Aberforth Smaller Companies Trust plc
Annual Report and Financial Statements
31 December 2025
Contents
Strategic Report
Investment Performance, Portfolio and Historical Returns
The Company and Investment Objective 1
Financial Highlights 1
Chairman’s Statement 2
Key Performance Indicators 5
Historical Information 7
Managers’ Report 8
Stewardship and Environmental, Social and Governance 16
Thirty Largest Investments 19
Investment Portfolio and Portfolio Information 20
Business Model and Company Matters
Company Status 24
Investment Policy and Strategy 24
Dividend Policy 24
Directors’ Duty to Promote the Success of the Company 25
Principal Risks 26
Viability Statement 28
Other Information 28
Governance Report
Board of Directors 29
Directors’ Report 30
Corporate Governance Report 34
Audit Committee Report 38
Directors’ Remuneration Policy 41
Directors’ Remuneration Report 42
Directors’ Responsibility Statement 44
Financial Report
Independent Auditor’s Report 45
Income Statement 51
Reconciliation of Movements in Shareholders’ Funds 52
Balance Sheet 53
Cash Flow Statement 54
Notes to the Financial Statements 55
Notice of the Annual General Meeting 64
Shareholder Information 66
Glossary 68
Corporate Information 69
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 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
Aberforth Smaller Companies Trust plc 1
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 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 24.
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 Deutsche Numis Smaller Companies Index (excluding Investment Companies) (“DNSCI (XIC)” or
“benchmark”) over the long term.
Cumulative Performance over past year
(figures are total returns and have been rebased to 100 at 31 December 2024)
31 December 31 December %
2025 2024 Change
Total Returns for the year
Net Asset Value per Ordinary Share2 7.9% 12.1% n/a
DNSCI (XIC) 12.7% 9.5% n/a
Ordinary Share Price2 10.8% 10.7% n/a
Asset Values at 31 December
Shareholders’ Funds1 £1,392m £1,397m -0.4
Net Asset Value per Ordinary Share1 1,745.26p 1,666.95p 4.7
Share Price at 31 December
Market Capitalisation2 £1,255m £1,232m 1.9
Ordinary Share Price2 1,574.00p 1,470.00p 7.1
Ordinary Share Discount2 9.8% 11.8% n/a
Returns and Dividends for the year
Revenue Return per Ordinary Share1 64.02p 56.59p 13.1
Dividends per Ordinary Share (excluding special dividends)1 46.80p 43.60p 7.3
Dividends per Ordinary Share (including special dividends)1 58.80p 49.60p 18.5
Total Return per Ordinary Share1 117.90p 180.09p n/a
Gearing2 4.8% 7.2% n/a
Ongoing Charges2 0.80% 0.78% n/a
Portfolio Turnover2 34.5% 19.6% n/a
1 UK GAAP Measure 2 Alternative Performance Measure (refer to glossary on page 68) Source: Aberforth Partners LLP
Financial Highlights
115
110
105
100
95
90
Dec-24 Mar-25 Jun-25 Sep-25 Dec-25
ASCoT NAV Benchmark ASCoT Share Price
2
Strategic Report
Aberforth Smaller Companies Trust plc
Chairman’s Statement
Review of performance
ASCoT completed its 35th year in the twelve months to 31 December 2025 and recorded a net asset value total return of
7.9%. The share price total return was higher at 10.8%, which reflected a narrowing of the discount between the net asset
value and share price. ASCoT’s small company benchmark is the Deutsche Numis Smaller Companies Index (excluding
investment companies), which is abbreviated throughout this report as DNSCI (XIC). Its total return in 2025 was 12.7%. The
positive return from small companies is welcome, but it was eclipsed in 2025 by that of larger companies: the FTSE All-Share
was up by a remarkable 24.0%. I touch on the context for performance in 2025 below, while the Managers’ Report as usual
goes into the important influences on absolute and relative performance in greater depth.
ASCoT’s long term performance record is strong. Since inception in 1990, ASCoT’s net asset value total return has
compounded at an 11.7% annual rate, which compares with 9.7% for the DNSCI (XIC).
Investment background in 2025
Donald Trump’s second presidency took shape in the opening months of 2025. It was dominated by the so-called
Liberation Day tariffs, which shocked financial markets and sent share prices around the world lower. The long lasting
impact on businesses is unclear since the measures are subject to legal challenge in the US itself and negotiations between
countries continue. However, after their initial consternation, markets took confidence from a series of trade deals that
indicate a pragmatism on the part of the US’s trading partners, and that would seem to reduce the risk of a spiralling trade
war. Sentiment also improved as geopolitical risk eased. The war in Ukraine continues, but the US has worked to achieve
a ceasefire between Israel and Hamas. The recovery in share prices was further enhanced by what often feels like an
obsession with AI. There is growing excitement that the vast amounts being invested by the large US technology
companies will generate commensurate profits in due course.
However, I would note that the strong returns in 2025 were not the preserve of the AI leaders, as the performance of
larger companies in the UK showed in shrugging off concerns about the UK’s politics and economy. If the FTSE All-Share
showed what was possible, the valuation of smaller companies continues to bear the brunt of concerns about the UK’s
fiscal position. Their share prices have struggled as both recent Budgets leaned on the private sector and the political
stability promised by Labour’s decisive majority remained elusive. Amid this uncertainty, it is important to remember that
the market’s reservations about smaller companies contrasted with another year of dividend growth and share buy-backs,
funded by the strong free cash flow and balance sheets that characterise the DNSCI (XIC) and ASCoT’s portfolio. These
qualities are not lost on overseas companies or private equity as takeovers of small companies carry on at an unusually
high rate. ASCoT’s performance continued to benefit from this takeover interest as recommended bids for eight of the
investee companies were received in 2025.
Dividends
Despite the caution about the state of the UK’s politics and economy, the Investment Income from Revenue that ASCoT
received from its investee companies grew by 7% in 2025. This outcome was better than the Managers’ estimates at the
start of the year and surpassed the previous high point in 2023. The Revenue Return per Ordinary Share was 64.0p.
Excluding special dividends received in both years, the Revenue Return per Ordinary Share rose by 13% in 2025 compared
with 2024. This good rate of progress was helped by the year’s share buy-back activity, which is described below.
The Board’s ambition is to grow ASCoT’s full year ordinary dividend above the year-on-year rate of CPI inflation, which was
3.4% in December 2025. Our dividend deliberations are also influenced by ASCoT’s dividend experience over the year and
on the Managers’ forecasts for coming years. We are conscious that the dividends paid by ASCoT are an output of the
Managers’ investment process and that they should not lead that process. With this in mind, we take comfort from
ASCoT’s healthy revenue reserves, which afford the Managers investment flexibility and allow dividends to move ahead
even in testing times, most recently during the pandemic.
The Board proposes a final dividend of 32.5p per Ordinary Share, which compares with the previous year’s 30.0p. Together
with the interim dividend of 14.3p, the full year dividend would be 46.8p. Growth for the full year dividend would be 7.3%,
which would be comfortably above the rate of inflation. On top of the ordinary dividend, we propose a special dividend
of 12.0p, which brings the total dividend to 58.8p per share and ensures that ASCoT complies with HMRC’s minimum
retention test for investment trusts. The total of these means that ASCoT would distribute c.£47m in the form of dividends
to its Shareholders in respect of 2025. Even after these payments, ASCoT would be able to retain 5.2p of revenue per
Ordinary Share. This would increase revenue reserves to 99.1p per Ordinary Share to keep the ordinary dividend covered
close to a healthy two times.
Share buy-backs
The Board and Managers have two aims for ASCoT’s share buy-backs. First, when conducted at a discount to net asset
value, they deliver an economic uplift for those Shareholders wishing to remain invested in the Company. Second, they
provide additional liquidity at the margin for those Shareholders looking to crystallise their investment. An additional
Strategic Report
Aberforth Smaller Companies Trust plc 3
Chairman’s Statement
benefit is that consistently applied share buy-backs may bring additional tension to the share price of an investment trust
when the market loses sight of the portfolio’s value. This last point is less certain since the discount depends on many
factors that the Board and Managers cannot influence. Nevertheless, the reasons for buy-backs are convincing and ASCoT
was active in 2025.
In the year to 31 December 2025, 4,082,000 shares were bought back and cancelled. The total value of these repurchases
was £60m, on an average discount of 11.2%. Since 2008, ASCoT has deployed £226m of its capital on share buy-backs,
which have added £33m of value to Shareholders.
Abnormal market circumstances may influence the pace of buy-backs, but ASCoT can fund them over time through cash
generated from the natural turnover of the portfolio. This is consistent with the Managers’ value investment philosophy
and has been supported by the high level of M&A activity in recent years. Additional flexibility is provided by the credit
facility with the Royal Bank of Scotland International.
The Company seeks authority to buy back up to 14.99% of its Ordinary Shares at each Annual General Meeting.
Shareholders voted in favour in March 2025 and the Board will seek to renew the authority at the Annual General Meeting
on 5 March 2026.
Gearing
The ability to gear is an important differentiator for investment trusts. The Board’s gearing policy has been consistent
throughout ASCoT’s life. Gearing is deployed in a tactical fashion with the aim of taking advantage of periods of stress in
equity markets. ASCoT has been geared on four occasions in its 35 years. The current phase started amid the pandemic
in early 2020 and has since enhanced ASCoT’s net asset value performance. The Board and Managers regularly review the
level of gearing. They judge that it remains appropriate in view of the attractive stockmarket valuations and the prospects
for the profitability of the underlying companies. At the year end, £75m of gearing was deployed and the gearing ratio,
which is defined in the glossary on page 68, was 5%. Beyond the potential to enhance investment returns, the credit
facility provides other benefits. It gives flexibility to conduct share buy-backs and allows the Managers to react nimbly to
new opportunities without disturbing existing investments. This is particularly important in what can be a volatile and
relatively illiquid asset class.
ASCoT has a credit facility with The Royal Bank of Scotland International Limited. This £130m facility runs to June 2026,
which is aligned with the three yearly continuation vote cycle. After the Annual General Meeting on 5 March 2026, and
providing that the continuation vote is passed, the Board and Managers will seek to put in place a new facility.
Annual General Meeting (AGM) and continuation vote
The AGM will be held at 14 Melville Street, Edinburgh EH3 7NS at 10.30 am on 5 March 2026. Details of the resolutions
to be considered by Shareholders are set out in the Notice of the Meeting on page 64. Shareholders are encouraged to
submit their vote by proxy in advance of the meeting. In accordance with normal practice, the results of the AGM will be
issued in a regulatory news announcement and posted on Aberforth’s website. An update on performance and the
portfolio will also be available on the website following the meeting.
It is the Company’s policy to hold a continuation vote every three years. March’s Annual General Meeting will include
the eleventh such vote in its history. The Board views the continuation vote as an important shareholder right and
encourages all Shareholders to exercise it.
ASCoT’s performance in the continuation vote period just completed was frustrating. The difficult conclusion to 2025
meant that ASCoT under-performed the DNSCI (XIC) over the three years to 31 December 2025. The net asset value total
return was 31.0%, while the share price total return was 32.5%. The comparable performance of the DNSCI (XIC) was
35.9%. Naturally, the Board has sought to understand the reasons for this.
Importantly, it is clear to us that there has been no deviation from how the Managers have always implemented ASCoT’s
investment policy. Their value investment discipline, fundamental analysis of companies and constructive approach to
stewardship are all unchanged. Confidence in this allows us to look to longer term patterns of performance. A corollary
of the Managers’ consistency is a volatility to ASCoT’s relative performance, even over three year periods, as the mood
of the stockmarket ebbs and flows.
For much of the most recent continuation vote period, the stockmarket’s mood was one of gloom towards the UK’s
politics and economy, with further uncertainty emanating from the US’s experiment with tariffs. These factors affected
sentiment towards and valuations of many smaller companies. From our interactions with the Managers, we know that
they have confidence in the resilience of many smaller companies and that they are therefore comfortable investing in
such businesses, notwithstanding their greater sensitivity to swings in economic activity. We saw this sensitivity in action
during the pandemic in 2020, when ASCoT’s investment performance suffered particularly badly as economic activity
collapsed. Clearly, the reasons for the economic uncertainty then were different from today’s, but the Managers’
confidence in the resilience of the portfolio’s businesses was vindicated as the recovery took hold.
This has not been the first continuation vote period in which ASCoT’s total return has lagged its benchmark’s. For the
Board, the reassuring point is that the consistency of the investment approach has allowed a rebound in ASCoT’s
fortunes in earlier instances and has underpinned an excellent record of relative and absolute performance over longer
time periods. Three years ago, following a continuation vote period in which ASCoT out-performed the DNSCI (XIC), I
observed that ASCoT’s differentiated and consistent investment proposition “does not guarantee superior performance
every year, but it does improve the likelihood of success over time”. The relevance of this point stands, which gives the
Board confidence to focus on the investment opportunity at hand and on ASCoT’s prospective returns.
Conclusion
The Managers’ Report addresses ASCoT’s investment opportunity in detail. I would draw out the following points as
important aspects of what is a positive outlook.
•
Sentiment towards the UK remains downbeat, which is affecting the stockmarket’s valuations of smaller companies.
•
We have a good idea why this pessimism persists. The dominant narrative since the EU Referendum – almost ten
years ago now – has been one of political dysfunction and economic stagnation in the UK.
•
Large companies have shrugged off these concerns – even domestically oriented companies such as the banks have
participated in the FTSE All-Share’s resurgence. History gives encouragement that where large companies lead small
companies follow.
•
My personal suspicion is that the UK gloom has been overdone and that the UK’s institutional advantages are being
overlooked. However, I am more confident in asserting that the dominant narrative has drowned out recognition of
the underlying progress of smaller companies.
•
In recent years, ASCoT’s portfolio holdings have endured a pandemic, a surge in inflation, higher interest rates and a
recession. In the Board’s discussions with the Managers about the investee companies, we are struck by their
resilience. They have retained strong balance sheets and continued to generate cash, which is coming back to their
shareholders in the form of rising dividends and share buy-backs.
•
The underlying qualities and valuations of these companies are being recognised, though not yet in a broad fashion.
The beneficiaries hitherto have been overseas companies and private equity who are responsible for the still high
rate of M&A within the small company universe. Another lesson from history is that when the appetite for small
companies improves share prices move rapidly and substantially.
•
The current lack of interest in small UK quoted companies contrasts sharply with the great confidence that the
stockmarket has in the giant technology companies as they spend their billions on AI development. In my experience
of equity markets, such disparities in sentiment and valuation are not uncommon but tend to be overdone. As in the
past, ASCoT is well positioned to benefit when fashions do inevitably change.
None of this is to deny the risks confronting smaller companies, from domestic politics, through the threat of a trade war
and actual conflicts, to the implications of the vast investment in AI. However, investment is always risky. The returns
generated by equities over time have been the rewards for exposing capital to risk. In my experience, what is crucial is
that the capital should be deployed in assets whose valuations provide a margin of safety and should be managed in
accordance with a tried and tested investment process.
On both counts, ASCoT’s record suggests that it is well positioned. The Managers’ approach to the asset class sets the
portfolio apart from the majority of small company funds. It has driven good returns to Shareholders over time and the
Board notes that the Managers continue to add to their personal holdings in ASCoT. We also recognise the advantages
of ASCoT’s investment trust status, particularly when operating in a relatively illiquid and volatile asset class such as small
UK quoted companies. The ability to retain income helps dividends to grow in real terms even in difficult circumstances
and contrasts with the more volatile capital performance. Meanwhile, share buy-backs and tactical gearing promise to
improve what we expect to be a positive performance from the portfolio over coming years.
