
-5%
0%
5%
10%
15%
20%
Premium
Discount
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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Aberforth Smaller Companies Trust plc 3
Chairman’s Statement
Review of performance
ASCoT’s net asset value total return in the twelve months to 31 December 2022 was -10.4%. In share price terms, the
return was -7.3% as the discount narrowed from 12.6% to 9.8% over the course of the year. These asset and share price
declines are clearly disappointing, but it is pleasing that ASCoT did succeed in mitigating the more significant weakness
of small UK quoted companies in general. The Numis Smaller Companies Index (excluding Investment Companies) (NSCI
(XIC)) is ASCoT’s benchmark. Its total return in the year was -17.9%.
Declines of this sort were typical of financial assets around the world in 2022, with a notable exception being the FTSE
All-Share, which was broadly unchanged. The prices of both equities and bonds struggled amid the first meaningful
inflation in decades, as the world economy contorted to cope with the aftermath of the pandemic. Their credibility at
stake, central banks responded belatedly with substantial increases in interest rates. Their task was complicated in the
UK’s case by domestic political upheaval and more generally by Russia’s invasion of Ukraine in February. The continuing
war exacerbates many of the supply chain issues and price pressures that stemmed from the pandemic. The
combination of higher energy prices and higher interest rates threatens recession in much of the world, particularly in
the energy-importing economies of Europe.
Amid all these issues, it is easy to understand the weakness of small companies’ share prices in 2022. However, from
here it is more important to assess to what degree the challenges are already reflected in valuations. This is explored by
the Managers in detail in their report.
Dividends
One of the main themes of the Managers’ Report is the resilience of small UK quoted companies, which often seems to
be under-estimated by the stockmarket. Perhaps the clearest demonstration of this resilience is the dividend
performance of the companies. This suffered in the pandemic, but the recovery has been remarkably strong, so much so
that ASCoT’s Revenue Return per Ordinary Share in the year to 31 December 2022 rose to 55.64p, its highest ever. This
was 51% above 2021’s level and 32% above 2019’s, the year before the pandemic. Six special dividends paid by investee
companies in 2022 made a helpful contribution. However, even with these excluded, it was an exceptionally good
outcome and one that contrasts with the exceptionally difficult experience in 2020.
In setting ASCoT’s dividend, the Board seeks to look beyond the portfolio’s income receipts in any one year with the
ultimate aim of increasing the dividend at a rate above that of inflation. In this, we are guided by dividend forecasts
provided by the Managers and can utilise revenue reserves, which are prudently replenished in the good years. It is clear
that the ambition to grow ASCoT’s dividend in real terms represents a challenging hurdle at present, with December’s CPI
rising by 10.5% year-on-year. However, the strength of the dividend experience over the past twelve months means that
the Board can comfortably achieve its aim in respect of 2022.
Therefore, we are pleased to propose a final dividend of 26.95p per Ordinary Share, which is 11.1% higher than last year’s
24.25p. In combination with the 12.05p interim dividend, this would take the full year ordinary dividend to 39.00p, which
would represent growth of 10.8%. In addition, we propose a special dividend of 8.30p, much of which would correspond
to the special dividends received by ASCoT from investee companies during the year. The special dividend would also
ensure that ASCoT passes HMRC’s all-important minimum retention test for investment companies.
As to the future, the Managers expect dividend growth from the portfolio in 2023, but the looming recession means that
their estimates are likely to prove volatile. There are, though, offsetting considerations. First, the total dividend proposed
for 2022 of 47.30p would allow ASCoT’s revenue reserves to be strengthened prudently from 59.0p to 69.9p per Ordinary
Share. As it did during the pandemic, the Board is prepared to use these reserves to support an uncovered dividend.
Second, the Managers’ data show that the balance sheets of the portfolio companies are unusually robust and should be
able to mitigate the full impact of a recession on dividends. The Board is therefore optimistic that ASCoT can continue its
record of real dividend growth, which has seen dividends compound at more than 7% per annum over 32 years.
Continuation vote
It is the Company’s policy to hold a continuation vote every three years. The Annual General Meeting on 2 March 2023
will include the tenth such vote in its history. The Board views the continuation vote as an important shareholder right
and encourages all Shareholders to exercise it.
The period in respect of the tenth continuation vote was tumultuous, encompassing as it did the aftermath of Brexit, the
pandemic, a war and a decisive departure from the extraordinarily accommodative monetary policies that followed the
credit crunch in 2009. After a tricky start, ASCoT’s performance emerged consistent with its investment objective. The
net asset value total return of 0.5% was 4.7% ahead of the NSCI (XIC)’s total return and, as described above, the
Company’s dividend record has been sustained. While even three years is probably too short a period to judge an
investment strategy, it is pleasing that the Managers’ commitment to the value investment style has benefited from the
change in investment climate. The value style has out-performed over the three years and ASCoT has benefited
accordingly.
The Board believes that superior investment performance, over longer time periods, requires the consistent application
of an investment philosophy and investment process. Part of its role, therefore, is to check that the Managers remain
true to their principles, even in the most challenging circumstances. In this last continuation vote period, it was
encouraging to see the continuity of the Managers’ investment philosophy and conviction, as they deployed gearing to
4 Strategic Report
Aberforth Smaller Companies Trust plc
Chairman’s Statement
take advantage of distressed valuations during the pandemic and added to their own holdings in ASCoT’s shares. Their
preparedness to stand apart from the crowd means that ASCoT benefits from a differentiated and relevant investment
proposition. This does not guarantee superior performance every year, but it does improve the likelihood of success
over time. The Board therefore recommends that Shareholders vote in favour of the Company’s continuation.
Gearing
The Board’s gearing policy has been consistent throughout ASCoT’s life. Gearing is deployed tactically with the aim of
taking advantage of periods of stress in equity markets. This has led to ASCoT being geared on four occasions over its
32 years, with the most recent episode prompted by the pandemic in 2020, as noted above. Gearing has remained in
place since then and, notwithstanding the setback to share prices in 2022, has enhanced ASCoT’s net asset value
performance. At 31 December 2022, the gearing ratio, which is net debt to Shareholders’ Funds, was 5.7%.
The £130m debt facility to enable this is provided by The Royal Bank of Scotland International. Its term runs to June
2023, which is designed to align with the three yearly continuation vote cycle. After the Annual General Meeting, and
providing the continuation vote is passed, the Board and the Managers will seek to put in place a new facility, which will
continue to provide the Company with access to liquidity for investment purposes and for share buy-backs as and when
appropriate. In an at times volatile and less liquid asset class such as small UK quoted companies, having access to
immediate funds through a credit facility provides the Managers with valuable flexibility.
Share buy-back
The Company seeks authority to buy back up to 14.99% of its Ordinary Shares at the Annual General Meeting. The
authority was renewed in March 2022. In the year to 31 December 2022, 2,603,661 shares were bought back and
cancelled. The total value of these repurchases was £33.3m, on an average discount of 13.8%. In 2021, buy-backs
totalled £12.9m at an average discount of 11.2%. The corresponding figures for 2020 were £6.1m and 13.8%.
The Board continues to believe that, at the margin, buy-backs provide an increase in liquidity for those Shareholders
wishing to crystallise their investment and, at the same time, deliver an economic uplift for those Shareholders wishing
to remain invested in the Company. Accordingly, the Board will be seeking to renew the buy-back authority at the
Annual General Meeting on 2 March 2023.
Stewardship
The Board is responsible for the effective stewardship of the Company’s affairs and oversees the activities of the
Managers in relation to Environmental, Social and Governance (ESG) matters. Pages 13 to 15 cover the Board’s oversight
and activities in 2022. They also set out the Managers’ ESG policies and practices, along with their voting approach and
activity during the year. The Board endorses the Managers’ stewardship policy, which is set out in their submission as a
signatory to the UK Stewardship Code. This, together with examples relating to voting and engagement with investee
companies, can be found in the “About Aberforth” section of the Managers’ website at www.aberforth.co.uk.
Board changes
The Board regularly reviews its composition and structure in line with corporate governance requirements. As part of the
Board’s succession planning, Julia Le Blan, who has been a Director for nine years and Chair of the Audit Committee for
five years, will not stand for re-election at the forthcoming Annual General Meeting. Julia has made a significant
contribution to the Board and we wish her well for the future.
As I indicated in my Interim Report, Patricia Dimond was appointed as a Director and member of the Audit Committee
with effect from 3 March 2022. She will take over as Chair of the Audit Committee on 2 March 2023 following Julia’s
retirement. The Board also announced the appointment of Jaz Bains as a Director from 10 October 2022. Jaz has worked
in the energy sector for over 30 years. In 2013 he helped set up and launch The Renewables Infrastructure Group (TRIG),
now a FTSE 250 listed investment company, and he is responsible for leading the Operations Manager function of TRIG.
He is also the senior independent director of the Jupiter Green Investment Trust Plc. Jaz has attended board meetings
since October and will become a member of the Audit Committee on 2 March 2023.
Annual General Meeting (AGM)
The AGM will be held at 14 Melville Street, Edinburgh EH3 7NS at 10.30 am on 2 March 2023. Details of the resolutions
to be considered by Shareholders are set out in the Notice of the Meeting on page 62. Shareholders are encouraged to
submit their vote by proxy in advance of the meeting in case restrictions apply and it is not possible for shareholders to
attend in person. An update on performance and the portfolio will be available on the Managers' website following the
meeting. In accordance with normal practice, the results of the AGM will be issued in a regulatory news announcement
and also posted on the website.
Strategic Report
Aberforth Smaller Companies Trust plc 5
Chairman’s Statement
Conclusion
Twelve months ago, I expressed optimism for a year of progress and positive returns. This proved misplaced with the
onset of war in Ukraine, which exacerbated the inflationary pressures that were a legacy of the pandemic. Elevated
energy prices and rising interest rates threaten recession, which is in all probability already under way in the UK.
Recessions are unpleasant – companies’ profits and people’s livelihoods are squeezed. Financial accidents happen as
those rising interest rates and falling profits expose leverage. In navigating a path through recession, experience and
resilience are important. Through its regular engagement with the Managers, the Board is reassured that these are
attributes both of the executive teams running ASCoT’s investee companies and of the Managers themselves. The strong
balance sheets that characterise the portfolio do not ensure a painless experience over the coming year but they
certainly do suggest that ASCoT’s holdings will be well placed to enjoy the recovery that will inevitably come.
In the meantime, we should not lose sight of a silver lining in the recessionary cloud. The concern about economic
slowdown resulted in widespread share price weakness last year. This has brought more opportunities to the value
investor. The enlarged opportunity set is evident in the rise in the number of NSCI (XIC) constituents following the
index’s rebalancing on 1 January 2023. The Board has been concerned about the shrinkage of the investment universe
in recent years and so this may represent a welcome, and hopefully sustainable, reversal.
When the recovery does come, history teaches that share prices will rebound long before profits – it is after all the role
of markets to anticipate and discount. The Managers’ Report describes the portfolio’s low historical price earnings ratio
and argues persuasively that much of the risk of recession is in the price. However, the timing of an inflection is more
difficult since low historical valuations are a necessary condition of a pick-up in share prices, but they are not a sufficient
condition. As the Managers suggest, that path through recession will have its twists and turns as companies report
results and as markets react to the interplay of inflation and interest rates.
Looking beyond the near term, my fellow directors and I are optimistic about ASCoT’s prospects. Events of the past few
years have demonstrated the relevance of the Company’s differentiated investment strategy. Recent M&A activity
underlines the attractions of the sorts of companies selected by the Managers. Meanwhile, the market’s willingness to
look beyond growth stocks improves the value investor’s odds of beating the benchmark index. Over time, it is realistic
to assume that market sentiment will oscillate between growth and value. Given this, what matters in my experience is
that investment managers remain consistent in terms of their process and style. When it comes to ASCoT’s Managers,
this is something about which we as the Board and you as shareholders can be confident over the years to come.
Finally, my fellow Directors and I very much welcome the views of Shareholders and are available to talk to you directly.
My email address is noted below.
Richard Davidson
Chairman
27 January 2023
richard.davidson@aberforth.co.uk
6 Strategic Report
Aberforth Smaller Companies Trust plc
Managers’ Report
Introduction
Since inception in 1990, ASCoT’s purpose has been to achieve a net asset value total return greater than that of the NSCI
(XIC) over the long term. To achieve this objective, the Managers have applied a consistent and differentiated
investment strategy, which has three notable aspects.
• The investment process is focused on understanding companies within the NSCI (XIC). The Managers consider factors
such as financial performance, competitive dynamics and capital allocation priorities, as well as relevant
environmental and social matters. A crucial focus is governance, which involves regular meetings with company
directors. The outcome of the process is the selection of stocks to own in the portfolio.
• Stock selection is guided by a value investment philosophy. The reason for this is that there is strong historical
evidence that over time a value premium can be harvested within equity markets. In practice, the Managers seek
companies whose share prices are trading at wide discounts to their true values. As the gap between the two
narrows, positions are reduced, with the proceeds recycled into other companies with greater upside, a process that
the Managers term the “value roll”.
• The team managing the portfolio is experienced and well-resourced. It is often the case that the team members have
known the investee companies for longer than the directors running them. The Managers have always engaged
actively but discreetly with boards, both as part of their research and to seek to effect change if necessary. Their
ability to engage is improved by their willingness to take significant stakes in investee companies.
The consistent application of these features does not guarantee strong returns in each year. However, it does ensure
that ASCoT benefits from a differentiated and relevant investment strategy and, as the table in the following section
suggests, it has contributed to results that have met the investment objective over ASCoT’s history.
Performance
ASCoT’s net asset value fell by 10.4% in total return terms in 2022. This was well ahead of the benchmark, with the NSCI
(XIC)’s total return being -17.9%. In what was a year of poor equity returns around the world, larger UK companies
distinguished themselves with a modestly positive return, as the FTSE All-Share benefited from its high exposure to
energy companies.
CAGR since
Total returns 2020 2021 2022 3 years ASCoT’s inception
ASCoT NAV -15.4% +32.5% -10.4% +0.5% +11.9%
NSCI (XIC) -4.3% +21.9% -17.9% -4.2% +9.6%
FTSE All-Share -9.8% +18.3% +0.3% +7.1% +8.1%
MSCI World (£ terms) +13.2% +23.4% -7.9% +28.7% +9.3%
The table above puts 2022’s returns in the context of the three year continuation vote period that ended on 31 December
2022. The negative return of the NSCI (XIC) is notable for being the first time that small companies have lost ground over one
of ASCoT’s continuation vote periods. ASCoT itself recorded a positive return and thus pulled ahead of the benchmark despite
a difficult start to the three years. The table also brings in a gauge of international equity returns, which illustrates the
opportunity cost of exposure to the UK in recent years and hints at the present cheapness of UK equities. However, given the
turbulence of world events over the period, it is perhaps surprising that equity returns were on the whole positive. Indeed,
greater stress is evident among government bonds, with the ten year gilts yield rising from 0.8% to 3.7% over the three years
to produce a large negative total return.
The continuation vote period started with the pandemic. This remains a threat to public health in parts of the world, most
notably China, but it is the virus’s indirect effects, principally through the measures taken to control its spread, that are now
having the more meaningful impact. Huge fiscal and monetary stimulus, together with stresses in globalised supply chains,
sowed the seeds of the first meaningful inflationary episode for decades. Pressure has been intensified by the war in Ukraine,
which has raised energy prices and further complicated supply chains. Central banks have responded by raising interest rates
to take monetary conditions decisively away from the zero interest rate policies that have held sway since the global financial
crisis. However, higher interest rates have further increased the cost of living to threaten a slowdown in economic growth.
This looming recession has contributed to the weakness in share prices around the world in 2022.
On top of these global issues, investors in UK assets have had to contend with a fraught domestic political situation. The
scarcely believable events of the third quarter of 2022 contrast with the widespread optimism in the wake of the decisive
general election result at the end of 2019. The divisiveness of Brexit and an increasingly factionalised Conservative party
contributed to Liz Truss’s elevation to Prime Minister and to a mini budget that saw global financial markets lose confidence
in the UK. Sterling took the strain, which is an advantage of a freely floating currency, but the more meaningful pain was
experienced in sharply higher borrowing costs for the government and the private sector. Among equities, the aversion to
all things British saw outflows from open-ended funds and institutional allocations to UK equities approach twenty year lows.
The swift change of Prime Minister has restored confidence, bringing a rally in sterling and gilts, but UK equity valuations
continue to trade at wide discounts to their global peers.
Strategic Report
Aberforth Smaller Companies Trust plc 7
Managers’ Report
The main influences on performance in 2022
The table below sets out the contribution of various factors to ASCoT’s relative return in 2022. The following paragraphs
add context and explanation, mainly to the first row in the table, which quantifies the performance of the portfolio and
is usually the most meaningful effect on ASCoT’s overall returns.
For the twelve months ended 31 December 2022 Basis points
Attributable to the portfolio of investments, based on mid prices
(after transaction costs of 14 basis points) 850
Movement in mid to bid price spread (7)
Cash/gearing (64)
Purchase of ordinary shares 36
Management fee (64)
Other expenses (5)
Total attribution based on bid prices
746
Note: 100 basis points = 1%. Total Attribution is the difference between the total return of the NAV and the Benchmark Index (i.e. NAV = -10.41%;
Benchmark Index = -17.87%; difference is 7.46% being 746 basis points).
Value Style
The value investment style helped performance in 2022. It has, however, been out of favour for most of the period since
the global financial crisis 14 years ago. An important influence on this has been the monetary conditions that were a
response to the credit crunch. Low to zero interest rates and quantitative easing contributed to lengthened investment
horizons and unusually low discount rates used to value assets. The beneficiaries in the equity world were companies
whose cash flows were more weighted to future years, many of which are currently loss-making. These long duration
equities are growth stocks, which enjoyed substantial revaluations over the past decade or so and a period of particularly
sharp out-performance amid the pandemic.
The Managers have regularly hypothesised that an increase in bond yields and, by extension, in discount rates would
expose these high valuations and would lead to a period of better relative performance from value stocks. This has come
to pass, as inflationary pressures have returned, as interest rates have been increased in response and as bond yields
have risen. The value style has therefore performed relatively well since the vaccine rally towards the end of 2020. This
out-performance has been helped by disappointing results from many growth stocks – even some of the US technology
giants have responded with cost cutting and redundancies.
Within the NSCI (XIC), investment style effects can be tracked through data from London Business School, which defines
value stocks as those with low price-to-book ratios and growth stocks as those with high ratios. In 2022, the index’s value
component out-performed the index as a whole by 9%. The Managers’ investment process takes into account a broader
range of valuation metrics and qualitative considerations, but it is clear that the investment style environment was
helpful to ASCoT’s relative returns.
Economic cyclicality
Concern about recession was an important reason for the negative return from the portfolio and, indeed, from the NSCI
(XIC) in 2022. In contrast to weak share prices, the profit performance of ASCoT’s holdings in 2022 was generally good.
In large part, this was due to the momentum with which they entered the year as the recovery from the pandemic
continued to play out.
However, as the year wore on, several companies that are more exposed to the domestic economy started to report
weaker trading, as the familiar cost of living issues started to affect sales and costs. Meanwhile, those businesses with
a greater reliance on overseas markets proved more resilient. Their profits have been helped by the translation benefit
of sterling’s decline and by a build-up of inventories to meet customer demand amid the supply-chain problems. Despite
these diverging experiences at the underlying business level, there was little to choose between the share price
performances of the domestics group and the overseas group in 2022. Entering 2023, 54% of the revenues of the
portfolio holdings were generated in the UK economy, against 49% for the NSCI (XIC).
Since the global financial crisis, sensitivity to the economic cycle has been a trait generally shunned by stockmarkets.
Consequently, the value cohort of the NSCI (XIC) has become increasingly populated by economically sensitive
companies such as retailers, leisure businesses and engineers. It is therefore likely that concerns about imminent
recession would disproportionately affect a portfolio, such as ASCoT’s, selected under a value investment philosophy.
This would have hampered ASCoT’s performance relative to the NSCI (XIC) in 2022, but there are mitigating factors. As
noted above, growth stocks themselves are facing cyclical headwinds, while the balance sheets of ASCoT’s holdings are
unusually robust at present, which is explored in more detail below.
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Aberforth Smaller Companies Trust plc
Managers’ Report
Income
While the portfolio declined in capital terms in 2022, its income experience was very strong and supported ASCoT’s total
return in the year. The table below splits the portfolio’s holdings into five categories, which are determined by each
company’s most recent dividend action.
Nil Payer
18
Cutter
6
Unchanged
Payer
11
Increased
Payer
38
New/Returner
6
Starting with the Cutters, the reasons for the cuts over the past year were idiosyncratic rather than related to the more
uncertain economic environment. Their impact was eclipsed by the Increased Payers and the New / Returners. The latter
category comprises companies that are paying dividends for the first time or that have now resumed payments, having
passed their dividends during the pandemic. This provided a large contribution to the income growth enjoyed by ASCoT in
2022. Another boost came from the receipt of six special dividends paid by investee companies in the year.
It is important not to extrapolate the rate of income growth in 2022 – after all nil payers can only resume dividend
payments once and special dividends are by their nature unpredictable. Another consideration is that the Managers may
identify more attractive investment opportunities among nil yielding companies. A higher exposure to these would, all else
being equal, reduce ASCoT’s income. However, that is not the case today and the Managers presently anticipate a year of
progress in 2023 in underlying terms (i.e. excluding special dividends).
The outcome for 2023 will inevitably be influenced by the course of the economy, though the portfolio’s strong balance
sheets are helpful. Moreover, the average historical dividend cover of the portfolio at 31 December 2022 was 3.4x, which
compares favourably with the long term average of 2.7x. Finally, the Managers expect that several more of the current Nil
Payers will be able to resume dividend payments over the next year or so.
These considerations have informed the Board’s ambition to grow dividends paid by ASCoT in real terms and its decision
to increase the final dividend by 11%.
Stock selection – boosted by M&A
Stock selection helped ASCoT’s performance in 2022 and within this M&A was the clearest theme. Six of the portfolio’s
holdings received takeover bids during the year, with an average premium to the pre-announcement share price of almost
60%. The stimulus to performance of a takeover in a year of generally weak share prices is meaningful, but it remains
important to guard against opportunism on the part of the buyers when valuations of small UK quoted companies are so
low. Notwithstanding the sizeable takeover premiums, the Managers were disappointed with the terms of two of the
deals, which they believed undervalued the companies concerned. It is often the case that the best M&A experiences are
those in which boards of directors offer to consult shareholders well in advance. Such consultation reduces the risk of
embarrassment, should shareholders find proposed terms unacceptable, and can lead to better outcomes, which may be
that the company in question retains its independence. The Managers make it clear to the boards of the investee
companies that they want to be consulted in such situations and that they are willing to be insiders for extended periods.
