Aberdeen UK Smllr Cs - Annual Financial Report
RNS Number : 9461ZAberdeen UK Smaller Cos. Grwth Trst22 October 2026Aberdeen UK Smaller Companies Growth Trust plc
Annual Financial Report for the year ended 30 June 2026
Legal Entity Identifier (LEI): 213800UUKA68SHSJBE37
Investment Objective
To achieve long-term capital growth by investment in UK-quoted smaller companies
Reference Index
The Company’s reference index is the Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index.
Website
www.aberdeenuksmallercompaniesgrowthtrust.co.uk
Performance Highlights
Net asset total returnAB
Share price total returnAB
2026
-4.1%
2026
-3.6%
2025
+6.8%
2025
+11.4%
Total dividends per share
Discount to net asset valueAB
2026
14.00p
2026
8.7%
2025
13.20p
2025
9.0%
Revenue return per share
Ongoing charges ratioAB
2026
13.90p
2026
0.77%
2025
13.52p
2025
0.85%
A Considered to be an Alternative Performance Measure.
B A Key Performance Indicator (“KPI”).
For further information, please contact:
Ben Heatley
Evan Bruce-Gardyne
abrdn Fund Managers Limited
cef.cosec@aberdeenplc.com
Performance Highlights
Continued
30 June 2026
30 June 2025
% change
Capital return
Total assets
£271.9m
£399.2m
(31.9)%
Equity shareholders’ funds
£246.9m
£359.2m
(31.3)%
Market capitalisationA
£225.4m
£326.8m
(31.0)%
Net asset value per share
543.31p
581.37p
(6.5)%
Share price
496.00p
529.00p
(6.2)%
Discount to NAVB
8.7%
9.0%
Net gearingB
4.9%
6.6%
Reference indexC
5,957.22
5,780.00
3.1%
Dividends and earnings
Revenue return per shareD
13.90p
13.52p
2.8%
Total dividends per shareE
14.00p
13.20p
6.1%
Operating costs
Ongoing charges ratioBF
0.77%
0.85%
A Represents the number of Ordinary shares in issue in the Company multiplied by the Company’s share price.
B Considered to be an Alternative Performance Measure .
C Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index.
D Measures the revenue earnings for the year divided by the weighted average number of Ordinary shares in issue (see Statement of Comprehensive Income).
E The figures for dividend per share reflect the years in which they were earned (see note 8).
F Calculated in accordance with AIC guidance issued in October 2020.
Chair’s Statement
Dear Shareholders
Proposed Combination with JPMorgan UK Small Cap Growth & Income plc
Following the end of our financial year, on 18 September 2026, the Board announced that it had agreed heads of terms with the board of JPMorgan UK Small Cap Growth & Income plc (“JUGI”) for a combination of the Company and JUGI. The Board regularly evaluates both the Company's performance and the attractiveness and appeal of the Company to investors and this combination is the culmination of a competitive private review process undertaken by the Board.
The Board is conscious that over the past five years the Company has bought back more than half of its issued share capital, which has been essential to limit the discount and discount volatility. Whilst this has been in the best interests of shareholders, it has significantly reduced liquidity in the Company’s shares and the Board is concerned about the impact that ongoing share buybacks are likely to continue to have on the size and scale of the Company, the liquidity in the Company's shares and the Company's ability to appeal to investors and grow over time. The Board has negotiated the investment management fee down on two occasions in the past few years, resulting in a reduction in the ongoing charges ratio (“OCR”). However, as a result of the continuing buyback, this improvement in the OCR will be difficult to sustain with the OCR expected to rise in the current financial year, further reducing the Company’s attractiveness when compared to its peers.
Investment performance has also been challenging for a significant period during which time the Board, working with the Investment Manager, has robustly assessed and challenged the Company's portfolio managers and their investment process which has resulted in some changes in approach. Despite this, recent performance remains below both the reference index and a number of
similar peers, limiting the appeal of the Company to potential investors.The combination of the Company and JUGI will be implemented through a proposed members' voluntary winding up of the Company by way of a scheme of reconstruction of the Company under Section 110 of the Insolvency Act 1986 (the "Scheme"). Pursuant to the Scheme, the Company’s shareholders will be entitled to receive new shares in JUGI or to elect some or all of their shares for cash (at a 2% discount to NAV less the costs of the transaction), subject to an aggregate limit of 35% of the Company’s share capital.
Following implementation of the proposals, the enlarged JUGI will continue to be managed by JPMorgan Funds Limited in accordance with its existing investment objective and policy.
The Board considers that the proposals are in the best interests of shareholders, offering shareholders the opportunity to rollover their holdings into an investment trust with exceptional long-term performance within the UK Smaller Companies sector. Those who elect to do this will also benefit from holding shares in a larger, and so more cost efficient, company which should offer better trading liquidity.
The Company will publish a circular setting out full details of the proposals and convening the necessary general meetings to implement the Scheme. At the same time, JUGI will publish a circular to convene a general meeting of JUGI shareholders to approve the issue of new JUGI shares pursuant to the proposals. It is anticipated that such shareholder documentation will be published in late October/early November 2026.
Subject to the relevant conditions being satisfied, it is expected that the Scheme will be completed before the end of 2026, although the expected timetable in respect of the Scheme remains subject to change.
Performance
For the year ended 30 June 2026, the Company’s net asset value (“NAV”) total return, calculated on the basis that all dividends received are reinvested in additional shares, fell by 4.1%. The share price total return, calculated on the same basis, fell by 3.6%. These returns compare to a total return of 6.1% generated by the Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index (the “reference index”).
The Board is acutely aware that these are a disappointing set of results, particularly in terms of the performance relative to the reference index, as it extends the NAV underperformance record to cover one, three and five years. It notes that most of the other investment trusts with similar mandates also underperformed the index during the year, where a significant contribution came from the performance of the Precious Metals and Mining sector, which returned more than 60% over the year, driven in part by the performance of gold. However, the analysis shows that stock-specific issues were the major component to the Company’s underperformance rather than asset allocation. As stated above, the Board has worked with the Investment Manager to understand the causes of underperformance. A detailed review of performance and investment activity for the year is included in the Investment Manager’s Review.
Earnings and Dividends
The revenue return per share (“EPS”) for the year ended 30 June 2026 was 13.90p (2025: 13.52p), an increase of 2.8% compared to the previous year. The Company has continued to benefit from strong earnings resilience from the underlying portfolio holdings. Recurring income is increasingly the predominant source of dividends, with only 6.4% of investment income for the year coming from special dividends. This can be compared to the position 10 years ago when the proportion of revenue generated from special dividends was higher, and illustrates a trend by companies to return capital to shareholders through share buy backs.
Due to the timing of the AGM this year (see Annual General Meeting below), the Board will be unable to seek shareholder approval for the payment of a final dividend in the usual manner. The Board is therefore declaring a second interim dividend for the financial year of 9.5p per share, which will take the full year dividend to 14.0p per share, an increase of 6.1% on the full year dividend paid in 2025. The second interim dividend will be paid on 27 November 2026 to shareholders on the register on 6 November 2026, with an associated ex-dividend date of 5 November 2026.
Gearing
The Board has given the Investment Manager discretion to vary the level of gearing between 5% net cash and 25% net gearing (at the time of drawdown). During the year, the Company repaid the £40 million revolving credit facility from The Royal Bank of Scotland International and negotiated a £40 million evergreen secured revolving credit facility with Bank of America. At the year end, the Company had drawn £25 million of this facility and, at that time, the gross level of borrowings was offset by cash and cash equivalents of £12.1 million resulting in net gearing of 4.9% (2025: 6.6%). The cost of borrowing at the year end was 4.73%.
Ongoing Charges
The ongoing charges ratio (“OCR”) for the year ended 30 June 2026 was 0.77% (2025: 0.85%). The reduction is attributable to a lower management fee cost following the reduction that took place in April 2025 and lower administrative expenses compared to 2025.
Discount Control and Share Buy Backs
At the year end, the discount of the share price to the NAV was 8.7% (2025: 9.0%).
Over the year, the Company bought back 16.3 million shares, equating to 26.5% of the issued share capital, at a total cost of £83.7 million and a weighted average price of 509.5p per share. The weighted average discount at which the shares were repurchased was 9.2%. The Board calculates that this added 14.8p per share to the NAV per share for remaining shareholders. Since the year end, a further 2.7 million shares have been repurchased. All shares bought back are held in treasury.
The Board remains committed to its discount management policy and will continue to be active in the market if the discount exceeds 8% and it believes it to be in the best interests of shareholders to do so. The Board is pleased to note that the discount has narrowed over the last 12 months, although it remains frustrated that achieving this has required a significant reduction in the size of the Company.
The pace of buy backs meant that the Board convened a General Meeting on 31 March 2026 at which shareholders granted authority to the Board to renew the buy back authority for a further 14.99% of the issued share capital. The renewed authority will lapse at the AGM, at which time the Board will seek a renewed authority.
Full details of the Board’s discount control policy can be found in the Overview of Strategy.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) has been convened to take place at 10.00am on Thursday 31 December 2026.
Under company law, the Company is required to hold an AGM before the end of December each year. However, as a result of the proposals for the Company to combine with JUGI as set out above, it is not anticipated that the AGM will be required, but it has been convened as a fall-back option should the Scheme not complete before the end of December. Accordingly, if the Scheme is implemented prior to the date of the AGM then the Meeting will be adjourned indefinitely.
Board Composition
The Board was pleased to welcome Steve Russell as an independent non-executive Director of the Company with effect from 1 April 2026. Steve was, until 2025, Investment Director and a member of the multi asset investment committee at Ruffer LLP, where he helped direct its investment strategy. Steve will stand for election at the AGM.
The Board has also previously announced that Tim Scholefield will retire as a Director with effect from the AGM. Tim has been a Director of the Company for over nine years, having been appointed in February 2017. Over this time, Tim has provided a significant contribution to the Board and we wish him well in future roles.
Following completion of the Scheme, it is expected that Manju Malhotra and Steve Russell will join the board of JUGI.
Agreement with Saba
Since the end of the financial year, in common with a number of other investment trusts managed by Aberdeen, the Company has entered into a three year standstill agreement with abrdn Fund Managers Limited and Saba Capital Management LP with full details set out in a formal announcement dated 3 August 2026.
The agreement does not restrict or prohibit Saba's ability to vote in favour of or accept any takeover offer for the Company, nor does it restrict Saba's ability to deal in the Company’s shares (other than in any short selling).
Saba’s offer to enter into the agreement with the Company was as a result of separate arrangements between Aberdeen and Saba, to which the Company was not party. The Company has given no monetary consideration to Saba or any of its affiliates in return for the benefits of the agreement, and such benefits do not restrict the Board's or the Company's independence in any way, although Aberdeen has done so.
The agreement lasts until the earlier of (a) conclusion of the Company's 2029 Annual General Meeting or (b) the date abrdn Fund Managers Limited ceases to be appointed as the Company’s manager.
Outlook
Sentiment towards the UK economy has been negative for some time given the challenges it continues to face in terms of low GDP growth and high debt levels exacerbated by high interest rates. This shapes the outlook particularly for smaller UK companies which are more exposed to the domestic economy, including its high energy costs, than larger more globally oriented companies. Given the tight fiscal constraints, there is great uncertainty over how the government will tackle the policies needed to stimulate growth in the imminent Budget.
What is clear is that the valuations of these companies are at historic lows, and in many cases with yields as high as large companies. The attractions of the asset class are further evident from the string of bids we have seen for such companies over the past year. The Board is confident that the asset class contains significant opportunities for investors and that its recent recommendation to combine your Company into a larger, more cost effective, investment trust managed by JP Morgan Funds Limited offers shareholders an improved way to benefit from exposure to smaller UK companies over the period ahead.
Liz Airey
Chair
21 October 2026
Overview of Strategy (extract)
Business
The Company is an investment trust and its Ordinary shares are listed on the Main Market of the London Stock Exchange.
Investment Objective
The Company’s objective is to achieve long-term capital growth by investment in UK-quoted smaller companies.
Investment Policy
The Company intends to achieve its investment objective by investing in a diversified portfolio consisting mainly of UK-quoted smaller companies. The portfolio will normally comprise approximately 50 individual holdings representing the Investment Manager’s highest conviction investment ideas. In order to reduce risk in the Company without compromising flexibility, no holding within the portfolio should exceed 5% of total assets at the time of acquisition.
The Company may use derivatives for portfolio hedging purposes (i.e. only for the purpose of reducing, transferring or eliminating the investment risks in its investments in order to protect the Company’s portfolio).
Within the Company’s Articles of Association, the maximum level of gearing is 100% of net assets. The Directors have set parameters of between 5% net cash and 25% net gearing (at the time of drawdown) for the level of gearing that can be employed in normal market conditions. The Directors have delegated responsibility to the Investment Manager for the operation of the gearing level within the above parameters.
Board Investment Limits
The Directors have set additional guidelines in order to reduce the risk borne by the portfolio:
- Companies with a market capitalisation of below £50 million should not represent more than 5% of total assets.
- Companies involved in “Blue Sky” products should not represent more than 5% of total assets.
- No more than 40% of the portfolio should be invested in companies that are constituents of the FTSE AIM All-Share Index.
