Aberforth Smaller Companies Trust Plc - Final Results
Audited Annual Results for the year to
The following is an extract from the Company's Annual Report and Financial Statements for the year to
FINANCIAL HIGHLIGHTS
Year to
31 December 2025
Net Asset Value per Ordinary Share Total Return 7.9%
DNSCI (XIC) Total Return 12.7%
Ordinary Share Price Total Return 10.8%
Total ordinary dividends (excluding special dividend) for the year of 46.80p per share represents growth of 7.3% compared to last year’s 43.60p per share. In addition, a special dividend of 12.00p (last year: 6.00p) results in total dividends of 58.80p per share for the year.
INVESTMENT OBJECTIVE
The investment objective of the Company is to achieve a net asset value total return (with dividends reinvested) greater than that of the Deutsche Numis Smaller Companies Index (excluding Investment Companies) (“DNSCI (XIC)” or “benchmark”) over the long term.
CHAIRMAN’S STATEMENT TO SHAREHOLDERS
Review of performance
ASCoT completed its 35th year in the twelve months to
ASCoT’s long term performance record is strong. Since inception in 1990, ASCoT’s net asset value total return has compounded at an 11.7% annual rate, which compares with 9.7% for the DNSCI (XIC).
Investment background in 2025
Donald Trump’s second presidency took shape in the opening months of 2025. It was dominated by the so-called Liberation Day tariffs, which shocked financial markets and sent share prices around the world lower. The long lasting impact on businesses is unclear since the measures are subject to legal challenge in the US itself and negotiations between countries continue. However, after their initial consternation, markets took confidence from a series of trade deals that indicate a pragmatism on the part of the US’s trading partners, and that would seem to reduce the risk of a spiralling trade war. Sentiment also improved as geopolitical risk eased. The war in
However, I would note that the strong returns in 2025 were not the preserve of the AI leaders, as the performance of larger companies in the
Dividends
Despite the caution about the state of the UK’s politics and economy, the Investment Income from Revenue that ASCoT received from its investee companies grew by 7% in 2025. This outcome was better than the Managers’ estimates at the start of the year and surpassed the previous high point in 2023. The Revenue Return per Ordinary Share was 64.0p. Excluding special dividends received in both years, the Revenue Return per Ordinary Share rose by 13% in 2025 compared with 2024. This good rate of progress was helped by the year’s share buy-back activity, which is described below.
The Board’s ambition is to grow ASCoT’s full year ordinary dividend above the year-on-year rate of CPI inflation, which was 3.4% in
The Board proposes a final dividend of 32.5p per Ordinary Share, which compares with the previous year’s 30.0p. Together with the interim dividend of 14.3p, the full year dividend would be 46.8p. Growth for the full year dividend would be 7.3%, which would be comfortably above the rate of inflation. On top of the ordinary dividend, we propose a special dividend of 12.0p, which brings the total dividend to 58.8p per share and ensures that ASCoT complies with HMRC’s minimum retention test for investment trusts. The total of these means that ASCoT would distribute c.£47m in the form of dividends to its Shareholders in respect of 2025. Even after these payments, ASCoT would be able to retain 5.2p of revenue per Ordinary Share. This would increase revenue reserves to 99.1p per Ordinary Share to keep the ordinary dividend covered close to a healthy two times.
Share buy-backs
The Board and Managers have two aims for ASCoT’s share buy-backs. First, when conducted at a discount to net asset value, they deliver an economic uplift for those Shareholders wishing to remain invested in the Company. Second, they provide additional liquidity at the margin for those Shareholders looking to crystallise their investment. An additional benefit is that consistently applied share buy-backs may bring additional tension to the share price of an investment trust when the market loses sight of the portfolio’s value. This last point is less certain since the discount depends on many factors that the Board and Managers cannot influence. Nevertheless, the reasons for buy-backs are convincing and ASCoT was active in 2025.