It was also a busy year for M&A within the NSCI (XIC). Takeover bids for 19 of its constituents were announced, some of
which will not complete until 2023. The acquirers in 16 of these cases were overseas buyers, attracted no doubt by low
stockmarket valuations and by sterling weakness. Towards the end of the year, the pace of deals eased. The UK’s political
spasm in September may have been influential, but the more important reason was volatility within debt markets, which
complicated the funding of deals. In this regard, it was notable that the acquirers in 14 of the NSCI (XIC)’s 19 deals in 2022
were other corporates rather than private equity.
Size
The portfolio retains its high exposure to the “smaller small” companies within the NSCI (XIC). The reason is rooted in
relative valuations and is explained later in this report. Size positioning has often had a significant effect on performance.
For most of the period since the global financial crisis, investors have favoured the greater liquidity of the “larger small”
companies, which hindered the portfolio’s relative returns. However, the portfolio benefited from a resurgence of the
“smaller smalls” in 2020 and 2021. In 2022, there was little to choose between the price performances of the two cohorts
and so size positioning had a negligible effect on ASCoT’s performance.
Gearing
Amid the weakness of equities in 2022, ASCoT’s gearing hampered its performance, as the table at the beginning of this
section quantifies. ASCoT’s gearing strategy is tactical – it borrows when valuations and share prices are unusually low.
Gearing has been deployed four times in ASCoT’s history, the most recent opportunity coming in 2020 with the pandemic.
Notwithstanding the vaccine rally, valuations did not recover to the levels that prevailed before the pandemic and so ASCoT
was still geared as 2022 started. Through the year, the gearing ratio averaged 5%, its oscillations a function of stockmarket
moves and of the timing of the realisation of positions in holdings subject to takeover. Since deployment in mid 2020,
gearing has enhanced the performance of ASCoT’s portfolio. With valuations still attractive, it remains in place as 2023
begins.
Portfolio features
Active Share
Active share is a measure of how different a portfolio is from an index. The ratio is calculated as half of the sum of the
absolute differences between each stock’s weighting in the index and its weighting in the portfolio. The higher a portfolio’s
active share, the higher its chance of performing differently from the index, for better or worse. The Managers target an
active share ratio of at least 70%. At 31 December 2022, it stood at 77%, which is up slightly from 76% at the end of 2021.
Strategic Report
Aberforth Smaller Companies Trust plc 9
Managers’ Report
An influence on the rise of the active share was the annual rebalancing of the NSCI (XIC) on 1 January 2023. This is usually
a low-key affair, in which companies too big for the index are ejected and those now small enough are included. Occasionally
during periods of stockmarket stress, it is a bigger event, notably in 2009 amid the global financial crisis and now in 2023.
This year’s rebalancing saw 29 companies, whose share prices had performed particularly poorly in 2022, brought into the
index. These “fallen angels” accounted for 26% by value of the NSCI (XIC) on the 1 January 2023. They bring additional
opportunity and, indeed, the Managers have so far added two of the new entrants to the portfolio. These two companies
are former holdings, which the Managers know well but which had grown too large for the NSCI (XIC) in previous years. It
remains to be seen whether this significant refreshing of the index represents a turn in the long term trend of decline in the
number of NSCI (XIC) constituents.
Portfolio turnover
Portfolio turnover is defined as the lower of purchases and sales divided by average portfolio value. Over the twelve months
to 31 December 2022, turnover was 18%, which is just over half the average in ASCoT’s 32 year history. The relatively low
rate of turnover in 2022 reflected the weakness of the stockmarket. Lower share prices imply higher upside to the
Managers’ price targets, which, all else being equal, discourages changes to the portfolio. By extension, with rising share
prices there should be more opportunity to realise value and redeploy the proceeds in other companies with higher upsides.
The Managers term this the “value roll”. It can make an important contribution to ASCoT’s performance over time.
Environmental, social and governance (ESG)
The Managers integrate matters related to ESG into their investment process, in which relevant issues are considered
alongside any other that affects a company’s profits and valuation. With its emphasis on bottom-up analysis and
engagement, the process is well suited to this approach. In 2022, the Managers enhanced their tracking and assessment of
ESG matters through the development of an additional module within their investment database. Over time, it is hoped that
this will yield useful data, whose presentation will help Shareholders understand the portfolio’s ESG profile and, more
ambitiously, any relationship between ESG issues and valuations. In the meantime, the work done to populate the new
module has made it clear that small UK quoted companies are making significant progress in their ESG disclosures and, more
importantly, are very much focused on the impact of issues such as climate change on their future profits and valuations. It
is clear to the Managers that the perception of small companies as ESG victims is misplaced. This creates investment
opportunity as companies’ continuing progress is rewarded with higher valuations over time. Further details of the
Managers’ approach to ESG are set out on pages 13 to 15.
Resilience
In 2022, the stockmarket has been concerned about the impact of recession on companies’ profits and balance sheets. The
typical decline in the profits of small companies in a recession is around one third. Previous downturns have been of varying
lengths and depths, but have been followed by periods of recovering profits and share prices. One upside of the various
crises to have peppered the past dozen or so years is that the management teams running small UK quoted companies are
experienced in damage limitation – as one chief executive put it in a recent update, “we are battle-hardened”. This gives
hope that the pressure of lower demand can be mitigated through cost control, even though the current inflationary forces
complicate the task.
The more profound risk during a recession is that a company’s balance sheet proves vulnerable, preventing it from enjoying
the subsequent rebound in trading conditions. In this regard, it is reassuring that the balance sheet profiles of both the
portfolio and of small companies as a whole are robust. This is displayed in the following table, in which Tracked Universe
refers to the 98% by value of the NSCI (XIC) that the Managers follow closely.
Net debt/EBITDA Net debt/EBITDA
Weight in companies with: Net cash < 2x > 2x Other*
Portfolio: 2022 41% 40% 14% 5%
Tracked universe: 2022 34% 34% 22% 10%
*Includes loss-makers and lenders.
The table shows that 41% of the portfolio is invested in companies with net cash on their balance sheets at the end of 2022.
Another 40% is invested in companies with relatively low financial leverage (i.e. net debt to EBITDA ratios below two times).
The portfolio’s profile compares well with that of the Tracked Universe. However, the index’s profile is also unusually robust.
Balance sheets within the NSCI (XIC) last reached today’s degree of resilience in around 2014. That was five years after a
recession, a period in which the boards of companies were so scarred by the experience of the credit crunch that they were
reluctant to invest.
Back to today, companies are entering a likely recession with strong balance sheets. In this, the recency of the pandemic is
influential: there has been little time to invest, while some companies benefited from government support and from equity
issuance. Whatever the reason, today’s situation is unusual since recessions are often preceded by a period of corporate
excess in the form of debt funded over-investment. There are caveats – notably the elevated inventories that some have
taken on amid the supply chain problems and the relevance for the first time in years of interest cover covenants – but the
balance sheet profile of both the portfolio and the index appears encouragingly resilient.
Valuations
The table below sets out the forward valuations of the portfolio, the Tracked Universe and certain subdivisions of the
Tracked Universe. The metric displayed is enterprise value to earnings before interest, tax and amortisation (EV/EBITA),
which the Managers use most often in valuing companies. The historical and forecast data underlying all the ratios are the
Managers’.
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Aberforth Smaller Companies Trust plc
Managers’ Report
EV/EBITA
ASCoT
Tracked universe (245 stocks)
- 41 growth stocks
- 204 other stocks
- 91 stocks > £600m market cap
- 154 stocks < £600m market cap
2021
7.4x
9.1x
14.1x
8.5x
10.6x
6.9x
2022
6.7x
8.9x
12.8x
8.3x
10.0x
7.1x
2023
6.2x
8.6x
10.7x
8.2x
10.1x
6.4x
2024
5.6x
7.8x
9.0x
7.5x
8.9x
6.0x
The table demonstrates some familiar features. The ratios for the portfolio are meaningfully lower than those for the
Tracked Universe, which is consistent with the Managers’ value investment philosophy. The growth stocks within the
Tracked Universe remain particularly highly rated. This is despite their under-performance in 2022 and may suggest
incremental vulnerability. Another relevant gauge of the portfolio’s value is to compare its 2022 EV/EBITA ratio with the
14x multiple at which the 19 takeover deals within the NSCI (XIC) in 2022 were agreed. The final two rows illustrate the
stockmarket’s continuing reluctance to embrace “smaller small” companies: those with market capitalisations below
£600m are considerably more attractively valued than are their larger peers. This explains why the portfolio’s weighting
of 62% in the “smaller smalls” is higher than the NSCI (XIC)’s 33%.
In attempting to understand the portfolio’s present value opportunity, the Managers’ estimates underlying the 2023 and
2024 EV/EBITA ratios are uncertain. The principal influence on the estimates is engagement with the management
teams running the companies. While they are well aware of the top down threats, many had not yet felt the full force
of a downturn on their businesses by the end of 2022. In all likelihood, the first half of 2023 will see trading updates
weakening and a reduction to profit estimates. Until the downgrade cycle has played out, valuation ratios based on
forecast profits are of less use. However, to cut through this and contextualise the attractiveness of today’s valuations,
there is a useful tool in the form of historical valuation ratios.
The table below of portfolio characteristics includes the historical PEs for the portfolio and the NSCI (XIC). Both were
unusually low at 8.1x at 31 December 2022, with the index’s ratio refreshed by the significant rebalancing described
previously. The two PEs are also calculated differently. The Managers remove one-off profits and losses from the
portfolio’s earnings per share, but London Business School does not do so for the NSCI (XIC). At 31 December 2022, this
flattered the index’s historical PE relative to the portfolio’s.
31 December 2022 31 December 2021
Portfolio characteristics ASCoT NSCI (XIC) ASCoT NSCI (XIC)
Number of companies 79 350 77 337
Weighted average market capitalisation £548m £866m £624m £934m
Price earnings (PE) ratio (historical) 8.1x 8.1x 13.3x 16.6x
Dividend yield (historical) 3.5% 3.4% 1.9% 2.1%
Dividend cover 3.4x 3.7x 4.0x 2.9x
The chart below puts the portfolio’s PE in the context of ASCoT’s history since inception in 1990. The chart also depicts
the mean PE over the period of 12.2x and the plus one to minus one standard deviation range. ASCoT’s historical PE has
dipped below the minus one standard deviation line on three previous occasions, all of which were coincident with
recession: most recently the pandemic, in the middle the global financial crisis and to the far left of the chart the early
1990s recession. Breaching the minus one standard deviation line has been a useful indicator of subsequent good
returns – it has historically indicated that much of the risk has been priced in, allowing the stockmarket to re-rate shares
in advance of the recovery in profits.
ASCoT’s historical PE ratio
20x
18x
16x
14x
12x
10x
8x
6x
4x
ASCoT PE
+/- Standard Deviation
Mean
20x
18x
16x
14x
12x
10x
8x
6x
4x
1990
1995
2000
2005
2010
2015
2020
2022
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Aberforth Smaller Companies Trust plc 11
Managers’ Report
To take the argument to the next stage, it was noted above that small cap profits typically fall by one third in a recession,
though over varying time periods. A repeat of that experience would take today’s historical PE of 8.1x to 12.1x. Despite
being a multiple of what could be considered trough profits, this would be slightly below the portfolio’s long term
average PE. Again, it may be inferred from this that much of the impact of a downturn on corporate profitability has
been reflected in share prices. This does not mean that share prices will not fall from here since volatility is inevitable
as companies report results affected by recession. However, the chart shows that the historical PE can rise substantially
from present levels, as reported profits fall and as share prices start to anticipate recovery. The Managers are therefore
confident in good returns from ASCoT’s portfolio over the medium and long term.
Outlook and conclusion
One of the second order effects of the pandemic has been to accelerate and accentuate several underlying challenges
to the economic and financial conditions that have held sway since the global financial crisis. The conditions have been
ones of modest economic growth, low interest rates and low inflation, while the underlying challenges have been
broadly inflationary. These have included heightened geopolitical tension, deglobalisation, re-shoring, an upsurge in
industrial action, and demographic trends that reduce the working age population. The war in Ukraine has given extra
impetus to the first bout of meaningful inflation for decades. The chief executive of one of ASCoT’s investee companies
has observed that what keeps him awake at night is not the price of electricity in 2023, but where his customers will be
doing their business in five or ten years’ time as the tectonic plates of economics and geopolitics shift.
Year-on-year changes in the consumer prices index in the UK and further afield will likely moderate as effects of high
energy prices annualise, but the structural issues listed above mean that the rate of inflation may not return reliably to
the very low levels to which the world had become accustomed. It would therefore be unlikely that interest rates and
bond yields can fall back to the very low levels that allowed investment with almost limitless time horizons. A reversion
to financial conditions more akin to those that prevailed before the global financial crisis is not without risk.
Governments and investors have adopted borrowing habits that may be exposed by the reimposition of a real cost of
capital. Accidents are possible, with signs of stress already in the UK’s liability driven investment industry, in
cryptocurrency failures and in the higher cost of borrowing for private equity firms.
However, there is scope for optimism and opportunity too. A meaningful cost of capital, rather than one artificially
suppressed by central banks, imposes discipline on investment decisions. This improves the chance of sustainably high
returns on investment, which in turn might address the disappointingly low productivity performance of the UK and
other economies in recent years. In parallel, trends such as deglobalisation and the re-shoring of production imply a
period of higher capital expenditure, which would provide opportunities for business, including small UK quoted
companies. A final consideration concerns the value investment style, which felt the headwinds of the low interest rate
environment since the global financial crisis. A reversal would imply a better outlook for value or at least a more neutral
style backdrop, which would be to ASCoT’s benefit.
Turning back to the portfolio, its valuations are unusually attractive at present. Of course, PE ratios do not fall so low
unless the stockmarket is worried about something. In the case of ASCoT’s holdings, the wide-held concerns are their
perceived vulnerability to recession and their “Britishness”, an attribute that has been shunned amid the political
upheaval of recent years. On top of these factors is the evolution of a regulatory focus on risk and liquidity. This has
discouraged institutional investment in smaller companies in a self-reinforcing vicious circle and accounts for the
particularly low valuations of the “smaller small” companies from which ASCoT benefits.
If these are the reasons for the low valuations, why are they too low? At the broad level, it is the nature of equity
markets to over-shoot. Indications that this might be the case are the PE ratio chart shown above and the fact that
institutional allocations to UK equities have dwindled to very low levels. More specifically, the records of ASCoT’s
holdings through the trials and tribulations of recent years have been good – these are resilient businesses with strong
balance sheets and experienced management. Corroboration for this contention comes from 2022’s M&A activity:
overseas businesses clearly disagree with the equity market and are willing to pay substantial valuation premiums for
control.
Therefore, while trading conditions in 2023 are likely to be challenging, a good deal of the risk is likely already to be in
the price. ASCoT’s closed end structure and tactical approach to gearing are well suited to navigating the near term
uncertainty. Refreshed by the NSCI (XIC)’s significant 2023 rebalancing, ASCoT’s investment universe harbours
numerous opportunities for a value investor focused on understanding and engaging with the companies. Accordingly,
the Managers look to future years with confidence that ASCoT can out-perform against the backdrop of what current
valuations suggest should be a rising stockmarket.
Aberforth Partners LLP
Managers
27 January 2023
12 Strategic Report
Aberforth Smaller Companies Trust plc
Stewardship and Environmental, Social and Governance (ESG)
Board oversight and activities
At the heart of the Board’s approach to stewardship is promoting the success of the Company for the benefit of
Shareholders as a whole. The main gauge of success is achievement of the Company’s investment objective in a manner
consistent with its investment policy and strategy. In doing so, the Board considers its corporate governance obligations,
regulation, risk and market integrity. Both the investment objective and these factors are affected by environmental,
social and governance matters.
In discharging these stewardship responsibilities, the Board benefits from a group of directors with deep and diverse
expertise. Their main role is one of oversight, since the Company’s day-to-day activities are undertaken by external
firms. Monitoring is based on quarterly updates from the Managers and Secretaries. During the year, the Board
reviewed the Managers’ stewardship and ESG related activity. This included the following.
• Enhancements to the Managers’ stewardship and ESG policies and practices. During the year, the Managers’
dedicated additional resource to support sustainability matters.
• Analysis and use of the data from an ESG survey of investee companies conducted in 2021, supporting active
engagement during 2022.
• The completion of a proprietary methodology in a database module for assessing investee companies’ ESG issues and
for tracking related engagement activity.
• The Board reviewed and welcomed the publication of Aberforth’s second Governance and Corporate Responsibility
statement. It provides information about Aberforth’s approach to ESG matters, including disclosures about
greenhouse gas emissions for scope 1, 2 and 3.
Since the Company has no employees and the Board has engaged external firms to undertake the Company’s activities,
the Company has no greenhouse gas emissions to report from its operations and does not have responsibility for any
other emissions-producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations
2013. The Board considered the applicability to the Company of the Streamlined Energy & Carbon Reporting Statement
(‘SECR’) and determined that the Managers’ voluntary detailed disclosures under SECR are most relevant.
The Managers, to whom the Board has delegated investment management responsibilities and discretion to exercise
voting rights, play a crucial role in how the Company’s approach to stewardship is put into practice. Their investments
decisions, engagement with companies and voting are conducted in a manner consistent with their own stewardship
policy. This is designed to deliver the Company’s investment objective, while taking into account broader responsibilities
to the economy, environment and society. The Board has reviewed, and endorses, the Managers’ Stewardship approach
and Policy, the details of which are set out below.
Managers’ Activities
Philosophy, policies and practices
The Managers’ approach to Stewardship and ESG is available on the Aberforth website in the “About Aberforth” section.
The policy framework is set out in the following documents.
• About Aberforth: the background and founding principles of the firm, its core strategic philosophy and nature of the
business.
• Investment Philosophy: the Managers’ approach to investing as adopted for the Company, relevant extracts of which
are included in the narrative that follows.
• Stewardship Policy: Aberforth’s approach to stewardship of clients’ capital, set out the format of the Financial
Reporting Council's (FRC) UK Stewardship Code.
• Engagement and Voting Framework: how Aberforth engages and votes, along with what is expected from investee
companies.
• Examples of Engagement and Voting: examples of how the Engagement and Voting framework is put into action.
• Governance and Corporate Responsibility: Aberforth Partners LLP’s approach to stewardship, which is reported
annually.
Strategic Report
Aberforth Smaller Companies Trust plc 13
Stewardship and Environmental, Social and Governance (ESG)
The Managers’ approach to Stewardship and ESG is overseen by their Stewardship Committee, which is a sub-committee
of the partnership committee, Aberforth’s ultimate governance body.
The investment cases for many of the Company’s holdings are influenced by environmental, social and governance
matters, particularly as the increased profile of such issues affects the stockmarket’s valuations of companies. The
Managers do not exclude investments from the portfolio based on ESG considerations alone. Rather, analysis of ESG
matters is integrated into the investment process and is considered alongside other factors in forming an investment
case.
Where ESG or other matters impinge upon the investment case, the Managers engage with the investee company’s
board, which is responsible for the design and implementation of the company’s environmental, social and governance
policies. The Managers are well placed to undertake this activity, since engagement has always been a fully integrated
element of their investment process and feeds through to the target valuations for companies. The Managers believe
that their willingness to engage constructively with the boards of investee companies has benefited investment
performance over time and is therefore important to the long term success of the Company.
To support the investment process, Aberforth has enhanced its proprietary investment database with a module to
improve the analysis and tracking of important ESG issues. The module captures relevant metrics, such as greenhouse
gas emissions, Task Force for Climate-related Financial Disclosures (TCFD) compliance and the setting of net zero and
science based targets. It also evaluates investee companies on the basis of several ESG subfactors. The scoring
methodology starts with a sector-driven risk score, which is determined by Aberforth’s Stewardship Committee and is
influenced by inputs from several third parties such as the Sustainability Accounting Standards Boards (SASB) and other
relevant external ESG analyses. From there, the investee company’s actual score for each subfactor is determined, taking
into account the risk score and company-specific considerations. This methodology allows the portfolio’s ESG profile to
be snapshotted and to be tracked through time, as well as helping to identify risks to investment cases and to focus
engagement efforts.
Voting Policy and Activity
The Board has given discretion to the Managers to exercise voting rights on behalf of the Company. The Managers
consider and vote on every resolution that is put to shareholders of the companies in which ASCoT is invested. The Board
endorses the Managers’ voting philosophy, which treats clients as part owners of the underlying companies. These
voting principles are set out in the Managers’ “Engagement and Voting Framework” document. The Managers vote
against resolutions that they believe may damage shareholders’ rights or economic interests, which specifically includes
consideration of environmental and social matters.
The Board receives quarterly reports from the Managers on governance and voting issues pertaining to investee
companies. The annual voting activity for the Company is noted in the table below.
ASCoT's voting activity, 12 months to 31 December 2022
Shareholder meetings at which ASCoT's shares were voted 91
Shareholder meetings at which ASCoT's shares voted against or abstained 11
Number of resolutions voted 1,318
Number of resolutions voted against 3
Number of resolutions abstained 15
Voting is often the conclusion of engagement, which is undertaken directly and over time with the boards of investee
companies. In normal circumstances, concerns would have been raised and discussed with an investee company’s
directors before the vote. Such engagement improves understanding of issues underlying controversial resolutions and
can result in change that allows the Managers to vote in favour of the relevant resolutions.
Among small UK quoted companies, there are still few general meeting resolutions directly relevant to environmental
and social issues, so much of the voting is focused on governance. During 2022, the Managers did not vote in favour of
resolutions for the re-election of non-independent directors who could risk board independence. Votes against were
also prompted by concerns about remuneration and about the effectiveness of directors. Beyond resolutions put to
annual general meetings, the Managers voted against the approval of the takeover of one of the investee companies
since the terms of the deal under-valued the business in question.
14 Strategic Report
Aberforth Smaller Companies Trust plc
Stewardship and Environmental, Social and Governance (ESG)
The Managers’ submission to the UK Stewardship Code
The UK Stewardship Code, issued by the FRC, sets out the principles of effective stewardship by institutional investors.