Investment Process
The Investment Manager’s investment process combines asset allocation, stock selection, portfolio construction, risk management, and dealing. The investment process is led by Quality, Growth and Momentum; with the focus on earnings momentum providing flexibility through economic cycles. The Investment Manager’s stock selection led process involves using a proprietary screening tool, “the Matrix”. The Matrix reflects Quality, Growth, Momentum and Valuation based factor analysis of the universe. That analysis is combined with extensive research and meetings with senior management of these potential investments. Final portfolios are compiled and managed with continued use of these insights, along with risk analysis and portfolio construction inputs.
Reference Index
The Company’s reference index is the Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index.
Delivering the Investment Objective
The Directors are responsible for determining the Company’s investment objective and investment policy. Day-to-day management of the Company’s assets has been delegated, via the Alternative Investment Fund Manager (the “AIFM”), to the Investment Manager.
Key Performance Indicators (“KPIs”)
The Board assesses the performance of the Company against the range of KPIs shown below over a variety of timeframes, but has particular focus on the long-term, which the Board considers to be at least five years.
KPI
Description
Net asset value (“NAV”) total return performance
The Board measures the Company’s NAV total return performance against the total return of the reference index (the Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index) and the Close Peer Group.
Share price total return performance
The Board measures the Company’s share price total return performance against the total return of the reference index and the Close Peer Group.
Discount/premium to NAV
The Board compares the discount or premium of the Ordinary share price to the NAV per share with the discount/premium of the peer group and also to the Company’s committed discount target on a rolling 12 month basis.
Ongoing charges
The Board monitors the Company’s ongoing charges ratio (“OCR”) against prior years and other similar sized companies in the Close Peer Group.
Principal and Emerging Risks and UncertaintiesThe Board carries out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks.
The Board has carried out a robust assessment of the Company’s principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation. The principal risks and uncertainties facing the Company at the current time, together with a description of the mitigating actions the Board has taken, are set out in the table below. In addition to these principal risks and uncertainties, the Board considers that the development of Artificial Intelligence (“AI”) presents potential risks and opportunities to businesses in almost every sector. The extent of the risk presented by AI is extremely hard to assess at this point but the Board considers that it is an emerging risk and, together with the Manager, will monitor developments in this area. The principal risks and uncertainties are reviewed by the Audit Committee in the form of a risk matrix and the Committee also gives consideration to the emerging risks facing the Company.
In terms of its appetite for risk, the Board has identified what it considers to be the key risks to which the Company is exposed and seeks to take a proportionate approach to the control of these risks. In particular, by considering the likelihood and impact of a specific risk, if the potential exposure is rated as Critical or Significant, the Board ensures that significant mitigation is in place to reduce the likelihood of occurrence whilst recognising that this may not be possible in all cases.
The principal risks associated with an investment in the Company’s shares are published monthly in the Company’s factsheet and they can be found in the pre-investment disclosure document (“PIDD”) published by the Manager, both of which are available on the Company’s website.
Risk
Trend
Mitigating Action
Strategy - the Company’s objectives or the investment trust sector as a whole become unattractive to investors, or the Company becomes uncompetitive (including its size and costs), leading to a fall in demand for the Company’s shares.
Note 1
Through regular updates from the Manager, the Board monitors the discount/ premium at which the Company’s shares trade relative to the NAV (further information included in “Share price” below) . It also holds an annual strategy meeting and receives feedback from the Company’s Stockbroker and shareholders and updates from the Manager’s investor relations team at Board meetings.
Investment performance - the appointment or continuing appointment of an investment manager with inadequate resources, skills or experience, the investment style or process being out of favour, or the adoption of inappropriate strategies in pursuit of the Company’s objectives, could result in poor investment performance, a loss of value for shareholders and a widening discount.
Note 2
The Board meets the Manager on a regular basis and keeps investment performance under close review. Representatives of the Investment Manager attend all Board meetings and a detailed formal appraisal of the Manager is carried out by the Management Engagement Committee on an annual basis.
The Board sets and monitors the investment restrictions and guidelines and receives regular reports which include performance reporting on the implementation of the investment policy, the investment process, risk management and application of the investment guidelines.
Staff turnover – the unmanaged departure of key members of the investment team or increased staff turnover within the team could impact on future investment performance and lead to loss of investor confidence.
The Board receives updates from the Manager on staff changes and succession planning within the investment team.
The Investment Manager employs a standardised investment process
for the management of the portfolio and the smaller companies team is well-resourced. These factors mitigate against the impact of the departure of any one member of the investment team.
Share price - failure to manage the discount effectively or an inappropriate marketing strategy could lead to a fall in the share price relative to the NAV per share.
The Company operates a discount control mechanism and aims to maintain a discount level of less than 8% to the cum-income NAV under normal market conditions. Details of the discount control mechanism are contained in the Discount Control Policy section below. The Directors undertake a programme of inviting major shareholders to discuss issues of governance or strategy with the Chair or Senior Independent Director. In addition, the Company participates in the Manager’s investment trust promotional programme where the Manager has an annual programme of meetings with institutional shareholders and reports back to the Board on these meetings.
Financial instruments - insufficient oversight or controls over financial risks, including market price risk, liquidity risk and credit risk could result in losses to the Company.
As stated above, the Board sets investment guidelines and restrictions which are reviewed regularly and the Manager reports on compliance with them at Board meetings.
Further details of the Company’s financial instruments and risk management are included in note 16 to the financial statements.
Financial obligations - inadequate controls over financial record keeping and forecasting, the setting of an inappropriate gearing strategy or the breaching of loan covenants could result in the Company being unable to meet its financial obligations, losses to the Company and impact its ability to continue trading as a going concern.
At each Board meeting, the Board reviews management accounts and receives a report from the Administrator, detailing any breaches in the internal controls during the period under review. The Board sets gearing limits and monitors the level of gearing and compliance with the main financial covenants at Board meetings.
The Audit Committee meets representatives from the Manager’s Compliance and Internal Audit teams on at least an annual basis and discusses any findings and recommendations relevant to the Company.
Regulatory - failure to comply with relevant laws and regulations could result in fines, loss of reputation and potential loss of investment trust status.
The Board receives updates on relevant changes in regulation from the Manager, industry bodies and external advisers. The Board and Audit Committee monitor compliance with regulations by review of checklists and internal control reports from the Manager. Directors keep up to date in a variety of ways, including attendance at training courses and seminars.
Operational - the Company is dependent on third parties for the provision of all systems and services (in particular those of the Manager and the Depositary) and any control failures and gaps in their systems and services could result in a loss or damage to the Company.
The Audit Committee reviews reports from the Manager on its internal controls and risk management (including an annual ISAE Report) and considers assurances from all its other significant service providers on at least an annual basis, including on matters relating to business continuity. Written agreements are in place with all third party service providers.
The Audit Committee meets representatives from the Manager’s Compliance and Internal Audit teams on at least an annual
basis and discusses any findings and recommendations relevant to
the Company.The Manager monitors closely the control environments and quality of services provided by third parties, through service level agreements, regular meetings and key performance indicators, and provides periodic updates to the Board on this work.
A formal appraisal of the Company’s main third party service providers
is carried out by the Management Engagement Committee on an
annual basis.Cyber - control failures or the absence of adequate IT security systems of third party service providers (including the Manager and the Depositary) could result in losses or damage to the Company.
Note 3
The Audit Committee receives reports from the Manager and other third party service providers on their internal controls and risk management processes, including on matters relating to cyber security. The Audit Committee also receives an annual presentation from the Manager’s cyber security team.
The Manager monitors closely the IT security controls of its outsourced service providers.
Geopolitical - the effects of geopolitical instability or change could have an adverse impact on stock markets and the value of the Company’s investment portfolio.
Note 4
Current geopolitical risks include the conflicts in Ukraine and the Middle East. The Investment Manager’s focus on quality companies, the diversified nature of the portfolio and a managed level of gearing all serve to provide a degree of protection in times of market volatility.
Notes:
- Strategy risk is heightened due to the volume of share buy backs undertaken by the Company to control the share price discount to NAV, and the recent increase in corporate activity and consolidation within the investment trust sector.
- Investment performance risk is heightened due to the underperformance of the Company against the reference index.
- Cyber risk is heightened due to the increased risk of cyber security incidents within the Company’s main service providers, following cyber attacks against high profile businesses in the UK.
- Geopolitical risk is heightened due to the increased volatility of the global political landscape which feeds into market volatility.
- The trend of all other risk categories is stable.
Promotional ActivitiesThe Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the rating of the Company’s shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Manager on behalf of a number of investment trusts under its management. The Company also supports the Manager’s investor relations programme which involves regional roadshows, promotional and public relations campaigns. The Manager’s promotional and investor relations teams report to the Board on a quarterly basis giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make-up of that register.
The purpose of the promotional and investor relations programmes is both to communicate effectively with existing shareholders and to gain new shareholders, with the aim of improving liquidity and enhancing the value and rating of the Company’s shares. Communicating the long-term attractions of the Company is key. The promotional programme includes commissioning independent paid for research on the Company, most recently from Kepler Trust Intelligence. A copy of the latest research note is available from the Company's website.
The cost to the Company of participating in these programmes is matched by the Manager through the provision of the necessary resources to carry out the marketing and promotional activities.
Employees and Human Rights
The Company has no employees as the Board has delegated the day to day management and administrative functions to the Manager. There are therefore no disclosures to be made in respect of employees or human rights.
Modern Slavery Act
Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.
Environmental, Social and Governance (“ESG”) Matters
The Board and Investment Manager are committed to investing in a responsible manner and the Investment Manager considers ESG factors as part of the investment decision-making process.
The UK Stewardship Code and Proxy Voting
The Company supports the UK Stewardship Code, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. Aberdeen Group plc is a signatory of the UK Stewardship Code which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long-term investment return to shareholders. While delivery of stewardship activities has been delegated to the Manager, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company’s behalf.
The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company’s portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues. Further details can be obtained on the Manager’s website.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.
Task Force for Climate-Related Financial Disclosures (“TCFD”)
Under Listing Rule 11.4.22(R), the Company, as a closed ended investment company, is exempt from complying with the Task Force on Climate-related Financial Disclosures (“TCFD”).
Sustainability Disclosure Requirements (“SDR”)
In November 2023, the Financial Conduct Authority (“FCA”) published its sustainability disclosure requirements and investment labels regime (“SDR”) to address concerns about misleading sustainability claims. SDR includes an opt-in labelling regime for sustainable investment products, additional disclosure requirements and restrictions on the use of sustainability terms. It also established anti-greenwashing (“AGW”) rules. Investment trusts and their managers are in scope of the SDR. Although investment trusts are not directly in scope of the AGW requirements, the rules apply indirectly to them, mostly via obligations imposed on their managers.
Although Environmental, Social and Governance (“ESG”) factors are taken into consideration by the Investment Manager as part of its investment analysis, the Company itself does not have an explicit sustainability objective and so under SDR is categorised as “Non-labelled” rather than “Labelled” or “Other”.
Discount Control Policy
The Board operates a discount control mechanism which targets a maximum discount of the share price to the cum-income net asset value of 8% under normal market conditions. In pursuit of this objective, the Board closely monitors the level of the discount and buys back shares in the market when it believes it is in the best interests of shareholders as a whole to do so. At each Annual General Meeting, the Board seeks shareholder approval to buy back up to 14.99% of the Company’s share capital. Share buy-backs will only be made where the Board believes it to be in the best interests of shareholders as a whole and the making and timing of share buy-backs will be at the discretion of the Board.
The Company has a tender offer mechanism in place and the Board intends to continue to seek shareholder approval at each Annual General Meeting to enable it to carry out tender offers on a discretionary basis in circumstances where the Board believes that share buy-backs are not sufficient to maintain the discount at an appropriate level, although it expects that buy-backs should be the primary mechanism for managing the discount.
Viability Statement
As set out in more detail in the Chair’s Statement, it is proposed that the Company combines with JPMorgan UK Small Cap Growth & Income plc (“JUGI”). The combination, if approved by each company's shareholders, will be effected by way of a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986 and the associated transfer of part of the assets and undertaking of the Company to JUGI in exchange for the issue of new ordinary shares in JUGI (the “Scheme”). The outcome of the general meetings to make the Scheme effective represents a material uncertainty in the context of the preparation of these financial statements on a going concern basis.
Notwithstanding this material uncertainty, for the purposes of this viability statement, the Board has decided that five years is an appropriate period over which to report. This takes into account that the Company, which does not have a fixed life, is a long-term investment vehicle and the Board considers that this period reflects a balance between looking out over a long-term horizon and the inherent uncertainties of looking out further than five years.
In assessing the viability of the Company over the review period, the Directors have focused upon the following factors:
- The principal risks and uncertainties detailed above and the steps taken to mitigate these risks, together with the emerging risks identified by the Board.
- The Company is invested in listed securities that are readily-realisable in normal market conditions and there is a spread of investments held across a diversified range of sectors. This should enable the Company to meet any short-term liabilities if required.
- The Company is closed ended in nature and therefore it is not required to sell investments when shareholders wish to sell their shares.
- The level of share buy backs undertaken by the Company and the impact these have had on the Company’s size.
- The ability of the Company to continue to buy back shares under the authorities provided by shareholders.
- The Company’s long-term performance record.
- The Company’s level of gearing. The Company had net gearing of 4.9% as at 30 June 2026. The Board has set overall limits for borrowing and reviews regularly the Company’s level of gearing, cash flow projections and compliance with banking covenants. The Company has a £40 million secured facility with Bank of America which is typically drawn down for short term periods and can be repaid without any significant financial penalties. The facility is an ‘evergreen’ facility which will continue until such time as the Company or the lender provide notice of termination in accordance with the agreement.