In the year to
Abnormal market circumstances may influence the pace of buy-backs, but ASCoT can fund them over time through cash generated from the natural turnover of the portfolio. This is consistent with the Managers’ value investment philosophy and has been supported by the high level of M&A activity in recent years. Additional flexibility is provided by the credit facility with the
The Company seeks authority to buy back up to 14.99% of its Ordinary Shares at each Annual General Meeting. Shareholders voted in favour in
Gearing
The ability to gear is an important differentiator for investment trusts. The Board’s gearing policy has been consistent throughout ASCoT’s life. Gearing is deployed in a tactical fashion with the aim of taking advantage of periods of stress in equity markets. ASCoT has been geared on four occasions in its 35 years. The current phase started amid the pandemic in early 2020 and has since enhanced ASCoT’s net asset value performance. The Board and Managers regularly review the level of gearing. They judge that it remains appropriate in view of the attractive stockmarket valuations and the prospects for the profitability of the underlying companies. At the year end, £75m of gearing was deployed and the gearing ratio, which is defined in the glossary on page 68 of the Annual Report, was 5%. Beyond the potential to enhance investment returns, the credit facility provides other benefits. It gives flexibility to conduct share buy-backs and allows the Managers to react nimbly to new opportunities without disturbing existing investments. This is particularly important in what can be a volatile and relatively illiquid asset class.
ASCoT has a credit facility with
Annual General Meeting (AGM) and continuation vote
The AGM will be held at
It is the Company’s policy to hold a continuation vote every three years. March’s Annual General Meeting will include the eleventh such vote in its history. The Board views the continuation vote as an important shareholder right and encourages all Shareholders to exercise it.
ASCoT’s performance in the continuation vote period just completed was frustrating. The difficult conclusion to 2025 meant that ASCoT under-performed the DNSCI (XIC) over the three years to
Importantly, it is clear to us that there has been no deviation from how the Managers have always implemented ASCoT’s investment policy. Their value investment discipline, fundamental analysis of companies and constructive approach to stewardship are all unchanged. Confidence in this allows us to look to longer term patterns of performance. A corollary of the Managers’ consistency is a volatility to ASCoT’s relative performance, even over three year periods, as the mood of the stockmarket ebbs and flows.
For much of the most recent continuation vote period, the stockmarket’s mood was one of gloom towards the UK’s politics and economy, with further uncertainty emanating from the US’s experiment with tariffs. These factors affected sentiment towards and valuations of many smaller companies. From our interactions with the Managers, we know that they have confidence in the resilience of many smaller companies and that they are therefore comfortable investing in such businesses, notwithstanding their greater sensitivity to swings in economic activity. We saw this sensitivity in action during the pandemic in 2020, when ASCoT’s investment performance suffered particularly badly as economic activity collapsed. Clearly, the reasons for the economic uncertainty then were different from today’s, but the Managers’ confidence in the resilience of the portfolio’s businesses was vindicated as the recovery took hold.
This has not been the first continuation vote period in which ASCoT’s total return has lagged its benchmark’s. For the Board, the reassuring point is that the consistency of the investment approach has allowed a rebound in ASCoT’s fortunes in earlier instances and has underpinned an excellent record of relative and absolute performance over longer time periods. Three years ago, following a continuation vote period in which ASCoT out-performed the DNSCI (XIC), I observed that ASCoT’s differentiated and consistent investment proposition “does not guarantee superior performance every year, but it does improve the likelihood of success over time” . The relevance of this point stands, which gives the Board confidence to focus on the investment opportunity at hand and on ASCoT’s prospective returns.
Conclusion
The Managers’ Report addresses ASCoT’s investment opportunity in detail. I would draw out the following points as important aspects of what is a positive outlook.
• Sentiment towards the
• We have a good idea why this pessimism persists. The dominant narrative since the EU Referendum – almost ten years ago now – has been one of political dysfunction and economic stagnation in the
• Large companies have shrugged off these concerns – even domestically oriented companies such as the banks have participated in the FTSE All-Share’s resurgence. History gives encouragement that where large companies lead small companies follow.
• My personal suspicion is that the
• In recent years, ASCoT’s portfolio holdings have endured a pandemic, a surge in inflation, higher interest rates and a recession. In the Board’s discussions with the Managers about the investee companies, we are struck by their resilience. They have retained strong balance sheets and continued to generate cash, which is coming back to their shareholders in the form of rising dividends and share buy-backs.
• The underlying qualities and valuations of these companies are being recognised, though not yet in a broad fashion. The beneficiaries hitherto have been overseas companies and private equity who are responsible for the still high rate of M&A within the small company universe. Another lesson from history is that when the appetite for small companies improves share prices move rapidly and substantially.
• The current lack of interest in small
None of this is to deny the risks confronting smaller companies, from domestic politics, through the threat of a trade war and actual conflicts, to the implications of the vast investment in AI. However, investment is always risky. The returns generated by equities over time have been the rewards for exposing capital to risk. In my experience, what is crucial is that the capital should be deployed in assets whose valuations provide a margin of safety and should be managed in accordance with a tried and tested investment process.