I would also note that ASCoT enjoys significant flexibility in its capital allocation by virtue of its natural portfolio turnover,
ability to gear and revenue reserves. These features allow meaningful sums to be returned to Shareholders – dividends
and share buy-backs totalled £107m in respect of 2025. The Board is therefore optimistic about ASCoT’s prospects from
here and recommends that Shareholders vote in favour of the Company’s continuation at March’s AGM.
Ahead of that event, my fellow Directors and I welcome views and questions from Shareholders. Please contact me at
my e-mail address, which is noted below.
Richard Davidson
Chairman
29 January 2026
richard.davidson@aberforth.co.uk
4
Strategic Report
Aberforth Smaller Companies Trust plc
Chairman’s Statement
Strategic Report
Aberforth Smaller Companies Trust plc 5
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 with dividends reinvested; share price total
return with dividends reinvested; performance relative to the DNSCI (XIC); dividend growth; and any 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 6. A glossary of Alternative
Performance Measures can be found on page 66 and the Company's objective is on page 1.
Net Asset Value per Ordinary Share1 7.9% 31.0% 55.5% 82.5% 4,698.1%
DNSCI (XIC) 12.7% 35.9% 36.0% 83.1% 2,505.4%
Ordinary Share Price1 10.8% 32.5% 47.8% 78.8% 4,430.5%
Cumulative Performance over 10 years
(figures are total returns and have been rebased to 100 at 31 December 2015)
Since inception
Periods to 31 December 2025 1 Year 3 Years 5 Years 10 Years
(10 December 1990)
Cumulative Performance (Total Returns)
Net Asset Value per Ordinary Share1 7.9% 9.4% 9.2% 6.2% 11.7%
DNSCI (XIC) 12.7% 10.8% 6.3% 6.2% 9.7%
Ordinary Share Price1 10.8% 9.8% 8.1% 6.0% 11.5%
1 Alternative Performance Measure (refer to glossary on page 68) Source: Aberforth Partners LLP
Since inception
Periods to 31 December 2025 1 Year 3 Years 5 Years 10 Years
(10 December 1990)
Annualised Performance (Total Returns)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
200
175
150
125
100
75
ASCoT NAV Benchmark ASCoT Share Price
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 with dividends reinvested; share price total
return with dividends reinvested; performance relative to the DNSCI (XIC); dividend growth; and any 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 7. A glossary of Alternative
Performance Measures can be found on page 68 and the Company's objective is on page 1.
6
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 2015)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
110
100
90
80
70
Dividends and CPI Cumulative Growth (figures have been rebased to 100 at 31 December 2015)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
190
180
170
160
150
140
130
120
110
100
Premium/Discount (being the difference between Share Price and NAV)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
-5%
0%
5%
10%
15%
20%
Premium
Discount
NAV v Benchmark Share Price v Benchmark
CPI Dividends (excluding special dividends)
Strategic Report
Aberforth Smaller Companies Trust plc 7
2 years from 31 December 2023 10.0 11.1 10.7 21.1 23.3 22.7
3 years from 31 December 2022 9.4 10.8 9.8 31.0 35.9 32.5
4 years from 31 December 2021 4.1 2.8 5.3 17.4 11.6 22.8
5 years from 31 December 2020 9.2 6.3 8.1 55.5 36.0 47.8
6 years from 31 December 2019 4.7 4.5 3.6 31.6 30.2 23.5
7 years from 31 December 2018 7.6 7.2 8.1 67.0 63.0 72.5
8 years from 31 December 2017 4.4 4.1 5.4 41.3 38.0 52.2
9 years from 31 December 2016 6.2 5.7 7.2 72.4 64.9 86.7
10 years from 31 December 2015 6.2 6.2 6.0 82.5 83.1 78.8
15 years from 31 December 2010 8.7 8.1 9.4 247.2 221.4 287.2
20 years from 31 December 2005 7.6 7.9 7.7 333.6 361.0 344.0
35.1 years from inception
on 10 December 1990 11.7 9.7 11.5 4,698.1 2,505.4 4,430.5
Annualised Returns (%) Cumulative Returns (%)
ASCoT ASCoT
ASCoT Share ASCoT Share
Periods to 31 December 2025 NAV Index Price NAV Index Price
Discrete Annual Returns (%)
ASCoT ASCoT
Period NAV Index Share Price
1 year to 31 December 2025 7.9 12.7 10.8
1 year to 31 December 2024 12.1 9.5 10.7
1 year to 31 December 2023 8.2 10.1 8.0
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
Historical Information
Ten Year Summary (ASCoT)
Net Asset Revenue Dividends
Value per Share per Ordinary per Ordinary Ongoing
As at Share Price Discount Share Share Charges
Gearing
31 December p p % p p %
%
2025 1,745.3 1,574.0 9.8 64.02 58.80 0.80
4.8
2024 1,667.0 1,470.0 11.8 56.59 49.60 0.78
7.2
2023 1,536.7 1,378.0 10.3 59.79 50.50 0.79
5.1
2022 1,465.7 1,322.0 9.8 55.64 47.30 0.80
5.7
2021 1,674.4 1,464.0 12.6 36.76 35.20 0.75
5.6
2020 1,292.4 1,248.0 3.4 13.28 33.30 0.81
6.1
2019 1,570.2 1,540.0 1.9 42.26 36.00 0.77
0.8
2018 1,273.7 1,138.0 10.7 45.30 38.00 0.79
1.3
2017 1,543.7 1,326.0 14.1 41.59 35.50 0.76
0.3
2016 1,292.6 1,109.0 14.2 36.93 30.10 0.80
2.7
2015 1,254.3 1,193.0 4.9 35.03 28.75 0.79
0.3
Total Returns
The Historical Information above includes Alternative Performance Measures (refer to glossary on page 68).
8
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 DNSCI
(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 basis of the investment process is understanding companies within the DNSCI (XIC). The Managers consider factors
such as financial performance, competitive dynamics and capital allocation priorities, as well as relevant environmental
and social matters. Company analysis is conducted by individual investment managers, but decisions about which stocks
merit a place in the portfolio are taken by the full investment team. The team is experienced and well-resourced. It is
often the case that it has known investee companies for longer than the directors running the companies.
•
Stock selection is guided by a value investment philosophy. The reason for this is that there is strong historical evidence
that a value premium can be harvested within equity markets over time. 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”.
•
Consideration of governance issues and engagement with company directors, especially chairs, is an important element
of Aberforth’s investment process. Throughout ASCoT’s history, the Managers have aimed to engage in a purposeful,
discreet and constructive fashion, both as part of their research and to effect change if necessary. They engage on any
topic that affects a company’s valuation and are willing to be taken inside for extended periods. In return for this
commitment to responsible stewardship of their clients’ capital, the Managers expect that consultation will be timely
and that they will not be presented with faits accomplis by the boards of 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, which has contributed to a good outcome for
investors over ASCoT’s 35 years.
Performance
ASCoT’s superior total returns since its inception are shown in the table below. The table also shows performance data for
the three year continuation vote period that ended on 31 December 2025. The three indices provide context and include
the DNSCI (XIC), which is ASCoT’s benchmark of small UK quoted companies.
Analysis of performance and portfolio characteristics
•
Equity returns through the continuation vote period were positive, supported by the continued recovery from the
pandemic.
•
The strongest performance came from the MSCI World index. This is dominated by the US stockmarket and so reflected
the incredibly strong returns from the very large technology companies that are seen to be leading the AI race.
•
Perhaps the most notable number in the table is the resurgence of the UK in 2025, with large company share prices
rising by even more than world equities.
•
The strength of the FTSE All-Share in 2025 meant that smaller companies under-performed large over the three years.
This large cap out-performance is considered in greater detail below.
•
ASCoT’s total return lagged that of the benchmark across the continuation vote period. This was largely a result of a
disappointing outcome for 2025 and so the performance analysis commentary later in this report focuses on events in 2025.
Over the past three years, the valuations of small UK quoted companies experienced two challenges, one more relevant to
those companies that earn their profits within the UK economy, and the other to those companies reliant on overseas
markets.
•
The former group, the domestics, comprises consumer-oriented companies, such as retailers, leisure businesses and
media companies. It accounts for around 53% of the revenues of DNSCI (XIC) constituents. These companies were most
severely affected by Brexit and by lockdown during the pandemic. They operated resiliently in the face of these
challenges but were confronted in 2025 by intensifying concerns about the UK government’s fiscal situation. The
Chancellor has struggled to achieve convincing fiscal headroom as she contends with her own fiscal rules, manifesto
commitments and the internal politics of the Labour Party. The predicament was encapsulated by the gyrations in gilt
yields through 2025 and by the rising cost of government debt here in comparison with the rest of the world: ten year
gilt yields started 2025 in line with those in the US but ended the year 31 basis points higher. The UK private sector,
wary after the 2024 Budget, was naturally cautious ahead of the 2025 Budget. It is likely that economic activity suffered
as, in a classic Ricardian fashion, households and businesses held back on spending and investment. This was to the
disadvantage of the domestically oriented companies.
CAGR to 31 December 2025
Total returns 2023 2024 2025 3 years Inception
ASCoT NAV +8.2% +12.1% +7.9% +9.4% +11.7%
DNSCI (XIC) +10.1% +9.5% +12.7% +10.8% +9.7%
FTSE All-Share +7.9% +9.5% +24.0% +13.6% +8.5%
MSCI World (£ terms) +18.0% +21.6% +13.2% +17.5% +9.9%
Strategic Report
Aberforth Smaller Companies Trust plc 9
Managers’ Report
•
The overseas facing companies tend to be industrial businesses and account for the other 47% of the DNSCI (XIC)’s total
revenues. They were less affected by the pandemic and their profitability even benefited from the EU referendum as
sterling weakened in its aftermath. The disruption of supply chains in the wake of the pandemic, along with the conflicts
in Ukraine and Gaza, were unhelpful, but these companies tended to enjoy good trading conditions for much of the
three year period. That changed in April 2025 with Donald Trump’s tariff announcements. Their longer lasting effects
on global trade and broad economic activity are as yet uncertain, but it is clear that businesses have incurred near term
headwinds in the form of higher costs and working capital requirements. Consequently, the valuations of overseas
facing companies within the DNSCI (XIC) also came under pressure in 2025.
These twin pressures have hampered the valuation of smaller companies, particularly those whose profits are perceived to
be more sensitive to broader economic activity. This has affected ASCoT's performance since many of the most attractively
valued smaller companies today are in the more economically sensitive sectors of the stockmarket. Indeed, the market's
near term fears of cyclicality can often be what presents the Managers with investment opportunity as they take a longer
term view of a business's underlying qualities and profit potential.
For most of the three year continuation vote period, gloom about the UK's politics and economics affected sentiment
towards the UK stockmarket in general, with the valuations of both small and large companies below their long term
averages. That started to change in 2025. The very strong total returns from large companies took their valuations above
the long term average, even as smaller companies continued to languish. A common explanation for this performance
divergence rests in the different sector profiles of the large and small company universes. Among the stronger performers
in the FTSE All-Share in 2025 were banks, defence, mining, telecoms and life assurance, which are all sectors with a lower
representation in the DNSCI (XIC). However, this explanation struggles when the banks are considered further. Most of the
banks are heavily reliant on the domestic UK economy. They are literally geared into the health of British businesses and
households, the same sort of exposure that many smaller companies have.
Smaller companies are being penalised for their very size and relative illiquidity, rather than for fundamental reasons. This
suspicion is backed up by analysis of the dividend characteristics of the DNSCI (XIC) and the FTSE All Share. For the first time
since the global financial crisis, the dividend yield of the DNSCI (XIC) is higher than the FTSE All-Share’s. This is despite small
companies’ average dividend cover being above that of large companies and despite small companies’ balance sheets being
stronger than those of large companies. Moreover, dividend growth of the DNSCI (XIC) has remained superior to that of the
FTSE All-Share. Since 2015 – the year before the EU referendum and therefore a fair starting point – small company
dividend growth has been 63%, whereas large company dividend growth has been 29%. Since 2019 – the year before the
pandemic – small companies have grown their dividends by 23%, whereas large companies have seen their aggregate
dividends decline by 6%.
The superior dividend growth from smaller companies is evident in almost all time periods and supports the growing
dividends paid by ASCoT to its Shareholders. These dividends also benefit from how the Managers invest ASCoT’s capital.
An important facet of the process is the “value roll”, in which capital is rotated from companies with low upside to the
Managers’ target prices into companies with high upsides. This rotation implies that capital is moved from companies with
low dividend yields into those with high dividend yields, a dynamic that enhances the income earned by the portfolio over
time. This has enabled ASCoT’s dividends to grow by 7.1% per annum since inception in 1990, well ahead of the DNSCI
(XIC)’s 4.9%, the FTSE All-Share’s 3.4% and the consumer price index at 2.4%. The steadiness and consistency of ASCoT’s
dividend growth contrast with the volatility of annual capital performance. They have also contributed to the good absolute
and relative total returns that ASCoT has achieved over time.
Influences on performance in 2025
In 2025, ASCoT’s NAV total return was 7.9%, which was behind the DNSCI (XIC)’s 12.7%. The table below sets out the
contribution of certain factors to ASCoT’s relative return. As usual, the most important influence was the investment
portfolio. The paragraphs that follow provide context and explanation for the portfolio’s performance in 2025.
For the twelve months ended 31 December 2025 Basis points
Attributable to the portfolio of investments, based on mid prices
(after transaction costs of 18 basis points) (429)
Movement in mid to bid price spread 12
Cash/gearing (27)
Purchase of ordinary shares 54
Management fee (70)
Other expenses (12)
Total attribution based on bid prices
(472)
Note: 100 basis points = 1%. Total Attribution is the difference between the total return of the NAV and the Benchmark Index (i.e. NAV = 7.95%;
Benchmark Index = 12.67%; difference is -4.72% being -472 basis points).
10
Strategic Report
Aberforth Smaller Companies Trust plc
Managers’ Report
Economic cyclicality
As described above, ASCoT’s returns in 2025 were influenced by concerns about economic activity both domestically
and overseas. Many of the most attractively valued companies within the DNSCI (XIC) at present are perceived as
sensitive to the economic cycle. The Managers are prepared to look beyond these near term concerns, putting more
store in the resilience of business models, records of profit progress from cycle to cycle and strength of balance sheets.
Such bouts of concern are not unusual in ASCoT’s 35 year history. Economic cyclicality hampered ASCoT’s performance
in 2025, but it is the Managers’ experience that the stockmarket tends to under-estimate the resilience of smaller
companies and thus creates the conditions for a strong recovery in due course.
Value style
The Managers follow a value investment philosophy. They calculate target valuations for existing and potential
investments. These are influenced by fundamental analysis of the companies, judgement informed by experience, and
reference to other relevant valuations in equity markets or corporate activity. Growth of profits is an important
component of target valuations, but the Managers find that stockmarket valuations are often too generous in their
assumptions of the sustainability and pace of growth.
To gauge the style effect on ASCoT’s performance, the Managers use analysis by the London Business School (LBS). This
defines value narrowly in terms of low price to book ratios, rather than in the broader fashion undertaken by the
Managers. Therefore, while useful, the LBS approach is an imperfect measure of style effects, particularly over short
periods. Despite AI leading the way among global equity markets, the LBS analysis suggests that value stocks within the
DNSCI (XIC) out-performed the index as a whole in 2025. On this basis, style would have benefited ASCoT’s returns in
2025.