- The Company has cash and money market funds which at 30 June 2026 amounted to £12.1 million. These balances allow the Company to meet liabilities as they fall due.
- The level of ongoing charges.
- There are no capital commitments currently foreseen that would alter the Board’s view.
- The robustness of the operations of the Company’s third party service suppliers.
The Directors have also reviewed the revenue and ongoing expenses forecasts for the coming year and considered the Company’s Statement of Financial Position as at 30 June 2026 which shows net current liabilities of £13.3 million at that date, and do not consider this to be a concern due to the liquidity of the portfolio which should enable the Company to meet any short-term liabilities if required.
In assessing the Company’s future viability, the Board has assumed that shareholders will wish to continue to have exposure to the Company’s activities in the form of a closed ended entity and the Company will continue to have access to sufficient capital.
In making its assessment, the Board is also aware that there are other matters that could have an impact on the Company’s prospects or viability in the future, including ongoing consolidation within the investment trust sector, further geo-political volatility, economic shocks or significant stock market volatility caused by other factors, and changes in regulation or investor sentiment.
Outlook
The Board’s view on the general outlook for the Company can be found in the Chair’s Statement.
On behalf of the Board
Liz Airey
Chair
21 October 2026
Promoting the Success of the Company
Introduction
Section 172 (1) of the Companies Act 2006 (the “Act”) requires each Director to act in the way he/she considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole.
The Board is required to describe to the Company’s shareholders how the Directors have discharged their duties and responsibilities over the course of the financial year under that provision of the Act (the “Section 172 Statement”). This statement provides an explanation of how the Directors have promoted the success of the Company for the benefit of its members as a whole, taking into account, among other things, the likely long-term consequences of decisions, the need to foster relationships with all stakeholders and the impact of the Company’s operations on the environment.
The Purpose of the Company and Role of the Board
The purpose of the Company is to act as an investment vehicle to provide, over time, financial returns (both income and capital) to its shareholders. Investment trusts, such as the Company, are long-term investment vehicles and are typically externally managed, have no employees, and are overseen by an independent non-executive board of directors.
The Board, which at the end of the year, comprised six independent non-executive Directors with a broad range of skills and experience across all major functions that affect the Company, retains responsibility for taking all decisions relating to the Company’s investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company’s service providers.
The Board’s philosophy is that the Company should operate in a transparent culture where all parties are treated with respect and provided with the opportunity to offer practical challenge and participate in positive debate which is focused on the aim of achieving the expectations of shareholders and other stakeholders alike. The Board reviews the culture and manner in which the Manager and Investment Manager operate at its meetings and receives regular reporting and feedback from the other key service providers. The Board is very conscious of the ways it promotes the Company’s culture and ensures as part of its regular oversight that the integrity of the Company’s affairs is foremost in the way that the activities are managed and promoted. The Board works very closely with the Manager and Investment Manager in reviewing how stakeholder issues are handled, ensuring good governance and responsibility in managing the Company’s affairs, as well as visibility and openness in how the affairs are conducted.
The Company’s main stakeholders have been identified as its shareholders, the Manager (and Investment Manager), service providers, investee companies, debt providers and, more broadly, the environment and community at large.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings and receives feedback on the Manager’s interactions with them.
Stakeholder
How We Engage
Shareholders
Shareholders are key stakeholders and the Board places great importance on communication with them. The Board welcomes all shareholders’ views and aims to act fairly to all shareholders. The Manager and Company’s Stockbroker regularly meet with current and prospective shareholders to discuss performance and shareholder feedback is discussed by the Directors at Board meetings. Directors meet shareholders at the Annual General Meeting and the Chair is available to meet with the Company’s larger shareholders to discuss their views. In addition, during the year the Board held an online shareholder presentation at which shareholders had the opportunity to ask questions of the Chair and Investment Manager.
The Company participates in the Manager’s investor relations programme as a means of communicating with the shareholder base.
Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, Company announcements, including daily net asset value announcements, and the Company’s website.
The Company’s Annual General Meeting provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Manager. The Board encourages shareholders to attend the Company’s Annual General Meeting and to provide feedback on the Company.
Manager (and Investment Manager)
The Investment Manager’s Review details the key investment decisions taken during the year. The Investment Manager has continued to manage the portfolio and other assets in accordance with the mandate agreed with the Company, with oversight provided by the Board.
The Board regularly reviews the Company’s performance against its investment objective and the Board undertakes an annual strategy review meeting to ensure that the Company
is positioned well for the future delivery of its objective for its stakeholders.The Board receives presentations from the Investment Manager at every Board
meeting to help it to exercise effective oversight of the Investment Manager and the Company’s strategy.The Board, through the Management Engagement Committee, formally reviews the performance of the Manager (and Investment Manager) at least annually.
Service Providers
The Board seeks to maintain constructive relationships with the Company’s service providers either directly or through the Manager with regular communications and meetings.
The Management Engagement Committee conducts an annual review of the performance, terms and conditions of the Company’s main service providers to ensure they are performing in line with Board expectations, carrying out their responsibilities and providing value
for money.Investee Companies
Responsibility for monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager.
The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company’s portfolio. The Manager reports on a quarterly basis on stewardship (including voting) issues.
Through engagement and exercising voting rights, the Investment Manager actively works with companies to improve corporate standards, transparency and accountability.
The Board monitors investments made and divested and provides constructive challenge to understand the rationale for investment and voting decisions made.
Debt Providers
On behalf of the Company, the Manager maintains a positive working relationship with the provider of the Company’s loan facility, and provides regular updates on business activity and compliance with its loan covenants.
Environment and Community
The Board and Investment Manager are committed to investing in a responsible manner and the Investment Manager considers Environmental, Social and Governance (“ESG”) factors as part of the investment decision-making process.
Specific Examples of Stakeholder Consideration During the Year
The importance of giving due consideration to the Company’s stakeholders is considered during every significant Board decision. The Directors were particularly mindful of stakeholder considerations as part of the following decisions made during the year ended 30 June 2026. Each of these decisions was made after taking into account the short and long-term benefits for stakeholders.
Dividends
The Board has declared a second interim dividend for the year of 9.50p per Ordinary share. Following payment of the second interim dividend, total dividends for the year will amount to 14.00p per Ordinary share, an increase of 6.1% compared to the previous year. Although the Company has a capital growth objective, the Board recognises the importance of dividends to shareholders.
Shareholder Engagement
During the year, the Board met shareholders at the Annual General Meeting (“AGM”) and in advance of the AGM the Board held an online shareholder presentation at which shareholders had the opportunity to ask questions of the Chair and Investment Manager.
The Board considers that it is important to maintain an ongoing dialogue with shareholders to properly understand their views and to communicate the actions of the Board.
Share Buy Backs and Renewal of Authority at General Meeting
In accordance with the discount control policy, during the year the Company bought back 16.3 million Ordinary shares to be held in treasury, providing an accretion to the NAV per share and a degree of liquidity to the market at times when the discount to the NAV per share has widened in normal market conditions.
At the Company’s AGM held on 20 November 2025, shareholders gave authority to the Directors to buyback a total of 8,148,168 Ordinary shares representing 14.99% of the then issued share capital. As at 25 February 2026, the Company had bought back 5,670,814 Ordinary shares and therefore the authority granted at the AGM in 2025 had been substantially utilised. The Directors concluded that the remaining capacity under the authority was likely to have been fully utilised before the Company’s next AGM, in 2026, if the purchases of shares were to continue at the same rate.
In order for the Board to continue to operate the discount control mechanism, the Directors therefore sought, and obtained, approval from shareholders, at a General Meeting of the Company held on 31 March 2026, to renew the Company’s authority to buy back Ordinary Shares, with such renewed authority expiring at the conclusion of the AGM in 2026.
It is the view of the Board that the discount control policy and use of the Company’s share buy back authority to provide liquidity to the market in the manner described above is in the interest of all shareholders.
Cancellation of Share Premium Account
Following shareholder approval at the General Meeting on 21 May 2025, the Company received court approval, by way of a court order dated 15 August 2025, for cancellation of the amount standing to the credit of the Share Premium Account. The court order was registered at Companies House on 20 August 2025 at which point cancellation of the entire amount standing to the credit of the Share Premium Account, being approximately £170 million, became effective. That amount has been credited to a special distributable reserve which is available to fund the cost of share buy backs and future dividend payments, if required.
The Board believes that it is in the Company’s interest to have this flexibility in its reserves, although the Board has no current intention of using the new reserve for dividend payments which it expects will continue to be resourced through annual net revenues and revenue reserves.
Board Succession
As explained in the Directors’ Report, having served as a Director for nine years, Tim Scholefield will retire at the Annual General Meeting. Following a formal recruitment process, the Board decided to appoint Mr Stephen Russell as an independent Director on 1 April 2026.
New Board appointments seek to achieve a good balance of skills, experience, gender and ethnicity. The Board believes that shareholders’ interests are best served by ensuring a smooth and orderly refreshment of the Board which serves to provide continuity and maintain the Board’s open and collegiate style.
Following completion of the combination with JUGI (see below), it is expected that Manju Malhotra and Steve Russell will join the board of JUGI.
Proposed Combination with JPMorgan UK Small Cap Growth & Income plc
As set out in more detail in the Chair’s Statement, following the end of the financial year, on 18 September 2026, the Board announced a proposal for the Company to combine with JPMorgan UK Small Cap Growth & Income plc (“JUGI”). This combination, if approved by each company's shareholders, will be effected by way of a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986 and the associated transfer of part of the assets and undertaking of the Company to JUGI in exchange for the issue of new ordinary shares in JUGI.
The Board considers that the proposals are in the best interests of shareholders, offering shareholders the opportunity to rollover their holdings into an investment trust with exceptional long-term performance within the UK Smaller Companies sector. Those who elect to do this will also benefit from holding shares in a larger, and so more cost efficient, company which should offer better trading liquidity.
On behalf of the Board
Liz Airey
Chair
21 October 2026
Performance
Performance (total return)
1 year return
3 years return
5 years return
10 years return
%
%
%
%
Net asset valueAB
–4.1
+20.9
–18.5
+87.4
Share priceB
–3.6
+29.9
–20.5
+90.2
Reference IndexC
+6.1
+25.8
–1.0
+74.8
Peer Group weighted average (NAV)
+4.6
+25.8
+12.5
+102.9
Peer Group weighted average (share price)
+8.8
+29.3
+9.5
+114.5
A Cum-income NAV with debt at fair value.
B Considered to be an Alternative Performance Measure.
C Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index.
Source: Morningstar
Year to 30 June
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Per Ordinary share (p)
Net revenue return
6.42
7.24
8.80
6.74
6.43
9.07
12.44
13.12
13.52
13.90
Ordinary dividends paid/proposed
6.70
7.00
7.70
7.70
7.70
8.10
11.00
12.00
13.20
14.00
Net asset valueA
456.60
552.93
539.54
527.73
737.97
530.37
482.95
556.19
581.37
543.31
Share price
431.00
500.00
491.50
482.00
698.00
453.00
414.00
486.50
529.00
496.00
Discount (%)A
5.6
9.6
8.9
8.7
5.4
14.6
14.3
12.5
9.0
8.7
Ongoing charges ratio (%)B
1.08
1.04
0.90
0.91
0.88
0.82
0.95
0.92
0.85
0.77
Gearing ratio (%)C
1.7
3.6
1.5
(0.3)
5.7
5.1
2.5
5.8
6.6
4.9
Shareholders’ funds (£m)D
324
408
543
528
728
499
427
413
359
247
Revenue reserves (£m)E
6.26
8.30
10.87
8.80
7.53
8.81
12.47
13.53
14.43
14.28
A Calculated with debt at par value and diluted for the effect of Convertible Unsecured Loan Stock conversion from 1 July 2016 until 30 June 2017. From 30 June 2018, net asset value is calculated with debt at par value.
B Calculated as an average of shareholders’ funds throughout the year and in accordance with updated AIC guidance issued in October 2020, to include the Company’s share of costs of holdings in investment companies on a look-through basis.
C Net gearing ratio calculated as debt less cash invested in AAA-rated money market funds and short-term deposits divided by net assets at the year end.
D Increase in 2018 included the effect of the merger with Dunedin Smaller Companies Investment Trust PLC.
E Revenue reserves are reported prior to paying the second interim or final dividend for the year.
Investment Manager’s Review
How did the Company perform this financial year?
Over the year to 30 June 2026 the net asset value (“NAV”) fell by 4.1% in total return terms compared to a positive total return of 6.1% from the Deutsche Numis Smaller Companies plus AIM (ex Investment Companies) Index (the “reference index”). We are obviously disappointed to underperform the reference index and to see a falling NAV at a time when the market has generated a positive return.
The majority of the underperformance was concentrated in the first half of the period, when a Value-led market weighed heavily on our Quality Growth & Momentum (“QMG”) style; Quality was the worst-performing factor in the UK, and Growth remained out of favour, while the rally in lower quality, more cyclical companies ran directly counter to our positioning. Precious metal mining companies, which were not held in the portfolio during the first half of the year, also performed well during that period, increasing in significance in the reference index.
The second half of the year, whilst still challenging, was more encouraging, and we believe process enhancements (as described in greater detail below) have created a better balance to the portfolio. Reducing the portfolio's underweight exposure to Value has been positive as Value has continued to perform well, and the tilt towards Quality is now contributing more positively.