The Managers are committed to effective stewardship and were early adopters of the UK Stewardship Code. They were
again recognised as an approved signatory of the code in September 2022. The Managers publish their submission on
their website, along with supporting documentation.
UN Principles For Responsible Investment (‘UNPRI’)
The Managers are a signatory to, and participate in, the annual UNPRI assessment. The results are available within the
“About Aberforth” section of the Managers' website.
Aberforth Partners LLP’s governance and corporate responsibility
The Managers’ approach for their business to Stewardship and ESG matters is governed by the Stewardship Committee.
Details are set out in their “Governance & Corporate Responsibility” statement. This includes their policies and practices
covering their approach to governance, risk and control, company culture, human resources and environmental matters.
The document also sets out Aberforth’s approach to emissions disclosures. It reported on scope 1 and 2 emission
disclosures in 2021 and is enhanced for the inclusion of Scope 3 emissions in 2022. These are reported in the Governance
and Corporate Responsibility section of the Managers’ website. These voluntary disclosures are reported under the
Streamlined Energy & Carbon Reporting Statement (‘SECR’).
Further details
Further detail on the Managers’ Stewardship policy and supporting ESG documentation are available within the “About
Aberforth” section of their website at www.aberforth.co.uk.
Strategic Report
Aberforth Smaller Companies Trust plc 15
Thirty Largest Investments
As at 31 December 2022
Value % of Total
No. Company £’000 Net Assets Business Activity
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
FirstGroup
Redde Northgate
Morgan Advanced Materials
Centamin
Wilmington Group
Rathbones Group
Wincanton
EnQuest
Robert Walters
Just Group
43,621
42,272
39,269
35,492
34,368
33,802
33,723
29,860
29,622
28,671
3.5 Bus & rail operator
3.4 Van rental
3.1 Manufacture of carbon & ceramic materials
2.8 Gold miner
2.7 Business publishing & training
2.7
2.7
2.4 Oil & gas exploration and production
2.4 Recruitment
2.3
Private client fund manager
Logistics
Individually underwritten annuities
Top Ten Investments
350,700
28.0
Vesuvius
Videndum
RPS Group
Senior
Energean
C&C Group
Bakkavor Group
Reach
Ecora Resources
Conduit Holdings
28,396
28,392
28,037
26,207
23,930
23,137
23,043
23,001
22,341
22,149
Photographic & broadcast accessories
Energy & environmental consulting
2.3 Metal flow engineering
2.3
2.2
2.1 Aerospace & automotive engineering
1.9 Oil & gas exploration and production
1.9 Brewer and drinks distributor
1.8
Food manufacturer
1.8 UK newspaper publisher
1.8 Natural resources royalties
1.8 Bermuda based (re)insurer
Top Twenty Investments
599,333
47.9
Ricardo
Bodycote
CMC Markets
Rank Group
Crest Nicholson
SIG
TI Fluid Systems
Headlam Group
Lookers
Hostelworld Group
Top Thirty Investments
Other Investments (49)
Total Investments
Net Liabilities
Total Net Assets
22,048
21,799
21,571
21,561
21,393
21,354
21,179
20,018
19,733
19,417
809,406
512,855
1,322,261
(71,391)
1,250,870
Environmental & engineering consulting
1.8
Engineering - heat treatment
1.7
1.7
Financial derivatives dealer
1.7 Multi-channel gaming operator
1.7 Housebuilding
1.7
1.7 Automotive parts manufacturer
1.6 Distributor of floor coverings
1.6 Motor vehicle retailer
1.6 Hostel booking platform
Specialist building products distributor
64.7
41.0
105.7
(5.7)
100.0
Investments are in Ordinary Shares unless otherwise stated.
16 Strategic Report
Aberforth Smaller Companies Trust plc
Investment Portfolio
As at 31 December 2022
Value % of Total % of NSCI
Security £’000 Net Assets (XIC)1
Software and Computer Services
Moneysupermarket.com
Technology Hardware and Equipment
TT Electronics
Telecommunications Equipment
Telecommunications Service Providers
Zegona Communications
Health Care Providers
Medica Group
Medical Equipment and Services
Pharmaceuticals and Biotechnology
Banks
Finance and Credit Services
International Personal Finance
Provident Financial
Investment Banking and Brokerage Services
City of London Investment Group
CMC Markets
Jupiter Fund Management
Rathbones Group
XPS Pensions Group
Life Insurance
Hansard Global
Just Group
Non-life Insurance
Conduit Holdings
Sabre Insurance Group
Real Estate Investment and Services
Foxtons
Real Estate Investment Trusts
Empiric Student Property
Helical
Industrials REIT
Workspace Group
Automobiles and Parts
TI Fluid Systems
Consumer Services
RM
Household Goods and Home Construction
Crest Nicholson
Headlam Group
Leisure Goods
Personal Goods
Media
Centaur Media
Hyve Group
National World
Reach
STV Group
Wilmington Group
Strategic Report
13,283
13,283
16,771
16,771
–
165
165
19,324
19,324
–
–
–
30,516
18,313
12,203
96,463
11,485
21,571
15,731
33,802
13,874
32,423
3,752
28,671
34,988
22,149
12,839
9,234
9,234
21,181
5,084
7,012
3,834
5,251
21,179
21,179
6,673
6,673
41,411
21,393
20,018
–
–
90,304
6,393
8,975
8,698
23,001
8,869
34,368
6.2
0.8
1.2
0.8
0.8
0.2
0.9
3.7
2.0
11.3
0.9
1.8
2.5
7.4
1.3
0.2
2.0
0.3
0.1
3.7
1.1
1.1
1.3
1.3
–
0.0
0.0
1.5
1.5
–
–
–
2.5
1.5
1.0
7.7
0.9
1.7
1.3
2.7
1.1
2.6
0.3
2.3
2.8
1.8
1.0
0.7
0.7
1.7
0.4
0.6
0.3
0.4
1.7
1.7
0.5
0.5
3.3
1.7
1.6
–
–
7.2
0.5
0.7
0.8
1.8
0.7
2.7
Aberforth Smaller Companies Trust plc 17
Investment Portfolio
As at 31 December 2022
Value % of Total % of NSCI
Security £’000 Net Assets (XIC)1
Retailers
Card Factory
DFS Furniture
Lookers
Topps Tiles
Travel and Leisure
FirstGroup
Hostelworld Group
Marstons
Mitchells & Butlers
Rank Group
Beverages
C&C Group
Food Producers
Bakkavor Group
R.E.A. Holdings
Personal Care, Drug and Grocery Stores
McBride
Construction and Materials
Eurocell
Galliford Try Holdings
Keller
Ricardo
Severfield
Aerospace and Defence
Senior
Electronic and Electrical Equipment
Dialight
Morgan Advanced Materials
General Industrials
Industrial Engineering
Castings
Vesuvius
Videndum
XAAR
Industrial Support Services
De La Rue
PageGroup
Paypoint
Robert Walters
RPS Group
SIG
Smiths News
Speedy Hire
Industrial Transportation
Fisher (James) & Sons
Redde Northgate
VP
Wincanton
Industrial Materials
63,809
18,999
15,387
19,733
9,690
115,469
43,621
19,417
15,753
15,117
21,561
23,137
23,137
25,205
23,043
2,162
2,072
2,072
74,720
18,294
14,886
14,755
22,048
4,737
26,207
26,207
52,514
13,245
39,269
–
85,383
15,746
28,396
28,392
12,849
129,334
13,685
8,431
6,180
29,622
28,037
21,354
12,220
9,805
90,912
11,198
42,272
3,719
33,723
–
5.1
1.5
1.2
1.6
0.8
9.2
3.5
1.5
1.3
1.2
1.7
1.8
1.8
2.0
1.8
0.2
0.2
0.2
6.1
1.5
1.2
1.2
1.8
0.4
2.1
2.1
4.2
1.1
3.1
–
6.8
1.3
2.3
2.3
0.9
10.4
1.1
0.7
0.5
2.4
2.2
1.7
1.0
0.8
7.3
0.9
3.4
0.3
2.7
–
4.0
8.4
0.9
2.4
1.2
4.6
2.3
2.8
1.1
1.4
6.1
2.5
0.1
18 Strategic Report
Aberforth Smaller Companies Trust plc
Investment Portfolio
As at 31 December 2022
Value % of Total % of NSCI
Security £’000 Net Assets (XIC)1
Industrial Metals and Mining
Bodycote
Capital
Ecora Resources
Kenmare Resources
Precious Metals and Mining
Centamin
Gem Diamonds
Chemicals
RHI Magnesita
Oil, Gas and Coal
Energean
EnQuest
Genel Energy
Petrofac
Pharos Energy
Alternative Energy
Electricity
Waste and Disposal Services
Total Investments
Net Liabilities
Total Net Assets
1 Reflects the rebalanced index as at 1 January 2023.
Summary of Material Investment Transactions
For the year ended 31 December 2022
80,200
21,799
18,526
22,341
17,534
40,368
35,492
4,876
6,478
6,478
72,538
23,930
29,860
6,349
5,601
6,798
–
–
–
6.4
1.7
1.5
1.8
1.4
3.2
2.8
0.4
0.5
0.5
5.8
1.9
2.4
0.5
0.5
0.5
–
–
–
1,322,261
(71,391)
1,250,870
105.7
(5.7)
100.00
3.1
2.5
3.1
4.1
0.1
0.0
1.2
100.0
100.0
Cost Proceeds
Purchases £’000 Sales £’000
54,144
Bodycote
44,696
Energean
32,839
Moneysupermarket.com
31,026
Mitchells & Butlers
21,463
Micro Focus
21,362
Fisher (James) & Sons
17,754
Rank Group
12,490
Helical
CMC Markets
10,171
Jupiter Fund Management
9,379
Go-Ahead Group
6,085
PageGroup
5,901
Sabre Insurance Group
5,409
Conduit Holdings
5,046
C&C Group
2,006
Reach
1,870
Petrofac
1,833
Speedy Hire
511
Headlam Group
495
RHI Magnesita
109
62
Other Purchases
Brewin Dolphin Holdings
Micro Focus
Go-Ahead Group
RPS Group
McKay Securities
Stagecoach Group
Provident Financial
Hollywood Bowl
Keller
Forterra
Rathbones Group
Alfa Financial Software Holdings
Petrofac
Medica Group
TT Electronics
Redde Northgate
STV Group
McColl's Retail Group
Videndum
R.E.A. Holdings
Other Sales
20,652
19,776
12,451
11,234
9,588
9,348
8,521
8,301
8,098
7,578
7,578
7,396
6,775
6,661
6,291
6,120
6,065
5,967
5,595
5,502
70,664
Total Purchases (incl. transaction costs)
250,161
Total Sale Proceeds (incl. transaction costs)
284,651
Strategic Report
Aberforth Smaller Companies Trust plc 19
Portfolio Information
FTSE Industry Classification Exposure Analysis
31 December 2021 31 December 2022
Net Net
Sector
Portfolio Portfolio Purchases/ Appreciation/ Portfolio Portfolio NSCI (XIC)2
Weight Valuation (Sales)1 (Depreciation) Valuation Weight Weight
% £’000 £’000 £’000 £’000 % %
Technology
Telecommunications
Health care
Financials
Real Estate
Consumer Discretionary
Consumer Staples
Industrials
Basic Materials
Energy
Utilities
4
–
2
17
2
29
4
33
6
3
–
59,246
188
26,132
271,786
31,673
446,904
63,398
518,647
88,936
47,675
–
(30,564)
–
(3,782)
(40,926)
(959)
(10,192)
6,779
(2,958)
27,680
20,432
–
1,371
(23)
(3,026)
(36,470)
(298)
(97,867)
(19,763)
(56,619)
10,430
4,431
–
30,053
165
19,324
194,390
30,416
338,845
50,414
459,070
127,046
72,538
–
2
–
1
15
2
26
4
35
10
5
–
7
2
2
20
10
20
4
21
9
4
1
100
1,554,585
(34,490)
(197,834)
1,322,261
100
100
FTSE Index Classification Exposure Analysis
31 December 2021 31 December 2022
NSCI NSCI
Portfolio (XIC) Portfolio (XIC)2
No. of Valuation Weight Weight No. of Valuation Weight Weight
Index Classification Companies £’000 % % Companies £’000 % %
FTSE 100 – – – – – – – –
FTSE 250 18 581,789 38 63 21 505,252 38 67
FTSE SmallCap 42 780,738 50 27 41 633,787 48 23
FTSE Fledgling 7 50,841 3 1 8 51,393 4 1
Other 10 141,217 9 9 9 131,829 10 9
77 1,554,585 100 100 79 1,322,261 100 100
1 Includes transaction costs.
2 Reflects the rebalanced index as at 1 January 2023.
20 Strategic Report
Aberforth Smaller Companies Trust plc
Historical Information
Total Returns
Discrete Annual Returns (%)
ASCoT ASCoT
Period NAV Index Share Price
1 year to 31 December 2022 -10.4 -17.9 -7.3
1 year to 31 December 2021 32.5 21.9 20.3
1 year to 31 December 2020 -15.4 -4.3 -16.5
1 year to 31 December 2019 26.9 25.2 39.8
1 year to 31 December 2018 -15.4 -15.3 -11.8
1 year to 31 December 2017 22.1 19.5 22.6
1 year to 31 December 2016 5.8 11.1 -4.2
1 year to 31 December 2015 10.2 10.6 13.9
1 year to 31 December 2014 -0.7 -1.9 0.1
1 year to 31 December 2013 52.4 36.9 62.0
Annualised Returns (%) Cumulative Returns (%)
ASCoT ASCoT
ASCoT Share ASCoT Share
Periods to 31 December 2022 NAV Index Price NAV Index Price
2 years from 31 December 2020 9.0 0.1 5.6 18.7 0.1 11.5
3 years from 31 December 2019 0.2 -1.4 -2.3 0.5 -4.2 -6.8
4 years from 31 December 2018 6.3 4.7 6.8 27.5 20.0 30.2
5 years from 31 December 2017 1.5 0.3 2.8 7.8 1.5 14.9
6 years from 31 December 2016 4.7 3.3 5.9 31.6 21.3 40.9
7 years from 31 December 2015 4.8 4.4 4.4 39.3 34.8 34.9
53.6
8 years from 31 December 2014 5.5 5.1 5.5
53.8
9 years from 31 December 2013 4.8 4.3 4.9
149.1
10 years from 31 December 2012 8.8 7.2 9.6
15 years from 31 December 2007 7.4 7.3 8.8
252.3
611.0
20 years from 31 December 2002 10.4 10.6 10.3
32.1 years from inception
on 10 December 1990 11.9 9.6 11.6 3,562.8 1,817.7 3,319.2
53.5
52.5
132.3
192.4
629.6
49.1
46.3
100.4
189.1
648.4
Ten Year Summary (ASCoT)
Net Asset Revenue Dividends
Value per Share per Ordinary per Ordinary Ongoing
As at Share Price Discount Share Share net Charges
31 December p p % p p %
Gearing
%
2022 1,465.7 1,322.00 9.8 55.64 47.30 0.80
2021 1,674.4 1,464.00 12.6 36.76 35.20 0.75
2020 1,292.4 1,248.00 3.4 13.28 33.30 0.81
2019 1,570.2 1,540.00 1.9 42.26 36.00 0.77
2018 1,273.7 1,138.00 10.7 45.30 38.00 0.79
2017 1,543.7 1,326.00 14.1 41.59 35.50 0.76
2016 1,292.6 1,109.00 14.2 36.93 30.10 0.80
2015 1,254.3 1,193.00 4.9 35.03 28.75 0.79
2014 1,161.4 1,072.00 7.7 27.24 24.75 0.82
2013 1,193.2 1,095.00 6.7 27.37 23.50 0.79
2012 802.8 695.50 13.4 26.07 22.25 0.81
5.7
5.6
6.1
0.8
1.3
0.3
2.7
0.3
2.8
2.6
5.9
Strategic Report
Aberforth Smaller Companies Trust plc 21
Business Model and Company Matters
Company Status
The Company is a closed-ended investment trust listed on the London Stock Exchange and an Alternative Investment
Fund under the Alternative Investment Fund Managers (AIFM) Directive. The Company has been approved by HM
Revenue & Customs as an investment trust for accounting periods commencing on or after 1 January 2013 subject to
the Company continuing to meet the eligibility conditions. The Company will continue to conduct its affairs as an
investment trust. Furthermore, the Company is an investment company as defined within the meaning of Section 833
of the Companies Act 2006.
Investment Policy
The Company aims to achieve its objective by investing in small UK quoted companies. These are companies with a
market capitalisation, at time of purchase, equal to or lower than that of the largest company in the bottom 10% of the
main UK equity market or companies in the NSCI (XIC). At 1 January 2023 (the date of the last annual index rebalancing),
the index included 350 companies, with an aggregate market capitalisation of £140 billion. Its upper market
capitalisation limit was £1.6 billion, although this limit changes owing to movements in the stockmarket. If any holding
no longer falls within this definition of a small company, its securities become candidates for sale.
Portfolio risk is spread by diversification of holdings in individual companies: the portfolio will usually have holdings in
over 80 small UK quoted companies. The Company may, at time of purchase, invest up to 15% of its assets in any one
security. However, in practice, each investment will typically be substantially less and, at market value, represent less
than 5% of the portfolio on an on-going basis.
The Company’s policy towards companies quoted on the Alternative Investment Market (“AIM”) generally precludes
investment, except either where an investee company moves from the “Main Market” to AIM (so as to avoid being a
forced seller) or where a company quoted on AIM has committed to move from AIM to the “Main Market” (so as to
enable investment before a full listing is obtained). The Company does not invest in any unquoted companies. Neither
does the Company invest in securities issued by other UK listed closed-ended investment funds except where they are
eligible to be included in the NSCI (XIC). In any event, the Company invests no more than 15% of total assets in other
listed closed-ended investment funds.
The Managers aim to keep the Company near fully invested in equities at all times and there is normally no attempt to
engage in market timing by holding high levels of liquidity. The Company may employ gearing. The Board, in conjunction
with the Managers, is responsible for determining the parameters for gearing. When considered appropriate, gearing is
used tactically in order to enhance returns.
The Board believes that small UK quoted companies continue to provide opportunities for positive total returns over the
long term. Any material changes to the Company’s investment objective and policy will be subject to Shareholder
approval.
Investment Strategy
The Managers adhere to a value investment philosophy. In practice, this approach utilises several valuation metrics,
recognising that flexibility is required when assessing businesses in different industries and that buyers of these
businesses may include other corporates as well as stockmarket investors. As a result of this philosophy, the Company’s
holdings are usually on more attractive valuations than the average for the NSCI (XIC). While there is good evidence that
a value approach within small UK quoted companies results in superior returns over the long term, there can be
extended periods when the value style is out of favour.
The Managers select companies for the portfolio on the basis of fundamental or “bottom-up” analysis. Analysis involves
scrutiny of businesses’ financial statements and assessment of their market positions. An important part of the process
is regular engagement with board members of prospective and existing investments. Holdings are sold typically when
their valuations reach targets determined by the Managers.
In order to improve the odds of achieving the investment objective, the Managers believe that the portfolio must be
adequately differentiated from the benchmark index. Therefore, within the diversification parameters described in
Investment Policy, the Managers regularly review the level of differentiation, with the aim of sustaining an active share
ratio for the portfolio of at least 70%.
Dividend Policy
The Board confirms its ambition to grow dividends in real terms. In addition, in order to qualify as an investment trust,
the Company must not retain more than 15% of its income from any financial year. The Company pays an interim
dividend in August each year based on the forecast net revenue position for the current financial year. A final dividend,
subject to shareholder approval, is then paid in March each year based on the actual net income for the financial year
just ended and the future earnings forecasts.
22 Strategic Report
Aberforth Smaller Companies Trust plc
Directors’ Duty to Promote the Success of the Company
The Directors have a duty to promote the success of the Company for the benefit of Shareholders as a whole and to
describe how they have performed this duty having regard to matters set out in section 172(1) of the Companies Act
2006. The Directors have fulfilled this duty and taken decisions during the year in relation to the matters described
below, having considered the likely consequences of their actions over the long term and on other stakeholders.
Stakeholders – As an externally managed investment company, the Company does not have employees. Its main
stakeholders therefore comprise its Shareholders, who are also its customers, and a small number of suppliers. These
suppliers are external firms engaged by the Board to provide, amongst others, investment management, secretarial,
depositary, custodial and banking services. The principal relationship is with the Managers and page 28 contains further
information. Their investment management services are fundamental to the long term success of the Company through
the pursuit of the investment objective. The Board regularly monitors the Company’s investment performance in relation
to its objective and also to its investment policy and strategy. It seeks to maintain a constructive working relationship
with the Managers and on an annual basis reviews their continuing appointment to ensure it is in the best long term
interests of Shareholders. The Board receives and reviews detailed presentations and reports from the Managers and
other suppliers to enable the Directors to exercise effective oversight of the Company’s activities. Further information
on the Board’s review process is set out in the Corporate Governance Report. The Managers seek to maintain
constructive relationships with other suppliers on behalf of the Company, typically through regular communications,
provision of relevant information and update meetings.
Shareholder communications and engagement – To help the Board in its aim to act fairly as between the Company’s
members, the Board encourages communications with all Shareholders. The Annual and Interim reports are issued to
Shareholders and are available on the Managers’ website together with other relevant information including monthly
factsheets. The Managers offer to meet the larger Shareholders twice a year to provide detailed reports on the progress
of the Company and receive feedback, which is provided to the Board. Directors are also available to meet Shareholders
during the year and, in normal times, at the AGM. Shareholders’ views are considered as part of the Board’s regular
strategy reviews. Shareholders have the opportunity to validate the Board's strategy through a triennial vote on the
continuation of the Company and the Board encourages Shareholders to participate in this vote.
Enhancing value – In seeking to enhance value for Shareholders over the long term, the Board has also established guidelines
to allow the Managers to deploy gearing on a tactical basis when opportunities arise and to implement share buy-backs. The
Company has a borrowing facility and, as described in the Chairman's Statement, part of it has been drawn down to take
advantage of attractive investment valuations. In addition, the Board remains committed to a progressive dividend policy, as
reflected in the dividends announced for the year.
Corporate Governance – As described in more detail within the Corporate Governance Report, the Board is committed to
maintaining and demonstrating high standards of corporate governance in relation to the Company’s business conduct.