Size, within the DNSCI (XIC)
The DNSCI (XIC) includes all main listed stocks in the UK with market capitalisations below c.£2.5bn. It therefore has an
extensive overlap with the FTSE 250 and includes many mid caps, which the Managers refer to as “larger small” companies.
However, ASCoT has a relatively high exposure to the DNSCI (XIC)’s “smaller small” companies and has had for much of the
period since the global financial crisis in 2008. This positioning reflects the more attractive valuations available down the
market capitalisation scale, which are demonstrated in the Valuations section later in this report. Analysis by LBS shows
that the return from “smaller small” companies was slightly ahead of that from “larger small” companies in 2025.
Accordingly, ASCoT had a modest benefit from its size positioning over the past twelve months.
Corporate activity
The pattern is a familiar one of recent years – a lot of takeovers targeting small UK quoted companies, a lot of buy-backs
and few IPOs.
On M&A, the takeovers of eleven companies in the DNSCI (XIC) were completed in 2025. On top of those, there were offers
outstanding for another ten companies at the year end. Of these 21 deals, the bidders were most often trade buyers, with
private equity houses less active than in 2024. The bidders were overwhelmingly from overseas, attracted by the presently
low stockmarket valuations of small UK quoted companies. The average premium of the bid price to the undisturbed share
price before announcement of the deal was 44%, which is above the longer term average premium for control of 25-30%.
ASCoT had investments in eleven of the 21 takeover targets. Four of the eleven deals were announced in 2024, with the
deals completing in 2025. The takeover premiums therefore benefited 2024 returns. Nevertheless, M&A helped ASCoT’s
returns in 2025.
Takeovers can be an effective means by which the value in ASCoT’s portfolio is realised. However, there is an important
caveat. The low valuations of smaller companies mean that takeovers may be proposed on unattractive terms and that
investors’ interests might be better served by rejecting the takeover approach. The risk is exacerbated by boards and some
shareholders yielding too quickly to takeover interest, no doubt succumbing to the gloomy sentiment towards the UK. The
Managers attempt to mitigate the risk by engaging with boards to support their independence if the terms of a bid are
unattractive or to improve the terms. This engagement is helped by the often significant stakes that ASCoT and Aberforth’s
other clients hold in investee companies. At 31 December 2025, 15% of ASCoT’s portfolio was invested in companies that
had attracted takeover interest over the previous 18 months, but where the approaches had not developed into formal
bids. In several of these situations, the Managers were consulted by the boards of the target companies and, if the
standalone option promised superior returns, supported their independence.
The depressed valuations of small UK quoted companies mean that the IPO market remains subdued. There were just two
IPOs of a reasonable size and eligible for the DNSCI (XIC) in 2025. The Managers view this dearth of activity as a temporary
phenomenon and a function of prevailing valuations. Recent regulatory change, to the listing rules and prospectus regime,
are likely to encourage IPOs once the valuation basis of the small UK quoted companies recovers.
While the DNSCI (XIC) has not been refreshed by IPOs, it is experiencing an influx of companies that are choosing to move
from AIM to the Main Market. ASCoT does not invest in AIM quoted companies except in limited circumstances. These
Strategic Report
Aberforth Smaller Companies Trust plc 11
include when an AIM company makes a public announcement of its intention to move to the Main List. Over the past 18
months, 15 AIM quoted companies have announced an intention to relist. Of these, six completed the process in 2025 and
were included in the DNSCI (XIC) on its annual rebalancing on 1 January 2026. Of the 15 companies, ASCoT has invested in
four. These businesses were subject to the Managers’ usual investment process of research and engagement. Their
valuations were attractive and consistent with the existing portfolio’s.
Income
The UK’s economic and political uncertainties contributed to a lacklustre capital performance in 2025, but the dividend
performance from small UK quoted companies remained resilient. ASCoT’s income experience is shown in the following table,
which splits the portfolio’s 78 holdings into categories determined by the most recent dividend action.
The drag on ASCoT’s income from the 9 cutters was out-weighed by the 28 companies that increased their dividends and by
the four companies that either resumed dividends or paid for the first time. Overall, ASCoT’s Investment Income from Revenue,
as shown in the Income Statement, rose by 7% in 2025. There was a slightly larger contribution from special dividends received
than in 2024, but the effect was not significant. The 7% growth took Investment Income to its highest level in ASCoT’s 35 years,
surpassing the previous high in 2023.
The historical dividend yield of ASCoT’s holdings at 31 December 2025 was 4.3%, which was 31% higher than the average over
ASCoT’s 35 year history. Dividend cover was 2.2x, which is less than the long term average of 2.8x. The lower dividend cover
was due to the effect of macro economic uncertainty on profits, together with the higher dividends as companies looked
through the near term uncertainty and took confidence from strong balance sheets. The Managers’ forecasts suggest that
dividend cover will rise in 2026 and 2027.
Significant stakes
Engagement with the boards of investee companies has always been a crucial component of the Managers’ investment
process. It is particularly relevant at present in view of the high rate of takeover activity among smaller companies and of the
recent regulatory changes to the listing rules and prospectus regime. The latter are intended to make the UK stockmarket a
more attractive place to list, but they come at a cost by undermining governance protections for investors in UK listed
companies.
The Managers’ scope to engage effectively is supported by their ability to take significant stakes of up to 25% in issued share
capital across their client base. At 31 December 2025, ASCoT had six holdings in which Aberforth’s clients had a stake of more
than 20% and 28 holdings in which the stake exceeded 10%. The 28 holdings had a combined portfolio weight of 32%.
Significant stakes bring increased influence but come with a downside in the form of illiquidity – reducing these positions by
selling into the stockmarket can be difficult. However, there are compensating factors. First, the increased influence, coupled
with patience and support, has contributed to improved investment outcomes – significant stakes have enhanced ASCoT’s
performance over time. Second, illiquidity has been manageable. Exiting significant stakes has been facilitated by M&A or by
renewed investor appetite as prospects for the business improve. Third, ASCoT’s closed-end structure is ideally suited to
holding significant stakes – patient support from investors is often required as boards work to improve business performance.
The Managers are confident that their approach to engagement and ability to take significant stakes have enhanced ASCoT’s
returns over time and will continue to do so.
ASCoT’s gearing
As an investment trust ASCoT can employ gearing with the aim of enhancing returns from the portfolio. ASCoT’s approach to
gearing is tactical and seeks to take advantage of periods of stress in economies and financial markets. It is currently geared for
the fourth time in its history, having drawn on its borrowing facility amid the pandemic in early 2020. Since then, returns from
small UK quoted companies have been positive and gearing has enhanced ASCoT’s returns, which was also the case in 2025
specifically. Since UK equity valuations continue to be attractive, the Managers believe that it is appropriate that ASCoT remains
geared. At 31 December 2025, the gearing ratio was 5%. The realisation of proceeds from takeovers was substantial through
2025, which meant that the gearing ratio was often below the Managers’ target. Given the attractiveness of valuations and the
profusion of investment opportunities, it is likely, all else equal, that the gearing ratio will rise from its current level.
Managers’ Report
Nil Payer
Cutter
Unchanged Payer
Increased Payer
New/Returner
14
9
23
28
4
12
Strategic Report
Aberforth Smaller Companies Trust plc
Managers’ Report
Portfolio characteristics
The next table presents a selection of important characteristics for both the portfolio and the DNSCI (XIC). The subsequent
paragraphs expand on some of these characteristics.
Valuations
Last year’s Managers’ Report described an unusual triple valuation discount from which ASCoT benefited. This is summarised
Balance sheets
The following table sets out the balance sheet profile of ASCoT’s portfolio and of the Managers’ Tracked Universe. This subset
of the DNSCI (XIC) represents 99% by value of the index as a whole and is made up of the 246 companies that the Managers
follow closely.
Balance sheets remain robust both within the portfolio and among small caps in general. Compared with a year ago, the
portfolio’s exposure to companies with stronger balance sheets has risen: the weighting in companies with net cash and
leverage below two times was 75% at the end of 2024 and 85% at the end of 2025. This shift reflects both the cash generation
of the investee companies and portfolio activity. The stockmarket’s lack of interest in smaller companies means that stronger
balance sheets are not being reflected in higher valuations. This lack of discernment has brought more companies into the
Managers’ valuation range and has contributed to the higher exposure to companies with strong balance sheets.
The strength of balance sheets raises the question of how capital should be deployed. This is a frequent topic of engagement
for the Managers with the boards of ASCoT’s investee companies. The highest priority should be organic investment to
maintain the viability of a business and allow it to grow. This is especially pertinent at present since it seems that the economic
and political uncertainty has discouraged companies from larger capital expenditure projects. After organic investment, a
coherent and appropriate dividend policy is essential, optimally one that allows ordinary dividends to grow in real terms
through economic cycles. After that, acquisitions may be considered, but these should be assessed against the benchmark of
lower risk special dividends or share buy-backs. Many small companies again bought back shares in 2025, including 29
companies within ASCoT’s portfolio of 78 stocks.
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% for ASCoT’s portfolio compared with the DNSCI (XIC). At 31 December 2025, it stood at 80%.
Value roll and portfolio turnover
The main influence on ASCoT’s portfolio turnover in any period is usually the stockmarket’s appetite for small UK quoted
companies. If prices and valuations are rising, the upsides to the Managers’ target prices are likely to be narrowing. All else being
equal, this would encourage the rotation of ASCoT’s capital from companies with lower upsides to those with higher.
Portfolio turnover is defined as the lower of purchases and sales divided by the average portfolio value. In 2025, turnover was
34%, which is in line with the long term average of 33%. This rate of turnover was influenced by the year’s significant takeover
activity.
31 December 2025 31 December 2024
Portfolio characteristics ASCoT DNSCI (XIC) ASCoT DNSCI (XIC)
Number of companies 78 352 79 350
Weighted average market capitalisation £578m £1,225m £649m £1,019m
Weighting in “smaller small” companies* 49% 17% 55% 21%
Weighting in companies with net cash** 39% 26% 29% 30%
Portfolio turnover 34% – 20% –
Active share 80% – 78% –
Price earnings (PE) ratio (historical) 10.5x 13.8x 9.6x 13.0x
Dividend yield (historical) 4.3% 3.4% 4.0% 3.4%
Dividend cover (historical) 2.2x 2.1x 2.6x 2.2x
*”Smaller small” companies are members of the DNSCI (XIC) that are not also members of the FTSE 250; **Tracked Universe reference explained below.
Net debt/EBITDA Net debt/EBITDA
Weight in companies with: Net cash < 2x > 2x Other*
Portfolio 2025 39% 46% 14% 1%
Tracked Universe 2025 26% 43% 24% 7%
*Includes loss-makers and lenders
Strategic Report
Aberforth Smaller Companies Trust plc 13
Environmental, social and governance (ESG)
In their analysis and assessment of companies, the Managers consider any issue that affects valuation. This includes matters that
come under the umbrella term of ESG. If the Managers determine that a company’s valuation can be enhanced by addressing
such an issue, they engage with the board in question. Most engagements remain concerned with governance, which reflects
the Managers’ firm belief that good governance is a pre-requisite for a good performance in environmental and social terms.
Examples are provided in the Stewardship & ESG section of the Managers’ website at www.aberforth.co.uk. Further details of
the Managers’ approach to ESG are set out on pages 16 to 18 of this annual report.
Valuations
Recent Managers’ Reports have described how ASCoT benefits from a triple valuation discount. This referred to ASCoT’s
portfolio being on lower valuations than small UK quoted companies, which were on lower valuations than UK large
companies, which were on lower valuations than world equities. The table below updates the analysis.
Twelve months on, the triple discount remains in place, and yet there has been movement. The historical PEs of all four
groups have risen, but the most significant move over the past twelve months has been among large UK companies. The
PE of the FTSE All-Share has jumped from 14.6x to 17.6x and now sits above its long term average of 15.3x. Meanwhile, the
PE of smaller companies, and of ASCoT’s portfolio in particular, remain below their long term averages. As noted in the
opening section of this report, it is unclear at the fundamental level why the valuation gap between small and large
companies should have opened up to this degree. In view of the fundamental qualities of smaller companies – stronger
balance sheets and higher growth – their lower valuations offer the opportunity of stronger future share price returns.
The following table turns to forward looking valuations. It uses the Managers’ favoured valuation metric, EV/EBITA
(enterprise value to earnings before interest, tax and amortisation). Ratios are set out for the portfolio, the Tracked
Universe and certain subdivisions of the Tracked Universe. The profits underlying the ratios are based on the Managers’
forecasts for each company that they track. The bullet points following the table summarise its main messages.
•
ASCoT’s EV/EBITA ratio is higher for 2025 than for 2024, which implies that profits earned by portfolio companies fell
slightly in 2025. This is consistent with the slowdown in activity through the second half of the year as concern about
the Budget grew. The decline in the ratio in 2026 compared with 2025 suggests that, based on the Managers’ bottom-
up estimates, profits will increase again in 2026.
•
The average EV/EBITA multiples of the portfolio are lower than those of the Tracked Universe. This has been a
consistent feature over ASCoT’s history and is consistent with the Managers’ value investment style.
•
The portfolio’s 8.0x EV/EBITA ratio for 2025 is considerably lower than the average multiple of 14.7x at which takeover
offers for DNSCI (XIC) constituents have been made in the past four years.
Managers’ Report
35 year
31 December
31 December
31 December
Price earnings (PE) ratio:
average
2023
2024
2025
World equities*
16.0x
16.0x
17.0x
18.1x
FTSE All-Share
15.3x
10.3x
14.6x
17.6x
Smaller companies**
13.5x
10.3x
11.9x
12.2x
Portfolio
12.0x
7.9x
9.6x
10.5x
* Source: Bloomberg; Panmure Liberum, ** DNSCI (XIC) to 2013 then Tracked Universe
EV/EBITA 2024 2025 2026
ASCoT's portfolio 7.8x 8.0x 7.2x
Tracked Universe (246 stocks) 11.2x 11.1x 9.7x
– 34 growth stocks 19.8x 17.5x 15.5x
– 212 other stocks 10.5x 10.5x 9.1x
– 113 stocks >60% revenue within UK 11.5x 11.2x 10.1x
– 113 stocks >60% revenue overseas 10.8x 10.7x 9.2x
– 110 stocks > £600m market cap 12.0x 11.8x 10.4x
– 136 stocks < £600m market cap 9.0x 9.0x 7.8x
14
Strategic Report
Aberforth Smaller Companies Trust plc
Managers’ Report
•
Each year, the Managers identify a cohort of growth stocks within the DNSCI (XIC). The 34 growth stocks for 2026 are
on much higher multiples than both the portfolio and the rest of the Tracked Universe.
•
The “smaller small” companies within the DNSCI (XIC) remain more attractively valued than the “larger smalls”. This
explains why ASCoT’s portfolio has a relatively high exposure to the “smaller smalls”.
•
For more of the period since the EU referendum, overseas facing companies have enjoyed higher valuations than have
their peers that are more reliant on the UK’s domestic economy. The gap between the two narrowed in 2025 as
sentiment towards the overseas cohort was affected by the tariffs.