Disappointingly, there were a number of stock specific issues during the year that had a negative impact on performance. These are detailed below.
However, with the portfolio's valuation relative to the reference index at a multi-year low, we believe this provides a supportive foundation for future returns. We are encouraged that markets now appear to be refocussing on company fundamentals.
What were the key drivers of performance?
The style tilts that come with our process had a negative impact on performance over the period, with these style headwinds delivering around half of the underperformance. The other half came from stock specifics.
Key positive drivers of performance were a cluster of high-conviction holdings that demonstrate the characteristics we look for. Applied Nutrition (+150%) was the standout holding as the market rewarded successive upgrades in revenue growth guidance and earnings expectations, execution of growth strategy across geographies globally, and the acquisition of US manufacturer Nutrablend. Balfour Beatty (+64%) was the next largest contributor, with strong execution across the business, supportive growth in infrastructure end markets, and strong order books providing good forward revenue visibility. Hunting (+51%) also performed well, delivering some attractive business wins and the quality of its business continues to improve with market leading propositions. Volex (+48%) also contributed strongly, supported by momentum in data centre related demand, as well as margin expansion. Alpha Group (+31%) also performed well following the announcement of its acquisition by Corpay.
On the negative side, ME Group (-54%) was the largest detractor, with a combination of a period undergoing strategic options of potential business sale, a delayed audit and end market headwinds all detrimental to what is typically a resilient business model. While frustrated about the self- inflicted share price weakness from the strategic review, we believe the outlook for ME Group is one of strong growth, particularly driven by the UK laundry rollout, and that trading in France will improve as already evidenced in more recent months. Pan African Resources (-32%) was exceptionally strong through the first half of the year, before we invested, and a large benchmark name given rising gold prices. We invested later in the period given our increasing comfort about the quality improvements of the business. However, with the price of gold falling more recently, the company’s share price has also fallen. Meanwhile, start-up issues in the Australian side of the business have been frustrating. We continue to hold Pan African Resources, where the gold price has stabilised, South African operations have been reporting well, and we believe the company can resolve the Australian teething issues. Mortgage Advice Bureau (-39%) is a company well versed in tough end markets, namely the UK housing sector, but, added to that, the market has concerns over how a business such as this might be disintermediated by AI technology. We continue to invest in Mortgage Advice Bureau which, despite negative sentiment affecting its housing end markets, is expected to deliver strong growth, aided by the refinancing market. We believe its valuation is underpricing that growth. Trustpilot (-45%) was also a detractor, as the market was concerned in its ability both to remain relevant in an AI world and to create a brand in the US. We exited the holding mid-way through the period. Jet2 (-29%) has suffered from negative sentiment surrounding UK consumer spending, with a late booking cycle for holidays making it more challenging to dynamically price to maximise profitability this summer. We continue to hold Jet2, where recent data has shown that, despite the late booking cycle, consumers are travelling. Jet2 continues to be a leader in its market, with high customer retention rates, and the likely acquisition of EasyJet by Apollo could create further opportunities for key air traffic slots or market share.
How challenging is lacklustre UK economic growth to the portfolio?
The UK stock market is not the UK economy. While UK GDP is forecast to grow by slightly more than 1% in 2026, the companies we hold are forecast to deliver much stronger growth and investors are being asked to pay very little for that growth. One reason for this more attractive growth rate is the diversification of revenue: approximately 50% of the portfolio's revenues are generated overseas, so many holdings are UK-listed but globally exposed businesses. Many UK smaller companies depend far more on their own end markets, structural growth themes and management execution, than on the domestic macro backdrop.
Our process deliberately targets exactly these characteristics - quality companies with pricing power, structural growth and strong balance sheets that can compound value and thrive even in a low-growth world. That said, subdued domestic GDP is not entirely without impact: sentiment towards the UK market has been negative, and particularly towards smaller companies given their more domestic tilt than their larger counterparts. This has been a headwind for demand for the asset class, and it has left it trading at historically depressed valuations as shown in the charts later in this review. We view that as an opportunity rather than a threat. This valuation depression is also a key driver of the degree of bid activity we have seen, and continue to see, across the asset class.
Approximately half of the portfolio’s revenue is UK-generated and domestically exposed company valuations are already at low levels, meaning that even modest improvements in end markets can drive strong share-price reactions. Our focus is on businesses where we feel confident they can meet or beat earnings expectations, and we feel valuations are not reflecting the outlook we expect.
In short, weak GDP shapes sentiment more than it constrains the underlying earnings power of the portfolio holdings, and disciplined stock selection remains the most reliable driver of returns in this environment. The portfolio has delivered 16.3% earnings per share (“EPS”) growth over the last year, compared to just 5.6% for the reference index.
How has the Iran conflict impacted markets and companies?
The conflict in the Middle East was the defining macro event of the period, impacting markets primarily through the change in the oil price. A major escalation in March, centred on disruption to shipping through the Strait of Hormuz, sent Brent crude above $100 a barrel and reignited inflation fears just as price pressures had begun to stabilise. In the initial days of the conflict, the shock hit smaller companies share prices hardest, however, encouragingly, despite the macro economic volatility, smaller companies have outperformed larger companies since the conflict started, not just in the UK but in many other regions.
As the conflict de-escalated and progress was made towards a US–Iran deal to reopen the Strait, the oil price fell back from an April peak of nearly $120 to around $80, allowing risk appetite to return. Supply risks have not come to pass on oil and related commodities.
The episode has left a lasting mark on monetary policy: with inflation of 3.1% at 31 August 2026, the Bank of England has held interest rates at 3.75% and has raised the prospect that future rate increases may be needed if inflation pressures persist.
Our response has been consistent with our process; we have remained anchored in well financed businesses with pricing power, structural growth and strong management teams, which we believe are best placed to compound value through this kind of uncertain, headline driven backdrop.
What process enhancements have you made?
Our investment approach remains firmly anchored on the Quality, Growth & Momentum (“QGM”) style. We have, however, refined aspects of the process to ensure stock selection, rather than factor exposure, is the primary driver of returns, particularly through the use of our extensive risk tools.
Specifically, we have made the following changes.
Firstly, we have taken a broader approach to what defines Quality; both quantitative and qualitative characteristics. This has been seen in portfolio actions, for example providing a better understanding of how sectors such as UK contractors and mining businesses have improved their Quality characteristics over recent periods and are now suitable candidates for our QGM process.
Secondly, we are controlling the extent of our factor exposures so that outcomes are increasingly determined by individual company fundamentals. That shift is already visible in the portfolio's risk profile, with stock-specific risk now more prominent than factor risk.
Thirdly, we have strengthened the integration of macro awareness through risk tools, reflecting the shifting interest rate environment and broader backdrop, including scenario analysis to understand how holdings behave under different conditions, such as stagflation. This aligns with the control of factor exposures, and increased awareness about how different macro environments may impact the portfolio.
Fourthly, while we retain our QGM tilts, we have enhanced the valuation discipline to mitigate the risk of de-rating even when earnings are delivered. In practice, this means being more sensitive to highly valued stocks where continued earnings upgrades become critical, and acting earlier and being more decisive in selling holdings that continue to underperform, or where the investment case has played out.
The Matrix remains central as a tool for identifying where the best QGM opportunities are evolving from, with earnings momentum a large influence.
Importantly, these are enhancements rather than a change of philosophy: the aim is for greater consistency in returns and better protection in tougher more macro driven market environments, giving our stock selection a fairer chance to shine. We believe the process enhancements created better balance in the portfolio during the second half of the year, which should benefit during periods where macro and style volatility are high and Value as a style is in favour. Investment decisions are made on a longer term view and we hope to see improved outcomes in the year ahead.
How is the portfolio positioned to navigate more volatile market conditions?
Building greater balance and resilience into the portfolio was a deliberate focus over the year and was a direct outcome of our process enhancements. We remain in volatile and ever changing stock markets, with factors such as inflation, interest rates, and global conflicts making the direction of markets less clear at both a style and sector level.
The risk profile of the portfolio at the end of the year was more prominent towards stock-specific than factor risk. We believe this means that performance should be driven more by individual company fundamentals rather than broad style, sector or market movements. Our risk tools have helped us to better understand the risk exposures at each stock level, helping portfolio construction.
That balance is reinforced by genuine diversification of revenue: approximately 50% of the portfolio's revenues are generated overseas, so many holdings are UK-listed but globally exposed.
We retain a healthy spread across structural themes including UK infrastructure, quality industrials, hard assets (those linked to assets such as commodities and infrastructure) and defensive, cash-generative compounders.
Given the combination of attractive valuations and more resilient outlooks in many of the UK domestic holdings, we feel confident they deserve a place in a balanced portfolio. This includes companies which are resilient and have end market strength (for example, UK contractors and food producers), as well as businesses going through a more challenging environment but where we believe that is reflected in outlooks and valuations (for example, travel companies such as Jet2 and On the Beach).
Importantly, this is a balance achieved without diluting our style: we retain our clear QGM tilts, but with tighter control of factor exposures and a greater emphasis on stock selection. We believe this positions the portfolio to be more resilient through volatile, macro-driven markets while still being able to deliver returns from businesses with strong balance sheets, pricing power and structural growth.
Portfolio turnover has been higher; is that a sign of enthusiasm for opportunities?
Turnover in the portfolio has averaged 25% over the last 5 years, reflecting our long-term buy-and-hold philosophy. However, turnover for the year ended 30 June 2026 was higher than usual, at 37%. Markets are currently in a period of shorter cycles, both economically and in terms of style performance. The decade of 2010-2020 of one macro environment is long behind us.
Last year's higher activity was driven by two related factors.
Firstly, genuine enthusiasm for new ideas: our research continues to generate a strong pipeline and there is healthy competition for capital within the portfolio, meaning new opportunities have to earn their place by displacing existing holdings. Given factor rotation in the market in recent years, we believe we are able to capture good QGM opportunities at very attractive valuations.
Secondly, and just as important, it reflects the deliberate portfolio actions that sit behind our process enhancements - controlling factor exposures, being more decisive in selling holdings that have continued to underperform or where valuations have become stretched, and taking earlier entry positions in companies where we see earnings momentum potential.
The higher turnover is not a change in philosophy; it is a combination of a rich opportunity set and a more decisive, disciplined approach to shaping the portfolio's risk profile, with the aim of letting stock selection drive returns. As referred to above, it is also impacted by the shorter cycles we are seeing in markets which could structurally increase turnover levels.
The “hard assets” exposures mentioned earlier were built up over the year. In the mining sector, we now hold Pan African Resources (a gold miner in South Africa and Australia), Atalaya Mining (a Spanish copper miner) and Capital Drilling (a drilling services company diversified by commodity and geography). We also bought into Helios Towers, an African telecoms tower infrastructure business. Ashmore is an emerging markets fund manager, where after many years of being out of favour, that asset class looks to be gathering momentum. Softcat and Computacenter are both IT services and software businesses, benefitting from AI capital expenditure. Sigmaroc is a lime/limestone business, with exposures across Europe dominated by construction and varied industrial end markets. James Fisher (defence, energy and maritime services) and Greencore (UK food producer) are companies we believe have improvement strategies which can drive growth and margins. Finally, in the financials sector we added Shawbrook (the specialist UK lender) and Plus 500 (a global multi-asset financial technology group).
What conditions are supportive of the UK Smaller Companies market and the portfolio?
It has been encouraging to see that, despite the macro volatility, smaller companies in the UK have outperformed large companies since the US-Iran conflict began, as they have in many other regions over the same period. Valuations remain at historic discounts to large companies, as they also do to global peers.
We have recently undergone UK political leadership change and we await the Budget in October to see how decisions around taxation and spending will be likely to impact growth.
Smaller companies yield as much as their larger counterparts for the first time in over two decades, their valuations are significantly below long term averages, overseas investors are increasingly being seen investing in the sector, and there are continuous bids for UK businesses at significant premiums to current market values highlighting the inherent value opportunity.