Stewardship matters – The Board also expects good standards at the companies in which the Company is invested. In
this regard, it is satisfied that the Managers’ investment process incorporates regular consideration of investee
companies’ governance structures and procedures. It is also encouraged that the Managers engage consistently and
proactively with the boards of investee companies on governance and other matters that are material to the investment
case. These activities are ultimately important to the long term success of the Company. Further information on
Stewardship matters is provided on pages 13 to 15.
Summary – In summary, the Board’s primary focus in promoting the long term success of the Company for the benefit
of its Shareholders as a whole is to direct the Company with a view to achieving the investment objective in a manner
consistent with its stated investment policy and strategy. In doing so, and as described above, it has due regard to the
impact of its actions on other stakeholders and the wider community.
Strategic Report
Aberforth Smaller Companies Trust plc 23
Principal Risks
The Board carefully considers the risks faced by the Company and seeks to manage these risks through continual review,
evaluation, mitigating controls and action as necessary. A risk matrix for the Company is maintained. It groups risks into the
following categories: portfolio management; investor relations; regulatory and legal; and financial reporting. Further
information regarding the Board’s governance oversight of risk and the context for risks can be found in the Corporate
Governance Report on page 35. The Audit Committee Report (pages 36 to 38) details the committee's review process,
matters considered, and actions taken on internal controls and risks during the year. The Company outsources all the main
operational activities to recognised, well-established firms and the Board receives internal control reports from these firms,
where available, to review the effectiveness of their control frameworks. During the Covid-19 pandemic, these firms
deployed alternative operational practices, including staff working remotely, to ensure continued business service. Many of
these practices continue in operation in some form.
Emerging risks are those that could have a future impact on the Company. The Board regularly reviews them and, during the
year, it added to the risk matrix potential economic risks arising from critical infrastructure security and global conflicts. This
risk was grouped under the principal risk category of market risk, as described below. The Board monitors how the Managers
integrate such risks into investment decision making.
Principal risks are those risks in the matrix that have the highest risk ratings. They tend to be relatively consistent from year
to year given the nature of the Company and its business. The principal risks faced by the Company, together with the
approach taken by the Board towards them, are summarised below. To indicate the level of monitoring required during this
year each principal risk has been categorised as either dynamic risk, requiring detailed monitoring as it can change regularly,
or stable risk.
Investment policy/performance risk
Risk–this is a portfolio management risk
Mitigation
The Company’s investment policy and strategy exposes
the portfolio to share price movements. The performance
of the investment portfolio typically differs from the
performance of the benchmark and is influenced by stock
selection, liquidity and market risk (see Market risk below
and Note 19 for further details). Investment in small
companies is generally perceived to carry more risk than
investment in large companies. While this is reasonable
when comparing individual companies, it is much less so
when comparing the risks inherent in diversified portfolios
of small and large companies.
The Board monitors performance against the investment
objective over the long term by ensuring the investment
portfolio is managed appropriately, in accordance with the
investment policy and strategy. The Board has outsourced
portfolio management to experienced
investment
managers with a clearly defined investment philosophy
and investment process. The Board receives regular and
detailed reports on investment performance including
detailed portfolio analysis, risk profile and attribution
analysis. Senior representatives of Aberforth Partners
attend each Board meeting. Peer group performance is
also regularly monitored by the Board. This remains a
dynamic risk, with detailed consideration during the year.
The Managers’ Report contains information on portfolio
investment performance and risk.
Market risk
Risk–this is a portfolio management risk
Mitigation
Investment performance is affected by external market
risk factors, including those creating uncertainty about
future price movements of investments. The Board
delegates consideration of market risk to the Managers to
be carried out as part of the investment process.
The Managers regularly assess the exposure to market risk
when making investment decisions and the Board monitors
the results via the Managers’ quarterly and other reporting.
The Board and Managers closely monitor significant
economic and political developments and, in particular, are
mindful of the continued uncertainty following the
departure of the UK from the EU, effects of the
Ukraine/Russian war and escalations, the impacts of the
Covid-19 pandemic and government responses, and the
potential effects of climate change. This remained a
dynamic risk during the year, in which the Managers
reported on market risks including inflation and supply-
chain pressures, energy security, recession and other
geopolitical issues as addressed in the Managers’ Report.
24 Strategic Report
Aberforth Smaller Companies Trust plc
Principal Risks
Share price discount
Risk–this is an investor relations risk
Investment trust shares tend to trade at discounts to their
underlying net asset values, but a significant share price
discount, or related volatility, could reduce shareholder
returns and confidence.
Mitigation
The Board and the Managers monitor the discount daily,
both in absolute terms and relative to ASCoT’s peers. In
this context, the Board intends to continue to use the buy-
back authority as described in the Directors’ Report. This
is considered a dynamic risk as the discount moves daily.
Gearing risk
Risk–this is a portfolio management risk
Mitigation
In rising markets, gearing enhances returns, but in falling
markets it reduces returns to shareholders.
The Board and the Managers have specifically considered
the gearing strategy and associated risks during the year.
At present this is a dynamic risk as the Company’s tactical
gearing facility is partially deployed.
Reputational risk
Risk–this is an investor relations risk
Mitigation
The reputation of the Company
maintaining the confidence of shareholders.
is
important
in
The Board and the Managers monitor factors that may
affect the reputation of the Company and/or of its main
service providers and take action if appropriate. The
Board reviews relevant internal control reporting for
critical outsourced service providers. This has been
monitored as a stable risk.
Regulatory risk
Risk–this is a regulatory and legal risk
Failure to comply with applicable legal and regulatory
requirements could lead to suspension of the Company’s
share price listing, financial penalties or a qualified audit
report. A breach of Section 1158 of the Corporation Tax
Act 2010 could lead to the Company losing investment
trust status and, as a consequence, any capital gains
would then be subject to capital gains tax.
Mitigation
The Board receives quarterly compliance reports from the
Secretaries to evidence compliance with rules and
regulations, together with
information on future
developments. This is a stable risk.
Strategic Report
Aberforth Smaller Companies Trust plc 25
Viability Statement
The Directors have assessed the viability of the Company over the five years to December 2027, taking account of the
Company’s position, its investment strategy, and the potential impact of the principal risks detailed on pages 24 and 25.
Based on this assessment, the Directors have a reasonable expectation that the Company will meet its liabilities as they
fall due and be able to continue in operation, notwithstanding that the Company's shareholders are to vote on the
continuation of the Company at the AGM on 2 March 2023 and again in 2026.
In making this assessment, the Directors took comfort from the results of a series of stress tests, which considered the
impact of severe market downturn scenarios on the Company’s financial position and, in particular, its ability to settle
projected liabilities of the Company as they fall due and to adhere to borrowing covenants (see note 12 on page 57).
Portfolio liquidity modelling was conducted to identify values that could be liquidated within different time periods. The
Company invests in companies listed and actively traded on the London Stock Exchange and, whilst less liquid than larger
quoted companies, the portfolio is well diversified by both number of holdings and industry sector. The Directors
determined that the five years to December 2027 is an appropriate period for which to provide this statement given the
Company’s long term investment objective, the simplicity of the business model, the resilience demonstrated by the
stress testing and the relatively low working capital requirements.
Other Information
Board Diversity
The Board’s diversity policy and information on Board diversity, including in relation to FCA Listing Rules and targets, is
set out on page 34.
Environmental, Human Rights, Employee, Social and Community Issues
The requirement to detail information about environmental matters, human rights, social and community issues does
not apply to the Company as it has no employees, all Directors are non-executive and it has outsourced its functions to
third party service providers. The Company’s and the Managers’ approaches to environmental, social and governance
matters is set out on pages 13 to 15.
Strategic Report
The Strategic Report, contained on pages 1 to 26, has been prepared by the Directors in accordance with Section 414 of the
Companies Act 2006 and has been approved by the Board of Directors on 27 January 2023 and signed on its behalf by:
Richard Davidson,
Chairman
26 Strategic Report
Aberforth Smaller Companies Trust plc
Governance Report
Board of Directors
Richard Davidson, Chairman
Appointed: 26 January 2019
Shareholding in the Company: 32,000 Ordinary Shares
Richard is Chair of MIGO Opportunities Trust plc and Foresight Sustainable Forestry Company plc. He is also Chair of the
University of Edinburgh’s Investment Committee. Formerly, he was a Partner and Manager of the Macro Fund at
Lansdowne Partners. Prior to that, he was a Managing Director and No.1 ranked investment strategist at Morgan
Stanley, where he worked for 15 years. Since 2003, Richard has also been heavily involved in forestry investment and
management.
2
Jaz Bains
Appointed: 10 October 2022
Shareholding in the Company: 1,030 Ordinary Shares
Jaz has worked in the energy sector for over 30 years. In 2013 he helped set up and launch The Renewables Infrastructure
Group (‘TRIG’), now a FTSE 250 listed investment company, and he is responsible for leading the Operations Manager
function of TRIG. He is also a non-executive director and senior independent director for the Jupiter Green Investment
Trust Plc.
Julia Le Blan
Appointed: 29 January 2014 and chairs the Audit Committee. Julia will be retiring from the Board of the Company on 2
March 2023.
Shareholding in the Company: 3,000 Ordinary Shares
Julia is a chartered accountant and has worked in the financial services industry for over 30 years. She was formerly a tax
partner at Deloitte and expert on the taxation of investment trust companies. She sat for two terms on the AIC’s
technical committee and is a director of The Biotech Growth Trust plc and British & American Investment Trust plc.
Patricia Dimond
Appointed: 3 March 2022
Shareholding in the Company: 4,000 Ordinary Shares and is a member of the Audit Committee
Patricia is a non-executive director and chair of audit of Hilton Food Group plc and a non-executive director of Foresight
VCT Plc. She is a trustee and chair of audit of the English National Opera and the National Academy for Social Prescribing.
She has had an international career with over 30 years in the consumer, retail and financial sectors. As an industry
executive or strategic advisor she has worked with FTSE 100, Private Equity and Founder/owner managed companies
with a focus on finance, strategy and corporate governance. She is a McKinsey & Company alumna, CFA charter holder,
has an MBA from IMD Switzerland and qualified as a chartered accountant with Deloitte, Haskins & Sells.
Victoria Stewart
Appointed: 1 September 2020
Shareholding in the Company: 4,200 Ordinary Shares and is a member of the Audit Committee
Victoria spent twenty two years as a fund manager, mostly with Royal London Asset Management. She was the sole
manager of the Royal London UK Smaller Companies Fund from its inception in 2007, leaving in 2016 and taking up a
non-executive director role with Secure Trust Bank PLC where she is chair of the remuneration committee. Victoria has
considerable experience of managing and investing in various investment vehicles and mid and small-cap listed
companies and has a strong working knowledge of performance analysis and corporate governance. Victoria is also a
non-executive director of Artemis Alpha Fund plc and JPMorgan Claverhouse Investment Trust plc.
Martin Warner
Appointed: 1 March 2018
Shareholding in the Company: 7,000 Ordinary Shares
Martin co-founded Michelmersh Brick Holdings plc in 1997 and served as Chief Executive and subsequently non-
executive Chairman from May 2017. Martin is a Fellow of the Royal Institute of Chartered Surveyors and is Chairman of
the Brick Development Association.
Governance Report
Aberforth Smaller Companies Trust plc 27
Directors’ Report
The Directors submit their Annual Report and Financial Statements for the year ended 31 December 2022.
Directors
The Directors of the Company during the financial year are listed on page 40. Further information about the Board can
be found in the Corporate Governance Report, which forms part of this Directors’ Report.
It is the responsibility of the Board to ensure that there is effective stewardship of the Company’s affairs. In common
with the majority of investment trusts, the Company has neither executive directors nor any employees. However, the
Board has engaged external firms to undertake the investment management, secretarial, depositary and custodial
activities of the Company.
Objective, Investment Policy, Investment Strategy, Dividend Policy and Risks
These are explained fully in the Strategic Report.
Return and Dividends
The total return attributable to shareholders for the year ended 31 December 2022 amounted to a loss of £156,692,000
(2021: profit of £367,526,000). The Net Asset Value per Ordinary Share at 31 December 2022 was 1,465.67p (2021:
1,674.35p).
Your Board is pleased to declare a final dividend of 26.95p and a special dividend of 8.30p (total of £30,084,000), which
produces total dividends for the year of 47.30p (total of £40,529,000). The final and special dividends, subject to Shareholder
approval, will be paid on 8 March 2023 to Shareholders on the register at the close of business on 10 February 2023.
Investment Managers
Aberforth Partners LLP (the firm, Managers or Aberforth) act as Alternative Investment Fund Manager and Secretaries
to the Company. The business was established in 1990 to provide institutional and wholesale investors with a high level
of resources focused exclusively on small UK quoted companies and deployed in accordance with a value investment
philosophy.
At 31 December 2022, funds under management were £1.9 billion, of which 80% was represented by investment trusts,
7% by a unit trust and 13% by segregated charity funds. All these funds are managed in line with the value philosophy
applied to the Company’s portfolio. The Managers believe that diseconomies of scale come with managing too much
money within an asset class such as small UK quoted companies. Accordingly, they impose a ceiling on funds under
management, which in normal circumstances would be equivalent to 1.5% of the total market capitalisation of the NSCI
(XIC) benchmark. Consistent with this, capacity at 31 December 2022 was circa £250 million of funds under management.
The firm is wholly owned by six partners – five Investment Partners and an Operations Partner, who is responsible for
the firm’s administration. The investment team comprised the five Investment Partners and one investment manager.
Analytical responsibilities are divided by stockmarket sector among the investment team, but investment decisions and
portfolio management are undertaken on a collegiate basis by the full team. The investment managers are remunerated
on the basis of the success of the firm and its funds as a whole. Alignment with the Company’s Shareholders is further
enhanced by the team’s meaningful personal investments in ASCoT's shares.
These investment management services can be terminated by either party at any time by giving six months’ notice of
termination. Compensation would be payable in respect of this six month period only if termination were to occur
sooner. Aberforth receives an annual management fee, payable quarterly in advance, equal to 0.75% of the net assets
up to £1 billion, and 0.65% thereafter. The management fee amounted to £9,368,000 in the year ended 31 December
2022 (2021: £10,005,000).
The secretarial fee amounted to £96,708 (excluding VAT) during 2022 (2021: £90,308). It is adjusted annually in line with
the Retail Prices Index and is subject to VAT, which is currently irrecoverable by the Company.
The Board reviews the Company’s investment management and secretarial arrangements on an on-going basis and
formally at its October meeting, for which each Director completes a Managers’ Evaluation questionnaire. The Board
then considers the results of the questionnaire and discusses the following matters, amongst others, in its review:
•
•
•
•
•
•
•
Following the most recent review, the Board was of the opinion that the continued appointment of Aberforth as
investment managers, on the terms agreed, remains in the best interests of Shareholders.
investment performance in relation to the investment objective, policy and strategy;
the continuity and quality of personnel managing the assets;
the level of the management fee;
the quality of reporting to the Board;
the alignment of interests between the Managers and the Company’s Shareholders;
the administrative services provided by the Secretaries; and
the level of satisfaction of major Shareholders with the Managers.
28 Governance Report
Aberforth Smaller Companies Trust plc
Directors’ Report
holding or controlling all assets of the Company that are entrusted to it for safekeeping;
cash monitoring and verifying the Company’s cash flows; and
oversight of the Company and the Managers.
Depositary
NatWest Trustee & Depositary Services Limited carry out the duties of Depositary as specified in the Alternative
Investment Fund Managers (AIFM) Directive in relation to the Company, including:
•
•
•
In carrying out such duties, the Depositary acts in the best interests of the Shareholders of the Company. The Depositary
is contractually liable to the Company for the loss of any securities entrusted to it. The Depositary is also liable to the
Company for all other losses suffered as a result of the Depositary’s fraud, negligence and/or failure to fulfil its duties
properly.
NatWest Trustee & Depositary Services Limited receive an annual fee, payable quarterly in arrears, of 0.0085% of the net
assets of the Company, being £124,000 for the year ended 31 December 2022 (2021: £153,000) and their appointment
may be terminated at any time by giving at least six months’ notice. A Depositary may only be removed from office when
a new Depositary is appointed by the Company.
Capital Structure and Share Buy-Backs
At 31 December 2022, the Company’s authorised share capital consisted of 333,299,254 Ordinary Shares of 1p of which
85,344,605 were issued and fully paid. During the year, 2,603,661 shares (3.1% of the Company’s issued share capital
with a nominal value of £26,037) were bought back and cancelled at a total cost of £33,296,000. No shares are held in
treasury. Share buy-backs may succeed in narrowing the discount between the Company’s share price and net asset
value per share (NAV) or in limiting its volatility, but their influence is inevitably subject to broader stockmarket
conditions. Irrespective of their effect on the discount, buy-backs at the margin provide an increase in liquidity for those
Shareholders seeking to crystallise their investment and at the same time deliver an economic uplift for those
Shareholders wishing to remain invested in the Company. Accordingly, it is the intention to continue to use the share
purchase facility within guidelines established from time to time by the Board.
Continuation of the Company
The Company has no fixed duration. However, in accordance with the Company’s Articles of Association, Shareholders
are asked every three years to vote on the continuation of the Company and an ordinary resolution will be proposed at
the Annual General Meeting to be held on 2 March 2023. Further details on the backdrop of the continuation vote are
included in the Chairman's Statement on pages 4 and 5, along with the Directors' recommendation.
If such resolution is not passed, the Directors will prepare and submit to Shareholders (for approval by special resolution)
proposals for the unitisation or appropriate reconstruction of the Company. In putting forward such proposals the
Directors will seek, inter alia, to provide Shareholders with a means whereby they can defer any liability to capital gains
tax on their investment at that time. If such proposals are not approved, Shareholders will, within 180 days of the
relevant Annual General Meeting, have the opportunity of passing an ordinary resolution requiring the Company to be
wound up. On a winding-up, after meeting the liabilities of the Company, the surplus assets will be paid to the holders
of Ordinary Shares and distributed, pro rata, among such holders.
Going Concern
The Audit Committee has undertaken and documented an assessment of whether the Company is a going concern for
the period of at least 12 months from the date of approval of the financial statements. The Committee reported the
results of its assessment to the Board.
The Company’s business activities, capital structure and borrowing facilities, together with the factors likely to affect its
development and performance, are set out in the Strategic Report. In addition, the Annual Report includes the
Company’s objectives, policies and processes for managing its capital and financial risk, along with details of its financial
instruments and its exposures to credit risk and liquidity risk. The Company’s assets comprise mainly readily realisable
equity securities and funding flexibility can typically be achieved through the use of the borrowing facilities, which are
described in notes 12 and 13 to the financial statements. The Company has adequate financial resources to enable it to
meet its day-to-day working capital requirements.
In summary and taking into consideration all available information, the Directors have concluded it is appropriate to
continue to prepare the financial statements on a going concern basis.
Voting Rights of Shareholders
At Shareholder meetings and on a show of hands, every Shareholder present in person or by proxy has one vote. On a
poll, every Shareholder present in person has one vote for each share he/she holds and a proxy has one vote for every
share in respect of which he/she is appointed.
Governance Report
Aberforth Smaller Companies Trust plc 29
Directors’ Report
The Board is pleased to offer electronic proxy voting, including CREST voting capabilities. Further details can be found in
the Notice of the AGM.
Notifiable Share Interests
The Board has received notifications of the following interests in the voting rights of the Company as at 31 December
2022 and 27 January 2023. The total number of voting rights amounted to 85,344,605 at 31 December 2022. Since 31
December 2022, no shares have been bought back and cancelled and therefore the total number of voting rights at 27
January 2023 amounted to 85,344,605.
Notified interests
Brewin Dolphin Limited
Investec Wealth & Investment Limited
Rathbone Brothers plc
Allspring Global Investments Holdings, LLC
Percentage
of Voting
Rights Held
10.5%
9.2%
6.1%
5.1%
Annual General Meeting
The AGM will be held on 2 March 2023 at 10.30 a.m. at 14 Melville Street, Edinburgh EH3 7NS. Shareholders are
encouraged to submit their votes by proxy in advance of the meeting in case restrictions apply and it is therefore not
possible for shareholders to attend in person. The Board will continue to consider carefully the arrangements for the
AGM. The Company will issue a regulatory news announcement, which will be posted on the Company's website, if the
only attendees permitted will be those required to form the quorum and allow the business to be conducted. The Notice
of the Meeting and explanatory notes are set out on pages 62 and 63. The following special resolution will be proposed
at the AGM.
Purchase of Own Shares (Special Resolution)
The current authority of the Company to make market purchases of up to 14.99% of the issued Ordinary Shares of the
Company expires at the end of the AGM. Resolution 13, as set out in the Notice of the AGM, seeks renewal of such
authority until the AGM in 2024. The price paid for shares will not be less than the nominal value of 1p per share and the
maximum price shall be the higher of (i) 105% of the average of the middle market quotations for the shares for the five
business days immediately preceding the date of purchase and (ii) the higher of the price of the last independent trade
and the highest current independent bid on the trading venue where the purchase is carried out. This authority, if
conferred, will be used as described on page 29 and only if to do so would be in the best interests of Shareholders
generally. Any shares purchased under the authority will be automatically cancelled, rather than being held in treasury,
thereby reducing the Company’s issued share capital. There are no outstanding options or warrants to subscribe for
equity shares in the capital of the Company.
Directors’ Recommendation
The Directors consider each resolution being proposed at the AGM to be in the best interests of Shareholders as a whole
and they unanimously recommend that all Shareholders vote in favour of them, as they intend to do so in respect of their
own beneficial shareholdings.
Additional information in respect of the Companies Act 2006
The following information is disclosed in accordance with Section 992 of the Companies Act 2006.
•
• Details of the substantial shareholders in the Company are listed above.
•
The Company’s capital structure and voting rights are summarised on pages 29 and 30.
The rules concerning the appointment and replacement of Directors are contained in the Company’s Articles of
Association and are discussed on pages 32 and 33.
Amendment of the Company’s Articles of Association and powers to issue shares on a non pre-emptive basis or buy
back the Company’s shares requires a special resolution to be passed by shareholders.
There are no restrictions concerning the transfer of securities in the Company; no special rights with regard to
control attached to securities; no agreements between holders of securities regarding their transfer known to the
Company; no agreements to which the Company is party that might affect its control following a takeover bid.
There are no agreements between the Company and its Directors concerning compensation for loss of office.