Outlook and conclusion
The “Liberation Day” tariff announcements convulsed stockmarkets in 2025. The full effects on global trade and economic
activity are still unclear, particularly when the status of some of the tariffs remains subject to legal challenge. What is clear
is that companies, both in ASCoT’s portfolio and more widely, are incurring extra cost when exporting to the US. This is
another factor in the broad theme of deglobalisation, which has developed since the pandemic as geopolitical tensions
have intensified. The implication for ASCoT is a more uncertain outlook for its cohort of investee companies that generate
their revenues outside the UK.
Despite the tariff shock, equity valuations have recovered well from the Liberation Day nadir. Returns have been
particularly good for the group of companies seen to be benefiting from AI. As 2025 ended, the hopes and valuations for
the AI leaders were very high, but some caution is merited. The business models of the US technology giants are no longer
capital light since AI development necessitates significant investment in computing power and infrastructure. More
broadly, the US economy is becoming increasingly reliant on AI, with growth driven by the investment boom and with
buoyant equity prices supporting the wealth effect. Furthermore, it is not clear what the returns on the investment will
prove to be or who will emerge the eventual winners of the AI arms race, as the US technology giants compete with each
other and with Chinese rivals. In the meantime, the effects of AI on companies more broadly are as yet unclear. Some
business models will be challenged and it is important for the Managers to consider where these threats lie. On the other
hand, it is also important to consider the productivity gains that AI promises. Despite what the relative valuations might
suggest, the upside from AI investment is unlikely to be confined to the companies currently deploying the capital – it is
plausible that ASCoT’s portfolio holdings can also benefit.
The more significant near term influence on the fortunes of small UK quoted companies is likely to be the direction of the
UK economy. The immediate challenges are the government’s fiscal position and a set of policies that are likely to increase
costs and the regulatory burden on the private sector. These problems are well known and have contributed to the gloom
surrounding the valuations of small UK quoted companies. However, there are other more positive dynamics at work,
which tend to be overlooked at present and which suggest that the often hysterical talk about the UK is overdone.
•
The private sector in the UK has deleveraged meaningfully over two decades – the ratio of private non financial debt to
GDP is back to the levels last seen in 2000. Financial risk today is therefore reduced and there is the potential to re-
leverage in the future. While many companies are choosing to deploy surplus capital on share buy-backs at present, a
pick-up in investment would be good for growth of profits and the economy in general.
•
The recent Budget, while unhelpfully late in the year, was not as threatening to economic activity as feared. The
Chancellor tested her fiscal rules by deferring most tax increases until later in the parliament. This pragmatism gives the
economy breathing space, especially as government spending does increase in the near term. One can debate the
merits of such policies, but at the margin they bode well for economic activity.
•
Inflation in the UK remains stickier than elsewhere but does seem to be on a downward path. This has given the Bank
of England scope to reduce interest rates, which again should be supportive of near term economic activity.
So there is good reason to believe that the UK economy may turn out to be better, or at least less bad, than commonly
perceived. This would be significant for the valuations of small UK quoted companies, especially the more economically
sensitive businesses since so little is expected of them. The revaluation of larger companies in 2025 – particularly the banks
– shows what is possible when sentiment turns. The opportunity is encapsulated by small companies’ low valuations and
high resilience. Self-help, strong balance sheets and free cash generation are supporting dividend growth and share buy-
backs as we await improved trading conditions.
The attractiveness of this combination is being recognised by more than the Managers. The elevated rate of M&A activity
shows that other companies and private equity, particularly from overseas, understand the value on offer among the
constituents of the DNSCI (XIC). At the same time, traditional holders of UK equities, such as insurance companies and
larger asset managers, are being replaced on share registers by other sorts of investor. These are typically smaller
institutions or individuals, often again from overseas, who share the Managers’ contrarian approach to investment and,
amid a broad opportunity set, have identified the value on offer among small UK quoted companies.
Strategic Report
Aberforth Smaller Companies Trust plc 15
Managers’ Report
Over ASCoT’s 35 years, the Managers’ consistent investment approach has achieved superior returns for Shareholders.
Their value investment philosophy, understanding of the companies and active engagement are particularly well suited to
the current opportunity in small UK quoted companies and bode well for future returns.
The Managers’ optimism is also rooted in ASCoT’s structural advantages. Tactical gearing and share buy-backs can enhance
the investment performance of the portfolio. They can also benefit growth in the dividends paid to ASCoT’s Shareholders.
The underlying resilience of the investee companies, along with ASCoT’s healthy revenue reserves, suggest that dividends
can continue to grow in real terms, even in more difficult economic conditions. Finally, the closed-end nature of an
investment trust affords the Managers a longer term investment horizon, allowing them to take advantage of concerns
about illiquidity, to engage constructively and to support investee companies. The aim here, as always, is the improvement
of investment returns for Shareholders.
Aberforth Partners LLP
Managers
29 January 2026
16
Strategic Report
Aberforth Smaller Companies Trust plc
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. The Board also considers its corporate governance obligations,
regulation, risk and market integrity. Both these and the investment objective 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 primarily based on quarterly updates from the Managers and Secretaries. During a year of steady
development, the Board reviewed the Managers’ stewardship and ESG related activity. This included the following.
• Continued updates to the Managers’ stewardship and ESG policies and practices.
• Continued development of Aberforth’s proprietary methodology for assessing investee companies’ ESG issues and
for tracking related engagement objectives and activity.
• Refresh and publication of the Managers’ Engagement and Voting framework.
• Publication of Aberforth’s fifth Governance and Corporate Responsibility statement, which describes Aberforth’s own
approach to ESG matters.
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 investment
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 (www.aberforth.co.uk) in the
“About Aberforth” section. The policy framework is set out in the following documents.
• About Aberforth: the firm’s background and founding principles, its strategic philosophy and nature of the business.
• Investment Philosophy: the Managers’ approach to investing as adopted for the Company.
• Stewardship Policy: Aberforth’s approach to stewardship of clients’ capital, set out in the format of the Financial
Reporting Council's (FRC) UK Stewardship Code.
• ESG Integration Framework: how Aberforth's integrated ESG framework operates in practice.
• Engagement and Voting Framework: how Aberforth engages and votes, and what it expects of 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 its own stewardship, governance and
ESG matters.
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.
Stewardship and Environmental, Social and Governance (ESG)
Strategic Report
Aberforth Smaller Companies Trust plc 17
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.
Engagement
Where ESG or other matters impinge upon the investment case, the Managers engage with the investee company’s
board. This engagement is purposeful, discreet and always occurs with the objective of improving investment outcomes.
The Managers are well placed to undertake this activity. Engagement has always been a fully integrated element of their
investment process and their influence is supported by meaningful stakes in the investee 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.
Proprietary Aberforth database
To support the investment process, Aberforth continues to enhance a module within its proprietary investment database
that tracks and analyses important ESG data and issues. The database captures relevant metrics, such as greenhouse gas
emissions, Task Force for Climate-related Financial Disclosures (TCFD) compliance, and net zero and science-based
targets. It also evaluates investee companies on the basis of several ESG subfactors. The methodology starts with a
sector-driven risk assessment, 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). From there, each investee
company is evaluated taking into account the risk materiality, mitigating practices, targets for improvement and
opportunities. 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. The methodology is described in
greater detail in Aberforth's “ESG Integration Framework” document. The methodology is reviewed annually.
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.
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 2025
Shareholder meetings at which ASCoT's shares were voted 96
Shareholder meetings at which ASCoT's shares voted against or abstained 17
Number of resolutions voted 1,421
Number of resolutions voted against 26
Number of resolutions abstained 10
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 remain few general meeting resolutions directly relevant to environmental
and social issues, so much of the voting is focused on governance. During 2025, 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 directors' effectiveness in M&A transactions and capital allocation decisions.
Stewardship and Environmental, Social and Governance (ESG)
18
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 August 2025. 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 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 is governed by the Stewardship Committee. Details
are set out in their “Governance and 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, along with its Scope 1, 2 and 3 emissions.
These voluntary disclosures are reported under the Streamlined Energy & Carbon Reporting Statement (‘SECR’).
Strategic Report
Aberforth Smaller Companies Trust plc 19
1
CMC Markets
42,997
3.1 5.1
Financial derivatives trading platform
2
Jupiter Fund Management
41,990
3.0 5.0
Investment manager
3
Vesuvius
38,917
2.8 4.0
Metal flow engineering
4
ZIGUP
38,403
2.8 4.4
Van rental
5
Marstons
37,766
2.7 10.1
Pub operator
6
Wilmington Group
36,789
2.6 13.9
Business information and training
7
Galliford Try Holdings
36,255
2.6 6.9
Building and infrastructure contractor
8
Senior
35,830
2.6 4.4
Aerospace and automotive engineering
9
Rathbones Group
35,690
2.6 2.0
Wealth management
10
Morgan Advanced Materials
33,367
2.4 5.5
Manufacturer of carbon and ceramic materials
Top Ten Investments
378,004
27.2
11
Ashmore Group
32,968
2.3 2.6
Investment manager
12
MONY Group
31,032
2.2 3.2
Price comparison websites
13
NCC Group
30,230
2.1 6.9
IT security
14
C&C Group
29,135
2.1 5.8
Brewer and drinks distributor
15
Workspace Group
28,892
2.1 3.8
Property - rental to small businesses
16
Mitchells & Butlers
27,145
2.0 1.7
Operator of restaurants, pubs and bars
17
Capital
26,185
1.9 10.2
Rental of drilling equipment
18
Rank Group
26,144
1.9 5.6
Multi-channel gaming operator
19
Crest Nicholson
25,004
1.8 6.8
Housebuilding
20
Smiths News
24,996
1.8 13.4
Newspaper distribution
Top Twenty Investments
659,735
47.4
21
Ecora Resources
24,600
1.8 8.6
Natural resources royalties
22
Bodycote
24,406
1.7 2.0
Engineering - heat treatment
23
XP Power
23,984
1.7 9.5
Power controls
24
Foxtons Group
23,460
1.7 13.4
Estate agent
25
Conduit Holdings
22,257
1.6 3.5
Bermuda based (re)insurer
26
Sabre Insurance Group
22,221
1.6 6.9
Car insurance
27
FirstGroup
21,762
1.6 2.0
Bus and rail operator
28
Halfords Group
21,382
1.5 6.9
Automotive and cycling products retailer
29
DFS Furniture
20,277
1.5 4.9
Furniture retailer
30
Hilton Food Group
20,239
1.5 4.5
Food manufacturer
Top Thirty Investments
884,323
63.6
Other Investments (48)1
573,548
41.2
Total Investments
1,457,871
104.8
Net Current Assets/(Creditors) (66,155)
(4.8)
Total Net Assets
1,391,716
100.0
Investments are in Ordinary Shares unless otherwise stated.
1 In addition to the 25 portfolio holdings of 3% or more of the investee company’s share capital disclosed in the top thirty
table above, which were valued at £742m, the Company’s other investments included 35 other portfolio holdings of 3% or
more, which were valued at £416m.
Thirty Largest Investments
As at 31 December 2025
% of
Value % of Total Company
No. Company £’000 Net Assets Held1 Business Activity
20
Strategic Report
Aberforth Smaller Companies Trust plc
Software and Computer Services
61,262
4.3
4.1
MONY Group
31,032
2.2
NCC Group
30,230
2.1
Technology Hardware and Equipment
13,546
1.0
0.4
TT Electronics
13,546
1.0
Telecommunications Service Providers
17,175
1.2
1.4
Gamma Communications
17,175
1.2
Health Care Providers
–
–
0.4
Medical Equipment and Services
–
–
0.2
Pharmaceuticals and Biotechnology
–
–
2.3
Banks
12,748
0.9
3.2
Close Brothers Group
12,748
0.9
Finance and Credit Services
–
–
2.2
Investment Banking and Brokerage Services
187,514
13.5
12.1
Ashmore Group
32,968
2.3
City of London Investment Group
14,267
1.1
CMC Markets
42,997
3.1
Jupiter Fund Management
41,990
3.0
Rathbones Group
35,690
2.6
Brooks Macdonald Group
19,602
1.4
Life Insurance
4,749
0.3
1.7
Hansard Global
4,749
0.3
Non-life Insurance
44,478
3.2
1.5
Conduit Holdings
22,257
1.6
Sabre Insurance Group
22,221
1.6
Real Estate Investment and Services
38,515
2.8
3.8
Foxtons Group
23,460
1.7
Savills
15,055
1.1
Real Estate Investment Trusts
47,045
3.4
8.2
Helical
18,153
1.3
Workspace Group
28,892
2.1
Automobiles and Parts
–
–
1.0
Consumer Services
15,896
1.1
0.1
RM
15,896
1.1
Household Goods and Home Construction
45,184
3.2
1.5
Crest Nicholson
25,004
1.8
MJ Gleeson
20,180
1.4
Leisure Goods
1,240
0.1
0.3
Videndum
1,240
0.1
Personal Goods
8,390
0.6
1.0
Watches of Switzerland Group
8,390
0.6
Media
69,815
5.0
1.5
Centaur Media
7,549
0.5
Reach
16,619
1.2
S4 Capital
6,090
0.4
STV Group
2,768
0.3
Wilmington Group
36,789
2.6
Retailers
92,078
6.6
5.8
Card Factory
18,422
1.3
DFS Furniture
20,277
1.5
Halfords Group
21,382
1.5
Headlam Group
4,857
0.3
Pets at Home Group
17,725
1.3
Topps Tiles
9,415
0.7
Value % of Total % of DNSCI
Security £’000 Net Assets (XIC)1
Investment Portfolio
As at 31 December 2025
Strategic Report
Aberforth Smaller Companies Trust plc 21
Investment Portfolio (continued)
As at 31 December 2025
Travel and Leisure
160,405
11.5
6.5
Hostelworld Group
15,336
1.1
Marstons
37,766
2.7
Mitchells & Butlers
27,145
2.0
Mobico Group
7,529
0.5
Rank Group
26,144
1.9
Hollywood Bowl
17,332
1.2
Domino's Pizza Group
18,339
1.3
Wetherspoon (JD)
10,814
0.8
Beverages
29,135
2.1
0.7
C&C Group
29,135
2.1
Food Producers
20,239
1.5
4.7
Hilton Food Group
20,239
1.5
Personal Care, Drug and Grocery Stores
16,237
1.3
3.0
McBride
1,194
0.2
Greggs
15,043
1.1
Construction and Materials
85,778
6.2
6.0
Eurocell
17,459
1.3
Forterra
17,194
1.2
Galliford Try Holdings
36,255
2.6
Severfield
3,946
0.3
Breedon Group
10,924
0.8
Aerospace and Defense
38,143
2.8
2.8
Avon Technologies
2,313
0.2
Senior
35,830
2.6
Electronic and Electrical Equipment
43,235
3.1
1.9
Dialight
19,251
1.4
XP Power
23,984
1.7
General Industrials
11,375
0.9
1.9
Macfarlane Group
11,375
0.9
Industrial Engineering
119,972
8.6
1.3
Bodycote
24,406
1.7
Castings
14,701
1.1
Morgan Advanced Materials
33,367
2.4
Vesuvius
38,917
2.8
XAAR
8,581
0.6
Industrial Support Services
80,637
5.7
6.2
PageGroup
17,295
1.2
PayPoint
11,157
0.8
Robert Walters
8,912
0.6
SIG
7,431
0.5
Smiths News
24,996
1.8
Speedy Hire
10,846
0.8
Industrial Transportation
80,214
5.8
2.2
FirstGroup
21,762
1.6
Fisher (James) & Sons
11,828
0.8
VP
8,221
0.6
ZIGUP
38,403
2.8
Industrial Metals and Mining
62,134
4.5
3.2
Capital
26,185
1.9
Ecora Resources
24,600
1.8
Kenmare Resources
11,349
0.8
Precious Metals and Mining
–
–
0.6
Chemicals
–
–
1.8
Value % of Total % of DNSCI
Security £’000 Net Assets (XIC)1
22
Strategic Report
Aberforth Smaller Companies Trust plc
Oil, Gas and Coal
50,732
3.6
2.2
EnQuest
20,141
1.4
Pharos Energy
10,223
0.7
Ashtead Technology Holdings
9,438
0.7
Serica Energy
10,930
0.8
Alternative Energy
–
–
0.3
Electricity
–
–
0.6
Gas, Water and Multi-utilities
–
–
1.4
Portfolio Total
1,457,871
104.8
100.0
Net Current Assets/(Creditors)
(66,155)
(4.8)
Total Net Assets
1,391,716
100.0
1 Reflects the rebalanced index as at 1 January 2026
Investment Portfolio (continued)
As at 31 December 2025
Value % of Total % of DNSCI
Security £’000 Net Assets (XIC)1
Strategic Report
Aberforth Smaller Companies Trust plc 23
31 December 2024 31 December 2025
DNSCI DNSCI
Portfolio (XIC) Portfolio (XIC)2
No. of Valuation Weight Weight No. of Valuation Weight Weight
Index Classification Companies £’000 % % Companies £’000 % %
Portfolio Information
FTSE Industry Classification Exposure Analysis
FTSE Index Classification Exposure Analysis
31 December 2024 31 December 2025
Net Net
Portfolio Portfolio Purchases/ Appreciation/ Portfolio Portfolio DNSCI (XIC)2
Weight Valuation (Sales)1 (Depreciation) Valuation Weight Weight
Sector
% £’000 £’000 £’000 £’000 % %
Technology
4
63,989
11,041
(221)
74,809
5
5
Telecommunications
2
32,603
(32,099)
16,671
17,175
1
1
Health care
–
–
–
–
–
–
3
Financials
19
277,117
(91,708)
64,080
249,489
17
21
Real Estate
4
66,374
25,400
(6,214)
85,560
6
12
Consumer Discretionary
28
414,786
21,840
(43,618)
393,008
27
18
Consumer Staples
6
89,789
(29,900)
5,723
65,612
5
8
Industrials
32
486,315
(34,470)
7,508
459,353
32
22
Basic Materials
3
40,285
7,765
14,083
62,133
4
6
Energy
2
26,046
30,511
(5,825)
50,732
3
2
Utilities
–
–
–
–
–
–
2
100
1,497,304
(91,620)
52,187
1,457,871
100
100
FTSE 100 – – – – – – – –
FTSE 250 26
673,440
45 79 30 738,555 50 83
FTSE SmallCap 42
658,138
44 15 41 607,930 42 12
FTSE Fledgling 5 29,216 2
– 2 12,298 1 –
Other 6
136,510
9
6 5 99,088 7 5
Total 79 1,497,304 100 100 78 1,457,871 100 100
1 Includes transaction costs and effect of sector reclassification. 2 Reflects the rebalanced index as at 1 January 2026.