Abby Glennie and Amanda Yeaman
Aberdeen
21 October 2026
Investment Portfolio
As at 30 June 2026
Valuation
Total
Valuation
2026
portfolio
2025
Company
Sector
£’000
%
£’000
Morgan Sindall
Construction and Materials
10,049
3.9
17,454
AJ Bell
Investment Banking and Brokerage Services
9,535
3.7
8,444
Applied Nutrition
Food Producers
7,653
2.9
4,244
Cairn Homes
Household Goods and Home Construction
7,591
2.9
11,073
Tatton Asset Management
Investment Banking and Brokerage Services
7,519
2.9
8,538
Balfour Beatty
Construction and Materials
7,366
2.8
-
Paragon Banking
Finance and Credit Services
7,304
2.8
14,832
Galliford Try
Construction and Materials
7,245
2.8
1,336
Hill & Smith
Industrial Metals and Mining
7,231
2.8
6,976
Volution
Construction and Materials
7,153
2.7
11,990
Top ten investments
78,646
30.2
Cranswick
Food Producers
6,997
2.7
14,033
Sirius Real Estate
Real Estate Investment Trusts
6,088
2.3
9,207
Volex
Electronic and Electrical Equipment
6,073
2.3
5,513
Avon Technologies
Aerospace and Defense
6,033
2.3
11,829
Helios Towers
Telecommunications Service Providers
5,872
2.3
-
Bloomsbury Publishing
Media
5,351
2.1
4,567
Hunting
Oil, Gas and Coal
5,316
2.0
7,486
Plus500
Investment Banking and Brokerage Services
5,294
2.0
-
Computacenter
Software and Computer Services
5,134
2.0
-
Alfa
Software and Computer Services
5,090
2.0
5,344
Top twenty investments
135,894
52.2
ME Group
Leisure Goods
4,988
1.9
12,780
Premier Foods
Food Producers
4,972
1.9
10,176
Mortgage Advice Bureau
Finance and Credit Services
4,669
1.8
11,538
Pan African Resources
Precious Metals and Mining
4,470
1.7
-
Jet2
Travel and Leisure
4,377
1.7
11,670
CVS
Health Care Providers
4,279
1.6
7,377
TBC Bank Group
Banks
4,219
1.6
-
Mitie Group
Industrial Support Services
4,026
1.6
-
Chemring
Aerospace and Defense
4,024
1.6
7,981
Auction Technology
Software and Computer Services
3,937
1.5
4,039
Top thirty investments
179,855
69.1
Ashtead Technology
Oil, Gas and Coal
3,915
1.5
7,789
XPS Pensions
Investment Banking and Brokerage Services
3,908
1.5
13,723
Atalaya Mining
Industrial Metals and Mining
3,815
1.5
-
Diploma
Industrial Support Services
3,789
1.5
7,481
Craneware
Health Care Providers
3,711
1.4
6,431
Renew Holdings
Construction and Materials
3,611
1.4
3,853
Greencore
Food Producers
3,533
1.4
-
Coats
General Industrials
3,499
1.3
6,122
Ashmore
Finance and Credit Services
3,480
1.3
-
Boku
Industrial Support Services
3,265
1.3
5,645
Top forty investments
216,381
83.2
Softcat
Software and Computer Services
3,126
1.2
-
Rosebank Industries
Electronic and Electrical Equipment
3,062
1.2
-
Sigmaroc
Construction and Materials
3,047
1.2
-
Johnson Service
Industrial Support Services
2,951
1.1
8,756
Capital Drilling
Industrial Metals and Mining
2,920
1.1
-
Savills
Real Estate Investment and Services
2,864
1.1
5,081
Vesuvius
Industrial Engineering
2,842
1.1
-
Shawbrook
Banks
2,799
1.1
-
Dunelm Group
Retailers
2,720
1.0
-
Games Workshop
Leisure Goods
2,698
1.0
8,431
Top fifty investments
245,410
94.3
GB Group
Software and Computer Services
2,608
1.0
-
Wickes
Retailers
2,580
1.0
2,484
Rotork
Electronic and Electrical Equipment
2,509
1.0
4,058
On the beach
Travel and Leisure
2,485
0.9
2,856
Next 15
Media
2,004
0.8
2,112
Fisher (James) & Sons
Industrial Transportation
1,749
0.7
-
LBG Media
Media
788
0.3
3,028
Total portfolio
260,133
100.0
All investments are equity investments.
Sector Distribution of Investments
As at 30 June 2026
Portfolio weighting
2026
2025
%
%
Basic Materials
7.1
1.8
Industrial Metals and Mining
5.4
1.8
Precious Metals and Mining
1.7
–
Consumer Discretionary
13.6
21.7
Consumer Services
–
1.9
Household Goods and Home Construction
2.9
5.0
Leisure Goods
2.9
5.5
Media
3.2
3.6
Retailers
2.0
0.6
Travel and Leisure
2.6
5.1
Consumer Staples
8.9
9.4
Food Producers
8.9
9.4
Energy
3.5
5.1
Oil, Gas and Coal
3.5
5.1
Financials
18.7
19.6
Banks
2.7
–
Finance and Credit Services
5.9
6.9
Investment Banking and Brokerage Services
10.1
12.7
Health Care
3.0
1.7
Health Care Providers
3.0
1.7
Industrials
31.8
25.7
Aerospace and Defense
3.9
5.2
Construction and Materials
14.8
10.6
Electronic and Electrical Equipment
4.5
2.6
General Industrials
1.3
1.6
Industrial Engineering
1.1
–
Industrial Support Services
5.5
5.7
Industrial Transportation
0.7
–
Real Estate
3.4
3.7
Real Estate Investment and Services
1.1
1.3
Real Estate Investment Trusts
2.3
2.4
Technology
7.7
6.8
Software and Computer Services
7.7
6.0
Technology Hardware and Equipment
–
0.8
Telecommunications
2.3
4.5
Telecommunications Service Providers
2.3
4.5
Total
100.0
100.0
Directors’ Report (extract)
The Directors present their report and the audited financial statements of the Company for the year ended 30 June 2026.
Results and Dividends
The financial statements for the year ended 30 June 2026 are contained below. A first interim dividend of 4.50p per Ordinary share was paid on 17 April 2026 and the Directors have declared a second interim dividend of 9.50p per Ordinary share, payable on 27 November 2026 to shareholders on the register on 6 November 2026. The ex-dividend date is 5 November 2026.
Principal Activity and Status
The Company is registered as a public limited company in Scotland under company number SC145455, is an investment company within the meaning of Section 833 of the Companies Act 2006 and carries on business as an investment trust.
The Company has been accepted as an investment trust under Sections 1158 and 1159 of the Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory Instrument 2011/2999. The Directors are of the opinion that the Company has conducted its affairs so as to be able to retain such approval.
The Company intends to manage its affairs so that its Ordinary shares continue to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account.
Capital Structure and Voting Rights
The Company’s issued share capital at 30 June 2026 consisted of 45,440,230 (2025: 61,783,713) Ordinary shares of 25 pence each and there were 58,724,192 (2025: 42,380,709) Ordinary shares held in treasury.
During the year 16,343,483 Ordinary shares were bought back into treasury.
Since the year end, the Company has bought back a further 2,657,002 Ordinary shares into treasury. Accordingly, as at the date of this Report, the Company’s issued share capital consisted of 42,783,228 Ordinary shares of 25 pence each and 61,381,194 Ordinary shares held in treasury.
Each ordinary shareholder is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary share held.
Management Agreement
The Company has appointed abrdn Fund Managers Limited (“aFML”), a wholly owned subsidiary of Aberdeen Group plc, as its Alternative Investment Fund Manager (the “Manager”). aFML has been appointed to provide investment management, risk management, administration and company secretarial services, and promotional activities to the Company. The Company's portfolio is managed by abrdn Investment Management Limited (the “Investment Manager”) by way of a group delegation agreement in place between it and aFML. In addition, aFML has sub-delegated administrative and secretarial services to Aberdeen Corporate Secretary Limited (previously abrdn Holdings Limited) and promotional activities to abrdn Investments Limited.
With effect from 1 July 2023, the management fee was calculated quarterly in arrears at a rate of 0.75% per annum on the first £175 million of the Company’s net assets, 0.65% per annum on net assets above this threshold until £550 million, and 0.55% on net assets above this threshold.
With effect from 1 April 2025, the management fee is calculated at a rate of 0.60% per annum on the first £200 million of the Company’s net assets and 0.55% on net assets above this threshold.
The Manager also receives a separate fee for the provision of promotional activities to the Company. Further details of the fees payable to the Manager are shown in notes 4 and 5 to the financial statements.
The management agreement is terminable on not less than six months’ notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.
Directors
Stephen Russell was appointed as an independent non-executive Director on 1 April 2026. At the year end, there were six independent non-executive Directors. Liz Airey is the Chair and Tim Scholefield is the Senior Independent Director.
Having served as a Director for nine years, Tim Scholefield will retire from the Board at the Annual General Meeting. All of the other Directors will retire and, being eligible, offer themselves for election/re-election at the Annual General Meeting.
The Directors attended scheduled Board and Committee meetings during the year ended 30 June 2026 as follows (with their eligibility to attend the relevant meetings in brackets):
Board Meetings
Audit Committee
Meetings
Management
Engagement
Committee
Meetings
Nomination Committee Meetings
Liz Airey
4 (4)
- (-)A
1 (1)
1 (1)
Ashton Bradbury
4 (4)
2 (2)
1 (1)
1 (1)
Alexa Henderson
3 (4)
2 (2)
- (1)
- (1)
Manju Malhotra
4 (4)
2 (2)
1 (1)
1 (1)
Stephen Russell
1 (1)
- (-)
1 (1)
1 (1)
Tim Scholefield
4 (4)
2 (2)
1 (1)
1 (1)
A Liz Airey is not a member of the Audit Committee but attends the meetings by invitation
The Board meets more frequently when business needs require.
The Board believes that all the Directors seeking election/re-election remain independent of the Manager and free from any relationship which could materially interfere with the exercise of their judgement on issues of strategy, performance, resources and standards of conduct. The Board believes that each Director has the requisite high level and range of business, investment and financial experience which enables the Board to provide clear and effective leadership and proper governance of the Company. Following formal performance evaluations, each Director’s performance continues to be effective and demonstrates commitment to the role, and their individual performances contribute to the long-term sustainable success of the Company. In addition, all Directors have demonstrated that they have sufficient time to fulfil their directorial roles with the Company. The Board therefore recommends the election/re-election of each of the Directors at the Annual General Meeting.
External Agencies
The Board has contractually delegated to external agencies, including the Manager and other service providers, certain services including: the management of the investment portfolio, the day-to-day accounting and company secretarial requirements, the depositary services (which include cash monitoring, the custody and safeguarding of the Company’s financial instruments and monitoring the Company’s compliance with investment limits and leverage requirements) and the share registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered in so far as they relate to the affairs of the Company. In addition, ad hoc reports and information are supplied to the Board as requested.
Board Diversity
The Board recognises the importance of having a range of skilled and experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, socio-economic background, religion, ethnic or national origins or disability in considering the appointment of its Directors. In view of its size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. In doing so, the Board will take account of the targets set out in the FCA’s Listing Rules, which are set out in the tables below.
The Board has resolved that the Company’s year end date is the most appropriate date for disclosure purposes. The following information has been provided by each Director through the completion of questionnaires. There have been no changes since the year end.
Board Gender as at 30 June 2026
Number of Board members
Percentage of the Board
Number of senior positions on the Board
(note 3)
Number in executive management
Percentage of executive management
Men
3
50%
2
n/a
n/a
Women
3
50%
(note 1)
3
Not specified/prefer not to say
-
-
-
Board Ethnic Background as at 30 June 2026
Number of Board members
Percentage of the Board
Number of senior positions on the Board
(note 3)
Number in executive management
Percentage of executive management
White British or other White
(including minority-white groups)5
83%
4
n/a
n/a
Asian/Asian British
1
(note 2)
17%
1
Not specified/prefer not to say
-
-
-
Notes:
1. Meets target that at least 40% of Directors are women as set out in LR 6.6.6R (9)(a)(i).
2. Meets target that at least one Director is from a minority ethnic background as set out in LR 6.6.6R (9)(a)(iii).
3. The Board considers that the role of Chair, Senior Independent Director (“SID”), and the chairs of the Audit Committee, Management Engagement Committee and Nomination Committee are senior Board positions. The Company is externally managed and does not have any executive staff. Specifically, it does not have either a CEO or CFO as set out in LR 6.6.6R (9)(a)(ii).
Board’s Policy on Tenure
In normal circumstances, it is the Board’s expectation that Directors will not serve beyond the Annual General Meeting following the ninth anniversary of their appointment. However, the Board takes the view that independence of individual Directors is not necessarily compromised by length of tenure on the Board and that continuity and experience can add significantly to the Board’s strength. The Board believes that recommendation for re-election should be on an individual basis following a rigorous review which assesses the contribution made by the Director concerned, but also taking into account the need for regular refreshment and diversity.
It is the Board’s policy that the Chair of the Board will not normally serve as a Director beyond the Annual General Meeting following the ninth anniversary of his or her appointment to the Board. However, this may be extended in certain circumstances or to facilitate effective succession planning and the development of a diverse Board. In such a situation the reasons for the extension will be fully explained to shareholders and a timetable for the departure of the Chair clearly set out.
The Role of the Chair and Senior Independent Director
The Chair is responsible for providing effective leadership to the Board, by setting the tone of the Company, demonstrating objective judgement and promoting a culture of openness and debate. The Chair facilitates the effective contribution and encourages active engagement by each Director. In conjunction with the Company Secretary, the Chair ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chair acts upon the results of the Board evaluation process by recognising strengths and addressing any weaknesses and also ensures that the Board engages with major shareholders and that all Directors understand shareholder views.
The Senior Independent Director acts as a sounding board for the Chair and acts as an intermediary for other Directors, when necessary. Working closely with the Nomination Committee, the Senior Independent Director takes responsibility for an orderly succession process for the Chair, and leads the annual appraisal of the Chair’s performance. The Senior Independent Director is also available to shareholders to discuss any concerns they may have.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, each Director prepares a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his or her connected persons. The Board considers each Director’s situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director’s ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential, or actual, conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although all Directors are issued with letters of appointment. Other than the deeds of indemnity, there were no contracts during, or at the end of the year, in which any Director was interested.
The Company has a policy of conducting its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and has procedures in place that are proportionate to the Company’s circumstances to prevent them. The Manager also adopts a group-wide zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. Copies of the Manager’s anti-bribery and corruption policies are available on its website.
In relation to the corporate offence of failing to prevent tax evasion, it is the Company’s policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.
Directors’ and Officers’ Liability Insurance
The Company’s Articles of Association provide for each of the Directors to be indemnified out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. In addition, the Company has entered into separate deeds of indemnity with each of the Directors, reflecting the scope of the indemnity in the Articles. Directors’ and Officers’ liability insurance cover has been maintained throughout the financial year at the expense of the Company.