On both counts, ASCoT’s record suggests that it is well positioned. The Managers’ approach to the asset class sets the portfolio apart from the majority of small company funds. It has driven good returns to Shareholders over time and the Board notes that the Managers continue to add to their personal holdings in ASCoT. We also recognise the advantages of ASCoT’s investment trust status, particularly when operating in a relatively illiquid and volatile asset class such as small
I would also note that ASCoT enjoys significant flexibility in its capital allocation by virtue of its natural portfolio turnover, ability to gear and revenue reserves. These features allow meaningful sums to be returned to Shareholders – dividends and share buy-backs totalled £107m in respect of 2025. The Board is therefore optimistic about ASCoT’s prospects from here and recommends that Shareholders vote in favour of the Company’s continuation at March’s AGM.
Ahead of that event, my fellow Directors and I welcome views and questions from Shareholders. Please contact me at my e-mail address, which is noted below.
Chairman
richard.davidson@aberforth.co.uk
MANAGERS’ REPORT
Introduction
Since inception in 1990, ASCoT’s purpose has been to achieve a net asset value total return greater than that of the DNSCI (XIC) over the long term. To achieve this objective, the Managers have applied a consistent and differentiated investment strategy, which has three notable aspects.
• The basis of the investment process is understanding companies within the DNSCI (XIC). The Managers consider factors such as financial performance, competitive dynamics and capital allocation priorities, as well as relevant environmental and social matters. Company analysis is conducted by individual investment managers, but decisions about which stocks merit a place in the portfolio are taken by the full investment team. The team is experienced and well-resourced. It is often the case that it has known investee companies for longer than the directors running the companies.
• Stock selection is guided by a value investment philosophy. The reason for this is that there is strong historical evidence that a value premium can be harvested within equity markets over time. In practice, the Managers seek companies whose share prices are trading at wide discounts to their true values. As the gap between the two narrows, positions are reduced, with the proceeds recycled into other companies with greater upside, a process that the Managers term the “value roll”.
• Consideration of governance issues and engagement with company directors, especially chairs, is an important element of Aberforth’s investment process. Throughout ASCoT’s history, the Managers have aimed to engage in a purposeful, discreet and constructive fashion, both as part of their research and to effect change if necessary. They engage on any topic that affects a company’s valuation and are willing to be taken inside for extended periods. In return for this commitment to responsible stewardship of their clients’ capital, the Managers expect that consultation will be timely and that they will not be presented with faits accomplis by the boards of investee companies.
The consistent application of these features does not guarantee strong returns in each year. However, it does ensure that ASCoT benefits from a differentiated and relevant investment strategy, which has contributed to a good outcome for investors over ASCoT’s 35 years.
Performance
ASCoT’s superior total returns since its inception are shown in the table below. The table also shows performance data for the three year continuation vote period that ended on
CAGR to 31
Total returns 2023 2024 2025 December 2025
3 years Inception
ASCoT NAV +8.2% +12.1% +7.9% +9.4% +11.7%
DNSCI (XIC) +10.1% +9.5% +12.7% +10.8% +9.7%
FTSE All-Share +7.9% +9.5% +24.0% +13.6% +8.5%
MSCI World (£ terms) +18.0% +21.6% +13.2% +17.5% +9.9%
• Equity returns through the continuation vote period were positive, supported by the continued recovery from the pandemic.
• The strongest performance came from the
• Perhaps the most notable number in the table is the resurgence of the
• The strength of the FTSE All-Share in 2025 meant that smaller companies under-performed large over the three years. This large cap out-performance is considered in greater detail below.
• ASCoT’s total return lagged that of the benchmark across the continuation vote period. This was largely a result of a disappointing outcome for 2025 and so the performance analysis commentary later in this report focuses on events in 2025.
Over the past three years, the valuations of small
• The former group, the domestics, comprises consumer-oriented companies, such as retailers, leisure businesses and media companies. It accounts for around 53% of the revenues of DNSCI (XIC) constituents. These companies were most severely affected by Brexit and by lockdown during the pandemic. They operated resiliently in the face of these challenges but were confronted in 2025 by intensifying concerns about the
• The overseas facing companies tend to be industrial businesses and account for the other 47% of the DNSCI (XIC)’s total revenues. They were less affected by the pandemic and their profitability even benefited from the EU referendum as sterling weakened in its aftermath. The disruption of supply chains in the wake of the pandemic, along with the conflicts in
These twin pressures have hampered the valuation of smaller companies, particularly those whose profits are perceived to be more sensitive to broader economic activity. This has affected ASCoT's performance since many of the most attractively valued smaller companies today are in the more economically sensitive sectors of the stockmarket. Indeed, the market's near term fears of cyclicality can often be what presents the Managers with investment opportunity as they take a longer term view of a business's underlying qualities and profit potential.