•
•
•
30 Governance Report
Aberforth Smaller Companies Trust plc
Directors’ Report
Bribery Act 2010
The Company does not tolerate bribery and is committed to carrying out business fairly, honestly and openly. Aberforth
Partners LLP, the Company’s Investment Managers, have confirmed that anti-bribery policies and procedures are in place
and they do not tolerate bribery.
Modern Slavery Statement
The Company is not within scope of the Modern Slavery Act 2015 and is not, therefore, obliged to make a human
trafficking statement. The Company has no employees and its supply chain consists mainly of professional advisers so is
considered to be low risk in relation to this matter.
Criminal Finances Act 2017
The Company does not tolerate the criminal facilitation of tax evasion.
Post Balance Sheet Events
Since 31 December 2022, there are no post balance sheet events that would require adjustment of or disclosure in the
financial statements.
Independent Auditor
Johnston Carmichael LLP has expressed its willingness to continue in office as auditor and a resolution proposing its re-
appointment will be put to the forthcoming Annual General Meeting.
Disclosure of Information to Auditor
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s Auditor is unaware. They also confirm that each Director
has taken all steps that they ought to have taken as a Director to make themselves aware of any relevant audit
information, and to establish that the Company’s Auditor is aware of that information.
Future Developments
The future success of the Company is dependent primarily on the performance of its investments. Although the Company
invests in companies that are listed or quoted in the United Kingdom, the underlying businesses of those companies are
affected by various economic factors, many of an international nature. The Board’s intention is that the Company will
continue to pursue its investment objective and the stated investment strategy and policy.
Approved and authorised for issue by the Board of Directors
Richard Davidson
Chairman
27 January 2023
Governance Report
Aberforth Smaller Companies Trust plc 31
Corporate Governance Report
Introduction
The Board is committed to maintaining and demonstrating high standards of corporate governance. The Board has
considered the principles and provisions of the Association of Investment Companies Code of Corporate Governance
(“the AIC Code”). The AIC Code addresses all the principles and provisions set out in the UK Corporate Governance Code,
which applies for the year ended 31 December 2022, as well as setting out additional principles and provisions on issues
that are of specific relevance to investment trusts. The Board considers that reporting in accordance with the principles
and provisions of the AIC Code provides more relevant and comprehensive information to shareholders. The AIC Code is
available on the AIC website at www.theaic.co.uk. This report forms part of the Directors’ Report on pages 28 to 31.
Compliance
Throughout the year ended 31 December 2022 the Company complied with the recommendations of the AIC Code
except, as explained below, where the Company does not believe it appropriate to comply.
The Board, being small in size and composed entirely of independent non-executive Directors, has not appointed a
Remuneration or a Nomination Committee. Directors’ fees and the appointment of new Directors are considered by the
Board as a whole. The Board has also decided not to nominate a Deputy Chairman or a Senior Independent Director,
although the Chair of the Audit Committee fulfils this role when necessary, for example in taking the lead in the annual
evaluation of the Chairman.
The UK Corporate Governance Code includes provisions relating to the role of the chief executive, executive Directors’
remuneration and the need for an internal audit function. For reasons set out in the AIC Code, the Board considers these
provisions are not relevant to the Company as it is an externally managed investment company. In particular, all of the
Company’s day-to-day management and administrative functions are outsourced to third parties. As a result, the
Company has no executive Directors, employees or internal operations. The Company has therefore not reported further
in respect of these provisions.
The Board
The Board is responsible for the effective stewardship of the Company’s affairs. Strategic issues and all operational
matters of a material nature are considered at its meetings. At 31 December 2022, the Board comprised six non-
executive Directors, of whom Richard Davidson is Chairman. A formal schedule of matters reserved for decision by the
Board has been adopted. The Board has engaged external firms to provide investment management, secretarial,
depositary and custodial services. Contractual arrangements are in place between the Company and these firms.
The Board carefully considers the various guidelines for determining the independence of non-executive Directors, placing
particular weight on the view that independence is evidenced by an individual being independent of mind, character and
judgement. All Directors are presently considered to be independent. All Directors retire at the AGM each year and, if
appropriate and continuing, seek re-election. Each Director has signed a letter of appointment to formalise the terms of
their engagement as a non-executive Director, copies of which are available on request and at the AGM.
Meetings
The Board meets at least quarterly to review the overall business of the Company and to consider the matters specifically
reserved for it. Detailed information is provided by the Managers and Secretaries for these meetings and additionally at
regular intervals to enable the Directors to monitor compliance with the investment objective and the Company’s
investment performance compared with its benchmark index. The Directors also review several important areas
including:
•
•
•
•
•
•
•
•
the stockmarket environment;
the Company’s investment activity over the quarter relative to its investment policy;
performance in relation to comparable investment trusts and open-ended funds;
the revenue account, balance sheet and gearing position;
share price discount (both absolute levels and volatility);
shareholder register (including significant changes);
regulatory matters; and
relevant industry issues.
The Board also holds an annual strategy session to consider, amongst other matters, the Company’s objective and
investment strategy.
32 Governance Report
Aberforth Smaller Companies Trust plc
Corporate Governance Report
Annual Plan
The following highlights various additional matters considered by the Board during the past year:
January
March/April
July
October
Consider Final
Dividend
Approval of the
Annual Report
Shareholder
Communication
Consider Interim
Dividend
Approval of Half
Yearly Report
Internal Control
Review
Corporate
Governance Review
including the
Managers’ policy
on stewardship
Review of
Gearing
Review of
significant
interests
Annual Strategy
Review
Detailed review
of Investment
Trust Peer Group
Review Managers’
continued
appointment and
remuneration
Board &
Committee
Evaluation
Board
Composition
Review of
Directors’ Fees
The following table sets out the Directors of the Company during the financial year, together with the number of Board
and Committee meetings held and the number of meetings attended by each Director (whilst a Director or Committee
member). Directors who are not members of the Audit Committee were invited to be present at meetings of the Audit
Committee.
Board
Director Eligible to attend Attended Eligible to attend Attended
Audit
Committee
Richard Davidson, Chairman 5 5 – –
Jaz Bains (appointed 10 October 2022) 1 1 – –
Paula Hay-Plumb (retired 3 March 2022) 1 1 1 1
Julia Le Blan 5 4 3 3
Patricia Dimond (appointed 3 March 2022) 3 3 2 2
Victoria Stewart 5 5 3 3
Martin Warner 5 5 – –
There has been no change to the Directors between 31 December 2022 and 27 January 2023.
Appointments to the Board
The Board regularly reviews its composition, having regard to the Board’s structure and to the present and future needs
of the Company. The Board takes into account its diversity, the balance of expertise and skills brought by individual
Directors, and length of service, where continuity and experience can add significantly to the strength of the Board.
The Board believes in the benefits of having a diverse range of experience, skills, length of service and backgrounds. The
Board is also of the view that length of service will not necessarily compromise the independence or contribution of
directors of an investment trust company. Continuity and experience can add significantly to the strength of the Board
especially in times of market turbulence. Nevertheless, the Board’s policy is that in normal circumstances the Chairman and
Directors are expected to serve for a nine-year term, though this may be adjusted for reasons of flexibility. Julia Le Blan is
retiring from the Board at the 2023 AGM having been a Director for nine years and all the continuing Directors have served
for fewer than nine years. The Board appointed two new Directors during 2022. Patricia Dimond was appointed on 3 March
2022 and Jaz Bains was appointed on 10 October 2022. Details of each Director are contained on page 27. The search for
candidates involved the establishment of a committee, chaired by Richard Davidson, to meet with a shortlist of candidates
provided by external search consultants. Trust Associates was engaged to conduct the search that led to the appointment
of Patricia Dimond, and Cornforth Consulting was engaged for the search that led to the appointment of Jaz Bains. Neither
of these external search firms has any connections with the Company or Directors.
Governance Report
Aberforth Smaller Companies Trust plc 33
Corporate Governance Report
Board Diversity Policy and Information
The Board’s policy for the appointment of non-executive directors reflects its belief in the benefits of having a diverse range
of experience, skills, length of service and backgrounds. The policy is always to seek to appoint the best person for the job. In
pursuing this policy, the Board actively promotes equality and fairness and does not discriminate on the grounds of gender,
race, ethnicity, religion, sexual orientation, age, physical ability or socio-economic backgrounds. The overriding aim of the
policy is to seek to ensure that the Board and its committees are composed of the best combination of people to promote the
success of the Company for Shareholders over the long term. The current Directors have a range of relevant business, financial
and asset management skills and experience. Brief biographical details of the members of the Board are shown on page 27.
The Board recognises the new diversity targets set out on the FCA’s Listing Rule 9.8.6R (9), and although the Company is not
required to report against these targets until its 2023 Annual Report, it has chosen to do so in the diversity information
provided below. The Company meets these FCA diversity targets as at 31 December 2022 and there have been no changes
since that date that have affected the Company’s ability to meet them.
Board Gender Number of Percentage of Number of senior
as at 31 December 2022 Board members the Board positions on the Board
Men 3 50.0% 1
Women 3 50.0% 1
In respect of gender representation, the Company meets the FCA’s Listing Rules targets that at least 40% of individuals on
its board are women and at least one of the senior board positions is held by a woman. As set out in the table above, 50%
of the Board are women and the position of Chair of the Audit Committee, which fulfils the role of Senior Independent
Director where necessary, is held by a woman.
Board Ethnic Background Number of Percentage of Number of senior
as at 31 December 2022 Board members the Board positions on the Board
White British or other White
(including minority White groups)
5 83.3% 2
Minority Ethnic 1 16.7% –
The FCA’s Listing Rules target that at least one individual on a board is from a minority ethnic background and, as set out in
the table above, the Company meets this target.
The diversity data included above were obtained from individual Directors using a survey tool. As the Company is an
externally managed investment company and has no executive directors or management, it has not provided diversity
information on executive management.
Board performance and re-appointment of Directors
The Board undertakes a formal annual assessment of Directors and their collective performance on a range of issues
including the Board’s role, processes and interaction with the Managers. The Board appointed Lintstock Limited to facilitate
an external independent review of the Board and the Audit Committee by way of an evaluation questionnaire, the results
of which were discussed by the Directors in October 2022, providing valuable feedback for improving Board effectiveness
and highlighting areas for further development. The appraisal of the Chairman was led by the Chair of the Audit Committee.
The Board has agreed to utilise external facilitators every three years.
In line with the Board’s policy, all continuing Directors offer themselves for re-election at the forthcoming AGM. The Board
believes that each Director continues to be effective, bringing a wealth of knowledge and experience to the Board, and the
Chairman recommends their re-election to Shareholders.
34 Governance Report
Aberforth Smaller Companies Trust plc
Corporate Governance Report
Directors’ and Officers’ Liability Insurance
The Company maintains appropriate insurance cover in respect of legal action against its Directors. The Company has
also entered into qualifying third party deeds of indemnity with each Director to cover any liabilities that may arise to a
third party, other than the Company, for negligence, default or breach of trust or duty. The deeds were in force during
the year to 31 December 2022 and up to the date of approval of this report. The Directors are not indemnified in respect
of liabilities to the Company or costs incurred in connection with criminal proceedings in which the Director is convicted
or required to pay any regulatory or criminal fines.
Training and Advice
New Directors are provided with an induction programme that is tailored to the particular requirements of the
appointee. Thereafter regular briefings are provided on changes in regulatory requirements that affect the Company.
Directors are also encouraged to attend industry and other seminars. Directors, in the furtherance of their duties, may
also seek independent professional advice at the expense of the Company. No Director took such advice during the
financial year under review.
All Directors have access to the advice and services of the Company’s Secretaries, Aberforth Partners LLP, who are
responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are
complied with. The Company Secretaries are also responsible for advising the Board through the Chairman on all
governance matters.
Conflicts of Interest
Company directors have a statutory obligation to avoid a situation in which they (and connected persons) have, or can have,
a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company. The Board has in place
procedures for managing any actual or potential conflicts of interest. No interests conflicting with those of the Company
arose during the year under review.
Risk Management and Internal Control
The Board has overall responsibility for the Company’s risk management and internal control systems and for reviewing
their effectiveness. The Company applies the guidance published by the Financial Reporting Council on internal controls.
Internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve the business objective
and can provide only reasonable and not absolute assurance against material misstatement or loss. These controls aim to
ensure that the assets of the Company are safeguarded, that proper accounting records are maintained and that the
Company’s financial information is reliable. Further information on risk management and internal control is contained on
pages 36 to 38. The Directors have not identified any significant factors or weaknesses in respect of the Company's internal
control systems.
Relations with Shareholders
The Board places great importance on communication with Shareholders. Directors of the Company are available to meet
with any Shareholder on request. The Managers meet the larger Shareholders twice a year to provide them with a detailed
report on the progress of the Company and to receive feedback. The Board receives reports from the Managers on these
Shareholder meetings. The Shareholder presentation is published on the Managers' website. Furthermore, following
publication of the Annual Report, the Chairman emails the largest Shareholders inviting questions on all aspects concerning
the Company. The Directors may be contacted via the Secretaries whose details are shown on the back cover or through
the Chairman’s email address, richard.davidson@aberforth.co.uk.
All Shareholders have the opportunity to vote at and in normal circumstances attend the AGM where the Directors and
Managers are available to discuss important issues affecting the Company. Proxy voting figures are available at the AGM
and on the Managers’ website shortly thereafter. In addition to the annual and half yearly reports, the Company’s
performance, daily Net Asset Values, monthly factsheets and other relevant information are published at
www.aberforth.co.uk.
Governance Report
Aberforth Smaller Companies Trust plc 35
Audit Committee Report
The Committee members are all independent non-executive directors who have been selected by the Board to fulfil
the Committee’s duties based upon their range of financial and commercial expertise. The Committee members during
the year were Julia Le Blan (Chair), Patricia Dimond (appointed on 3 March 2022), Paula Hay-Plumb (retired on 3 March
2022) and Victoria Stewart. The current members’ biographies can be found on page 27. Each member of the
Committee has recent and relevant financial experience and the Committee as a whole has competence relevant to the
sector in which the Company operates.
Principal Objective
The objective of the Committee is to provide assurance to the Board as to the effectiveness of the Company’s internal
controls and the integrity of its financial records and externally published results. The Committee operates within terms
of reference that have been agreed by the Board. These are reviewed annually and are available upon request.
Principal Responsibilities
The Committee has been given the following responsibilities:
•
reviewing the Company’s internal financial controls and risk management systems, identifying principal risks and
monitoring the mitigating controls that have been established;
• monitoring compliance with the relevant statutory, regulatory and taxation requirements for a UK based
investment trust that is listed on the London Stock Exchange;
reviewing the Company’s annual and interim financial statements and any formal announcements on the
Company’s financial performance, the accounting policies adopted and the main judgemental areas;
ensuring that the Annual Report, taken as a whole, is fair, balanced and understandable;
agreeing the external auditor’s terms of appointment and remuneration, determining the independence and
objectivity of the auditor, assessing the effectiveness of the audit and conducting audit tenders;
considering whether it is appropriate for certain non-audit services to be carried out by the auditor and reviewing
the need for an internal audit function; and
assessing the going concern and viability of the Company, including assumptions used.
•
•
•
•
•
The Chair reports formally to the Board on the Committee’s proceedings after each meeting. To assist with the various
duties of the Committee, a meeting plan has been adopted and is reviewed annually. The latest version is shown below.
Risk Management and Internal Control
The Directors have a robust process for identifying, evaluating and managing the significant risks faced by the Company,
which are recorded in a risk matrix. As part of its risk process, the Audit Committee seeks to identify emerging risks to ensure
that they are effectively managed as they develop and are recorded in the risk matrix. The Audit Committee considers each
risk in the matrix as well as reviewing the mitigating controls in place. Each risk is rated for its “likelihood” and “impact” and
the resultant numerical rating determines its ranking into High, Medium or Low Risk. The principal risks faced by the
Company and Board’s approach to managing these risks are set out on pages 24 and 25. This process was in operation during
the year and continues in place up to the date of this report. It principally involves the Audit Committee receiving and
examining regular reports from the main service providers. The Board then receives a detailed report from the Audit
Committee on its findings. Further information on risk management and internal control is contained on page 38. The Audit
Committee has not identified any significant failures or weaknesses in respect of the Company’s internal control systems.
Audit Committee Annual Plan
January
April
July
October
Annual Report
including judgemental
areas, going concern,
viability statement,
letter of
representation,
expense analysis and
Annual Report
announcement
Custodian’s
Controls Report
update
Investment Trust
Status
Key Risks of the
Company
Meetings to be
called if required
Provision of non-
audit services,
including taxation
compliance services
Basis of
Management Fee
allocation (every
three years)
Audit meeting/
evaluation of the
audit including
auditor
independence
Half Yearly Report
including
judgemental areas,
going concern,
expense analysis and
Half Yearly Report
announcement
Key Risks of the
Company
Investment Trust
Status
Corporate
Governance
Compliance
Evaluation of the
Committee
Key Risks of the
Company
Investment Trust
Status
Audit Fees
Committee’s
Terms of Reference
Audit Committee
Plan
Auditor Plan,
together with the
Terms of
Engagement
Cyber Security
Measures (Aberforth
Partners)
Internal Controls
Review including
reports from the
Managers and other
third parties
36 Governance Report
Aberforth Smaller Companies Trust plc
Audit Committee Report
Meetings
Typically three meetings are held each year. Representatives of Aberforth Partners LLP, who provide the Company with
secretarial services, attend all of the meetings. The external auditor attends the meetings in January and October.
During the year to 31 December 2022 the Committee focused on the areas described below.
Matters Considered and Action taken by the Committee
Financial Reporting
In July 2022, the Committee focused on the preparation and content of the Half Yearly Report, including supporting
documentation from the Secretaries. The Half Yearly Report was not audited, as is customary for investment trusts.
In January 2023, the Committee received a report and supporting presentation from the external auditor on its audit
of the financial statements for the year to 31 December 2022. In addition, the Secretaries reported on the
preparation of the financial results and other relevant matters. The Committee considered these reports in detail and
took further comfort from the internal control and risks review covered below. The Chair of the Committee had
discussed the outcome of the audit process and the Annual Report with the audit partner without representatives of
Aberforth Partners being present. As part of its review of the financial statements, the Committee considered the
following significant issues.
Significant Issue
How the issue was addressed
Ownership and valuation of
the investment portfolio as
at 31 December 2022
Revenue recognition including
dividend completeness and
the accounting treatment of
special dividends
Investment Trust Status
Calculation of
management fees
Impact of pandemic
The Committee reviewed the Managers’ control framework, which includes controls over
valuation and ownership of investments. The appointed Depositary is responsible for
holding and controlling all assets of the Company entrusted for safekeeping. Ownership of
investments is verified through reconciliations by the Managers to Custodian records. The
Committee reviewed internal control reports from the Company’s Custodian. The
valuation of the portfolio is undertaken in accordance with the accounting policy for
investments as stated in Note 1 to the financial statements.
The Committee reviewed the Managers’ control framework, which includes controls over
revenue recognition. The Committee reviewed actual and forecast revenue entitlement at
each meeting. The accounting treatment of all special dividends was reviewed by the
Committee and the external auditor.
The Committee confirmed the position of the Company in respect of compliance with
investment trust status at each meeting with reference to a checklist prepared by the
Secretaries. The position is also confirmed by the external auditor as part of the audit process.
The Committee reviewed the Managers’ control framework, which includes controls over
expenses, including management fees. The Committee reviewed management fees
payable to the Managers. The external auditor tested the management fees as part of its
audit.
The Committee considered the impact of Covid-19 on the Company's financial statements
and the references in the Annual Report, including those contained in the 'Principal Risks'
and 'Managers' Report' sections.
The Committee read and discussed this Annual Report and concluded that it is fair, balanced and understandable. It
provides the information necessary for Shareholders to assess the Company’s performance, objective and strategy.
Accordingly, the Committee recommended to the Board that the financial statements be approved for publication.
Going Concern and Viability
The Committee received reports on going concern from the Secretaries in July and January. The content of the
investment portfolio, trading activity, portfolio diversification and the existing borrowing facilities were also
discussed. After due consideration, the Committee concluded it was appropriate to prepare the Company’s accounts
on a going concern basis and made this recommendation to the Board. The main factors that led to this conclusion
were the portfolio composition, the relatively low levels of cash required to continue operating the Company and the
availability of the borrowing facilities. It was also recognised that the Company's shareholders are to vote on the
continuation of the Company on 2 March 2023 and again in 2026.
The Committee also assessed the viability of the Company. The Committee agreed that it was appropriate to provide
a Viability Statement for a five year period for the reasons set out in the Statement on page 26. In January 2023, the
Committee reviewed a series of stress tests that considered the impact of severe market downturn scenarios on
Shareholders’ funds, the borrowing facilities, investment income and also the impact of losing investment trust status.
The outcome of this activity led the Committee to recommend the Viability Statement to the Board.
Governance Report
Aberforth Smaller Companies Trust plc 37
Audit Committee Report
Matters Considered and Action taken by the Committee
Internal Control and Risks
The Committee carefully considered a Matrix of the Company’s principal and emerging risks and the mitigating
controls at each meeting. In October the risks and controls were addressed in more detail. The Committee enhanced
the content of the Matrix during the year, including: adding the effects of the Ukraine/Russian war and escalations to
market risks; updating risk ratings where appropriate; moving certain risks from emerging to emerged but not
principal risks; and adding some political and economic emerging risks. The Committee believes the Matrix continues
to reflect accurately the Company’s principal risks. These risks are detailed on pages 24 and 25.
In October 2022 the Committee received the Managers’ report on internal controls, including the assurance report
issued by PricewaterhouseCoopers LLP (PwC) on the nature and effectiveness of the control framework that has been
established by the Managers. A representative of PwC attended the meeting. In addition, the Committee received
internal control reports from the Custodian, Northern Trust, and from the Registrar, Link Group. The Committee
reviewed these reports and concluded that there were no significant control weaknesses or other issues that needed
to be brought to the Board’s attention.
The Committee continues to monitor closely the increasing risk arising from cyber threats, notwithstanding that the
Company outsources all of its activities to external parties. In October, the Committee received a report from
Aberforth Partners on cyber security, covering the measures that are in place to protect the Managers’ systems and
the Company information that they contain. The Committee noted the assurances that have been given about the
effectiveness of control measures. It concluded that, although cyber-attack represents an increasing threat to
companies and public bodies worldwide, the Company has taken all reasonable steps to ensure that appropriate
protection measures are in place.