Corporate Governance
The Company is committed to high standards of corporate governance. The Board is accountable to the Company’s shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code as published in January 2024 (the “UK Code”), which is available on the Financial Reporting Council’s (the “FRC”) website: frc.org.uk.
The Board has also considered the principles and provisions of the AIC Corporate Governance Code as published in August 2024 (the “AIC Code”). The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to investment companies. The AIC Code is available on the AIC’s website: theaic.co.uk. It includes an explanation of how the AIC Code adapts the principles and provisions set out in the UK Code to make them relevant for investment companies.
The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the Financial Reporting Council (“FRC”), provides more relevant information to shareholders.
The Board confirms that, during the year, the Company complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
- interaction with the workforce (provisions 2, 5 and 6);
- the role and responsibility of the chief executive (provisions 9 and 14);
- requirement of the chairman of a remuneration committee to have served on a remuneration committee for at least 12 months prior to appointment (provision 32); and
- executive directors’ remuneration (provisions 33 and 36 to 41).
These provisions are not repeated in the AIC Code and the Board considers that they are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company’s day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.
Full details of the Company’s compliance with AIC Code can be found on its website.
Substantial Interests
Information provided to the Company by major shareholders pursuant to the FCA’s Disclosure, Guidance and Transparency Rules are published by the Company via a Regulatory Information Service.
The table below sets out the interests in 3% or more of the issued share capital of the Company, of which the Board was aware as at 30 June 2026.
Shareholder
Number of Ordinary shares
% held
Interactive Investor
9,281,066
20.4
Hargreaves Lansdown
5,687,893
12.5
RBC Brewin Dolphin
3,619,019
8.0
AJ Bell
2,792,204
6.1
Rathbones
2,154,085
4.7
Charles Stanley
1,758,718
3.9
West Yorkshire Pension Fund
1,559,694
3.4
HSDL Stockbrokers
1,375,869
3.0
The Company has not been notified of any changes to share holdings since the end of the year.
Going Concern
As set out in more detail in the Chair’s Statement, it is proposed that the Company combines with JPMorgan UK Small Cap Growth & Income plc (“JUGI”). The combination, if approved by each company's shareholders, will be effected by way of a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986 and the associated transfer of part of the assets and undertaking of the Company to JUGI in exchange for the issue of new ordinary shares in JUGI (the “Scheme”). The outcome of the general meetings to make the Scheme effective represents a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern.
Notwithstanding this material uncertainty, the Board has concluded that it remains appropriate to continue to prepare the financial statements on a going concern basis. In reaching this conclusion, the Board has come to the view that, as the Scheme is contingent on shareholder approval and the Company is considered solvent in all other regards, there is no irrevocable path to liquidation and thus going concern remains the most appropriate basis for preparation. In reaching this conclusion, the Board has also given due consideration to the risks associated with the Scheme.
The Board has also given consideration to the liquidity of the investment portfolio. The Company’s assets consist mainly of equity shares in companies listed on recognised stock exchanges and are considered by the Board to be realisable within a short timescale under normal market conditions. The Board has set overall limits for borrowing and reviews regularly the Company’s level of gearing, cash flow projections and compliance with banking covenants, including the headroom available. The Board has also performed stress testing and liquidity analysis.
The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report and they believe that the Company has adequate financial resources to continue in operational existence for a period of not less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that the Company’s diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term funding requirements were they to arise, as well as share buy back commitments. The Directors have also reviewed the revenue and ongoing expenses forecasts for the coming year and considered the Company’s Statement of Financial Position as at 30 June 2026 which shows net current liabilities of £13.3 million at that date, and do not consider this to be a concern due to the liquidity of the portfolio which would enable the Company to meet any short term liabilities if required.
Accountability and Audit
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s Auditor is unaware and each Director has taken all the steps that 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.
Independent Auditor
The Company’s Independent Auditor, Johnston Carmichael LLP, has indicated its willingness to remain in office. Resolutions to approve Johnston Carmichael LLP’s re-appointment for the year to 30 June 2027 and to authorise the Directors to determine its remuneration will be proposed at the Annual General Meeting.
Financial Instruments
The financial risk management objectives and policies arising from financial instruments and the exposure of the Company to risk are disclosed in note 16 to the financial statements.
Relations with Shareholders
The Directors place a great deal of importance on communications with shareholders. Shareholders and investors may obtain up to date information on the Company through its website and from the Manager and Company Secretary (see Contact Addresses).
Aberdeen Corporate Secretary Limited (previously abrdn Holdings Limited) has been appointed Company Secretary to the Company. Whilst Aberdeen Corporate Secretary Limited is a wholly owned subsidiary of Aberdeen Group plc, there is a clear separation of roles between the Manager and Company Secretary with different board compositions and different reporting lines in place. The Board notes that, in accordance with Market Abuse Regulations, procedures are in place to control the dissemination of information within the Aberdeen Group when necessary. Where correspondence addressed to the Board is received there is full disclosure to the Board. This is kept confidential if the subject matter of the correspondence requires confidentiality.
The Board’s policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (including the Company Secretary or the Manager) in situations where direct communication is required. In addition, representatives from the Manager meet with major shareholders on at least an annual basis in order to gauge their views, and report back to the Board on these meetings.
The Company’s Annual General Meeting provides a forum for communication primarily with private shareholders and is attended by the Board. The Investment Manager makes a presentation at the meeting and all shareholders have the opportunity to put questions to both the Board and the Manager/Investment Manager at the meeting.
The notice of the Annual General Meeting is sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Manager at the meeting.
Annual General Meeting
The Annual General Meeting (“AGM”) has been convened for 10.00am on Thursday 31 December 2026.
If the proposed scheme for the Company to combine with JPMorgan UK Small Cap Growth & Income plc, as set out in the Chair’s Statement, is implemented prior to the date of the AGM, then the meeting will be adjourned indefinitely.
By order of the Board
Aberdeen Corporate Secretary Limited
Company Secretary
1 George Street
Edinburgh EH2 2LL
21 October 2026
Statement of Directors’ Responsibilities in Respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 ‘The Financial Reporting Standard Applicable in the UK and Republic of Ireland’ 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 judgments and estimates that are reasonable, relevant and prudent;
- state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.Responsibility Statement of the Directors in Respect of the Annual Financial Report
The Directors confirm that to the best of their knowledge:
- the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
- the Strategic Report and Directors’ Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces; and
- the Annual Report taken as a whole, is fair, balanced and understandable and it provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
On behalf of the Board
Liz Airey
Chair
21 October 2026
Statement of Comprehensive Income
Year ended 30 June 2026
Year ended 30 June 2025
Revenue
Capital
Total
Revenue
Capital
Total
Notes
£’000
£’000
£’000
£’000
£’000
£’000
Net (losses)/gains on investments held at fair value
10
–
(25,792)
(25,792)
–
11,512
11,512
Income
3
8,877
–
8,877
11,344
–
11,344
Investment management fee
4
(402)
(1,207)
(1,609)
(622)
(1,867)
(2,489)
Other administrative expenses
5
(722)
(49)
(771)
(781)
–
(781)
Net return before finance costs and taxation
7,753
(27,048)
(19,295)
9,941
9,645
19,586
Finance costs
6
(455)
(1,365)
(1,820)
(611)
(1,832)
(2,443)
Return before taxation
7,298
(28,413)
(21,115)
9,330
7,813
17,143
Taxation
7
(11)
–
(11)
–
–
–
Return after taxation
7,287
(28,413)
(21,126)
9,330
7,813
17,143
Return per Ordinary share (pence)
9
13.90
(54.21)
(40.31)
13.52
11.32
24.84
The total column of this statement represents the profit and loss account of the Company. The ‘Revenue’ and ‘Capital’ columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the financial statements.
Statement of Financial Position
As at
As at
30 June 2026
30 June 2025
Notes
£’000
£’000
Non-current assets
Investments held at fair value through profit or loss
10
260,133
383,829
Current assets
Debtors
11
1,499
951
Cash and cash equivalents
12,136
16,218
13,635
17,169
Current liabilities
Creditors: other amounts falling due within one year
12
(1,884)
(1,812)
Bank overdraft
(2)
–
Bank loan
12
(25,000)
(39,991)
(26,886)
(41,803)
Net current liabilities
(13,251)
(24,634)
Total assets less current liabilities
246,882
359,195
Net assets
246,882
359,195
Capital and reserves
Called-up share capital
13
26,041
26,041
Share premium account
–
170,146
Special distributable reserve
102,640
–
Capital reserve
14
103,925
148,574
Revenue reserve
14,276
14,434
Equity shareholders’ funds
246,882
359,195
Net asset value per Ordinary share (pence)
15
543.31
581.37
The financial statements were approved by the Board of Directors on 21 October 2026 and were signed on its behalf by:
Liz Airey
Chair
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Equity
For the year ended 30 June 2026
Share
Special
Share
premium
distributable
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 30 June 2025
26,041
170,146
–
148,574
14,434
359,195
Return after taxation
–
–
–
(28,413)
7,287
(21,126)
Cancellation of share premium account
–
(170,146)
170,146
–
–
–
Buyback of Ordinary shares into Treasury (see note 13)
–
–
(67,506)
(16,236)
–
(83,742)
Dividends paid (see note 8)
–
–
–
–
(7,445)
(7,445)
Balance at 30 June 2026
26,041
–
102,640
103,925
14,276
246,882
For the year ended 30 June 2025
Share
Special
Share
premium
distributable
Capital
Revenue
capital
account
reserve
reserve
reserve
Total
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 30 June 2024
26,041
170,146
–
203,375
13,527
413,089
Return after taxation
–
–
–
7,813
9,330
17,143
Buyback of Ordinary shares into Treasury (see note 13)
–
–
–
(62,614)
–
(62,614)
Dividends paid (see note 8)
–
–
–
–
(8,423)
(8,423)
Balance at 30 June 2025
26,041
170,146
–
148,574
14,434
359,195
The capital reserve at 30 June 2026 is split between realised of £92,417,000 and unrealised of £11,508,000 (30 June 2025 – realised £71,720,000 and unrealised of £76,854,000).
The Company’s reserves available to be distributed by way of dividends or share buybacks which include the revenue reserve, the special distributable reserve and the realised element of the capital reserve amount to £209,333,000 (30 June 2025 – £86,154,000).
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows
Year ended
Year ended
30 June 2026
30 June 2025
£’000
£’000
Operating activities
Net return before taxation
(21,115)
17,143
Adjustment for:
Losses/(gains) on investments
25,792
(11,512)
Decrease in accrued dividend and interest income
238
1,609
Finance costs
1,820
2,443
Increase in other debtors
(1)
(1)
Decrease in other creditors
(130)
(84)
Overseas withholding tax suffered
(11)
–
Net cash inflow from operating activities
6,593
9,598
Investing activities
Purchases of investments
(109,051)
(119,283)
Sales of investments
206,247
183,672
Net cash inflow from investing activities
97,196
64,389
Financing activities
Bank and loan interest paid
(1,999)
(2,496)
Repurchase of Ordinary shares into Treasury
(83,429)
(62,770)
Drawdown of loan
25,000
–
Repayment of loan
(40,000)
–
Equity dividends paid
(7,445)
(8,423)
Net cash outflow from financing activities
(107,873)
(73,689)
(Decrease)/increase in cash and cash equivalents
(4,084)
298
Analysis of changes in cash and cash equivalents during the year
Opening balance
16,218
15,920
(Decrease)/increase in cash and cash equivalents as above
(4,084)
298
Closing balance
12,134
16,218
Represented by:
Cash at bank and in hand
(2)
5
Investments in AAA-rated money market funds
12,136
16,213
12,134
16,218
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
For the year ended 30 June 2026
1.
Principal activity
The Company is a closed-end investment company, registered in Scotland No SC145455, with its Ordinary shares being listed on the London Stock Exchange.
2.
Accounting policies
a)
Basis of accounting. The financial statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued in July 2022. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
The accounting policies applied are unchanged from the prior year and have been applied consistently.
Going concern with a Material Uncertainty. As set out in more detail in the Chair’s Statement, it is proposed that the Company combines with JP Morgan UK Small Cap Growth & Income plc (JUGI). The combination, if approved by each company’s shareholders, will be effected by way of a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986 and the associated transfer of part of the assets and undertaking of the Company to JUGI in exchange for the issue of new ordinary shares in JUGI (the “Scheme”). The outcome of the general meetings to make the Scheme effective represents a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern.
Notwithstanding this material uncertainty, the Board has concluded that it remains appropriate to continue to prepare the financial statements on a going concern basis. In reaching this conclusion, the Board has come to the view that, as the Scheme is contingent on shareholder approval and the Company is considered solvent in all other regards, there is no irrevocable path to liquidation and thus going concern remains the most appropriate basis for preparation. In reaching this conclusion, the Board has also given due consideration to the risks associated with the Scheme.
The Company’s assets consist mainly of equity shares in companies listed on recognised stock exchanges and are considered by the Board to be realisable within a short timescale under normal market conditions. The Board has set overall limits for borrowing and reviews regularly the Company’s level of gearing, cash flow projections and compliance with banking covenants. The Board has also performed stress testing and liquidity analysis.
As at 30 June 2026, the Company had drawn down £25 million from a £40 million ‘evergreen’ facility with Bank of America which will continue until such time as the Company or the lender provide notice of termination in accordance with the agreement.