For most of the three year continuation vote period, gloom about the
Smaller companies are being penalised for their very size and relative illiquidity, rather than for fundamental reasons. This suspicion is backed up by analysis of the dividend characteristics of the DNSCI (XIC) and the FTSE All Share. For the first time since the global financial crisis, the dividend yield of the DNSCI (XIC) is higher than the FTSE All-Share’s. This is despite small companies’ average dividend cover being above that of large companies and despite small companies’ balance sheets being stronger than those of large companies. Moreover, dividend growth of the DNSCI (XIC) has remained superior to that of the FTSE All-Share. Since 2015 – the year before the EU referendum and therefore a fair starting point – small company dividend growth has been 63%, whereas large company dividend growth has been 29%. Since 2019 – the year before the pandemic – small companies have grown their dividends by 23%, whereas large companies have seen their aggregate dividends decline by 6%.
The superior dividend growth from smaller companies is evident in almost all time periods and supports the growing dividends paid by ASCoT to its Shareholders. These dividends also benefit from how the Managers invest ASCoT’s capital. An important facet of the process is the “value roll”, in which capital is rotated from companies with low upside to the Managers’ target prices into companies with high upsides. This rotation implies that capital is moved from companies with low dividend yields into those with high dividend yields, a dynamic that enhances the income earned by the portfolio over time. This has enabled ASCoT’s dividends to grow by 7.1% per annum since inception in 1990, well ahead of the DNSCI (XIC)’s 4.9%, the FTSE All-Share’s 3.4% and the consumer price index at 2.4%. The steadiness and consistency of ASCoT’s dividend growth contrast with the volatility of annual capital performance. They have also contributed to the good absolute and relative total returns that ASCoT has achieved over time.
Influences on performance in 2025
In 2025, ASCoT’s NAV total return was 7.9%, which was behind the DNSCI (XIC)’s 12.7%. The table below sets out the contribution of certain factors to ASCoT’s relative return. As usual, the most important influence was the investment portfolio. The paragraphs that follow provide context and explanation for the portfolio’s performance in 2025.
For the twelve months ended31 December 2025 Basis points Attributable to the portfolio of investments, based on mid prices (429) (after transaction costs of 18 basis points) Movement in mid to bid price spread 12 Cash/gearing (27) Purchase of ordinary shares 54 Management fee (70) Other expenses (12) Total attribution based on bid prices (472) Note: 100 basis points = 1%. Total Attribution is the difference between the total return of the NAV and the Benchmark Index (i.e. NAV = 7.95%; Benchmark Index = 12.67%; difference is -4.72% being -472 basis points).
Economic cyclicality
As described above, ASCoT’s returns in 2025 were influenced by concerns about economic activity both domestically and overseas. Many of the most attractively valued companies within the DNSCI (XIC) at present are perceived as sensitive to the economic cycle. The Managers are prepared to look beyond these near term concerns, putting more store in the resilience of business models, records of profit progress from cycle to cycle and strength of balance sheets. Such bouts of concern are not unusual in ASCoT’s 35 year history. Economic cyclicality hampered ASCoT’s performance in 2025, but it is the Managers’ experience that the stockmarket tends to under-estimate the resilience of smaller companies and thus creates the conditions for a strong recovery in due course.
Value style
The Managers follow a value investment philosophy. They calculate target valuations for existing and potential investments. These are influenced by fundamental analysis of the companies, judgement informed by experience, and reference to other relevant valuations in equity markets or corporate activity. Growth of profits is an important component of target valuations, but the Managers find that stockmarket valuations are often too generous in their assumptions of the sustainability and pace of growth.