Summary of Material Investment Transactions for the year ended 31 December 2025
Cost Proceeds
Purchases £’000 Sales £’000
Pets at Home Group
20,883
Domino's Pizza Group
20,032
Gamma Communications
19,208
Brooks Macdonald Group
19,047
Ashmore Group
18,628
Hollywood Bowl
15,571
Greggs
15,158
Savills
14,566
Workspace Group
12,673
Breedon Group
11,684
Ashtead Technology Holdings
10,767
Serica Energy
10,479
MJ Gleeson
10,405
MONY Group
10,324
Wetherspoon (JD)
9,838
Hilton Food Group
9,272
Forterra
8,785
Crest Nicholson
7,847
PageGroup
7,294
Watches of Switzerland Group
6,656
Other Purchases
110,319
Total Purchases (incl. transaction costs)
369,436
Just Group
56,170
Bakkavor Group
52,161
Zegona Communications
51,307
International Personal Finance
39,275
TI Fluid Systems
38,114
Quilter
34,475
Dowlais Group
30,281
Avon Technologies
29,809
Ricardo
25,635
De La Rue
24,986
Galliford Try Holdings
12,690
National World
10,813
Close Brothers Group
9,212
Rank Group
8,922
Jupiter Fund Management
8,475
FirstGroup
6,755
Empiric Student Property
6,448
McBride
5,546
On The Beach Group
4,637
TT Electronics
4,444
Other Sales
901
Total Sale Proceeds (incl. transaction costs)
461,056
24
Strategic Report
Aberforth Smaller Companies Trust plc
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 DNSCI (XIC). At 1 January 2026 (the date of the last annual index rebalancing),
the index included 352 companies, with an aggregate market capitalisation of £180 billion. Its upper market
capitalisation limit was £2.5 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
around 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) or where an AIM quoted company has acquired an existing holding in
the Company’s portfolio with part of the consideration being shares of the acquiring company (so as to avoid being a
forced seller). 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 DNSCI (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 DNSCI (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 on an annual basis. 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.
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.
Strategic Report
Aberforth Smaller Companies Trust plc 25
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 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 30 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 in respect of 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 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. The continuation vote was last put to
Shareholders at the 2023 Annual General Meeting and was resoundingly supported. A resolution for the continuation of
the Company is being put to Shareholders at the Annual General Meeting to be held on 5 March 2026.
Enhancing value – In seeking to enhance value for Shareholders over the long term, the Board has a range of capital allocation
options. It has 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 to June 2026 and the Directors are considering the
refinancing of the facility for a further three years to June 2029. As described in the Chairman's Statement, part of it has been
drawn down to take advantage of attractive investment valuations. During the year, 4,082,000 shares were bought back and
cancelled at a total cost of £60.2m, adding value for Shareholders remaining invested in the Company. In addition, the Board
remains committed to a progressive dividend policy, as reflected in the dividends it decided upon and 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 – 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 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
16 to 18.
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.
Directors’ Duty to Promote the Success of the Company
26
Strategic Report
Aberforth Smaller Companies Trust plc
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; financial reporting; and core objectives.
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 37. The Audit Committee Report (pages 38 to 40) 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 including cyber
security. This review is also recorded in the Company's risk documentation.
Emerging risks are those that are still evolving, and are not fully understood, but that could have a future meaningful impact on
the Company. The Board regularly reviews them and, during the year, it added to the matrix the emerging risks related to various
economic and geopolitical market events and to uses of Artificial Intelligence. The Board monitors these risks and how the
Managers integrate them into their investment decision making. The Board also monitored the current corporate development
activity in the investment company sector and regularly considered implications for the Company and Shareholders.
Principal risks are those risks in the matrix that have the highest ratings based on likelihood and impact. 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 extent to which the principal risks
change during the year and the level of monitoring required, each principal risk has been categorised as either dynamic risk,
requiring detailed monitoring as it can change regularly, or stable risk.
Principal Risks
Investment strategy/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
investment strategy and policy, investment style, stock
selection, liquidity and market risk factors (see Market risk
above 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 risks.
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 factors
include geo-political and economic conditions. 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 including the
potential effects of climate change (see pages 16 to 18).
This remained a dynamic risk during the year, in which the
Managers reported on market risks including economic
and geopolitical issues as addressed in the Managers’
Report.
Strategic Report
Aberforth Smaller Companies Trust plc 27
Principal Risks
Share price discount
Risk–this is an investor relations risk
Mitigation
Investment trust shares tend to trade at discounts to their
underlying net asset values, but a significant share price
discount, related volatility, or a discount significantly
beyond peers’, could reduce shareholder returns and
confidence.
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
Tactical gearing can negatively affect investment
performance. 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 risk of an event damaging the Company's reputation
and shareholder demand. The reputation of the Company
is important in maintaining the confidence of
shareholders.
The Board and the Managers regularly 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
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.
Failure to comply with applicable legal, tax 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.
28
Strategic Report
Aberforth Smaller Companies Trust plc
The Directors have assessed the viability of the Company over the five years to December 2030, taking account of the
Company’s position, its investment strategy, and the potential impact of the principal risks detailed on pages 26 and 27.
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 vote on the continuation
of the Company every three years with the next vote at the AGM on 5 March 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 59).
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 triennial
continuation vote was considered including the outcome of the last vote in 2023, which was passed overwhelmingly. The
Directors determined that the five years to December 2030 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 36.
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 16 to 18.
Strategic Report
The Strategic Report, contained on pages 1 to 28, 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 29 January 2026 and signed on its behalf by:
Richard Davidson,
Chairman
Viability Statement
Governance Report
Aberforth Smaller Companies Trust plc 29
2
Board of Directors
Governance Report
Richard Davidson, Chairman
Appointed: 26 January 2019
Shareholding in the Company: 37,000 Ordinary Shares
Richard is also Chair of MIGO Opportunities Trust plc. 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.
In more recent years, Richard was also the Chair of Foresight Sustainable Forestry Company plc and of the University of
Edinburgh’s Investment Committee. Since 2003, Richard has also been heavily involved in forestry investment and
management.
Jaz Bains
Appointed: 10 October 2022
Shareholding in the Company: 1,030 Ordinary Shares and is a member of the Audit Committee
Jaz has worked in the energy sector for over 30 years. In 2013 he helped set up and launch The Renewables Infrastructure
Group (‘TRIG’), a FTSE 250 listed investment company, and until January 2025 he was responsible for leading the
Operations Manager function of TRIG. He has also been, until 2025, a non-executive director and senior independent
director for the Jupiter Green Investment Trust Plc.
Patricia Dimond, Senior Independent Director (SID)
Appointed: 3 March 2022
Shareholding in the Company: 10,008 Ordinary Shares and chairs the Audit Committee
Patricia is a non-executive director of Hilton Food Group plc and of Foresight VCT Plc. She is a trustee of the Booker Prize
Foundation and until 2025 was a trustee of 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 was chair of the remuneration committee. She stood
down as a director of Secure Trust Bank PLC on 31 December 2024. 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 a non-executive director of JPMorgan
Claverhouse Investment Trust plc and until 2024 was a non-executive director of Artemis Alpha Trust plc.
Martin Warner
Appointed: 1 March 2018
Shareholding in the Company: 10,000 Ordinary Shares and is a member of the Audit Committee
Martin co-founded Michelmersh Brick Holdings plc in 1997 and served as Chief Executive and subsequently, from 2017
until 2024, as non-executive Chairman. Martin is a Fellow of the Royal Institute of Chartered Surveyors and until 2024
was Chairman of the Brick Development Association.
30
Governance Report
Aberforth Smaller Companies Trust plc
Directors’ Report
The Directors submit their Annual Report and Financial Statements for the year ended 31 December 2025.
Directors
The Directors of the Company during the financial year are listed on page 42. 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 2025 amounted to a profit of £96,235,000
(2024: profit of £151,591,000). The Net Asset Value per Ordinary Share at 31 December 2025 was 1,745.26p (2024:
1,666.95p).
Your Board is pleased to declare a final dividend of 32.50p and a special dividend of 12.00p (total of £35,485,000), which
produces total dividends for the year of 58.80p (total of £47,116,000). The final and special dividends, subject to Shareholder
approval, will be paid on 9 March 2026 to Shareholders on the register at the close of business on 6 February 2026.
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 2025, funds under management were £2.1 billion, of which 78% was represented by investment trusts,
8% by a unit trust and 14% 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 DNSCI
(XIC) benchmark. Consistent with this, capacity at 31 December 2025 was circa £730 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, as set out on page 32.
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 £9,842,000 in the year ended 31 December
2025 (2024: £9,888,000).
The secretarial fee amounted to £119,000 (excluding VAT) during 2025 (2024: £114,800). It is adjusted annually in line
with the Consumer Price 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. Lintstock Limited facilitated an external review of the Managers during the year, with
each Director completing a Managers’ Evaluation questionnaire. The Board then considered the results of the
questionnaire and discussed the following matters, amongst others, in its review:
•
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.
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.
Governance Report
Aberforth Smaller Companies Trust plc 31
Directors’ Report
Consumer Duty
The Company is not directly subject to the FCA's Consumer Duty regulations. However, Aberforth, as ASCoT's FCA
authorised Alternative Investment Fund Manager, is subject to the Consumer Duty, and, in respect of its role with the
Company, reports certain data about the Company to product distributors via the European MiFID Template reporting
standard.
In 2024 the passing of the Packaged Retail and Insurance-based Investment Products (Retail Disclosure) (Amendment)
Regulations 2024, meant that the PRIIPS regulation does not apply to shares in a closed-ended investment company
that is UK-listed. In December 2025 the FCA published new rules for Consumer Composite Investments (CCI), which will
replace the previous rules for consumer facing disclosures. The Company and Managers are preparing for the adoption
of the new disclosures before the implementation date in June 2027.
During the year, Aberforth provided the Board with regular compliance updates, its value assessment report and
supporting papers. The Board also assessed the Company’s relevant costs and services. The Board considered and is
satisfied with Aberforth’s value assessment report. Additionally, in its monitoring of consumer outcomes to ensure their
consistency with Consumer Duty, the Board is satisfied that the value provided to retail investors is fair and is in line
with the Company’s stated objectives and investment philosophy.
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:
• 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.
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 0.0095% of the net
assets of the Company, being £162,000 for the year ended 31 December 2025 (2024: £145,000) 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 2025, the Company’s authorised share capital consisted of 333,299,254 Ordinary Shares of 1p of which
79,742,605 were issued and fully paid. During the year, 4,082,000 shares (5.1% of the Company’s issued share capital
with a nominal value of £40,820) were bought back and cancelled at a total cost of £60,245,000. 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 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.
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. The triennial continuation vote was considered including the outcome
of the last vote in 2023, which was passed overwhelmingly, and the prospects for passing the continuation vote to be
held on 5 March 2026.
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.
32
Governance Report
Aberforth Smaller Companies Trust plc
Directors’ Report
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.
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
2025 and 29 January 2026. The total number of voting rights amounted to 79,742,605 at 31 December 2025. Since
31 December 2025, 323,500 shares have been bought back and cancelled and therefore the total number of voting
rights at 29 January 2026 amounted to 79,419,105.
Notified interests
Percentage
of Voting
Rights Held
Rathbones Investment Management Ltd
11.0%
Evelyn Partners
5.1%
RBC Europe Limited 5.0%
Allspring Global Investments Holdings, LLC
4.9%
IntegraFin Holdings plc (Transact Nominees)
3.0%
Managers' Interests
The Managers' interests are further aligned with those of the Company through their significant personal holdings of the
Company's Ordinary Shares. Interests of the partners including their connected parties and investment team staff in the
voting rights of the Company as at 31 December 2025 totalled circa 590,000 Ordinary Shares, representing 0.7% of the
Ordinary share capital.
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 5 March 2026. Further details on the continuation vote are included in the
Chairman's Statement on pages 3 and 4, 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.
Annual General Meeting
The AGM will be held on 5 March 2026 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. The Notice of the Meeting and explanatory notes
are set out on pages 64 and 65. 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 2027. 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 31 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.
Governance Report
Aberforth Smaller Companies Trust plc 33
Directors’ Report
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.
•
The Company’s capital structure and voting rights are summarised on pages 31 and 32.
•
Details of the substantial shareholders in the Company are listed above.