The Directors are mindful of the Principal Risks and Uncertainties disclosed in the Strategic Report and they believe that the Company has adequate financial resources to continue in operational existence for a period of not less than 12 months from the date of approval of this Report. They have arrived at this conclusion having confirmed that the Company’s diversified portfolio of realisable securities is sufficiently liquid and could be used to meet short-term funding requirements were they to arise. The Directors have also reviewed the revenue and ongoing expenses forecasts for the coming year and considered the Company’s Statement of Financial Position as at 30 June 2026 which shows net current liabilities of £13.3 million at that date, and do not consider this to be a concern due to the liquidity of the portfolio which would enable the Company to meet any short-term liabilities if required.
b)
Investments. Investments have been designated upon initial recognition as fair value through profit or loss.This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company’s documented investment strategy, and information about the grouping is provided internally on that basis.
Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery to be made within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value. For listed investments, this is deemed to be closing bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all the FTSE All-Share and the most liquid AIM constituents.
Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
c)
Income. Income from equity investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are credited to revenue or capital in the Statement of Comprehensive Income, according to the circumstances of the underlying payment. Foreign income is converted at the exchange rate applicable at the time of receipt. Interest receivable on short-term deposits and money market funds is accounted for on an accruals basis under the effective interest method.
d)
Expenses and interest payable. Expenses are accounted for on an accruals basis. Expenses are charged to the capital column of the Statement of Comprehensive Income when they are incurred in connection with the maintenance or enhancement of the value of investments. The investment management fee and relevant finance costs are allocated 25% to revenue and 75% to the capital columns of the Statement of Comprehensive Income in line with the Board’s expectation of returns from the Company’s investments over the long term in the form of revenue and capital respectively (see notes 4 and 6). Legal and Professional fees incurred in relation to the cancellation of the share premium account have been allocated 100% to capital.
Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement of Comprehensive Income.
e)
Dividends payable. Dividends are recognised in the period in which they are paid.
f)
Nature and purpose of reserves
Called-up share capital. The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. This reserve is not distributable.
Share premium account. The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 25p. This reserve is not distributable. Following shareholder approval at the General Meeting on 21 May 2025, the Company received court approval, by way of a court order dated 15 August 2025, for cancellation of the entire amount standing to the credit of the Share premium account, being approximately £170 million.
Special distributable reserve. Following cancellation of the share premium account,as described above, approximately £170 million was credited to a special distributable reserve which is available to fund the cost of share buy backs and future dividend payments, if required. The Board believes that it is in the Company’s interest to have this flexibility in its reserves, although the Board has no current intention of using the new reserve for dividend payments which it expects will continue to be resourced through annual net revenues and revenue reserves.
Capital reserve. Gains or losses on disposal of investments and changes in fair values of investments are transferred to the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The part of this reserve represented by realised capital gains is available for distribution by way of share buybacks and dividends.
Revenue reserve. Income and expenses which are recognised in the revenue column of the Statement of Comprehensive Income are transferred to the revenue reserve. The revenue reserve is available for distribution including by way of dividend.
g)
Taxation. Tax expense represents the sum of tax currently payable and deferred tax. Any tax payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the year end date.
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the year end date where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the year end date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company’s taxable profits and its results as stated in the Financial Statements which are capable of reversal in one or more subsequent periods.
Owing to the Company’s status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
h)
Foreign currency. Non-monetary assets and liabilities denominated in foreign currency carried at fair value through profit or loss are converted into Sterling at the rate of exchange ruling at the year end date. Transactions during the year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the Statement of Comprehensive Income.
i)
Cash and cash equivalents. Cash comprises bank balances and cash held by the Company. Cash equivalents are short-term, highly liquid investments, including investments in AAA-rated money market funds, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
j)
Bank borrowing. Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds received, net of direct issue costs. They are subsequently measured at amortised cost. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income under the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
k)
Treasury shares. When the Company purchases its Ordinary shares to be held in treasury, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction from the special distributable reserve or capital reserve. When these shares are sold subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is transferred to the share premium account and any resulting deficit is transferred from the special distributable reserve or capital reserve.
l)
Judgements and key sources of estimation uncertainty. Disclosure is required of judgements and estimates made by management in applying the accounting policies that have a significant effect on the Financial Statements. Investments in AAA- rated money market funds are judged to be a cash or cash equivalent due to their short-term and highly liquid nature. There is also no significant risk that they will not be realised at their carrying value. Special dividends are assessed and credited to capital or revenue according to their circumstances and are considered to require significant judgement. The Directors do not consider there to be any significant estimates within the financial statements.
3.
Income
2026
2025
£’000
£’000
Income from investments
UK dividend income
7,081
8,800
Property income distributions
142
112
Overseas dividend income
676
1,197
Special dividends
536
531
8,435
10,640
Other income
Interest from AAA-rated money market funds
442
704
Total income
8,877
11,344
4.
Investment management fee
2026
2025
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Investment management fee
402
1,207
1,609
622
1,867
2,489
The balance due to abrdn Fund Managers Limited (“aFML”) at the year end in respect of investment management fees was £715,000 (2025 – £519,000). The management fee was revised with effect from 1 April 2025. For further details see the Directors’ Report.
5.
Administrative expenses (inclusive of VAT)
2026
2025
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Promotional activitiesA
131
–
131
246
–
246
Directors’ feesB
186
–
186
169
–
169
Auditor’s remuneration:
– fees payable to the Company’s Independent Auditor for the audit of the annual accounts (excluding VAT)
43
–
43
42
–
42
– VAT on audit fees
9
–
9
8
–
8
Registrar’s fees
53
–
53
42
–
42
Legal and professional feesC
91
49
140
56
–
56
Custody fees
30
–
30
32
–
32
Depositary fees
35
–
35
47
–
47
Other expenses
144
–
144
139
–
139
722
49
771
781
–
781
A During the year ended 30 June 2026 the Company had an agreement with aFML for the provision of promotional activities. Costs relating to promotional activities during the year, inclusive of VAT, were £131,000 (2025 – £246,000) and the amount due to aFML at the year end was £50,000 (2025 – £365,000).
B Increase in 2026 includes the appointment of Mr Russell with effect from 1 April 2026.
C Legal and professional fees charged to capital relate to the cancellation of the share premium account.
6.
Finance costs
2026
2025
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Bank loan interest
451
1,353
1,804
604
1,812
2,416
Non-utilisation fees
2
5
7
-
-
-
Amortisation of loan arrangement expenses
2
7
9
7
20
27
455
1,365
1,820
611
1,832
2,443
7.
Taxation
(a)
Analysis of charge for year
2026
2025
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Overseas withholding tax suffered
11
-
11
-
-
-
Total tax charge for the year
11
-
11
-
-
-
(b)
Provision for deferred taxation. At 30 June 2026, the Company had unutilised management expenses and loan relationship losses of £93,478,000 (2025 - £89,863,000). A deferred tax asset has not been recognised on the unutilised management expenses and loan relationship losses as it is unlikely there will be suitable future taxable profits against which these tax losses could be deducted. Therefore, it is unlikely that the Company will generate future taxable revenue that would enable the existing tax losses to be utilised.
(c)
Factors affecting the tax charge for the year. The tax charge for the year is higher (2025 – lower) than the standard rate of UK corporation tax for the period of 25% (2025 – 25%). The differences are explained in the following table:
2026
2025
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Net return before taxation
7,298
(28,413)
(21,115)
9,330
7,813
17,143
Corporation tax at 25% (2025 - 25%)
1,824
(7,103)
(5,279)
2,333
1,953
4,286
Effects of:
Non-taxable UK dividend income
(1,894)
–
(1,894)
(2,633)
-
(2,633)
Non-taxable overseas dividend income
(179)
–
(179)
-
-
-
Management expenses and loan relationship losses not utilised
249
655
904
300
925
1,225
Non-taxable losses/ (gains) on investments
-
6,448
6,448
-
(2,878)
(2,878)
Irrecoverable overseas withholding tax
11
-
11
-
-
-
Total tax charge
11
–
11
-
-
-
8.
Dividends
2026
2025
£’000
£’000
Amounts recognised as distributions to equity holders in the period:
2025 final dividend of 9.50p per share (2024 - 8.30p) paid on 28 November 2025
5,296
6,003
2026 interim dividend of 4.50p per share (2025 - 3.70p) paid on 17 April 2026
2,149
2,420
7,445
8,423
The second interim dividend in respect of the year has not been included as a liability in these financial statements.
Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 1158-1159 of the Corporation Taxes Act 2010 are considered. The net revenue available for distribution by way of dividend for the year is £7,287,000 (2025 - £9,330,000).
2026
2025
£’000
£’000
First interim dividend 2026 of 4.50p per share (2025 – 3.70p) paid on 17 April 2026
2,149
2,420
Second interim dividend 2026 of 9.50p per share (2025 final dividend – 9.50p) payable on 27 November 2026
4,064
5,538
6,213
7,958
The amount payable for the second interim dividend is based on the Ordinary shares in issue as at the date of approval of this Report, 21 October 2026, which satisfies the requirement of Section 1159 of the Corporation Tax Act 2010.
9.
Return per Ordinary share
2026
2025
p
£000
p
£000
Basic
Revenue return
13.90
7,287
13.52
9,330
Capital return
(54.21)
(28,413)
11.32
7,813
Total return
(40.31)
(21,126)
24.84
17,143
Weighted average number of Ordinary shares in issue
52,407,920
69,016,410
10.
Investments held at fair value through profit or loss
2026
2025
£’000
£’000
Opening book cost
306,975
343,678
Opening investment holdings gains
76,854
93,011
Opening fair value
383,829
436,689
Additions at cost
109,128
119,318
Disposals - proceeds
(207,032)
(183,690)
(Losses)/gains
(25,792)
11,512
Closing fair value
260,133
383,829
2026
2025
£’000
£’000
Closing book cost
248,625
306,975
Closing investment holding gains
11,508
76,854
Closing fair value
260,133
383,829
All investments are in equity shares listed on the London Stock Exchange.
The Company received £207,032,000 (2025 - £183,690,000) from investments sold in the period. The book cost of these investments when they were purchased was £167,478,000 (2025 - £156,021,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Transaction costs. During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within net (losses)/gains on investments held at fair value in the Statement of Comprehensive Income. The total costs were as follows:
2026
2025
£’000
£’000
Purchases
516
616
Sales
110
115
626
731
11.
Debtors
2026
2025
£’000
£’000
Amounts due from brokers
803
18
Net dividends and interest receivable
673
911
Other debtors
23
22
1,499
951
12.
Creditors: amounts falling due within one year
2026
2025
£’000
£’000
Amounts payable to brokers
112
35
Amounts payable in relation to share buybacks
740
427
Interest payable
159
347
Investment management fee payable
715
519
Sundry creditors
158
484
1,884
1,812
2026
2025
Bank loan
£’000
£’000
Bank loan
25,000
40,000
Unamortised loan arrangement expenses
–
(9)
25,000
39,991
On 13 August 2025, the Company entered into a new secured credit facility of £40 million with Bank of America. The new facility is an ‘evergreen’ facility which will continue until such time as the Company or the lender provide notice of termination in accordance with the agreement. At 30 June 2026, £25 million was drawn down at an interest rate of 4.73%. This facility replaced the previous three year revolving credit facility of £40 million (the “RCF”) held with The Royal Bank of Scotland International Limited which was repaid in full on 13 August 2025.
There were no loan arrangement expenses associated with the new ‘evergreen’ secured credit facility. At 30 June 2025 the RCF was shown in the Statement of Financial Position net of unamortised expenses of £9,000.
The terms of the ‘evergreen’ facility contains covenants that the Net Asset Value must not be less than £125 million (previously £200 million until amended on 26 March 2026) and that the percentage of borrowings against the Adjusted Portfolio Value, defined in the agreement as the Total Net Asset Value adjusted for 100% of the aggregate market value of any Unlisted Investments, shall not exceed 30%. The Company complied with all covenants throughout the year.
13.
Called-up share capital
2026
2025
Number
£’000
Number
£’000
Authorised
150,000,000
37,500
150,000,000
37,500
Issued and fully paid:
Ordinary shares of 25p each
45,440,230
11,360
61,783,713
15,446
Held in treasury:
58,724,192
14,681
42,380,709
10,595
104,164,422
26,041
104,164,422
26,041
Ordinary shares
Treasury shares
Total
Number
Number
Number
Opening balance
61,783,713
42,380,709
104,164,422
Share buybacks
(16,343,483)
16,343,483
–
Closing balance
45,440,230
58,724,192
104,164,422
During the year the Company repurchased 16,343,483 (2025 – 12,486,822) Ordinary shares to treasury at a cost of £83,742,000 (2025 – £62,614,000).
Share buybacks were funded from the capital reserve up to and including 14 August 2025. From 15 August 2025, the effective date of when the share premium account was cancelled, share buybacks are funded from the special distributable reserve.
14.
Capital reserve
2026
2025
£’000
£’000
Opening balance
148,574
203,375
Unrealised losses on investment holdings
(65,346)
(16,157)
Gains on realisation of investments at fair value
39,554
27,669
Management fee charged to capital
(1,207)
(1,867)
Finance costs charged to capital
(1,365)
(1,832)
Expenses charged to capital
(49)
–
Buyback of Ordinary shares into treasury
(16,236)
(62,614)
Closing balance
103,925
148,574
The capital reserve includes investment holding gains amounting to £11,508,000 (2025 – gains of £76,854,000) as disclosed in note 10.