External Auditor, Audit Planning and Audit fees
Johnston Carmichael LLP was appointed as the Company’s Auditor at the AGM held on 3 March 2022 in place of the
retiring auditor, Deloitte LLP, following a formal tender process. The Committee reviews the reappointment of the
auditor every year. The audit partner needs to be rotated every five years and David Holmes was first appointed audit
partner for the 2022 audit. Johnston Carmichael LLP presented its audit plan to the Committee in October in advance
of the 2022 audit. The plan set out the scope of the audit, the principal risks that would be addressed (as detailed in
the Independent Auditor's Report), the timetable and the proposed fees. These amounted to £31,500, excluding VAT,
for the year (2021: £32,000). There were no non-audit activities carried out by Johnston Carmichael LLP. Regulations
require the Company to tender the audit at least every ten years and the next audit tender process has to be
conducted no later than 2033.
Auditor
Following the completion of the audit in January 2023, the Committee reviewed the auditor’s effectiveness. The
Committee acknowledged that the audit team comprised staff with appropriate levels of knowledge and experience.
The Committee noted positive feedback from the Secretaries on Johnston Carmichael LLP’s performance on the audit.
Additionally Johnston Carmichael LLP had provided confirmation that they have complied with the relevant UK
professional and regulatory requirements on independence. Taking these factors into account, the Committee was
satisfied that the external audit was carried out effectively.
Committee Evaluation
An external review of the Committee’s effectiveness, using an online evaluation questionnaire, was facilitated by
Lintstock during the year. The outcome was positive with no significant concerns expressed. The Committee has agreed
to utilise external facilitators every three years.
Julia Le Blan
Audit Committee Chair
27 January 2023
38 Governance Report
Aberforth Smaller Companies Trust plc
Directors’ Remuneration Policy
This section provides details of the remuneration policy applying to the Directors of the Company. All Directors are non-
executive, appointed under the terms of letters of appointment and none has a service contract. The Board has prepared
this report in accordance with the requirements of the Companies Act 2006.
This policy was previously approved by Shareholders at the Annual General Meeting held in 2020. The policy provisions
continue to apply until they are next put to Shareholders for approval, which must be at intervals not exceeding three
years. A resolution is being put at the 2023 AGM to seek Shareholders' approval for the Directors' Remuneration Policy.
This policy, together with the Directors’ letters of appointment may be inspected at the Company’s registered office.
The Board considers and determines all matters relating to the Directors’ remuneration at the beginning of each financial
period. A Remuneration Committee has not been formed as all of the Directors are non-executive and considered
independent.
Company’s Policy on Directors’ Remuneration
The Company’s policy is that the remuneration of the Directors should be commensurate with the duties and
responsibilities of the role and consistent with the requirement to attract and retain Directors of appropriate quality and
experience. No Shareholder has expressed any views to the Company in respect of the Directors’ remuneration policy.
The remuneration policy is not subject to employee consultation as the Company has no employees. It is intended that
this policy will remain in place for the following financial year and subsequent periods.
The Board, at its discretion, determines Directors’ remuneration subject to the aggregate annual fees not exceeding
£200,000 in accordance with the Company’s Articles of Association. Such remuneration solely comprised Directors’ fees
as set out below and Directors are not eligible for any other remuneration.
The table below sets out the Directors’ fees in respect of the year ended 31 December 2022 and year ending 31
December 2023.
Chairman of the Company
Director and Chair of the Audit Committee
Director and Member of the Audit Committee
Director
Annual Fees
2023
£
41,460
34,300
29,300
27,640
Annual Fees
2022
£
39,300
32,500
27,780
26,200
Loss of Office
A Director may be removed without notice and no compensation will be due on loss of office.
Expenses
All directors are entitled to the reimbursement of expenses paid by them in order to perform their duties as a Director
of the Company.
Review of the Remuneration Policy
The Board has agreed to review the above policy at least annually to ensure that it remains appropriate.
Governance Report
Aberforth Smaller Companies Trust plc 39
Directors’ Remuneration Report
The Board has prepared this report in accordance with the requirements of the Companies Act 2006. The law requires the
Company’s Auditor to audit certain elements of this report. These elements are described below as “Audited”. The Auditor’s
opinion is included in the Independent Auditor’s Report on page 43.
Directors’ Letters of Appointment
Each Director has entered into a letter of appointment with the Company and is subject to annual re-election by Shareholders.
Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment and thereafter
at every subsequent Annual General Meeting. The following Directors held office during the year.
Date of Date of election/
Director Appointment re-election
Richard Davidson, Chairman 26 January 2019 AGM 2023
Paula Hay-Plumb (retired 3 March 2022) 29 January 2014 n/a
Jaz Bains 10 October 2022 AGM 2023
Julia Le Blan (not seeking re-election) 29 January 2014 n/a
Patricia Dimond 3 March 2022 AGM 2023
Victoria Stewart 1 September 2020 AGM 2023
Martin Warner 1 March 2018 AGM 2023
Directors’ Fees (Audited)
The emoluments of the Directors who served during the year were as follows.
Fees Fees
(Total Emoluments) (Total Emoluments)
2022 2021
Director £ £
Richard Davidson, Chairman 39,300 37,425
Jaz Bains (appointed 10 October 2022) 5,958 n/a
Julia Le Blan, Chair of the Audit Committee 32,500 30,950
Paula Hay-Plumb (retired 3 March 2022) 4,719 26,450
Patricia Dimond (appointed 3 March 2022) 23,042 n/a
Victoria Stewart 27,780 26,113
Martin Warner 26,200 24,950
159,499 150,308
Directors are remunerated exclusively by fixed fees and do not receive bonuses, share options, pension contributions or other
benefits apart from the reimbursement of allowable expenses.
The following table shows the remuneration of the Directors in relation to distributions to Shareholders by way of dividends
and share buy-backs.
Total Directors’ remuneration
Total dividends in respect of that year
Total share buy-back consideration
2022
£’000
159
40,529
33,296
The annual percentage change in Directors’ remuneration is provided in the table below.
Chairman of the Company
Director and Chair of the Audit Committee
Director and Member of the Audit Committee
Director
2022
5.0%
5.0%
5.0%
5.0%
2021
£’000
150
31,014
12,886
2021
0.0%
0.0%
0.0%
0.0%
Absolute
change
£’000
9
9,515
20,410
2020
1.8%
1.5%
1.7%
1.8%
The Company does not have any employees and hence no comparisons are given between Directors’ and employees’ pay
increases.
40 Governance Report
Aberforth Smaller Companies Trust plc
Directors’ Remuneration Report
Statement of Directors’ Shareholdings and Share Interests (Audited)
The Directors who held office at any time during the year ended 31 December 2022 and their interests in the Shares of the
Company as at that date and 1 January 2022 were as follows.
Directors Nature of Interest
31 December 2022
1 January 2022
Ordinary Shares
Richard Davidson, Chairman Beneficial
Jaz Bains (appointed 10 October 2022) Beneficial
Julia Le Blan Beneficial
Paula Hay-Plumb (retired 3 March 2022) Beneficial
Patricia Dimond (appointed 3 March 2022) Beneficial
Victoria Stewart Beneficial
Martin Warner Beneficial
Non Beneficial
32,000
1,030
3,000
n/a
4,000
4,200
2,000
5,000
32,000
n/a
3,000
2,600
n/a
4,200
2,000
5,000
There has been no change in the beneficial or non-beneficial holdings of the Directors between 31 December 2022 and
27 January 2023. The Company has no share options or share schemes. Directors are not required to own shares in the
Company.
Consideration of Shareholders’ Views and Statement of Voting
An ordinary resolution to approve the remuneration report is put to members at each Annual General Meeting. To date, no
Shareholders have commented in respect of the remuneration report or policy. At the last Annual General Meeting held on 3
March 2022, Shareholders, on a show of hands, passed the resolution to approve the Directors’ Remuneration Report: of the
54,718,957 proxy votes, 54,609,519 were cast in favour, 24,232 were cast against, 60,378 were discretionary and 24,828 votes
were withheld. At the Annual General Meeting held on 3 March 2020, Shareholders, on a show of hands, passed the resolution
to approve the Directors’ Remuneration Policy: of the proxy votes cast, 48,850,679 votes were cast in favour, 12,390 were cast
against, 43,932 were discretionary and 1,838,769 votes were withheld.
200%
150%
100%
50%
0%
Total return performance since 31 December 2012
Share Price Performance
This graph compares the performance
of the Company’s share price with the
Index
Numis Smaller Companies
(excluding Investment Companies), on
a total return basis (assuming all
dividends
since 31
reinvested)
December 2012. This index has been
the purposes of
selected
comparing the Company’s share price
it has been the
performance as
Company’s
since
inception.
benchmark
for
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
ASCoT Share Price Benchmark
The main influences on performance
over the year are described in the
Managers' Report.
Annual Statement
On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Directors’ Remuneration Report summarises,
as appropriate, for the year ended 31 December 2022:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration made during the year; and
(c) the context in which those changes occurred and decisions were taken.
On behalf of the Board
Richard Davidson
Chairman
27 January 2023
Governance Report
Aberforth Smaller Companies Trust plc 41
Directors’ Responsibility Statement
The Directors are required by law to prepare financial statements for each financial year in accordance with applicable
law and regulations. The Directors are also required to prepare a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement.
The Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (Financial Reporting Standard 102 and applicable law). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors
are required to:
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume the Company will
continue in business.
select suitable accounting policies and then apply them consistently;
•
The Directors are responsible for keeping accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company, and that enable
them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Annual Report is published on www.aberforth.co.uk, which is the website maintained by the Managers. The work
undertaken by the Auditor does not involve consideration of the maintenance and integrity of the website and,
accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation in other jurisdictions.
Declaration
Each of the Directors confirms to the best of their knowledge that:
(a) the financial statements, which have been prepared in accordance with applicable accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
(b) the Strategic Report includes a fair review of the development and performance of the business and the position
of the Company, together with a description of the principal risks and uncertainties that it faces; and
(c) the Annual Report, taken as a whole, is fair, balanced and understandable and provides information necessary for
Shareholders to assess the Company’s position, performance, business model and strategy.
On behalf of the Board
Richard Davidson
Chairman
27 January 2023
42 Governance Report
Aberforth Smaller Companies Trust plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ABERFORTH SMALLER
COMPANIES TRUST PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Aberforth Smaller Companies Trust plc (“the Company”), for the year ended 31
December 2022, which comprise the Income Statement, the Reconciliation of Movements in Shareholders’ Funds, the Balance Sheet,
the Cash Flow Statement, and the related notes, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
•
•
•
give a true and fair view of the state of Company’s affairs as at 31 December 2022 and of its net return for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard, as applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our approach to the audit
We planned our audit by first obtaining an understanding of the Company and its environment, including its key activities delegated
by the Board to relevant approved third-party service providers and the controls over provision of those services.
We conducted our audit using information maintained and provided by Aberforth Partners LLP (the “Investment Manager”, the
“Company Secretary,” and “Administrator”) The Northern Trust Company (the “Custodian”), NatWest Trustee & Depositary Services
Limited (the “Depositary”) and Link Group (the “Registrar”) to whom the Company has delegated the provision of services.
We tailored the scope of our audit to reflect our risk assessment, taking into account such factors as the types of investments within
the Company, the involvement of the Administrator, the accounting processes and controls, and the industry in which the Company
operates.
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in the evaluation of the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Financial Report
Aberforth Smaller Companies Trust plc 43
Independent Auditor’s Report
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.
We summarise below the key audit matters in arriving at our audit opinion above, together with how our audit addressed these
matters and the results of our audit work in relation to these matters.
Key audit matter
How our audit addressed the key audit matter and our
conclusions
Valuation and ownership of investments
(as per page 37 (Report of the Audit Committee), page 53
(Accounting Policies) and Note 10.
The valuation of the portfolio at 31 December 2022 was
£1,322m (2021: £1,555m) and comprised entirely of listed
equity investments.
As this is the largest component of the Company’s Balance
Sheet, accounting for 105.7% (2021: 105.6%) of net assets,
and a key driver of the Company’s total return, this has
been designated as a key audit matter, being one of the
most significant assessed risks of material misstatement
due to fraud or error.
There is a risk that investments held at fair value may not
be actively traded and the quoted prices may not be
reflective of their fair value (valuation).
Additionally, there is a risk that the investments recorded
as held by the Company may not represent property of the
Company (ownership).
indicators
Revenue recognition, including allocation of special
dividends as revenue or capital returns
(as per page 37 (Report of the Audit Committee), page 53
(Accounting Policies) and Note 3.
The income from investments for the year to 31 December
2022 was £53.2m (2021: £37.3m) consisting of dividends
received from listed investments.
Revenue-based performance metrics are often one of the
key performance
for stakeholders. The
investment income received by the Company during the
year directly impacts these metrics and the minimum
dividend required to be paid by the Company in order to
maintain investment trust status.
There is a risk that revenue is incomplete or inaccurate
through failure to recognise income entitlements or failure
to appropriately account for their treatment. It has
therefore been designated as a key audit matter being one
of the most significant assessed risks of material
misstatement due to fraud or error.
Additionally, judgement is required in determining the
allocation of special dividends as revenue or capital returns
in the Income Statement.
reviewed controls
reports provided by
We
the
Administrator and the Custodian to gain an understanding
of the processes relating to valuation and custody, and to
evaluate whether the key controls are designed effectively
and implemented.
We compared market prices applied to all listed equity
investments held at 31 December 2022 to an independent
investment
third-party source and recalculated the
valuations.
We obtained average
from an
independent third-party source for all investments held at
year end and assessed their liquidity.
We agreed the ownership of all listed equity investments
held at 31 December 2022 to the independently received
custodian report.
From our completion of these procedures, we identified no
material misstatements in relation to the valuation and
ownership of the investments.
trading volumes
We reviewed the controls report provided by the
Administrator to gain an understanding of the process
relating to revenue recognition, including the process for
allocating special dividends as revenue or capital returns,
and to evaluate whether the key controls are designed
effectively and implemented.
We confirmed that income is recognised in accordance
with the AIC SORP by assessing the accounting policies.
We recalculated 100% of dividends due to the Company
based on investment holdings throughout the year and
announcements made by investee companies.
We agreed a sample of investment income recognised to
bank statements.
We assessed the completeness of the special dividend
population and determined whether the Company’s
allocation of special dividends as revenue or capital returns
was appropriate by reference to the underlying commercial
circumstances.
From our completion of these procedures, we identified no
material misstatements in relation to revenue recognition,
including allocation of special dividends as revenue or
capital returns.
44 Financial Report
Aberforth Smaller Companies Trust plc
Independent Auditor’s Report
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature and
extent of our work and in evaluating the results of that work.
Materiality measure Value
Materiality for the financial statements as a whole – we have set materiality as 1% of net assets as we
believe that net assets is the primary performance measure used by investors and is the key driver of
shareholder value. It is also the standard industry benchmark for materiality for investment trusts and we
determined the measurement percentage to be commensurate with the risk and complexity of the audit
and the Company’s listed status.
£12.51m
(2021: £14.73m)
Performance materiality - performance materiality represents amounts set by the auditor at less than
materiality for the financial statements as a whole, to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial
statements as a whole.
In setting this we consider the Company’s overall control environment and any experience of the audit that
indicates a lower risk of material misstatements. Based on our judgements of these factors we have set
performance materiality at 50% of our overall financial statement materiality as this is our first year as
auditor.
Specific materiality – recognising that there are transactions and balances of a lesser amount which could
influence the understanding of users of the financial statements we calculate a lower level of materiality
for testing such areas.
£6.25m
(2021: £10.31m)
Specifically, given the importance of the distinction between revenue and capital for the Company, we
applied a separate testing threshold for the revenue column of the Income Statement, set at the higher of
5% of the revenue net return on ordinary activities before taxation and our Audit Committee Reporting
Threshold.
£2.41m
(2021: N/A)
Separately, we have also set a specific materiality in respect of related party transactions and Directors’
remuneration.
We used our judgement in setting these thresholds and considered our experience and industry
benchmarks for specific materiality.
Audit Committee reporting threshold - we agreed with the Audit Committee that we would report to them
all differences in excess of 5% of overall materiality in addition to other identified misstatements that
warranted reporting on qualitative grounds, in our view. For example, an immaterial misstatement as a
result of fraud.
£0.63m
(2021: £0.74m)
During the course of the audit, we reassessed initial materiality and found no reason to alter the basis of calculation used at year-end.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
• Evaluating management’s method of assessing going concern, including consideration of market conditions and uncertainties;
• Assessing and challenging the forecast cashflows and associated sensitivity modelling including assessment of the loan covenants
used by the Directors in support of their going concern assessment;
• Obtaining and recalculating management’s assessment of the Company’s ongoing maintenance of investment trust status;
• Evaluating management’s assessment of the business continuity plans of the Company’s main service providers; and
• Assessing the adequacy of the Company’s going concern disclosures included in the Annual Report.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Financial Report
Aberforth Smaller Companies Trust plc 45
Independent Auditor’s Report
Other information
The other information comprises the information included in the Annual Report other than the financial statements and our auditor’s
report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• The information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• The Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• Adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• The financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• Certain disclosures of Directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit; or
• A corporate governance statement has not been prepared by the Company.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 29;
• The Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period
is appropriate set out on page 26;
• The Directors’ statement on whether it has a reasonable expectation that the Company will be able to continue in operation and
meet its liabilities set out on page 26;
• The Directors’ statement on fair, balanced and understandable set out on page 42;
• The Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 24;
• The section of the annual report that describes the review of the effectiveness of risk management and internal control systems
set out on pages 35 and 36; and
• The section describing the work of the Audit Committee set out on pages 36 to 38.
46 Financial Report
Aberforth Smaller Companies Trust plc
Independent Auditor’s Report
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 42, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise
non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning
stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and the sector in which
it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the
financial statements. The most relevant frameworks we identified include:
• Companies Act 2006;
• FCA listing and DTR rules;
• The principles of the UK Corporate Governance Code applied by the AIC Code of Corporate Governance (the “AIC Code”);
• Industry practice represented by the Statement of Recommended Practice: Financial Statements of Investment Trust Companies
and Venture Capital Trusts (“the SORP”) issued in November 2014, and updated in July 2022 with consequential amendments;
• Financial Reporting Standard 102; and
• The Company’s qualification as an investment trust under section 1158 of the Corporation Tax Act 2010.
We gained an understanding of how the Company is complying with these laws and regulations by making enquiries of management
and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with
regulatory bodies and board meeting minutes.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur,
by meeting with management and those charged with governance to understand where it was considered there was susceptibility
to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether
this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those
charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation
to the allocation of special dividends. Audit procedures performed in response to these risks are set out in the section on key
audit matters above.
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements
were free of material fraud or error:
• Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act
2006 and the Listing Rules;
• Testing of accounting journals and other adjustments for appropriateness;
• Assessing judgements and estimates made by management for bias; and
• Agreement of the financial statement disclosures to supporting documentation.
Financial Report
Aberforth Smaller Companies Trust plc 47
Independent Auditor’s Report
Extent the audit was considered capable of detecting irregularities, including fraud (continued)
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as
fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the
audit procedures described above and the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we would become aware of it.
Other matters which we are required to address
O»
Following the recommendation of the Audit Committee, we were appointed by the Board on 3 March 2022 to audit the financial
statements for the year ended 31 December 2022 and subsequent financial periods. The period of our total uninterrupted
engagement is one year, covering the year ended 31 December 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent of
the Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
David Holmes (Senior statutory auditor)
For and on behalf of Johnston Carmichael LLP
Statutory Auditor
Edinburgh, United Kingdom
27 January 2023
(a) The maintenance and integrity of the Aberforth Partners LLP web site is the responsibility of the partners of Aberforth Partners LLP; the work carried out by the auditor of
Aberforth Smaller Companies Trust plc does not involve consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may
have occurred to the financial statements since they were initially presented on the web site.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
(b)
48 Financial Report
Aberforth Smaller Companies Trust plc
Income Statement
For the year ended 31 December 2022
2022 2021
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Net (losses)/gains on investments 10 – (195,756) (195,756) – 344,608 344,608
Investment income 3 53,188 – 53,188 37,331 – 37,331
Other income 3 7 – 7 125 – 125
Investment management fee 4 (3,513) (5,855) (9,368) (3,752) (6,253) (10,005)
Portfolio transaction costs 5 – (2,078) (2,078) – (2,790) (2,790)
Other expenses 5 (808) – (808) (811) – (811)
Net return before finance costs and tax 48,874 (203,689) (154,815) 32,893 335,565 368,458
Finance costs 6 (704) (1,173) (1,877) (349) (583) (932)
Return on ordinary activities before tax 48,170 (204,862) (156,692) 32,544 334,982 367,526
Tax on ordinary activities 7 – – – – – –
Return attributable to equity shareholders 48,170 (204,862) (156,692) 32,544 334,982 367,526
Returns per Ordinary Share 9 55.64p (236.64)p (181.00)p 36.76p 378.43p 415.19p
The Board declared on 27 January 2023 a final dividend of 26.95p per Ordinary Share and a special dividend of 8.30p per
Ordinary Share. The Board declared on 26 July 2022 an interim dividend of 12.05p per Ordinary Share.
The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above
statement derive from continuing operations. No operations were acquired or discontinued in the year. A Statement of
Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
The accompanying notes form an integral part of this statement.
Financial Report
Aberforth Smaller Companies Trust plc 49
Reconciliation of Movements in Shareholders’ Funds
For the year ended 31 December 2022
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 December 2021
Return on ordinary activities after taxation
Equity dividends paid
Purchase of Ordinary Shares
879 109 83,777 1,314,545 73,255 1,472,565
– – – (204,862) 48,170 (156,692)
8 – – – – (31,707) (31,707)
14 (26) 26 (33,296) – – (33,296)
Balance as at 31 December 2022
853 135 50,481 1,109,683 89,718 1,250,870
For the year ended 31 December 2021
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 December 2020
Return on ordinary activities after taxation
Equity dividends paid
Purchase of Ordinary Shares
888 100 96,663 979,563 70,716 1,147,930
– – – 334,982 32,544 367,526
8 – – – – (30,005) (30,005)
14 (9) 9 (12,886) – – (12,886)
Balance as at 31 December 2021
879 109 83,777 1,314,545 73,255 1,472,565
The accompanying notes form an integral part of this statement.