•
The rules concerning the appointment and replacement of Directors are contained in the Company’s Articles of
Association and are covered on pages 34 and 35.
•
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; and 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.
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 2025, 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
29 January 2026
34
Governance Report
Aberforth Smaller Companies Trust plc
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 Corporate Governance Code (“the
AIC Code”) issued in 2024. 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 2025, 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 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 30 to 33.
Compliance
Throughout the year ended 31 December 2025 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 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 2025, the Board comprised five 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 of the Company. 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.
Governance Report
Aberforth Smaller Companies Trust plc 35
Annual Plan
The following highlights various additional matters considered by the Board during the past year.
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. Richard Davidson attended each of the three Audit Committee meetings held during the year.
There has been no change to the Directors between 31 December 2025 and 29 January 2026.
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 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.
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 29.
Corporate Governance Report
Board
Audit Committee
Director Eligible to attend Attended Eligible to attend Attended
Richard Davidson, Chairman 5 5 – n/a
Jaz Bains 5 5 3 3
Patricia Dimond, Chair of the Audit Committee 5 5 3 3
Victoria Stewart 5 5 3 3
Martin Warner 5 5 3 3
January
March/April
July
October
Consider Final
Dividend
Approval of the
Annual Report
Review of
Gearing
Review of
Directors’ Fees
Distribution
Strategy, including
Managers Report
on activities
Consider Interim
Dividend
Approval of Half
Yearly Report
Annual Strategy
Review
Internal Control
and Risk Review
Corporate
Governance Review
Board &
Committee
Evaluation
Review Managers’
continued
appointment and
remuneration
Detailed review of
Investment Trust
Peer Group
Shareholder
Matters and
Communication,
including Annual
General Meeting
Stewardship and
ESG matters,
including the
Managers activities
Review of
significant interests
The Company meets the diversity targets set out in the FCA's Listing Rules as at 31 December 2025 and there have been no
changes since that date that have affected the Company’s ability to meet them. In respect of gender representation, the
FCA's Listing Rules target that at least 40% of individuals on a board are women and at least one of the senior board
positions is held by a woman. The FCA's Listing Rules also target that at least one individual on a board is from a minority
ethnic background.
The Company is externally managed and does not have executive functions and therefore does not have all of the senior
positions on its Board referenced in the final column of the tables above; specifically it does not have a CEO or a CFO. The
position of chair of the Board is held by a man and the position of Senior Independent Director is held by a woman. Patricia
Dimond, the Senior Independent Director, is also chair of the Audit Committee, which the Company considers to be a senior
role in an investment trust context.
As the Company has no executive directors or management, it has not provided diversity information on executive
management. Minority Ethnic includes categories for: Asian/Asian British; Black/African/Caribbean/Black British; Mixed/
Multiple Ethnic Groups; and Other Ethnic Groups.
The diversity data included above were obtained from individual Directors by self-disclosure using a survey tool.
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, culture and interaction with the Managers. The Board appointed Lintstock Limited to
facilitate an external independent review of the Board and the Audit Committee conducted by way of an evaluation
questionnaire, the results of which were discussed by the Directors in October 2025, providing valuable feedback for
improving Board effectiveness and highlighting areas for further development. The appraisal of the Chairman of the Board
was led by the Senior Independent Director.
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.
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 2025 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 individual Director took such advice
during the financial year under review.
36
Governance Report
Aberforth Smaller Companies Trust plc
Corporate Governance Report
Men 3 60.0%
Women 2 40.0%
Number of senior
Board Gender Number of Percentage of positions on the Board
as at 31 December 2025 Board members the Board (CEO, CFO, SID, Chair)
White British or other White
(including minority White groups) 4 80.0%
Minority Ethnic (see below) 1 20.0%
Number of senior
Board Ethnic Background Number of Percentage of positions on the Board
as at 31 December 2025 Board members the Board (CEO, CFO, SID, Chair)
see explanation below
see explanation below
Governance Report
Aberforth Smaller Companies Trust plc 37
Corporate Governance Report
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 38 to 40. The Directors have not identified any significant factors or weaknesses in respect of the Company's internal
control systems.
The Directors are well progressed in considering procedures to support the declaration of the effectiveness of material
controls, as required by provision 34 of the AIC Code, which will be included in the Company’s Annual Report for the year
to 31 December 2026. In 2025, whilst not new, the Board enhanced the Company’s risk matrix to identify material controls
more explicitly. In addition, the risk matrix formatting was adjusted to record material controls for risks beyond the principal
risks, including those related to reporting, data/price-sensitive information, compliance, and technology and cyber. This
includes reviewing the effectiveness of those related material controls. Recognising that many of the Company’s risks and
associated controls are outsourced to third parties, the Company has also enhanced its recording of oversight and assurance
from third parties during the year. During 2026 the Board will continue to consider any further enhancements to the
Company’s documentation and processes required to meet provision 34 of the AIC Code.
Relations with Shareholders
The Board places great importance on communication with Shareholders. Directors of the Company are available to meet
any Shareholder on request. The Managers offer to 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 in the 'Corporate Information'
section on page 69 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. The results of resolutions put to the AGM will
be available 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.
By Order of the Board
Richard Davidson
Chairman
29 January 2026
Audit Committee Report
The Audit 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 Patricia Dimond, Jaz Bains, Victoria Stewart and Martin Warner. The current members’ biographies can be
found on page 29. 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. A summary of 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 this, 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 the Board’s approach to managing these risks are set out on pages 26 and 27. 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. Further information on risk management and internal control is contained
on page 40. 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
Key Risks of the
Company
Provision of non-
audit services,
including taxation
compliance services
Custodian’s
Controls Report
update
Investment Trust
Status
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
Key Risks of the
Company
Investment Trust
Status
Basis of
Management Fee
allocation (every
three years)
Committee’s
Terms of Reference
Corporate
Governance
Compliance
Cyber Security
Measures (Aberforth
Partners)
Investment Trust
Status
Evaluation of the
Committee
Audit Committee
Annual Plan
External Auditor
Plan, together with
the Terms of
Engagement and
Audit Fees
Internal Controls
Review including
reports from the
Managers and other
third parties
Review of new
developments and
training for the
Audit Committee
Meetings to be
called if required
38 Governance Report
Aberforth Smaller Companies Trust plc
Audit Committee Report
Matters Considered and Action Taken by the Committee
Significant Issue
How the issue was addressed
Ownership and valuation of
the investment portfolio as
at 31 December 2025
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 external auditor verifies 100% of the
portfolio for ownership and valuation of investments as part of its audit.
Revenue recognition including
dividend completeness and the
accounting treatment of
special dividends
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.
Investment Trust Status
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 assessed by the external auditor as part of the
audit process.
Calculation of
management fees
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.
Meetings
Typically three meetings are held each year as highlighted in the Audit Committee Annual Plan. 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 2025 the Committee focused on the areas described below.
Governance Report
Aberforth Smaller Companies Trust plc 39
Financial Reporting
In July 2025, 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 2026, 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 2025. 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 Committee 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.
Going Concern and Viability
The Committee received reports on going concern from the Secretaries in July 2025 and January 2026. 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 vote on the
continuation of the Company every three years with the next such vote on 5 March 2026.
The Committee assessed the viability of the Company and 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 28. In January 2026, the Committee
reviewed a series of stress tests that considered the impact of severe market downturn scenarios on Shareholders’
funds, the borrowing facilities and investment income, and also the impact of losing investment trust status. The
outcome of this review led the Committee to recommend the Viability Statement to the Board.
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.
40
Governance Report
Aberforth Smaller Companies Trust plc
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. During the year the matrix was reassessed to ensure continued focus on the main risks for
the Company. In October 2025 the risks and controls were addressed in more detail. The Committee enhanced and
updated the content of the matrix during the year, including: monitoring economic and political developments in
market risks; updating risk ratings where appropriate; adding further content in anticipation of the new declaration
requirement on the effectiveness of material controls; moving certain risks from emerging to emerged but not
principal risks; and reviewing and adding additional emerging risks. The Committee believes the matrix continues to
reflect accurately the Company’s principal risks. These risks are detailed on pages 26 and 27.
In October 2025 the Committee received the Managers’ report on internal controls, including the assurance report
issued by Blick Rothenberg Audit LLP (Blick Rothenberg) on the nature and effectiveness of the control framework
that has been established by the Managers. A representative of Blick Rothenberg attended the meeting. In addition,
the Committee received internal control reports from the Custodian, Northern Trust, and from the Registrar, MUFG
Corporate Markets. 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 2025, the Committee received a report from
Aberforth Partners and their external service provider 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 on 3 March 2022, following a formal tender
process and this appointment has been renewed at each subsequent AGM. The Committee reviews the
reappointment of the auditor every year. The rotation of the audit partner is required every five years and Richard
Sutherland was first appointed audit partner for the 2023 audit. Johnston Carmichael LLP presented its audit plan to
the Committee in October 2025 in advance of the 2025 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.
The fees amounted to £38,000, excluding VAT, for the year (2024: £36,000). 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 will be conducted no later than 2032.
Auditor
Following the completion of the audit in January 2026, the Committee reviewed the auditor’s effectiveness. Audit
quality was assessed in a framework of various criteria, including planning, challenge and resolution of issues,
judgements and findings, and working relationships with the Secretaries. 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
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.
Audit Committee Report
Matters Considered and Action Taken by the Committee
Committee Evaluation
A review of the Committee’s effectiveness, using an external online evaluation questionnaire, was facilitated by Lintstock
Limited during the year. The outcome was positive with no significant concerns expressed. The Committee has agreed
to utilise external facilitators every three years.
Patricia Dimond
Audit Committee Chair
29 January 2026
Governance Report
Aberforth Smaller Companies Trust plc 41
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 2023. 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 2026 Annual General Meeting 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. Any views expressed by Shareholders to the Company in respect of the Directors’ remuneration policy
during the year will be taken into consideration when the Company's remuneration policy is reviewed and Directors' fees
are set. 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
£250,000 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 2025 and year ending 31
December 2026.
The increase in Directors' fees for 2026 followed an analysis of comparable investment trust companies and reflected
the Company's policy on Directors' Remuneration.
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.
Annual Fees
Annual Fees
2026
2025
£
£
Chairman of the Company
51,900
50,000
Director and Chair of the Audit Committee
43,600
42,000
Director and Member of the Audit Committee
35,300
34,000
42
Governance Report
Aberforth Smaller Companies Trust plc
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 45.
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.
Directors’ Fees (Audited)
The emoluments of the Directors who served during the year were as follows.
Date of Date of election/
Director Appointment re-election
Richard Davidson, Chairman 26 January 2019 AGM 2026
Jaz Bains 10 October 2022 AGM 2026
Patricia Dimond, Chair of the Audit Committee and SID 3 March 2022 AGM 2026
Victoria Stewart 1 September 2020 AGM 2026
Martin Warner 1 March 2018 AGM 2026
The following table shows the remuneration of the Directors in relation to distributions to Shareholders by way of dividends
and share buy-backs.
Absolute
2025
2024
change
£’000
£’000
£’000
Total Directors’ remuneration
194
174
20
Total dividends in respect of that year
47,116
41,620
5,496
Total share buy-back consideration
60,245
8,371
51,874
Richard Davidson, Chairman 50,000 44,250
Jaz Bains 34,000 31,250
Patricia Dimond, Chair of the Audit Committee and SID 42,000 36,600
Victoria Stewart 34,000 31,250
Martin Warner 34,000 31,059
194,000 174,409
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.
Fees Fees
(Total Emoluments) (Total Emoluments)
2025 2024
Director £ £
The annual percentage change in Directors’ remuneration is provided in the table below.
2025
2024
2023
2022
2021
Chairman of the Company 13.0%
6.7%
5.5%
5.0%
0.0%
Director and Chair of the Audit Committee 14.8%
6.7%
5.5%
5.0%
0.0%
Director and Member of the Audit Committee 8.8%
6.7%
5.5%
5.0%
0.0%
The Company does not have any employees and hence no comparisons are given between Directors’ and employees’ pay
increases.
Governance Report
Aberforth Smaller Companies Trust plc 43
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 2025 and their interests in the Shares of the
Company as at that date and 1 January 2025 were as follows.
Ordinary Shares
Directors Nature of Interest
31 December 2025
1 January 2025
Richard Davidson, Chairman Beneficial
37,000
37,000
Jaz Bains Beneficial
1,030
1,030
Patricia Dimond Beneficial
10,008
10,008
Victoria Stewart Beneficial
4,200
4,200
Martin Warner Beneficial
–
–
Non Beneficial
10,000
10,000
There has been no change in the beneficial or non-beneficial holdings of the Directors between 31 December 2025 and
29 January 2026. 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. During the year
no Shareholders have commented in respect of the remuneration report or policy. At the last Annual General Meeting held on
6 March 2025, Shareholders, on a poll, passed the resolution to approve the Directors’ Remuneration Report: of the proxy
votes cast, 47,812,027 were cast in favour, 56,659 were cast against and 25,864 votes were withheld. An ordinary resolution
to approve the remuneration policy is put to members every three years. At the Annual General Meeting held on 2 March 2023,
Shareholders, on a poll, passed the resolution to approve the Directors’ Remuneration Policy: of the proxy votes cast,
53,799,099 votes were cast in favour, 713,699 were cast against and 19,861 votes were withheld.
Share Price Performance
This graph compares the
performance of the Company’s
share price with the Deutsche
Numis Smaller Companies
Index (excluding Investment
Companies), on a total return
basis (assuming all dividends
reinvested) since 31 December
2015. This index has been
selected for the purposes of
comparing the Company’s
share price performance as it
has been the Company’s
benchmark since inception.
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 2025:
(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
29 January 2026
Total return performance since 31 December 2015
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
85%
70%
55%
40%
25%
10%
-5%
ASCoT Share Price Benchmark
Note: For further information on the above graph, please refer to the Historical Total Returns tables on page 7.
44
Governance Report
Aberforth Smaller Companies Trust plc
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:
•
select suitable accounting policies and then apply them consistently;
•
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.
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
29 January 2026
Financial Report
Aberforth Smaller Companies Trust plc 45
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ABERFORTH SMALLER
COMPANIES TRUST PLC
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 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”), NatWest Trustee & Depositary Services Limited (the “Depositary”), The Northern
Trust Company (the “Custodian”) and MUFG Corporate Markets (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.
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 2025, which comprise the Income Statement, the Reconciliation of Movements in Shareholders’ Funds, the Balance Sheet,
the Cash Flow Statement and notes to the financial statements, 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 the Company’s affairs as at 31 December 2025 and of its 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.
46
Financial Report
Aberforth Smaller Companies Trust plc
Key audit matters
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.
How our audit addressed the key audit matters and our
conclusions
Valuation of listed investments
As per page 39 (Report of the Audit Committee), page 55
(Accounting Policies) and Note 10.
The valuation of the portfolio at 31 December 2025 was
£1,458m (2024: £1,497m) and comprised entirely of listed
equity investments.
As this is the largest component of the Company’s Balance
Sheet and a key driver of the Company’s net assets and
total return, the valuation of the investments has been
designated as a key audit matter, being one of the most
significant assessed risks of material misstatement due to
error.
There is a further risk that investments held at fair value
may not be actively traded and the quoted prices may not
be reflective of their fair value.
Revenue recognition, including allocation of special
dividends as revenue or capital returns
As per page 39 (Report of the Audit Committee), page 55
(Accounting Policies) and Note 3.
Investment income recognised up to 31 December 2025
amounted to £59.4m (2024: £54.5m), predominantly
derived from dividend receipts on listed securities.