To gauge the style effect on ASCoT’s performance, the Managers use analysis by the
Size, within the DNSCI (XIC)
The DNSCI (XIC) includes all main listed stocks in the
Corporate activity
The pattern is a familiar one of recent years – a lot of takeovers targeting small
On M&A, the takeovers of eleven companies in the DNSCI (XIC) were completed in 2025. On top of those, there were offers outstanding for another ten companies at the year end. Of these 21 deals, the bidders were most often trade buyers, with private equity houses less active than in 2024. The bidders were overwhelmingly from overseas, attracted by the presently low stockmarket valuations of small
Takeovers can be an effective means by which the value in ASCoT’s portfolio is realised. However, there is an important caveat. The low valuations of smaller companies mean that takeovers may be proposed on unattractive terms and that investors’ interests might be better served by rejecting the takeover approach. The risk is exacerbated by boards and some shareholders yielding too quickly to takeover interest, no doubt succumbing to the gloomy sentiment towards the
The depressed valuations of small
While the DNSCI (XIC) has not been refreshed by IPOs, it is experiencing an influx of companies that are choosing to move from AIM to the Main Market. ASCoT does not invest in AIM quoted companies except in limited circumstances. These
include when an AIM company makes a public announcement of its intention to move to the Main List. Over the past 18 months, 15 AIM quoted companies have announced an intention to relist. Of these, six completed the process in 2025 and were included in the DNSCI (XIC) on its annual rebalancing on
Income
The UK’s economic and political uncertainties contributed to a lacklustre capital performance in 2025, but the dividend performance from small
Nil Payer Cutter Unchanged Payer Increased Payer New/Returner 14 9 23 28 4
The drag on ASCoT’s income from the 9 cutters was out-weighed by the 28 companies that increased their dividends and by the four companies that either resumed dividends or paid for the first time. Overall, ASCoT’s Investment Income from Revenue, as shown in the Income Statement, rose by 7% in 2025. There was a slightly larger contribution from special dividends received than in 2024, but the effect was not significant. The 7% growth took Investment Income to its highest level in ASCoT’s 35 years, surpassing the previous high in 2023.
The historical dividend yield of ASCoT’s holdings at
Significant stakes
Engagement with the boards of investee companies has always been a crucial component of the Managers’ investment process. It is particularly relevant at present in view of the high rate of takeover activity among smaller companies and of the recent regulatory changes to the listing rules and prospectus regime. The latter are intended to make the
The Managers’ scope to engage effectively is supported by their ability to take significant stakes of up to 25% in issued share capital across their client base. At
Significant stakes bring increased influence but come with a downside in the form of illiquidity – reducing these positions by selling into the stockmarket can be difficult. However, there are compensating factors. First, the increased influence, coupled with patience and support, has contributed to improved investment outcomes – significant stakes have enhanced ASCoT’s performance over time. Second, illiquidity has been manageable. Exiting significant stakes has been facilitated by M&A or by renewed investor appetite as prospects for the business improve. Third, ASCoT’s closed-end structure is ideally suited to holding significant stakes – patient support from investors is often required as boards work to improve business performance. The Managers are confident that their approach to engagement and ability to take significant stakes have enhanced ASCoT’s returns over time and will continue to do so.
ASCoT’s gearing
As an investment trust ASCoT can employ gearing with the aim of enhancing returns from the portfolio. ASCoT’s approach to gearing is tactical and seeks to take advantage of periods of stress in economies and financial markets. It is currently geared for the fourth time in its history, having drawn on its borrowing facility amid the pandemic in early 2020. Since then, returns from small
Portfolio characteristics
The next table presents a selection of important characteristics for both the portfolio and the DNSCI (XIC). The subsequent paragraphs expand on some of these characteristics.
31 December 2025 31 December 2024
Portfolio characteristics
ASCoT DNSCI (XIC) ASCoT DNSCI (XIC)
Number of companies 78 352 79 350
Weighted average market capitalisation £578m £1,225m £649m £1,019m
Weighting in “smaller small” companies* 49% 17% 55% 21%
Weighting in companies with net cash** 39% 26% 29% 30%
Portfolio turnover 34% - 20% -
Active share 80% - 78% -
Price earnings (PE) ratio (historical) 10.5x 13.8x 9.6x 13.0x
Dividend yield (historical) 4.3% 3.4% 4.0% 3.4%
Dividend cover (historical) 2.2x 2.1x 2.6x 2.2x
*”Smaller small” companies are members of the DNSCI (XIC) that are not also members of the
Balance sheets
The following table sets out the balance sheet profile of ASCoT’s portfolio and of the Managers’ Tracked Universe. This subset of the DNSCI (XIC) represents 99% by value of the index as a whole and is made up of the 246 companies that the Managers follow closely.
Weight in companies Net cash Net debt/EBITDA< 2x Net debt/EBITDA> 2x Other* with: Portfolio 2025 39% 46% 14% 1% Tracked Universe 2025 26% 43% 24% 7% *Includes loss-makers and lenders
Balance sheets remain robust both within the portfolio and among small caps in general. Compared with a year ago, the portfolio’s exposure to companies with stronger balance sheets has risen: the weighting in companies with net cash and leverage below two times was 75% at the end of 2024 and 85% at the end of 2025. This shift reflects both the cash generation of the investee companies and portfolio activity. The stockmarket’s lack of interest in smaller companies means that stronger balance sheets are not being reflected in higher valuations. This lack of discernment has brought more companies into the Managers’ valuation range and has contributed to the higher exposure to companies with strong balance sheets.