50 Financial Report
Aberforth Smaller Companies Trust plc
Balance Sheet
As at 31 December 2022
2022 2021
Note £’000 £’000
Fixed assets
Investments at fair value through profit or loss 10 1,322,261 1,554,585
Current assets
Debtors 11 2,145 1,875
Cash at bank 1,668 3,418
3,813 5,293
Creditors (amounts falling due within one year) 12 (75,204) (905)
Net current (liabilities)/assets (71,391) 4,388
TOTAL ASSETS LESS CURRENT LIABILITIES 1,250,870 1,558,973
Creditors (amounts falling due after more than one year) 13 – (86,408)
TOTAL NET ASSETS 1,250,870 1,472,565
CAPITAL AND RESERVES: EQUITY INTERESTS
Called up share capital 14 853 879
Capital redemption reserve 15 135 109
Special reserve 15 50,481 83,777
Capital reserve 15 1,109,683 1,314,545
Revenue reserve 15 89,718 73,255
TOTAL SHAREHOLDERS’ FUNDS 1,250,870 1,472,565
Net Asset Value per Ordinary Share 16 1,465.67p 1,674.35p
Approved and authorised for issue by the Board of Directors on 27 January 2023 and signed on its behalf by:
Richard Davidson,
Chairman
Company Number: SC126524
Registered in Scotland
The accompanying notes form an integral part of this statement.
Financial Report
Aberforth Smaller Companies Trust plc 51
Cash Flow Statement
For the year ended 31 December 2022
2022 2021
Note £’000 £’000
Operating activities
Net revenue before finance costs and tax 48,874 32,893
Investment management fee charged to capital 4 (5,855) (6,253)
(Increase) in debtors (365) (812)
(Decrease)/increase in other creditors (24) 37
Net cash inflow from operating activities 42,630 25,865
Investing activities
Purchases of investments (250,161) (381,045)
Sales of investments 284,746 385,146
Cash inflow from investing activities 34,585 4,101
Financing activities
Purchases of Ordinary Shares 14 (34,026) (12,156)
Equity dividends paid 8 (31,707) (30,005)
Interest and fees paid 17 (1,732) (850)
Gross drawdowns of bank debt facilities (before any costs) 18 126,000 134,000
Gross repayments of bank debt facilities (before any costs) 18 (137,500) (120,500)
Cash (outflow) from financing activities (78,965) (29,511)
Change in cash during the period (1,750) 455
Cash at the start of the period 3,418 2,963
Cash at the end of the period 1,668 3,418
The accompanying notes form an integral part of this statement.
52 Financial Report
Aberforth Smaller Companies Trust plc
Notes to the Financial Statements
1 Significant Accounting Policies
A summary of the principal accounting policies adopted, all of which have been applied consistently throughout the year and
the preceding year, is set out below.
(a) Basis of accounting
The financial statements have been presented under Financial Reporting Standard 102 ("FRS 102") and under the AIC’s
Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts”
("SORP") issued in 2022. The financial statements have been prepared on a going concern basis under the historical cost
convention, modified to include the revaluation of the Company’s investments as described below. The Directors' assessment
of the basis of going concern is described on page 29. The functional and presentation currency is pounds sterling, which is
the currency of the environment in which the Company operates. The Board confirms that no critical accounting judgements
or significant sources of estimation uncertainty have been applied to the financial statements and therefore there is not a
significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
(b) Investments
The Company’s investments have been categorised as “financial assets at fair value through profit or loss” as the Company’s
business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.
Quoted investments are valued at their fair value, which is represented by the bid price. Where trading in the securities of an
investee company is suspended, the investment is valued at the Board’s estimate of its fair value. Purchases and sales of
investments are recognised and de-recognised on trade date. Gains and losses arising from changes in fair value are included
in the capital return and transaction costs on acquisition or disposal of a security are expensed to the capital reserve.
(c) Income
Dividends receivable on quoted equity shares are accounted for on the ex dividend date as revenue, except where, in the
opinion of the Board, the dividend is capital in nature, in which case it is treated as a return of capital. Where the Company has
received its dividends in the form of additional shares rather than in cash, an amount equivalent to the cash dividend forgone
is recognised as income. Any surplus or deficit in the value of the shares received compared to the cash dividend forgone is
recognised as capital. Other income is accounted for on an accruals basis.
(d) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to revenue except as follows.
expenses that are related to the acquisition and disposal of an investment are charged to capital; and
•
expenses are charged to capital reserve where a connection with the maintenance or enhancement of the value of the
•
investments can be demonstrated. In this respect the investment management fee has been allocated 62.5% to capital
reserve and 37.5% to revenue reserve, in line with the Board’s expected long-term split of returns, in the form of capital
gains and income respectively, from the investment portfolio of the Company.
(e) Bank borrowings and finance costs
The arrangement fee in relation to the £130 million bank debt facility is amortised over the expected life of the facility (with
62.5% allocated to capital reserve and 37.5% to revenue reserve) on a straight line basis. As borrowings carry a market rate of
interest, they are recognised in the balance sheet at the outstanding balance advanced, less unamortised transaction costs.
Interest costs are accounted for on an accruals basis. Finance costs of debt, insofar as they relate to the financing of the
Company’s investments or to financing activities aimed at maintaining or enhancing the value of the Company’s investments,
are allocated 62.5% to capital reserve and 37.5% to revenue reserve, in line with the Board’s expected long-term split of
returns, in the form of capital gains and income respectively, from the investment portfolio of the Company.
(f) Capital reserve
The following are accounted for in this reserve:
•
•
•
•
gains and losses on the realisation of investments;
increases and decreases in the valuation of investments held at the year end;
gains on the return of capital by way of investee companies paying dividends that are capital in nature; and
expenses, together with the related taxation effect, charged to this reserve in accordance with the above policies.
(g) Special reserve
This reserve may be treated as distributable profits for all purposes, excluding the payment of dividends. The cost of purchasing
Ordinary Shares for cancellation is accounted for in this reserve.
(h) Revenue reserve
This reserve represents the only reserve from which dividends can be funded.
(i) Capital Redemption Reserve
The nominal value of shares bought back for cancellation is added to this reserve.
(j) Taxation
UK corporation tax payable is provided on taxable profits at the current rate. Deferred tax assets, using substantially enacted
tax rates, are only recognised if it is considered more likely than not that there will be suitable taxable profits from which the
future reversal of deferred tax assets may be deducted.
Financial Report
Aberforth Smaller Companies Trust plc 53
Notes to the Financial Statements
2 Alternative Performance Measures
Alternative Performance Measures (“APMs”) are measures that are not defined by FRS 102. The Company believes that APMs,
referred to as “Key Performance Indicators” on page 2, provide shareholders with important information on the Company and
are appropriate for an investment trust company. These APMs are also a component of reporting to the Board. A glossary of
APMs can be found on page 66.
3
Income
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Income from investments
UK dividends 46,645 – 46,645 34,254 – 34,254
Overseas dividends 6,334 – 6,334 3,077 – 3,077
Property income distributions 209 – 209 – – –
53,188 – 53,188 37,331 – 37,331
Other income
Interest income 7 – 7 108 – 108
Underwriting commission – – – 17 – 17
Total income 53,195 – 53,195 37,456 – 37,456
Overseas dividends relates to investments in companies that are registered overseas. During the year the Company received
special dividends amounting to £4,325,000 (2021: £5,061,000), of which £nil (2021: £nil) were considered a return of capital
by the investee company.
4 Investment Management Fee
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 3,513 5,855 9,368 3,752 6,253 10,005
Details of the investment management contract can be found on page 28.
5 Other Expenses and Portfolio transaction costs
2022 2021
£’000 £’000
The following expenses (including VAT, where applicable) have been charged to revenue.
Directors’ fees (refer to Directors’ Remuneration Report) 159 150
Depositary fee 124 153
Secretarial services 116 108
FCA and LSE listing fees 87 77
Registrar fee 69 87
Custody and other bank charges 59 70
Auditor’s fee – audit of the financial statements 38 38
– for non-audit services – –
AIC fee 23 20
Directors’ and Officers’ liability insurance 14 16
Legal fees 8 10
Other expenses 111 82
808 811
54 Financial Report
Aberforth Smaller Companies Trust plc
Notes to the Financial Statements
5 Other Expenses and Portfolio transaction costs (continued)
Expenses incurred in acquiring or disposing of investments classified at fair value through profit or loss, and charged to capital,
are analysed below:
2022 2021
£’000 £’000
Analysis of total purchases
Purchase consideration before expenses 248,421 377,809
Commissions 575 638
Taxes 1,165 1,487
Total purchase expenses (a) 1,740 2,125
Total purchase consideration 250,161 379,934
Analysis of total sales
Sales consideration before expenses 284,989 385,905
Commissions (b) (338) (665)
Total sale proceeds net of expenses 284,651 385,240
Total expenses incurred in acquiring/disposing of investments (a)-(b) 2,078 2,790
6 Finance Costs
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest/non-utilisation costs on bank borrowings 680 1,132 1,812 325 542 867
Amortisation of bank debt facility costs 24 41 65 24 41 65
704 1,173 1,877 349 583 932
7 Taxation
Analysis of tax charged on return on ordinary activities
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax charge for the year (see below) – – – – – –
Factors affecting current tax charge for the year
The tax assessed for the period is lower than the standard rate of corporation tax in the UK for a large company. The differences
are explained below.
Total returns on ordinary activities before tax 48,170 (204,862) (156,692) 32,544 334,982 367,526
Corporation tax at 19% (2021: 19%) 9,153 (38,924) (29,771) 6,183 63,647 69,830
Adjusted for the effects of:
Non-taxable UK dividend income (8,863) – (8,863) (6,508) – (6,508)
Non-taxable overseas dividend income (1,204) – (1,204) (585) – (585)
Expenses not deductible for tax purposes – 395 395 – 530 530
Excess expenses for which no relief has been taken 914 1,335 2,249 910 1,299 2,209
Non-taxable capital losses/(gains) – 37,194 37,194 – (65,476) (65,476)
UK corporation tax charge for the year – – – – – –
Irrecoverable overseas taxation suffered – – – – – –
Total tax charge for the year – – – – – –
The Company has not recognised a potential asset for deferred tax of £42,307,000 (2021: £29,908,000) in respect of unutilised
management expenses because it is unlikely that there will be suitable taxable profits from which the future reversal of a
deferred tax asset may be deducted. The potential deferred tax asset has been calculated using a corporation tax rate of 25%
(2021: 19%).
Financial Report
Aberforth Smaller Companies Trust plc 55
Notes to the Financial Statements
8 Dividends
2022 2021
£’000 £’000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2021 of 24.25p
(2020: 22.90p) paid on 8 March 2022 21,262 20,318
Interim dividend for the year ended 31 December 2022 of 12.05p
(2021: 10.95p) paid on 26 August 2022 10,445 9,687
31,707 30,005
Amounts not recognised in the period:
Final dividend for the year ended 31 December 2022 of 26.95p
(2021: 24.25p) payable on 8 March 2023 23,000 21,327
Special dividend for the year ended 31 December 2022 of 8.30p
(2021: nil) payable on 8 March 2023. 7,084
30,084 21,327
The final dividends for 2022 and 2021 and the special dividend for 2022 have not been included as liabilities in the financial
statements.
9 Returns per Ordinary Share
2022 2021
The returns per Ordinary Share are based on:
Returns attributable to Ordinary Shareholders £(156,692,000) £367,526,000
Weighted average number of shares in issue during the year 86,570,115 88,519,932
Returns per Ordinary Share (181.00)p 415.19p
There are no dilutive or potentially dilutive shares in issue.
10 Investments
2022 2021
£’000 £’000
Investments at fair value through profit or loss
Opening fair value 1,554,585 1,218,073
Opening fair value adjustment (65,848) 232,464
Opening book cost 1,488,737 1,450,537
Purchases at cost 248,421 377,809
Sale proceeds (284,989) (385,905)
Realised gains on sales 56,896 46,296
Closing book cost 1,509,065 1,488,737
Closing fair value adjustment (186,804) 65,848
Closing fair value 1,322,261 1,554,585
All investments are in ordinary shares listed on the London Stock Exchange unless otherwise stated on pages 17 to 19.
Gains/(losses) on investments:
Net realised gains on sales 56,896 46,296
Movement in fair value adjustment (252,652) 298,312
Net (losses)/gains on investments (195,756) 344,608
The company received £284,989,000 (2021: £385,905,000) from investments sold in the year. The book cost of these
investments was £228,093,000 (2021: £339,609,000). These investments have been revalued over time and until they were
sold any unrealised gains/losses were included in the fair value of the investments.
56 Financial Report
Aberforth Smaller Companies Trust plc
Notes to the Financial Statements
10 Investments (continued)
In accordance with FRS 102 fair value measurements have been classified using the fair value hierarchy:
Level 1 - using unadjusted quoted prices for identical instruments in an active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market data is unavailable).
Investments held at fair value through profit or loss
As at 31 December 2022
Listed equities
Unlisted equities
Total financial asset investments
As at 31 December 2021
Listed equities
Unlisted equities
Total financial asset investments
11 Debtors
Level 1
£'000
1,322,261
–
1,322,261
Level 1
£'000
1,554,585
–
1,554,585
Level 2
£'000
–
–
–
Level 2
£'000
–
–
–
Level 3
£'000
–
–
–
Level 3
£'000
–
–
–
Total
£'000
1,322,261
–
1,322,261
Total
£'000
1,554,585
–
1,554,585
2022 2021
£’000 £’000
Investment income receivable • 1,755
Investment income receivable 2,118 1,755
Amounts due from brokers – 95
Other debtors 27 25
Total 2,145 1,875
12 Creditors: amounts falling due within one year
2022 2021
£’000 £’000
Amounts due to brokers – 730
Other creditors 231 175
Bank debt facility 75,000 –
Less: Unamortised costs on bank debt facility (27) –
Total 75,204 905
The Company has an uncommitted overdraft credit facility of £20 million with The Northern Trust Company. The interest rate
applying to overdrawn balances is 1.25% over the UK Base Rate. In addition, an annual administration fee of £15,000 is incurred
in respect of the facility. No amounts were drawn under this facility at 31 December 2022 or 31 December 2021.
On 14 May 2020, the Company entered into a three year unsecured £130 million Facility Agreement with The Royal Bank of
Scotland International Limited. A 0.15% arrangement fee was paid on entering into the agreement and is being amortised over
the expected life of the facility. Under the facility, all funds drawn down attract interest at a margin of 0.80% over SONIA
equivalent (LIBOR prior to 1 January 2022). A non-utilisation fee is also payable on any undrawn element, at a rate ranging from
0.3% to 0.5%, depending on the level of utilisation. The current facility is due to expire on 15 June 2023.
The main covenant under the facility requires that, every month, total borrowings shall not exceed 25% of the Company’s total
adjusted gross assets. There were no breaches of the covenants during the year. As at 31 December 2022, total borrowings
represented 5.7% (2021: 5.6%) of total adjusted gross assets (as defined by Facility Agreement).
13 Creditors: amounts falling due after more than one year
2022 2021
£’000 £’000
Bank debt facility – 86,500
Less: Unamortised costs on bank debt facility – (92)
Total – 86,408
Amounts in 2021 relate to the Facility Agreement with Royal Bank of Scotland International referred to in Note 12.
Financial Report
Aberforth Smaller Companies Trust plc 57
Notes to the Financial Statements
14 Share Capital
2022 2021
No. of No. of
Shares £’000 Shares £’000
Authorised:
Ordinary Shares of 1p 333,299,254 3,333 333,299,254 3,333
Allotted, issued and fully paid:
Ordinary Shares of 1p 85,344,605 853 87,948,266 879
During the year, the Company bought back and cancelled 2,603,661 shares (2021: 874,800) at a total cost of £33,296,000
(2021: £12,886,000). During the period 1 January to 27 January 2023, no shares have been bought back for cancellation.
15 Capital and Reserves
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
At 31 December 2020 888 100 96,663 979,563 70,716 1,147,930
Net gains on sale of investments – – – 46,296 – 46,296
Movement in fair value adjustment – – – 298,312 – 298,312
Cost of investment transactions – – – (2,790) – (2,790)
Management fees charged to capital – – – (6,253) – (6,253)
Finance costs charged to capital – – – (583) – (583)
Special dividends taken to capital – – – – – –
Revenue return attributable to equity
shareholders – – – – 32,544 32,544
Equity dividends paid – – – – (30,005) (30,005)
Purchase of Ordinary Shares (9) 9 (12,886) – – (12,886)
At 31 December 2021 879 109 83,777 1,314,545 73,255 1,472,565
Net gains on sale of investments – – – 56,896 – 56,896
Movement in fair value adjustment – – – (252,652) – (252,652)
Cost of investment transactions – – – (2,078) – (2,078)
Management fees charged to capital – – – (5,855) – (5,855)
Finance costs charged to capital – – – (1,173) – (1,173)
Special dividends taken to capital – – – – – –
Revenue return attributable to equity
shareholders – – – – 48,170 48,170
Equity dividends paid – – – – (31,707) (31,707)
Purchase of Ordinary Shares (26) 26 (33,296) – – (33,296)
At 31 December 2022 853 135 50,481 1,109,683 89,718 1,250,870
16 Net Asset Value per Share
The Net Asset Value per Share and the net assets attributable to the Ordinary Shares at the year end are calculated in
accordance with their entitlements in the Articles of Association and were as follows.
2022 2021
Net assets attributable £1,250,870,000 £1,472,565,000
Ordinary Shares in issue at the end of year 85,344,605 87,948,266
Net Asset Value per Ordinary Share 1,465.67p 1,674.35p
Dividend reinvestment factor (defined in glossary) 1.023447 1.022974
Net Asset Value on a total return basis 1,500.03p 1,712.82p
The net asset value total return for the year ended 31 December 2022 is the percentage movement from the net asset value
as at 31 December 2021 of 1,674.35p (31 December 2020: 1,292.38p) to the net asset value, on a total return basis, at
31 December 2022 of 1,500.03p (31 December 2021: 1,712.82p), which is -10.4% (2021: 32.5%).
58 Financial Report
Aberforth Smaller Companies Trust plc
Notes to the Financial Statements
17 Interest and Finance Costs Paid
2022 2021
£’000 £’000
Interest/non-utilisation costs on bank debt facility 1,732 850
Total 1,732 850
18 Analysis of changes in net debt
Net debt Other Net debt at
at 1 January Cash non-cash 31 December
2022 flow movements 2022
£’000 £’000 £’000 £’000
Cash at bank 3,418 (1,750) – 1,668
Bank debt facility (86,500) 11,500 – (75,000)
Bank debt facility fee (see note 12) 92 – (65) 27
Total (82,990) 9,750 (65) (73,305)
19 Financial instruments and risk management
The Company’s financial instruments comprise its investment portfolio (see pages 17 to 19), cash balances, bank debt facilities,
debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement, and accrued
income. Bank debt facilities are utilised when the Board and Managers believe it is in the interest of the Company to gear the
portfolio. Note 1 sets out the significant accounting policies, including the basis of measurement applied for significant financial
instruments, principally investments, excluding cash at bank, which is carried at fair value. Note 1 also includes the basis on
which income and expenses arising from financial assets and liabilities are recognised and measured.
The main risks that the Company faces arising from its financial instruments are as follows.
(i) Interest rate risk is the risk that the interest receivable/payable and the market value of investment holdings may fluctuate
because of changes in market interest rates. The Company’s investment portfolio is not directly exposed to interest rate risk.
(ii) Liquidity risk is the risk that the Company will encounter difficulty raising funds to meet its cash commitments as they fall
due. Liquidity risk may result from either the inability to sell financial instruments quickly at their fair values or from the
inability to generate cash inflows as required.
(iii) Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
(iv) Market price risk is the risk that the market value of investment holdings will fluctuate as a result of fluctuations in market
prices caused by factors other than interest rate or currency rate movement.
The Company’s financial instruments are all denominated in sterling and therefore the Company is not directly exposed to
significant currency risk. However, it is recognised that most investee companies, whilst listed in the UK, are exposed to global
economic conditions and currency fluctuations.
(i) Interest rate risk
The Company’s policy is to hold cash in variable rate bank accounts and not usually to invest in fixed rate securities. Cash deposit
balances are held on variable rate bank accounts yielding 0.14% as at 31 December 2022 (2021: nil).
The Company has a bank debt facility of £130,000,000 of which £75,000,000 was drawn down as at 31 December 2022 (2021:
debt facility of £130,000,000, of which £86,500,000 was drawn down). Further details of this facility can be found in Notes 12
and 13.
If SONIA equivalent (2021: LIBOR) and the bank base rate had been 1% point higher at 31 December 2022, the impact on the profit
or loss and therefore Shareholders’ funds would have been negative £750,000 per annum (2021: negative £865,000). If SONIA
equivalent (2021: LIBOR) and the bank base rate had been 1% point lower at 31 December 2022, the impact on the profit or loss
and therefore Shareholders’ funds would have been a positive £750,000 per annum (2021: positive £216,250 at 0.25%). There
would be no direct impact on the portfolio valuation. The calculations are based on the bank facility drawn down and cash
balances as at the respective balance sheet dates and are not representative of the year as a whole and assume all other
variables remain constant. The level of change is considered to be a reasonable illustration based on current market conditions.
Financial Report
Aberforth Smaller Companies Trust plc 59
Notes to the Financial Statements
19 Financial instruments and risk management (continued)
(ii) Liquidity risk
The Company’s assets comprise mainly readily realisable equity securities, which are typically all Level 1 assets and actively
traded. Whilst less liquid than larger quoted companies, the portfolio is well diversified by both number of holdings and
industry sector. Short term funding flexibility can be achieved through the use of bank debt facilities. The Company’s current
liabilities all have a remaining contractual maturity of less than three months with the exception of the bank debt facility.
(iii) Credit risk
The Company invests in UK equities traded on the London Stock Exchange. Investment transactions are carried out with a number
of FCA regulated brokers, with trades typically undertaken on a delivery versus payment basis and on a short settlement period.
The investment portfolio assets of the Company are held by The Northern Trust Company, the Company’s custodian, in a
segregated account. In the event of the bankruptcy or insolvency of Northern Trust the Company’s rights with respect to the
securities held by the custodian may be delayed or limited. The Secretaries and the Depositary monitor the Company’s risk by
reviewing Northern Trust’s credit ratings and their internal control report. Cash at bank is held with reputable banks with
acceptable external credit ratings. Outstanding investment income is reconciled to receipts on payment date.