Revenue-based performance metrics are often one of the
key performance indicators 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.
There is a risk that revenue is incomplete, did not occur or
is 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 error.
Additionally, there is a further fraud risk of incorrect
allocation of special dividends as revenue or capital
returns, as judgement is required in determining their
allocation within the Income Statement.
We obtained and assessed controls reports provided by
The Northern Trust Company (as Custodian) and Aberforth
Partners LLP (as Administrator) to evaluate the design of
the process and implementation of key controls.
We compared market prices applied to all investments held
at 31 December 2025 to an independent third-party source
and recalculated the investment valuations.
We obtained average trading volumes from an
independent third-party source for all listed investments
held at year end and assessed their liquidity. Where trading
volumes indicated lower levels of liquidity, we obtained
management’s active market assessment to assess
whether the year-end fair value was appropriate.
From our completion of these procedures, we identified no
material misstatements in relation to the valuation of the
investments.
We obtained and assessed the controls report provided by
Aberforth Partners LLP (as Administrator) to evaluate the
design of the process and implementation of key controls.
We considered whether income was recognised and
disclosed 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 dividends received to bank
statements.
We assessed the completeness of the special dividend
population and determined whether special dividends
recognised were revenue or capital in nature with
reference to the underlying commercial circumstances of
the investee companies’ dividend payment.
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.
Financial Report
Aberforth Smaller Companies Trust plc 47
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
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. We determined the measurement
percentage to be commensurate with the risk and complexity of the audit and the Company’s listed status.
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, our past experience of the audit
that indicates a lower risk of material misstatements. Based on our judgement of these factors, we have
set performance materiality at 75% of our overall financial statement materiality.
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.
Specifically, given the importance of the distinction between revenue and capital for the Company, we also
applied a separate testing threshold for the revenue column of the Income Statement, set as 5% of the net
revenue return on ordinary activities before tax.
We have set a specific materiality in respect of related party transactions and Directors’ remuneration.
We used our judgement in setting these thresholds and considered our past experience of the audit, the
history of misstatements 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.
£13.92m
(2024: £13.97m)
£10.44m
(2024: £10.48m)
£2.61m
(2024: £2.38m)
£0.70m
(2024: £0.70m)
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 the continuation vote and macro-
economic uncertainties;
• Assessing and challenging the forecast cashflows and associated sensitivity modelling used by management in support of their
going concern assessment by reference to supporting documentation, our own understanding of the Company and the economic
environment in which it operates, and the results of other audit work;
• Assessing the accuracy of management’s forecasting by comparing the reliability of past forecasts to actual results;
• Performing arithmetical and consistency checks on management’s base forecast;
• Reviewing the adherence to loan covenants in place based on the forecasts and considered the likelihood of these being breached
in the future via the sensitivity analyses performed;
• Obtaining and recalculating management’s assessment of the Company’s ongoing maintenance of investment trust status;
• Considering management’s evaluation of the likely outcome of the upcoming continuation vote and obtaining evidence to support
their conclusions; 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.
48
Financial Report
Aberforth Smaller Companies Trust plc
Other information
The other information comprises the information included in the Annual Report and Financial Statements other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual
Report and Financial Statements. 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.
Independent Auditor’s Report
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.
Corporate governance statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the entity’s compliance with the provisions of the UK Corporate Governance Code specified for our
review by the Listing Rules.
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 31;
• 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 28;
• The Directors’ statement on fair, balanced and understandable set out on page 44;
• The Directors’ statement on whether it has a reasonable expectation that the Company will be able to continue in operation and
meets its liabilities set out on page 28;
• The Directors’ confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 26;
• The section of the Annual Report that describes the review of the effectiveness of risk management and internal control systems
set out on pages 37 and 38; and
• The section describing the work of the Audit Committee set out on pages 38 to 40.
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.
Financial Report
Aberforth Smaller Companies Trust plc 49
Independent Auditor’s Report
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 44, 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 to which 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;
• Financial Conduct Authority (FCA) listing and Disclosure Guidance and Transparency Rules (DTR);
• The principles of the UK Corporate Governance Code applied by the AIC Corporate Governance Code (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 July 2022;
• The Company’s qualification as an Investment Trust under section 1158 of the Corporation Tax Act 2010; and
• Financial Reporting Standard 102.
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 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. In areas of the financial statements where the
risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk
in relation to:
• Management override of controls
• The allocation of special dividends as revenue or capital returns.
50
Financial Report
Aberforth Smaller Companies Trust plc
Independent Auditor’s Report
Richard Sutherland (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
Statutory Auditor
Edinburgh, United Kingdom
29 January 2026
Audit procedures performed in response to the risks relating to the allocation of special dividends as revenue or capital returns are
set out in the section on key audit matters above, and audit procedures performed in response to the risk of management override
of controls are included below.
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:
• Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any
indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit
fraud or provide an opportunity to commit fraud;
• Performing audit procedures over the risk of management override of controls, including testing of journal entries and other
adjustments for appropriateness, recalculating the investment management fee, evaluating the business rationale of significant
transactions outside the normal course of business and assessing judgements made by management in their calculation of
accounting estimates for potential management bias;
• Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act
2006 and the Listing Rules; and
• Agreement of the financial statement disclosures to supporting documentation.
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 performed 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
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 years. The period of our total uninterrupted engagement
is four years, covering the years ended 31 December 2022 to 31 December 2025.
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.
Financial Report
Aberforth Smaller Companies Trust plc 51
Income Statement
For the year ended 31 December 2025
2025 2024
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Net gains on investments 10 – 54,778 54,778 – 116,364 116,364
Investment income 3 58,557 776 59,333 54,506 – 54,506
Other income 3 66 – 66 118 – 118
Investment management fee 4 (3,691) (6,151) (9,842) (3,708) (6,180) (9,888)
Portfolio transaction costs 5 – (2,591) (2,591) – (2,179) (2,179)
Other expenses 5 (980) – (980) (858) – (858)
Net return before finance costs and tax 53,952 46,812 100,764 50,058 108,005 158,063
Finance costs 6 (1,698) (2,831) (4,529) (2,427) (4,045) (6,472)
Return on ordinary activities before tax 52,254 43,981 96,235 47,631 103,960 151,591
Tax on ordinary activities 7 – – – – – –
Return attributable to equity shareholders 52,254 43,981 96,235 47,631 103,960 151,591
Returns per Ordinary Share 9 64.02p 53.88p 117.90p 56.59p 123.50p 180.09p
The Board declared on 29 January 2026 a final dividend of 32.50p per Ordinary Share and a special dividend of 12.00p per
Ordinary Share. The Board declared on 29 July 2025 an interim dividend of 14.30p 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.
52
Financial Report
Aberforth Smaller Companies Trust plc
Reconciliation of Movements in Shareholders’ Funds
For the year ended 31 December 2025
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 December 2024
838 150 30,469 1,262,006 103,854 1,397,317
Return on ordinary activities after taxation
– – – 43,981 52,254 96,235
Equity dividends paid
8 – – – – (41,591) (41,591)
Purchase of Ordinary Shares
14 (41) 41 (30,469) (29,776) – (60,245)
Balance as at 31 December 2025
797 191 – 1,276,211 114,517 1,391,716
For the year ended 31 December 2024
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 December 2023
844 144 38,840 1,158,046 99,353 1,297,227
Return on ordinary activities after taxation
– – – 103,960 47,631 151,591
Equity dividends paid
8 – – – – (43,130) (43,130)
Purchase of Ordinary Shares
14 (6) 6 (8,371) – – (8,371)
Balance as at 31 December 2024
838 150 30,469 1,262,006 103,854 1,397,317
The accompanying notes form an integral part of this statement.
Financial Report
Aberforth Smaller Companies Trust plc 53
The accompanying notes form an integral part of this statement.
Balance Sheet
As at 31 December 2025
2025 2024
Note £’000 £’000
Fixed assets
Investments at fair value through profit or loss 10 1,457,871 1,497,304
Current assets
Debtors 11 4,010 2,874
Cash at bank 5,141 1,349
9,151 4,223
Creditors (amounts falling due within one year) 12 (75,306) (302)
Net current (liabilities)/assets (66,155) 3,921
TOTAL ASSETS LESS CURRENT LIABILITIES 1,391,716 1,501,225
Creditors (amounts falling due after more than one year) 13 – (103,908)
TOTAL NET ASSETS 1,391,716 1,397,317
CAPITAL AND RESERVES: EQUITY INTERESTS
Called up share capital 14 797 838
Capital redemption reserve 15 191 150
Special reserve 15 – 30,469
Capital reserve 15 1,276,211 1,262,006
Revenue reserve 15 114,517 103,854
TOTAL SHAREHOLDERS’ FUNDS 1,391,716 1,397,317
Net Asset Value per Ordinary Share 16 1,745.26p 1,666.95p
Approved and authorised for issue by the Board of Directors on 29 January 2026 and signed on its behalf by:
Richard Davidson,
Chairman
Company Number: SC126524
Registered in Scotland
54
Financial Report
Aberforth Smaller Companies Trust plc
The accompanying notes form an integral part of this statement.
Cash Flow Statement
For the year ended 31 December 2025
2025 2024
Note £’000 £’000
Operating activities
Net revenue return before finance costs and tax 53,952 50,058
Receipt of special dividends taken to capital 3 776 –
Investment management fee charged to capital 4 (6,151) (6,180)
(Increase) in debtors (1,136) (213)
Increase in other creditors 12 10 8
Net cash inflow from operating activities 47,451 43,673
Investing activities
Purchases of investments (369,470) (307,701)
Sales of investments 461,056 288,596
Cash inflow/(outflow) from investing activities 91,586 (19,105)
Financing activities
Purchases of Ordinary Shares 14 (60,245) (8,371)
Equity dividends paid 8 (41,591) (43,130)
Interest and fees paid 17 (4,409) (6,452)
Gross drawdowns of bank debt facilities (before any costs) 18 95,000 79,000
Gross repayments of bank debt facilities (before any costs) 18 (124,000) (47,000)
Cash (outflow) from financing activities (135,245) (25,953)
Change in cash during the period 3,792 (1,385)
Cash at the start of the period 1,349 2,734
Cash at the end of the period 5,141 1,349
Financial Report
Aberforth Smaller Companies Trust plc 55
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"). 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 31. 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 closing 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.
•
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.
The part of this reserve represented by realised capital profits is available for distribution by way of share buy-backs but not
by way of dividends.
(g) Special reserve
During the year to 31 December 2025 the Special Reserve, which was used to account for the cost of purchasing Ordinary
Shares for cancellation, was exhausted. Following this, the Capital Reserve represented by realised capital profits, is being used.
(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. This reserve is presently not distributable.
(j) Share Capital
This relates to the number of shares in issue. When shares are bought back for cancellation, the nominal value is transferred
to the Capital Redemption Reserve. Share Capital is not distributable.
(k) Taxation
UK corporation tax payable is provided on taxable profits at the current rate and the tax charge includes irrecoverable overseas
tax suffered. 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.
56
Financial Report
Aberforth Smaller Companies Trust plc
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 5, 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 68.
3
Income
Income from investments
UK dividends 53,005 776 53,781 46,924 – 46,924
Overseas dividends 4,234 – 4,234 5,954 – 5,954
Property income distributions 1,318 – 1,318 1,628 – 1,628
58,557 776 59,333 54,506 – 54,506
Other income
Interest income 66 – 66 118 – 118
Total income 58,623 776 59,399 54,624 – 54,624
Overseas dividends relate to investments in companies that are UK quoted and registered overseas. During the year the
Company received special dividends amounting to £1,866,000 (2024: £822,000), of which £776,000 (2024: £nil) were
considered a return of capital by the investee company.
4 Investment Management Fee
Investment management fee 3,691 6,151 9,842 3,708 6,180 9,888
Details of the investment management contract can be found on page 30.
5 Other Expenses and Portfolio transaction costs
The following expenses (including VAT, where applicable) have been charged to revenue.
Directors’ fees (refer to Directors’ Remuneration Report) 194 174
Depositary fee 162 145
FCA and LSE listing fees 148 112
Secretarial services 143 138
Custody and other bank charges 65 70
Registrar fee 60 58
Auditor’s fee – audit of the financial statements 46 43
– for non-audit services – –
AIC fee 25 22
Directors’ and Officers’ liability insurance 13 14
Legal fees 11 6
Other expenses 113 76
980 858
Notes to the Financial Statements
2025 2024
£’000 £’000
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Financial Report
Aberforth Smaller Companies Trust plc 57
7 Taxation
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 52,254 43,981 96,235 47,631 103,960 151,591
Corporation tax at 25% (2024: 25%) 13,064 10,995 24,059 11,908 25,990 37,898
Adjusted for the effects of:
Non-taxable UK dividend income (13,251) (194) (13,445) (11,731) – (11,731)
Non-taxable overseas dividend income (1,059) – (1,059) (1,489) – (1,489)
Expenses not deductible for tax purposes – 648 648 – 545 545
Excess expenses for which no relief has been taken 1,246 2,245 3,491 1,312 2,556 3,868
Non-taxable capital (gains) – (13,694) (13,694) – (29,091) (29,091)
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 £52,878,000 (2024: £49,385,000) 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%
(2024: 25%).
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.
Analysis of total purchases
Purchase consideration before expenses 367,317 305,859
Commissions 481 409
Taxes 1,638 1,467
Total purchase expenses (a) 2,119 1,876
Total purchase consideration 369,436 307,735
Analysis of total sales
Sales consideration before expenses 461,528 288,899
Commissions (b) (472) (303)
Total sale proceeds net of expenses 461,056 288,596
Total expenses incurred in acquiring/disposing of investments (a)-(b) 2,591 2,179
6 Finance Costs
Interest/non-utilisation costs on bank borrowings 1,674 2,790 4,464 2,403 4,004 6,407
Amortisation of bank debt facility costs 24 41 65 24 41 65
1,698 2,831 4,529 2,427 4,045 6,472
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Analysis of tax charged on return on ordinary activities
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
2025 2024
£’000 £’000
58
Financial Report
Aberforth Smaller Companies Trust plc
8 Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2024 of 30.00p
(2023: 28.55p) paid on 10 March 2025 24,967 24,091
Special dividend for the year ended 31 December 2024 of 6.00p
(2023: 9.00p) paid on 10 March 2025 4,993 7,595
Interim dividend for the year ended 31 December 2025 of 14.30p
(2024: 13.60p) paid on 28 August 2025 11,631 11,444
41,591 43,130
Amounts not recognised in the period:
Final dividend for the year ended 31 December 2025 of 32.50p
(2024: 30.00p) payable on 9 March 2026 25,916 25,147
Special dividend for the year ended 31 December 2025 of 12.00p
(2024: 6.00p) payable on 9 March 2026 9,569 5,029
35,485 30,176
The final and special dividends have not been included as liabilities in the financial statements for 2025 and 2024.
9 Returns per Ordinary Share
The returns per Ordinary Share are based on:
Returns attributable to Ordinary Shareholders £96,235,000 £151,591,000
Weighted average number of shares in issue during the year 81,626,049 84,175,009
Returns per Ordinary Share 117.90p 180.09p
There are no dilutive or potentially dilutive shares in issue.