The strength of balance sheets raises the question of how capital should be deployed. This is a frequent topic of engagement for the Managers with the boards of ASCoT’s investee companies. The highest priority should be organic investment to maintain the viability of a business and allow it to grow. This is especially pertinent at present since it seems that the economic and political uncertainty has discouraged companies from larger capital expenditure projects. After organic investment, a coherent and appropriate dividend policy is essential, optimally one that allows ordinary dividends to grow in real terms through economic cycles. After that, acquisitions may be considered, but these should be assessed against the benchmark of lower risk special dividends or share buy-backs. Many small companies again bought back shares in 2025, including 29 companies within ASCoT’s portfolio of 78 stocks.
Active share
Active share is a measure of how different a portfolio is from an index. The ratio is calculated as half of the sum of the absolute differences between each stock’s weighting in the index and its weighting in the portfolio. The higher a portfolio’s active share, the higher its chance of performing differently from the index, for better or worse. The Managers target an active share ratio of at least 70% for ASCoT’s portfolio compared with the DNSCI (XIC). At
Value roll and portfolio turnover
The main influence on ASCoT’s portfolio turnover in any period is usually the stockmarket’s appetite for small
Portfolio turnover is defined as the lower of purchases and sales divided by the average portfolio value. In 2025, turnover was 34%, which is in line with the long term average of 33%. This rate of turnover was influenced by the year’s significant takeover activity.
Environmental, social and governance (ESG)
In their analysis and assessment of companies, the Managers consider any issue that affects valuation. This includes matters that come under the umbrella term of ESG. If the Managers determine that a company’s valuation can be enhanced by addressing such an issue, they engage with the board in question. Most engagements remain concerned with governance, which reflects the Managers’ firm belief that good governance is a pre-requisite for a good performance in environmental and social terms. Examples are provided in the Stewardship & ESG section of the Managers’ website at www.aberforth.co.uk. Further details of the Managers’ approach to ESG are set out on pages 16 to 18 of the Annual Report.
Valuations
Recent Managers’ Reports have described how ASCoT benefits from a triple valuation discount. This referred to ASCoT’s portfolio being on lower valuations than small
Price earnings 35 year average 31 December 31 December 2024 31 December 2025 (PE) ratio: 2023 World equities* 16.0x 16.0x 17.0x 18.1x FTSE All-Share 15.3x 10.3x 14.6x 17.6x Smaller 13.5x 10.3x 11.9x 12.2x companies** Portfolio 12.0x 7.9x 9.6x 10.5x
*Source: Bloomberg;
Twelve months on, the triple discount remains in place, and yet there has been movement. The historical PEs of all four groups have risen, but the most significant move over the past twelve months has been among large
The following table turns to forward looking valuations. It uses the Managers’ favoured valuation metric, EV/EBITA (enterprise value to earnings before interest, tax and amortisation). Ratios are set out for the portfolio, the Tracked Universe and certain subdivisions of the Tracked Universe. The profits underlying the ratios are based on the Managers’ forecasts for each company that they track. The bullet points following the table summarise its main messages.
EV/EBITA 2024 2025 2026 ASCoT’s portfolio 7.8x 8.0x 7.2x Tracked Universe (246 stocks) 11.2x 11.1x 9.7x - 34 growth stocks 19.8x 17.5x 15.5x - 212 other stocks 10.5x 10.5x 9.1x - 113 stocks >60% revenue withinUK 11.5x 11.2x 10.1x - 113 stocks >60% revenue overseas 10.8x 10.7x 9.2x - 110 stocks > £600m market cap 12.0x 11.8x 10.4x - 136 stocks < £600m market cap 9.0x 9.0x 7.8x
• ASCoT’s EV/EBITA ratio is higher for 2025 than for 2024, which implies that profits earned by portfolio companies fell slightly in 2025. This is consistent with the slowdown in activity through the second half of the year as concern about the Budget grew. The decline in the ratio in 2026 compared with 2025 suggests that, based on the Managers’ bottom-up estimates, profits will increase again in 2026.
• The average EV/EBITA multiples of the portfolio are lower than those of the Tracked Universe. This has been a consistent feature over ASCoT’s history and is consistent with the Managers’ value investment style.