The exposure to credit risk at the year-end comprises the following.
2022 2021
£’000 £’000
Investment income receivable 2,118 1,755
Amounts due from brokers – 95
Cash at bank 1,668 3,418
Total 3,786 5,268
(iv) Market price risk
The Company’s investment portfolio is exposed to market price fluctuations, which are monitored by the Managers in
pursuance of the investment objective. Further information on the investment portfolio is set out in the Managers’ Report on
pages 7 to 12. It is not the Managers’ policy to use derivatives or hedging instruments to manage market price risk.
If the investment portfolio valuation fell by 10% at 31 December 2022, the impact on the profit or loss and therefore
Shareholders’ funds would have been negative £132.2m (2021: negative £155.5m). If the investment portfolio valuation rose
by 10% at 31 December 2022, the impact on the profit or loss and therefore Shareholders’ funds would have been positive
£132.2m (2021: positive £155.5m). The calculations are based on the portfolio valuation as at the respective balance sheet
dates, are not representative of the year as a whole and assume all other variables remain constant. The level of change is
considered to be a reasonable illustration based on historical stockmarket volatility.
As at 31 December 2022, the investment portfolio largely consisted of investments valued at their bid price, which represents
fair value. Any cash balances, which are held in variable rate bank accounts, can be withdrawn on demand with no penalty.
Maturity profile of the Company’s financial liabilities
As at 31 December 2022
Due or Due Due Due
due no between between between
later than 1 and 3 and 1 and Due after
(All in £’000) 1 month 3 months 12 months 5 years 5 years Total
Liabilities:
Bank debt facility 133 – 75,000 – – 75,133
Unamortised costs on bank debt facility – – (27) – – (27)
Other creditors – 98 – – – 98
Total liabilities 133 98 74,973 – – 75,204
60 Financial Report
Aberforth Smaller Companies Trust plc
Notes to the Financial Statements
19 Financial instruments (continued)
As at 31 December 2021
Due or Due Due Due
due no between between between
later than 1 and 3 and 1 and Due after
(All in £’000) 1 month 3 months 12 months 5 years 5 years Total
Liabilities:
Bank debt facility 53 – – 86,500 – 86,553
Amounts due to brokers 730 – – – – 730
Unamortised costs on bank debt facility – – – (92) – (92)
Other creditors – 122 – – – 122
Total liabilities 783 122 – 86,408 – 87,313
Cash flows payable under financial liabilities by remaining contractual maturities
Due Due
Due between between
On within 3 and 1 and Due after
(All in £’000) demand 3 months 12 months 5 years 5 years Total
As at 31 December 2022
Bank debt facility – 762 75,643 – – 76,405
Amounts due to brokers – – – – – –
Other creditors – 231 – – – 231
Total – 993 75,643 – – 76,636
Due Due
Due between between
On within 3 and 1 and Due after
(All in £’000) demand 3 months 12 months 5 years 5 years Total
As at 31 December 2021
Bank debt facility – 242 739 86,946 – 87,927
Amounts due to brokers – 730 – – – 730
Other creditors – 175 – – – 175
Total – 1,147 739 86,946 – 88,832
Capital Management
The Company’s capital management objectives are to support the Company’s investment objective and to ensure that the
Company will be able to continue as a going concern.
This is achieved through the appropriate balance of equity capital and borrowings. The capital of the Company is its share capital
and reserves as set out in notes 14 and 15 together with its borrowings (see notes 12 and 13). Borrowing parameters are set by
the Board in conjunction with the Managers and the bank debt facility is used tactically in order to enhance returns. The
Company has the authority to buy back its own shares and activity during the year is detailed in note 14. The Company does not
have any externally imposed capital requirements other than the covenant on its bank debt facility as set out in Note 12.
20 Related Party Transactions
The Directors have been identified as related parties and their fees and shareholdings are detailed in the Directors’
Remuneration Report on pages 40 and 41. During the year no Director was interested in any contract or other matter requiring
disclosure under section 412 of the Companies Act 2006.
21 Contingencies, guarantees, financial commitments and contingent assets
The Company had no contingencies, guarantees or financial commitments as at 31 December 2022 (2021: nil).
22 Company information
Aberforth Smaller Companies Trust plc is a closed-ended investment company, registered in Scotland No SC126524, with its
Ordinary Shares listed on the London Stock Exchange. The address of the registered office is 14 Melville Street, Edinburgh,
EH3 7NS.
Financial Report
Aberforth Smaller Companies Trust plc 61
Notice of the Annual General Meeting
Notice is hereby given that the thirty-second Annual General Meeting of Aberforth Smaller Companies Trust plc will be held
at 14 Melville Street, Edinburgh on 2 March 2023 at 10.30 a.m. for the following purposes:
To consider and, if thought fit, pass the following Ordinary Resolutions:
1. That the Report and Financial Statements for the year ended 31 December 2022 be adopted.
2. That the Directors’ Remuneration Report for the year ended 31 December 2022 be approved.
3. That the Directors' Remuneration Policy be approved.
4. That a final dividend of 26.95p per share and a special dividend of 8.30p per share be approved.
5. That Richard Davidson be re-elected as a Director.
6. That Jaz Bains be elected as a Director.
7. That Patricia Dimond be elected as a Director.
8. That Victoria Stewart be re-elected as a Director.
9. That Martin Warner be re-elected as a Director.
10. To appoint Johnston Carmichael LLP as Independent Auditor of the Company to hold office until the conclusion of the
next Annual General Meeting at which the Financial Statements are laid before the Company.
11. That the Audit Committee be authorised to determine the remuneration of the Independent Auditor for the year to
31 December 2023.
12. That the Company continues to manage its affairs as an investment trust (as defined by Section 1158 of the Corporation
Taxes Act 2010).
To consider and, if thought fit, pass the following Special Resolution:
13. That pursuant to and in accordance with its Articles of Association and in substitution for any existing authority, the
Company be and is hereby authorised in accordance with section 701 of the Companies Act 2006 (the “Act”) to make
market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 1p each in the capital of the
Company (“Shares”), provided that:
(a) the maximum number of Shares hereby authorised to be purchased shall be 12,793,156 (or, if less, 14.99% of the
issued share capital of the Company on the date on which this resolution is passed);
(b) the minimum price which may be paid for a Share shall be 1p being the nominal value of a Share;
(c) the maximum price (exclusive of expenses) which may be paid for a Share shall be the higher of (i) 5% above the
average of the middle market quotations (as derived from the London Stock Exchange Daily Official List) for the
Shares for the five business days immediately preceding the date of purchase and (ii) the higher of the price of the
last independent trade and the highest current independent bid on the trading venue where the purchase is carried
out; and
(d) unless previously varied, revoked or renewed, the authority hereby conferred shall expire on 31 July 2024 or, if
earlier, at the conclusion of the annual general meeting of the Company to be held in 2024, save that the Company
may, prior to such expiry, enter into a contract to purchase Shares under such authority which will or might be
executed wholly or partly after the expiry of such authority and may make a purchase of Shares pursuant to any
such contract.
By Order of the Board
Aberforth Partners LLP, Secretaries
27 January 2023
62
Aberforth Smaller Companies Trust plc
Notice of the Annual General Meeting
1. Attending the Annual General Meeting in Person and Voting
A member who is entitled to vote at this meeting is entitled to appoint one or more proxies to attend, speak and vote on their behalf.
Such a proxy need not also be a member of the Company. Shareholders are encouraged to submit their votes by proxy in advance of
the meeting, in case restrictions apply and it is not possible for shareholders to attend in person. The Board will continue to consider
carefully the arrangements for the AGM and the Company will issue a regulatory news announcement, which will also be posted on
the Company’s website, if the only attendees permitted will be those required to form the quorum and allow the business to be
conducted.
To be entitled to vote at the Annual General Meeting (and for the purpose of determining the votes they may cast), members
must be registered in the Company’s register of members at close of business on 27 February 2023 (or, if the Annual General
Meeting is adjourned, at close of business on the day two days (excluding non-working days) prior to the adjourned meeting).
Changes to the register of members after the relevant deadline will be disregarded in determining the rights of any person to
vote at the Annual General Meeting.
2. Appointment of Proxy
A Form of Proxy for use by shareholders is enclosed. Shareholders are strongly encouraged to appoint the Chairman of the
meeting as their proxy to vote on their behalf. To register a vote electronically, log on to the Registrar’s website at
www.signalshares.com and follow the instructions on screen.
A member may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.
To appoint more than one proxy, please contact the Registrar of the Company. If a member submits more than one valid proxy
appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
To be valid the proxy form must be completed and lodged, together with the power of attorney or authority (if any) under which
it is signed, or a notarially certified copy of such power of authority, with the Registrar of the Company no later than 48 hours
(excluding non-working days) before the time set for the meeting, or any adjourned meeting.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for
the Annual General Meeting to be held on 2 March 2023 and any adjournment(s) thereof by using the procedures described in
the CREST Manual. The message must be transmitted so as to be received by the Company’s agent, Link Group (CREST
Participant ID: RA10), no later than 48 hours before the time appointed for the meeting.
3. Questions and Answers
The Board continues to welcome questions from shareholders in respect of the AGM. However, it asks shareholders to submit
any questions to the Board by email, to the following address enquiries@aberforth.co.uk before close of business on 27 February
2023 in case attendance at the AGM is restricted. In the event the AGM proceeds in its usual format as currently anticipated,
pursuant to section 319A of the Companies Act 2006, the Company must provide an answer to any question that is put by a
member attending the AGM relating to the business being considered, except if a response would not be in the interest of the
Company or for the good order of the meeting or if to do so would involve the disclosure of confidential information. The
Company may, however, elect to provide an answer to a question within a reasonable period of days after the conclusion of the
Annual General Meeting.
4. Total Voting Rights
As at 27 January 2023, the latest practicable date prior to publication of this document, the Company had 85,344,605 Ordinary
Shares in issue with a total of 85,344,605 voting rights.
5. Information on the Company’s Website
In accordance with section 311A of the Companies Act 2006, this notice of meeting, details of the total number of shares in
respect of which members are entitled to exercise voting rights at the Annual General Meeting and, if applicable, any members’
statements, members’ resolutions or members’ matters of business received by the Company after the date of this notice will
be available on the Managers’ website www.aberforth.co.uk.
6. Nominated Persons
Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy
information rights (a Nominated Person) may, under an agreement between such person and the Shareholder nominating such
person, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a
Nominated Person has no such proxy appointment right or does not wish to exercise such right, the Nominated Person may,
under any such agreement, have a right to give instructions to the registered Shareholder as to the exercise of voting rights.
7. Audit concerns
The members of the Company may require the Company (without payment) to publish, on the website, a statement (which is
also to be passed to the Auditor) setting out any matter relating to the audit of the Company’s accounts, including the Auditor’s
report and the conduct of the audit. The Company will be required to do so once it has received such requests from either
members representing at least 5% of the total voting rights of the Company or at least 100 members who have a relevant right
to vote and hold shares in the Company on which there has been paid up an average sum per member of at least £100. Such
requests must be made in writing and must state the member’s full name and address and be sent to the registered address of
the Company.
Aberforth Smaller Companies Trust plc 63
Shareholder Information
Introduction
Aberforth Smaller Companies Trust plc is an Investment Trust whose shares are traded on the London Stock Exchange.
Shareholder Register Enquiries
All administrative enquiries relating to shareholders such as queries concerning holdings, dividend payments, notification of change
of address, loss of certificate or requests to be placed on a mailing list should be addressed to the Company’s Registrar. Contact details
are shown on the inside back cover.
Payment of Dividends
To ensure that dividends are received as quickly as possible the Company’s Registrar may be instructed to pay them directly into a
bank account; tax vouchers are then mailed to shareholders separately. This method also avoids the risk of dividend cheques being
delayed or lost in the post. The Company also operates a Dividend Re-investment Plan to allow shareholders to use their cash
dividends to buy shares easily and at a low cost via the Company’s Registrar from whom the necessary forms are available.
Electronic Communications
Shareholders can choose to receive communications (including the Annual and Interim reports) from the Company in electronic
format. This method may be more convenient and secure for many Shareholders, reduces costs and has environmental benefits. To
use this service, Shareholders can register and provide their email address on the Registrar’s share portal at www.signalshares.com.
Thereafter, Shareholders will receive an email providing the website address link to the relevant document(s). After registering,
Shareholders will be able to request paper copies in the future.
Sources of Further Information
Shareholders can find up-to-date information about the Company on the Managers’ website at www.aberforth.co.uk. This includes
items such as the latest net asset value, share price and stock exchange announcements, as well as information relating to the
portfolio, management fee and dividend history. Other websites containing useful information on the Company include
www.trustnet.com, www.theaic.co.uk and www.ft.com. The prices of the Ordinary shares are also quoted daily in the Financial Times
and The Times newspapers.
How to Invest
The Company’s Ordinary Shares are traded on the London Stock Exchange. They can be bought or sold by placing an order with a
stockbroker, by asking a professional adviser to do so, or through most banks. The Company’s Managers, Aberforth Partners LLP, do
not offer any packaged products such as ISAs, Savings Schemes or Pension Plans.
Security Codes (Ordinary Shares)
SEDOL Bloomberg Reuters GIIN
Legal Entity Identifier
0006655
ASL LN ASL.L U6SSZS.99999.SL.826 213800GZ9WC73A92Q326
Continuation Vote
The Company has no fixed duration. However, in accordance with the Articles of Association, an ordinary resolution will be
proposed at the Annual General Meeting to be held in 2023 (and at every third subsequent Annual General Meeting) that the
Company continues to manage its affairs as an investment trust.
Retail Distribution/NMPI Status
The Company’s shares are intended for UK investors including retail investors, professionally advised private clients and
institutional investors who are seeking exposure to smaller companies in the United Kingdom, and who understand and are willing
to accept the risks of exposure to equities.
The Company currently conducts its affairs, and intends to continue to conduct its affairs, so that its Ordinary Shares can be
recommended by Independent Financial Advisers ("IFAs") to ordinary retail investors in accordance with the rules of the Financial
Conduct Authority ("FCA") in relation to non-mainstream pooled investment ("NMPI") products. The Company’s Ordinary Shares
are excluded from the FCA’s restrictions that apply to NMPI products because they are shares in an investment trust.
Please note that past performance is not a guide to the future. Your investment may be at risk as the value of investments may go
down as well as up and is not guaranteed. Therefore you may not get back the amount originally invested.
Individual Savings Accounts (ISA) Status
The Company’s Ordinary Shares are eligible for inclusion in the “Stocks and Shares” component of an ISA.
AIC
The Company is a member of The Association of Investment Companies, which produces a detailed Monthly Information Service on
the majority of investment trusts. This can be obtained by contacting The Association of Investment Companies, 9th Floor, 24 Chiswell
Street, London EC1Y 4YY; website: www.theaic.co.uk; tel: 020 7282-5555.
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Aberforth Smaller Companies Trust plc
Shareholder Information
Financial Calendar
Dividends in respect of the year ended 31 December 2022
Interim Special Final
Rate per Share: 12.05p 8.30p 26.95p
Ex Dividend: 4 August 2022 9 February 2023 9 February 2023
Record date: 5 August 2022 10 February 2023 10 February 2023
Pay date: 26 August 2022 8 March 2023 8 March 2023
Half Yearly Report Published late July/early August
Annual Report and Financial Statements Published late January/early February
Annual General Meeting 2 March 2023
Publication of Net Asset Values Daily (via the Managers’ website)
Alternative Investment Fund Managers Directive ("AIFMD")
The Company has appointed Aberforth Partners LLP as its alternative investment fund manager ("AIFM"). In accordance with the
AIFMD, information in relation to the Company’s leverage is required to be made available to Shareholders. The Company’s maximum
and actual leverage levels as at 31 December 2022 are shown below. There have been no changes to, or breaches of, the maximum
level of leverage employed by the Company.
2022 2021
Commitment Gross Commitment Gross
Leverage Exposure (refer to the Glossary) Method Method Method Method
Maximum limit 2.00:1 2.00:1 2.00:1 2.00:1
Actual 1.06:1 1.06:1 1.06:1 1.06:1
Furthermore, in accordance with the Directive, the AIFM’s remuneration policy and the numerical disclosures in respect of the AIFM’s
relevant reporting period (year ended 30 April 2022) are available on request from Aberforth Partners.
Automatic Exchange of Information
The OECD Common Reporting Standard for Automatic Exchange of Financial Account information (‘Common Reporting Standard’)
requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in
investment trusts. Accordingly Aberforth Smaller Companies Trust plc provides information annually to the local tax authority on the
tax residencies of a number of non-UK based certificated shareholders and corporate entities.
All new shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification
form for the purposes of collecting this information.
For further information, please see HMRC’s Quick Guide: Automatic Exchange of Information – information for account holders
https://www.gov.uk/government/publications/exchange-of-information-account-holders.
Beware of Share Fraud
Investment scams are designed to look like genuine investment opportunities. You might have been contacted by fraudsters if you
have been contacted out of the blue, promised tempting returns and told the investment is safe, called repeatedly or told the offer
is only available for a limited time. Shareholders may receive unsolicited phone calls or correspondence concerning investment
matters that imply a connection to the Company. These may be from overseas based ‘brokers’ who target UK shareholders offering
to sell them what often turn out to be worthless or high risk shares. Shareholders may also be advised that there is an imminent
offer for the Company, and the caller may offer to buy shares at significantly above the market price if an administration fee is paid.
Shareholders should treat all such approaches with caution.
You can find more information about investment scams at the Financial Conduct Authority (FCA) website:
www.fca.org.uk/consumers/protect-yourself-scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
Aberforth Smaller Companies Trust plc 65
Shareholder Information
Glossary of UK GAAP Measures
Net Asset Value, also described as Shareholders’ Funds, is the value of total assets less all liabilities. The Net Asset Value,
or NAV, per Ordinary Share is calculated by dividing this amount by the total number of Ordinary Shares in issue.
Gearing represents the amount by which total investments exceed Shareholders’ Funds, expressed as a percentage of
Shareholders’ Funds. If stockmarkets rise, gearing can increase the Company’s returns, but, if they fall, losses will be
greater. If the amount calculated is a negative percentage then total investments are less than Shareholders’ Funds.
Glossary of Alternative Performance Measures
Benchmark Total Return is the return on the benchmark, on a closing market price basis, assuming that all dividends
received were reinvested into the shares of the underlying companies at the time their shares were quoted ex dividend.
Further information on the Company’s benchmark, the Numis Smaller Companies Index (excluding Investment
Companies), can be found on page 22.
Discount is the amount by which the stockmarket price per Ordinary Share is lower than the Net Asset Value, or NAV,
per Ordinary Share. The discount is normally expressed as a percentage of the NAV per Ordinary Share. The opposite of
a discount is a premium.
Net Asset Value Total Return represents the theoretical return on NAV per Ordinary Share, assuming that dividends paid
to shareholders were reinvested at the NAV per Ordinary Share at the close of business on the day the shares were
quoted ex dividend (see note 16 on page 58 for details of the calculation).
Ongoing Charges represent the total cost of investment management fees and other operating expenses of £10,176,000
(2021: £10,816,000), as disclosed in the Income Statement, as a percentage of the average published net asset value of
£1,275,471,000 (2021: £1,436,761,000) over the period, and are calculated in accordance with the guidelines issued by
the AIC.
Portfolio Turnover is calculated by summing the lesser of purchases and sales over a one year period divided by the
average portfolio value for that period.
Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming
that all dividends received were reinvested, without transaction costs, into the Ordinary Shares of the Company at the
close of business on the day the shares were quoted ex dividend. The share price as at 31 December 2022 was 1,322.00p
(2021: 1,464.00p) and dividends, which went ex dividend during the year (see note 8 on page 56) were 36.30p (2021:
33.85p). The dividend reinvestment factor was 1.026723 (2021: 1.025611). The share price total return was therefore
-7.3% (2021: 20.3%), being the percentage derived from the closing share price, adjusted by the dividend reinvestment
factor, divided by the closing share price at the previous year end.
Other Glossary Terms
Active share ratio is calculated by summing the absolute differences between a portfolio’s weight in a stock and an
index’s weight in a stock for all the stocks in the portfolio or index. The total is then divided by two to give a ratio
between 0% and 100%. Active Share is addressed in “How Active Is Your Fund Manager?” (Antti Petajisto and Martijn
Cremers, Yale School of Management, 2009).
Dividend Reinvestment Factor is calculated on the assumption that dividends paid by the Company were reinvested into
Ordinary Shares of the Company at the NAV per Ordinary Share or share price, as appropriate, on the day the Ordinary
Shares were quoted ex dividend.
Leverage, for the purposes of the AIFM Directive, is any method that increases the Company’s exposure to stockmarkets
whether through borrowings, derivatives or any other means. It is expressed as a ratio of the Company’s exposure to its
NAV. In summary, the gross method measures the Company’s exposure before applying hedging or netting
arrangements. The commitment method allows certain hedging or netting arrangements to be offset. The Company has
no hedging or netting arrangements.
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Aberforth Smaller Companies Trust plc
Aberforth Smaller Companies Trust plc 67
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Aberforth Smaller Companies Trust plc
Corporate Information
Directors
Richard Davidson (Chairman)
Jaz Bains
Julia Le Blan
Patricia Dimond
Victoria Stewart
Martin Warner
Managers and Secretaries
Aberforth Partners LLP
14 Melville Street
Edinburgh EH3 7NS
Tel: 0131 220 0733
enquiries@aberforth.co.uk
www.aberforth.co.uk
Registered Office and Company Number
14 Melville Street
Edinburgh EH3 7NS
Registered in Scotland No. SC 126524
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Shareholder enquiries:
Tel: 0871 664 0300
(Calls cost 12p per minute plus network extras)
enquiries@linkgroup.co.uk
www.linkassetservices.com
Share Portal:
www.signalshares.com
Solicitors and Sponsors
Dickson Minto W.S.
16 Charlotte Square
Edinburgh EH2 4DF
Bankers
The Royal Bank of Scotland International Limited
280 Bishopsgate
London EC2M 4RB
Custodian
The Northern Trust Company
50 Bank Street
Canary Wharf
London E14 5NT
Independent Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh
EH3 7PE
Depositary
NatWest Trustee & Depositary Services Limited
House A, Floor 0
Gogarburn
175 Glasgow Road
Edinburgh
EH12 1HQ
J. Thomson Colour Printers 200321
Aberforth Smaller Companies Trust plc