15.
Net asset value per share
Total shareholders’ funds have been calculated in accordance with the provisions of applicable accounting standards. The analysis of total shareholders’ funds on the face of the Statement of Financial Position reflects the rights, under the Articles of Association, of the Ordinary shareholders on a return of assets.
2026
2025
Net assets attributable (£’000)
246,882
359,195
Number of Ordinary shares in issue at year endA
45,440,230
61,783,713
Net asset value per share
543.31p
581.37p
A Excluding shares held in treasury.
16.
Financial instruments
The Company’s financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions for the purpose of managing currency and market risks arising from the Company’s activities. No such transactions took place during the year.
The main risks the Company faces from its financial instruments are i) market price risk (comprising interest rate risk, currency risk and other price risk), ii) liquidity risk and iii) credit risk. There was no material currency risk to the Company for the period given its investing and financing activities are in the UK.
The Board regularly reviews and agrees policies for managing each of these risks. The Manager’s policies for managing these risks are summarised below and have been applied throughout the year.
i)
Market price risk. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – interest rate risk, currency risk and other price risk.
Interest rate risk
Interest rate movements may affect:
– the level of income receivable on cash deposits and money market funds;
– interest payable on the Company’s variable rate borrowings.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
As at 30 June 2026, the Company had drawn down £25 million from the £40 million secured ‘evergreen’ credit facility with Bank of America (2025 – £40 million drawn down from revolving credit facility with The Royal Bank of Scotland International Limited).
Interest risk profile. The interest rate risk profile of the portfolio of financial assets and liabilities at the year end date was as follows:
Weighted average
Weighted
period for which
average
Fixed
Floating
rate is fixed
interest rate
rate
rate
As at 30 June 2026
Years
%
£’000
£’000
Assets
Investments in AAA-rated money market funds
–
3.96
–
12,136
Total assets
–
–
–
12,136
Liabilities
Bank overdraft
–
7.23
–
2
Bank loan
0.12
4.73
25,000
–
Total liabilities
–
–
25,000
2
Weighted average
Weighted
period for which
average
Fixed
Floating
rate is fixed
interest rate
rate
rate
As at 30 June 2025
Years
%
£’000
£’000
Assets
Investments in AAA-rated money market funds
–
4.38
–
16,213
Cash at bank and in hand
–
2.72
–
5
Total assets
–
–
–
16,218
Liabilities
Bank loan
0.10
5.76
40,000
–
Total liabilities
–
–
40,000
–
The weighted average interest rate is based on the current yield of each asset, weighted by its market value.
The floating rate assets consist of investments in AAA-rated money market funds and cash deposits on call earning interest at prevailing market rates.
All financial liabilities are measured at amortised cost.
Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates at the year end date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
If interest rates had been 100 basis points higher and all other variables were held constant, the Company’s result for the year ended 30 June 2026 and net assets would increase by £121,000 (2025 – increase by £162,000). If interest rates had been 100 basis points lower and all other variables were held constant, the Company’s result for the year ended 30 June 2026 and net assets would decrease by £121,000 (2025 – decrease by £162,000). This is mainly attributable to the Company’s exposure to interest rates on its floating rate cash balances and money market funds.
Other price risk. Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
It is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are mainly listed on the London Stock Exchange.
Other price risk sensitivity. If market prices at the year end date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary Shareholders for the year ended 30 June 2026 would have increased/decreased by £26,013,000 (2025 – increase/decrease of £38,383,000). This is based on the Company’s equity portfolio held at each year end.
ii)
Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Liquidity risk is not considered to be significant as the Company’s assets comprise mainly readily realisable securities and AAA-rated money market funds, which can be sold to meet funding commitments if necessary. Subject to compliance with the terms of the ‘evergreen’ credit facility, including relevant covenant compliance, the Company has the ability to make future loan drawdowns during the period until such time as the Company or the lender provide notice of termination in accordance with the agreement. The maturity of the Company’s existing borrowings is set out below.
Due between
Expected
Due within
3 months
Due after
cash flows
3 months
and 1 year
1 year
As at 30 June 2026
£’000
£’000
£’000
£’000
Bank loan
25,298
25,298
–
–
Due between
Expected
Due within
3 months
Due after
cash flows
3 months
and 1 year
1 year
As at 30 June 2025
£’000
£’000
£’000
£’000
Bank loan
40,581
40,581
–
–
iii)
Credit risk. This is failure of the counter party to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
The risk is not significant, and is managed as follows:
– investment transactions are carried out with a number of brokers, whose credit-standing is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker;
– the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, both stock and cash reconciliations to the Custodians’ records are performed on a daily basis to ensure discrepancies are investigated on a timely basis;
– cash is held only with reputable banks with high quality external credit enhancements.
None of the Company’s financial assets are secured by collateral or other credit enhancements.
Credit risk exposure. In summary, compared to the amounts in the Statement of Financial Position, the maximum exposure to credit risk at 30 June was as follows:
2026
2025
Statement of
Maximum
Statement of
Maximum
Financial Position
exposure
Financial Position
exposure
Current assets
£’000
£’000
£’000
£’000
Debtors
803
803
18
18
Cash and cash equivalents
12,136
12,136
16,218
16,218
12,939
12,939
16,236
16,236
None of the Company’s financial assets is past due or impaired.
17.
Analysis of changes in net debt
At
Non-cash
At
30 June 2025
Cash flows
movements
30 June 2026
£’000
£’000
£’000
£’000
Cash and cash equivalents
16,218
(4,084)
-
12,134
Debt due in less than one year
(39,991)
15,000
(9)
(25,000)
(23,773)
10,916
(9)
(12,866)
At
Non-cash
At
30 June 2024
Cash flows
movements
30 June 2025
£’000
£’000
£’000
£’000
Cash and cash equivalents
15,920
298
-
16,218
Debt due in less than one year
(39,964)
-
(27)
(39,991)
(24,044)
298
(27)
(23,773)
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.
18.
Capital management
The investment objective of the Company is to achieve long term capital growth by investment in UK quoted smaller companies.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to Shareholders through the optimisation of the debt and equity balance.
The Company’s capital comprises the following:
2026
2025
£’000
£’000
Equity
Equity share capital
26,041
26,041
Reserves
220,841
333,154
Liabilities
Bank overdraft
2
–
Bank loan
25,000
39,991
271,884
399,186
The Company’s net gearing comprises the following:
2026
2025
£’000
£’000
Bank overdraft
(2)
–
Bank loan
(25,000)
(39,991)
Cash and cash equivalents
12,136
16,218
Amounts due from brokers
803
18
Amounts payable to brokers
(112)
(35)
Net gearing (borrowings less cash and money market fund investments)
(12,175)
(23,790)
Net assets
246,882
359,195
Net gearing (%)
4.9
6.6
The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes:
– the planned level of gearing which takes account of the Investment Manager’s views on the market;
– the level of equity shares;
– the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
The Company does not have any externally imposed capital requirements.
19.
Fair value hierarchy
FRS 102 requires an entity to classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications:
Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
All of the Company’s investments are in quoted equities (2025 – same) that are actively traded on recognised stock exchanges, with their fair value being determined by reference to their quoted closing bid prices at the reporting date. The total value of the investments of £260,133,000 (2025 – £383,829,000) have therefore been deemed as Level 1.
The fair value of the £25 million secured credit facility loan as at the 30 June 2026 is £25,000,000, due to it being short-term in nature, with a par value per Statement of Financial Position of £25,000,000. Under the fair value hierarchy in accordance with FRS 102, these borrowings can be classified at Level 2.
20.
Transactions with the Manager
The Company has an agreement with abrdn Fund Managers Limited for the provision of management services. The management fee is calculated and payable quarterly in arrears at a rate of 0.60% per annum on the first £200 million of net assets and 0.55% on net assets above £200 million. Prior to 1 April 2025, the management fee was charged at 0.75% per annum on the first £175 million of net assets, 0.65% per annum on net assets between £175 million and £550 million and 0.55% on net assets above £550 million.
The Manager also receives a separate fee to cover the provision of promotional activities as disclosed in note 5.
21.
Related party transactions
The Directors of the Company received fees for their services. Further details are provided in the Directors’ Remuneration Report.
22.
Subsequent events
On 18 September 2026 the Board announced that it had agreed heads of terms with the board of JP Morgan UK Small Cap Growth & Income plc (“JUGI”) in respect of a proposed combination of the Company with JUGI. The combination, if approved by each company’s shareholders, will be effected by way of a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986 with the associated transfer of part of the assets and undertaking of the Company to JUGI in exchange for the issue of new ordinary shares in JUGI (the “Scheme”). Under the terms of the Scheme an up to 35 per cent cash exit opportunity will be offered to the Company’s shareholders to realise part of their investment in the Company at a 2% discount to the adjusted net asset value.
Subsequent to the year end, up to the date of approval of this Report, the Company repurchased a further 2,657,002 Ordinary shares to be held in treasury at a cost of £13,820,000.
Alternative Performance Measures
The Directors assess the Company’s performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies. Where the calculation of an APM is not detailed within the financial statements, an explanation of the methodology employed is provided below:
Discount
A discount is the percentage by which the market price is lower than the Net Asset Value (“NAV”) per share.
30 June 2026
30 June 2025
Share price
496.00p
529.00p
Net Asset Value per share
543.31p
581.37p
Discount
8.7%
9.0%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents divided by shareholders’ funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due from and to brokers at the period end as well as cash and short-term deposits.
30 June 2026
30 June 2025
£’000
£’000
Total borrowings A
(25,000)
(39,991)
Cash and short term deposits
(2)
5
Investments in AAA-rated money market funds
12,136
16,213
Amounts due from brokers
803
18
Amounts payable to brokers
(112)
(35)
Total cash and money market fund investmentsB
12,825
16,201
Net gearing (borrowings less cash and money market fund investments)C=A+B
(12,175)
(23,790)
Shareholders’ fundsD
246,882
359,195
Net gearingC/D
4.9%
6.6%
Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC, which is defined as the total of investment management fees and recurring administrative expenses and expressed as a percentage of the average of published daily net asset values throughout the year.
30 June 2026
30 June 2025
£’000
£’000
Investment management feeA
1,609
2,489
Administrative expensesB
771
781
Less: non-recurring chargesC
(110)
(11)
Ongoing charges
2,270
3,259
Average daily net assets
293,250
385,637
Ongoing charges ratio
0.77%
0.85%
A See note 4.
B See note 5 .
C Comprises professional fees not expected to recur.
The ongoing charges ratio differs from the other ongoing costs figure reported in the Company’s Key Information Document calculated in line with the PRIIPs regulations, which includes the ongoing charges ratio and the financing and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price have performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return assumes reinvesting the net dividend paid by the Company back into the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return assumes reinvesting the net dividend back into the share price of the Company on the date on which that dividend goes ex-dividend.
NAV total return
Year ended 30 June 2026
2026
2025
Opening NAV
581.37p
556.19p
Closing NAV
543.31p
581.37p
(Decrease)/increase in NAV
(38.06)p
25.18p
% (Decrease)/increase in NAV
(6.5)%
4.5%
Uplift from reinvestment of dividendsA
2.4%
2.3%
NAV total return (decrease)/increase
(4.1)%
6.8%
A The uplift from reinvestment of dividends assumes that the dividends of 9.5p in November 2025 and 4.5p in April 2026 (8.3p and 3.7p in 2024/25) paid by the Company were reinvested in the NAV of the Company on the ex-dividend date.
Share price total return
Year ended 30 June 2026
2026
2025
Opening share price
529.00p
486.50p
Closing share price
496.00p
529.00p
(Decrease)/increase in share price
(33.00)p
42.50p
% (Decrease)/increase in share price
(6.2)%
8.7%
Uplift from reinvestment of dividendsA
2.6%
2.7%
Share price total return (decrease)/increase
(3.6)%
11.4%
A The uplift from reinvestment of dividends assumes that the dividends of 9.5p in November 2025 and 4.5p in April 2026 (8.3p and 3.7p in 2024/25) paid by the Company were reinvested in the shares of the Company on the ex-dividend date.
Additional Notes to the Annual Financial Report
The Annual General Meeting (“AGM”) has been convened for 10.00am on Thursday 31 December 2026. If the proposed scheme for the Company to combine with JPMorgan UK Small Cap Growth & Income plc, as set out in the Chair’s Statement, is implemented prior to the date of the AGM, then the meeting will be adjourned indefinitely.
The second interim dividend for the financial year, of 9.5p per share, will be paid on 27 November 2026 to shareholders on the register on 6 November 2026, with an associated ex-dividend date of 5 November 2026.
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 June 2026 have been agreed with the auditor and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2025 and 2026 statutory accounts received unqualified reports from the Company's auditor and did not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006. The financial information for 2025 is derived from the statutory accounts for 2025 which have been delivered to the Registrar of Companies. The 2026 accounts will be filed with the Registrar of Companies in due course.
The Annual Report and Accounts will be posted to shareholders in October 2026. Copies will be available during normal business hours from the Secretary, Aberdeen Corporate Secretary Limited, 1 George Street, Edinburgh EH2 2LL or from the Company’s website: www.aberdeenuksmallercompaniesgrowthtrust.co.uk*
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested.
By order of the Board
Aberdeen Corporate Secretary Limited
Company Secretary
21 October 2026* Neither the Company’s website nor the content of any website accessible from hyperlinks on it (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
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