• The portfolio’s 8.0x EV/EBITA ratio for 2025 is considerably lower than the average multiple of 14.7x at which takeover offers for DNSCI (XIC) constituents have been made in the past four years.
• Each year, the Managers identify a cohort of growth stocks within the DNSCI (XIC). The 34 growth stocks for 2026 are on much higher multiples than both the portfolio and the rest of the Tracked Universe.
• The “smaller small” companies within the DNSCI (XIC) remain more attractively valued than the “larger smalls”. This explains why ASCoT’s portfolio has a relatively high exposure to the “smaller smalls”.
• For more of the period since the EU referendum, overseas facing companies have enjoyed higher valuations than have their peers that are more reliant on the UK’s domestic economy. The gap between the two narrowed in 2025 as sentiment towards the overseas cohort was affected by the tariffs.
Outlook and conclusion
The “Liberation Day” tariff announcements convulsed stockmarkets in 2025. The full effects on global trade and economic activity are still unclear, particularly when the status of some of the tariffs remains subject to legal challenge. What is clear is that companies, both in ASCoT’s portfolio and more widely, are incurring extra cost when exporting to the US. This is another factor in the broad theme of deglobalisation, which has developed since the pandemic as geopolitical tensions have intensified. The implication for ASCoT is a more uncertain outlook for its cohort of investee companies that generate their revenues outside the
Despite the tariff shock, equity valuations have recovered well from the Liberation Day nadir. Returns have been particularly good for the group of companies seen to be benefiting from AI. As 2025 ended, the hopes and valuations for the AI leaders were very high, but some caution is merited. The business models of the US technology giants are no longer capital light since AI development necessitates significant investment in computing power and infrastructure. More broadly, the US economy is becoming increasingly reliant on AI, with growth driven by the investment boom and with buoyant equity prices supporting the wealth effect. Furthermore, it is not clear what the returns on the investment will prove to be or who will emerge the eventual winners of the AI arms race, as the US technology giants compete with each other and with Chinese rivals. In the meantime, the effects of AI on companies more broadly are as yet unclear. Some business models will be challenged and it is important for the Managers to consider where these threats lie. On the other hand, it is also important to consider the productivity gains that AI promises. Despite what the relative valuations might suggest, the upside from AI investment is unlikely to be confined to the companies currently deploying the capital – it is plausible that ASCoT’s portfolio holdings can also benefit.
The more significant near term influence on the fortunes of small
• The private sector in the
• The recent Budget, while unhelpfully late in the year, was not as threatening to economic activity as feared. The Chancellor tested her fiscal rules by deferring most tax increases until later in the parliament. This pragmatism gives the economy breathing space, especially as government spending does increase in the near term. One can debate the merits of such policies, but at the margin they bode well for economic activity.
• Inflation in the
So there is good reason to believe that the
The attractiveness of this combination is being recognised by more than the Managers. The elevated rate of M&A activity shows that other companies and private equity, particularly from overseas, understand the value on offer among the constituents of the DNSCI (XIC). At the same time, traditional holders of
Over ASCoT’s 35 years, the Managers’ consistent investment approach has achieved superior returns for Shareholders. Their value investment philosophy, understanding of the companies and active engagement are particularly well suited to the current opportunity in small
The Managers’ optimism is also rooted in ASCoT’s structural advantages. Tactical gearing and share buy-backs can enhance the investment performance of the portfolio. They can also benefit from growth in the dividends paid to ASCoT’s Shareholders. The underlying resilience of the investee companies, along with ASCoT’s healthy revenue reserves, suggest that dividends can continue to grow in real terms, even in more difficult economic conditions. Finally, the closed-end nature of an investment trust affords the Managers a longer term investment horizon, allowing them to take advantage of concerns about illiquidity, to engage constructively and to support investee companies. The aim here, as always, is the improvement of investment returns for Shareholders.
Managers
DIRECTORS’ RESPONSIBILITY STATEMENT
Each of the Directors confirms to the best of their knowledge that:
(a) the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
(b) the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and
(c) the Annual Report, taken as a whole, is fair, balanced and understandable and provides information necessary for Shareholders to assess the Company’s position, performance, business model and strategy.