10 Investments
Opening fair value 1,497,304 1,363,980
Opening fair value adjustment 186,264 188,097
Opening book cost 1,683,568 1,552,077
Purchases at cost 367,317 305,859
Sale proceeds (461,528) (288,899)
Realised gains on sales 96,000 114,531
Closing book cost 1,685,357 1,683,568
Closing fair value adjustment (227,486) (186,264)
Closing fair value 1,457,871 1,497,304
All investments are in ordinary shares listed on the London Stock Exchange unless otherwise stated on pages 20 to 22.
Gains/(losses) on investments:
Net realised gains on sales 96,000 114,531
Movement in fair value adjustment (41,222) 1,833
Net gains on investments 54,778 116,364
The company received £461,528,000 (2024: £288,899,000) from investments sold in the year. The book cost of these
investments was £365,528,000 (2024: £174,368,000). 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.
Notes to the Financial Statements
2025 2024
£’000 £’000
2025 2024
2025 2024
£’000 £’000
2025 2024
£’000 £’000
Financial Report
Aberforth Smaller Companies Trust plc 59
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
Level 1
Level 2
Level 3
Total
As at 31 December 2025
£'000
£'000
£'000
£'000
Listed equities
1,457,871
–
–
1,457,871
Unlisted equities
–
–
–
–
Total financial asset investments
1,457,871
–
–
1,457,871
Level 1
Level 2
Level 3
Total
As at 31 December 2024
£'000
£'000
£'000
£'000
Listed equities
1,497,304
–
–
1,497,304
Unlisted equities
–
–
–
–
Total financial asset investments
1,497,304
–
–
1,497,304
11 Debtors
Investment income receivable 3,921 2,794
Taxation recoverable 47 47
Other debtors 42 33
Total 4,010 2,874
12 Creditors: amounts falling due within one year
Interest/non-utilisation costs on bank borrowings 217 162
Other creditors 116 106
Amounts due to brokers – 34
Bank debt facility 75,000 –
Less: Unamortised costs on bank debt facility (27) –
Total 75,306 302
The Company has an uncommitted overdraft credit facility of £20 million with The Northern Trust Company. The interest rate
applying to overdrawn balances is 1.4% 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 2025 or 31 December 2024.
On 19 May 2023, the Company refinanced its existing 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 1.15% over SONIA
equivalent. A non-utilisation fee of 0.5% is also payable on any undrawn element. The facility is due to expire on 15 June 2026.
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 2025, total borrowings
represented 5.1% (2024: 6.9%) of total adjusted gross assets (as defined by Facility Agreement).
13
Creditors: amounts falling due after more than one year
Bank debt facility – 104,000
Less: Unamortised costs on bank debt facility – (92)
Total – 103,908
Amounts in 2024 relate to the Facility Agreement with Royal Bank of Scotland International referred to in Note 12.
2025 2024
£’000 £’000
2025 2024
£’000 £’000
60
Financial Report
Aberforth Smaller Companies Trust plc
14
Share Capital
Authorised:
Ordinary Shares of 1p 333,299,254 3,333 333,299,254 3,333
Allotted, issued and fully paid:
Ordinary Shares of 1p 79,742,605 797 83,824,605 838
During the year, the Company bought back and cancelled 4,082,000 shares (2024: 590,000) at a total cost of £60,245,000
(2024: £8,371,000). During the period 1 January to 29 January 2026, 323,500 shares have been bought back for cancellation.
15 Capital and Reserves
At 31 December 2023 844 144 38,840 1,158,046 99,353 1,297,227
Net gains on sale of investments – – – 114,531 – 114,531
Movement in fair value adjustment – – – 1,833 – 1,833
Cost of investment transactions – – – (2,179) – (2,179)
Management fees charged to capital – – – (6,180) – (6,180)
Finance costs charged to capital – – – (4,045) – (4,045)
Special dividends taken to capital – – – – – –
Revenue return attributable to equity
shareholders – – – – 47,631 47,631
Equity dividends paid – – – – (43,130) (43,130)
Purchase of Ordinary Shares (6) 6 (8,371) – – (8,371)
At 31 December 2024 838 150 30,469 1,262,006 103,854 1,397,317
Net gains on sale of investments – – – 96,000 – 96,000
Movement in fair value adjustment – – – (41,222) – (41,222)
Cost of investment transactions – – – (2,591) – (2,591)
Management fees charged to capital – – – (6,151) – (6,151)
Finance costs charged to capital – – – (2,831) – (2,831)
Special dividends taken to capital – – – 776 – 776
Revenue return attributable to equity
shareholders – – – – 52,254 52,254
Equity dividends paid – – – – (41,591) (41,591)
Purchase of Ordinary Shares (41) 41 (30,469) (29,776) – (60,245)
At 31 December 2025 797 191 – 1,276,211 114,517 1,391,716
The capital reserve includes a closing fair value adjustment, representing unrealised gains/(losses) on investments of
£(227,486,000) (2024: £(186,264,000)).
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.
Net assets attributable £1,391,716,000 £1,397,317,000
Ordinary Shares in issue at the end of year 79,742,605 83,824,605
Net Asset Value per Ordinary Share (a) 1,745.26p 1,666.95p
Dividend reinvestment factor (defined in glossary as an alternative performance measure) (b) 1.031025 1.033876
Net Asset Value Total Return basis (defined in glossary as an alternative
performance measure) (a) x (b) 1,799.41p 1,723.42p
The net asset value total return for the year ended 31 December 2025 is the percentage movement from the net asset value
as at 31 December 2024 of 1,666.95p (31 December 2023: 1,536.73p) to the net asset value, on a total return basis, at
31 December 2025 of 1,799.41p (31 December 2024: 1,723.42p), which is 7.9% (2024: 12.1%).
Notes to the Financial Statements
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
2025 2024
No. of No. of
Shares £’000 Shares £’000
2025 2024
Financial Report
Aberforth Smaller Companies Trust plc 61
Notes to the Financial Statements
17 Interest and Finance Costs Paid
Interest/non-utilisation costs on bank debt facility 4,409 6,452
Total 4,409 6,452
18 Analysis of changes in net debt
Cash at bank 1,349 3,792 – 5,141
Bank debt facility (104,000) 29,000 – (75,000)
Bank debt facility fee (see note 12) 92 – (65) 27
Total (102,559) 32,792 (65) (69,832)
19 Financial instruments and risk management
The Company’s financial instruments comprise its investment portfolio (see pages 20 to 22), 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 move 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 0.045% as at 31 December 2025 (2024: 0.18%).
The Company has a bank debt facility of £130,000,000 of which £75,000,000 was drawn down as at 31 December 2025 (2024:
debt facility of £130,000,000 of which £104,000,000 was drawn down). Further details of this facility can be found in Notes 12
and 13.
If SONIA equivalent and the bank base rate had been 1% point higher at 31 December 2025, the impact on the profit or loss and
therefore Shareholders’ funds would have been negative £750,000 per annum (2024: negative £1,040,000). If SONIA equivalent and
the bank base rate had been 1% point lower at 31 December 2025, the impact on the profit or loss and therefore Shareholders’
funds would have been a positive £750,000 per annum (2024: positive £1,040,000). 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.
Net debt Other Net debt at
at 1 January Cash non-cash 31 December
2025 flow movements 2025
£’000 £’000 £’000 £’000
2025 2024
£’000 £’000
62
Financial Report
Aberforth Smaller Companies Trust plc
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, which at 31 December 2025 amounted to £1,457,871,000 (2024:
£1,497,304,000), 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, other than as described above in respect of investment portfolio assets, at the year-end comprises
the following.
Investment income receivable 3,921 2,794
Taxation recoverable 47 47
Cash at bank 5,141 1,349
Total 9,109 4,190
(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 8 to 15. 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 2025, the impact on the profit or loss and therefore
Shareholders’ funds would have been negative £145.8m (2024: negative £149.7m). If the investment portfolio valuation rose
by 10% at 31 December 2025, the impact on the profit or loss and therefore Shareholders’ funds would have been positive
£145.8m (2024: positive £149.7m). 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 2025, the investment portfolio 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 2025
Liabilities:
Bank debt facility and unamortised costs 217 – 74,973 – – 75,190
Amount due to brokers – – – – – –
Other creditors – 116 – – – 116
Total liabilities 217 116 74,793 – – 75,306
Notes to the Financial Statements
2025 2024
£’000 £’000
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
Financial Report
Aberforth Smaller Companies Trust plc 63
19 Financial instruments (continued)
As at 31 December 2024
Liabilities:
Bank debt facility and unamortised costs 162 – – 103,908 – 104,070
Amount due to brokers 34 – – – – 34
Other creditors – 106 – – – 106
Total liabilities 196 106 – 103,908 – 104,210
Cash flows payable under financial liabilities by remaining contractual maturities
As at 31 December 2025
Bank debt facility – 2,153 76,818 – – 78,971
Interest/non-utilisation costs on
bank borrowings – 217 – – – 217
Other creditors – 116 – – – 116
Total – 2,486 76,818 – – 79,304
As at 31 December 2024
Bank debt facility – 1,534 4,689 106,830 – 113,053
Amount due to brokers – 34 – – – 34
Interest/non-utilisation costs on
bank borrowings – 162 – – – 162
Other creditors – 106 – – – 106
Total – 1,836 4,689 106,830 – 113,355
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 note 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 covenants on its bank debt facility as set out in note 12 and 13.
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 42 and 43. 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 2025 (2024: 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.
Notes to the Financial Statements
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
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
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
64
Aberforth Smaller Companies Trust plc
Notice of the Annual General Meeting
Notice is hereby given that the thirty-fifth Annual General Meeting of Aberforth Smaller Companies Trust plc will be held at
14 Melville Street, Edinburgh on 5 March 2026 at 10.30 a.m. for the following purposes.
To consider and, if thought fit, pass the following Ordinary Resolution.
1. That the Report and Financial Statements for the year ended 31 December 2025 be received and adopted.
2. That the Directors’ Remuneration Report for the year ended 31 December 2025 be received, adopted and approved.
3. That the Directors' Remuneration Policy as set out in the Annual Report be approved.
4. That a final dividend of 32.50p per share and a special dividend of 12.00p per share be approved.
5. That Richard Davidson be re-elected as a Director.
6. That Jaz Bains be re-elected as a Director.
7. That Patricia Dimond be re-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. That Johnston Carmichael LLP be re-appointed 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 2026.
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 but
without prejudice to the exercise of such authority prior to the passing of this resolution, the Company be and is hereby
generally and unconditionally 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 aggregate number of Shares hereby authorised to be purchased shall be 11,904,924 (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 of a Share and the highest current independent bid for such a Share on the trading venue
where the purchase is carried out at the time the purchase is carried out; and
(d) unless previously varied, revoked or renewed by the Company in a general meeting, the authority hereby conferred
shall expire on 31 July 2027 or, if earlier, at the conclusion of the annual general meeting of the Company to be held
in 2027, 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
29 January 2026
Aberforth Smaller Companies Trust plc 65
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.
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 3 March 2026 (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. Completed Forms of Proxy should be returned to the Registrar, MUFG
Corporate Markets, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL. 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. Unless
otherwise indicated on the Form of Proxy, CREST or any other electronic voting instruction, the proxy will vote as they think fit
or, at their discretion, withhold from voting.
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 5 March 2026 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, MUFG Corporate Markets
(CREST Participant ID: RA10), no later than 48 hours before the time appointed for the meeting. Unless otherwise indicated on
the Form of Proxy, CREST or any other electronic voting instruction, the proxy will vote as they think fit or, at their discretion,
withhold from voting.
3. Questions and Answers
The Board continues to welcome questions from Shareholders in respect of the Annual General Meeting. However, it asks
Shareholders to submit any questions to the Board by email to enquiries@aberforth.co.uk before close of business on 3 March
2026. 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 29 January 2026, the latest practicable date prior to publication of this document, the Company had 79,419,105 Ordinary
Shares in issue with a total of 79,419,105 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.
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Aberforth Smaller Companies Trust plc
Shareholder Information
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 'Corporate Information' page.
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 form.
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 price of the Ordinary shares is also quoted daily in the Financial Times
newspaper.
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)
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 on 5 March 2026 (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 detailed monthly information 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 72825555.
SEDOL Bloomberg Reuters GIIN
Legal Entity Identifier
Aberforth Smaller Companies Trust plc 67
Alternative Investment Fund Managers Directive ("AIFMD")
Shareholder Information
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 2025 are shown below. There have been no changes to, or breaches of, the maximum
level of leverage employed by the Company.
Maximum limit 2.00:1 2.00:1 2.00:1 2.00:1
Actual 1.05:1 1.05:1 1.07:1 1.07:1
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 2025) are available on the Aberforth Partners website or on request.
2025 2024
Commitment Gross Commitment Gross
Leverage Exposure (refer to the Glossary) Method Method Method Method
Financial Calendar
Dividends in respect of the year ended 31 December 2025
Interim Special Final
Rate per Share: 14.30p 12.00p 32.50p
Ex Dividend: 7 August 2025 5 February 2026 5 February 2026
Record date: 8 August 2025 6 February 2026 6 February 2026
Pay date: 28 August 2025 9 March 2026 9 March 2026
Half Yearly Report Published late July/early August
Annual Report and Financial Statements Published late January/early February
Annual General Meeting 5 March 2026
Publication of Net Asset Values Daily (via the Managers’ website)
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.
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Aberforth Smaller Companies Trust plc
Glossary
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.
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 Deutsche Numis Smaller Companies Index (excluding Investment
Companies), can be found on page 24.
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.
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 gearing percentage calculated is a negative percentage then total investments are less than Shareholders’
Funds.
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 60 for details of the calculation).
Ongoing Charges represent the total cost of investment management fees and other expenses of £10,822,000 (2024:
£10,746,000), as disclosed in the Income Statement, as a percentage of the average published net asset value of
£1,351,485,000 (2024: £1,380,735,000) 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 2025 was 1,574.00p
(2024: 1,470.00p) and dividends, which went ex dividend during the year (see note 8 on page 58) were 50.30p (2024:
51.15p). The dividend reinvestment factor was 1.034957 (2024: 1.037541). The share price total return was therefore
10.8% (2024: 10.7%), 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 used to calculate total return performance by including the effect of dividends from the
Company. It 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.
J. Thomson Colour Printers 200321
Aberforth Smaller Companies Trust plc 69
Corporate Information
Directors
Richard Davidson (Chairman)
Jaz Bains
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 & Company Number
14 Melville Street
Edinburgh EH3 7NS
Registered in Scotland No. SC 126524
Registrar
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds LS1 4DL
Shareholder enquiries:
Tel: 0371 664 0300
(Calls are charged at the standard geographical
rate and will vary by provider)
Email: shareholderenquiries@cm.mpms.mufg.com
Website: eu.mpms.mufg.com
Share Portal:
www.signalshares.com
or its replacement Investor Centre portal:
https://uk.investorcentre.mpms.mufg.com
Custodian
The Northern Trust Company
50 Bank Street
Canary Wharf
London E14 5NT
Bankers
The Royal Bank of Scotland International Limited
Level 10
250 Bishopsgate
London EC2M 4AA
Independent Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh EH3 7PE
Solicitors and Sponsors
Dickson Minto WS
6 St Andrew Square
Edinburgh EH2 2BD
Depositary
NatWest Trustee & Depositary Services Limited
House A, Floor 0
Gogarburn
175 Glasgow Road
Edinburgh EH12 1HQ
Security Codes
SEDOL: 0006655
Bloomberg: ASL LN
Reuters: ASL.L
GIIN: U6SSZS.99999.SL.826
LEI: 213800GZ9WC73A92Q326