On behalf of the Board
Chairman
PRINCIPAL RISKS
The Board carefully considers the risks faced by the Company and seeks to manage these risks through continual review, evaluation, mitigating controls and action as necessary. A risk matrix for the Company is maintained. It groups risks into the following categories: portfolio management; investor relations; regulatory and legal; financial reporting; and core objectives. Further information regarding the Board’s governance oversight of risk and the context for risks can be found in the Corporate Governance Report on page 37 of the 2025 Annual Report. The Audit Committee Report (pages 38 to 40 of the Annual Report) details the Committee's review process, matters considered, and actions taken on internal controls and risks during the year.
The Company outsources all the main operational activities to recognised, well-established firms and the Board receives internal control reports from these firms, where available, to review the effectiveness of their control frameworks including cyber security. This review is also recorded in the Company's risk documentation.
Emerging risks are those that are still evolving, and are not fully understood, but that could have a future meaningful impact on the Company. The Board regularly reviews them and, during the year, it added to the matrix the emerging risks related to various economic and geopolitical market events and to uses of Artificial Intelligence. The Board monitors these risks and how the Managers integrate them into their investment decision making. The Board also monitored the current corporate development activity in the investment company sector and regularly considered implications for the Company and Shareholders.
Principal risks are those risks in the matrix that have the highest ratings based on likelihood and impact. They tend to be relatively consistent from year to year given the nature of the Company and its business. The principal risks faced by the Company, together with the approach taken by the Board towards them, are summarised below. To indicate the extent to which the principal risks change during the year and the level of monitoring required, each principal risk has been categorised as either dynamic risk, requiring detailed monitoring as it can change regularly, or stable risk.
Market risk
Risk–this is a portfolio management Mitigation
risk
The Managers regularly assess the
exposure to market risk when making
investment decisions and the Board
Investment performance is affected by monitors the results via the Managers’
external market risk factors, including quarterly and other reporting. The Board
those creating uncertainty about future and Managers closely monitor significant
price movements of investments. The economic and political developments
factors include geo-political and including the potential effects of
economic conditions. The Board climate change (see pages 16 to 18 of
delegates consideration of market risk the Annual Report). This remained a
to the Managers to be carried out as dynamic risk during the year, in which
part of the investment process. the Managers reported on market risks
including economic and geopolitical
issues as addressed in the Managers’
Report.
Investment strategy/performance risk
Risk–this is a portfolio management Mitigation
risk
The Board monitors performance against
The Company’s investment policy and the investment objective over the long
strategy exposes the portfolio to share term by ensuring the investment
price movements. The performance of the portfolio is managed appropriately, in
investment portfolio typically differs accordance with the investment policy
from the performance of the benchmark and strategy. The Board has outsourced
and is influenced by investment portfolio management to experienced
strategy and policy, investment style, investment managers with a clearly
stock selection, liquidity and market defined investment philosophy and
risk factors (see Market risk above and investment process. The Board receives
Note 19 in the 2025 Annual Report for regular and detailed reports on
further details). Investment in small investment performance including
companies is generally perceived to detailed portfolio analysis, risk
carry more risk than investment in profile and attribution analysis. Senior
large companies. While this is representatives of Aberforth Partners
reasonable when comparing individual attend each Board meeting. Peer group
companies, it is much less so when performance is also regularly monitored
comparing the risks inherent in by the Board. This remains a dynamic
diversified portfolios of small and risk, with detailed consideration during
large companies. the year. The Managers’ Report contains
information on portfolio investment
performance and risks.
Share price discount
Risk–this is an investor relations risk Mitigation
The Board and the Managers monitor the
Investment trust shares tend to trade at discount daily, both in absolute terms
discounts to their underlying net asset and relative to ASCoT’s peers. In this
values, but a significant share price context, the Board intends to continue
discount, related volatility, or a to use the buy- back authority as
discount significantly beyond peers’, described in the Directors’ Report, in
could reduce shareholder returns and the 2025 Annual Report. This is
confidence. considered a dynamic risk as the
discount moves daily.
Gearing risk
Risk–this is a portfolio management Mitigation
risk
Tactical gearing can negatively affect The Board and the Managers have
investment performance. In rising specifically considered the gearing
markets, gearing enhances returns, but strategy and associated risks during the
in falling markets it reduces returns year. At present this is a dynamic risk
to shareholders. as the Company’s tactical gearing
facility is partially deployed.
Reputational risk
Risk–this is an investor relations risk Mitigation
The Board and the Managers regularly
monitor factors that may affect the
The risk of an event damaging the reputation of the Company and/or of its
Company's reputation and shareholder main service providers and take action
demand. The reputation of the Company is if appropriate. The Board reviews
important in maintaining the confidence relevant internal control reporting for
of shareholders. critical outsourced service providers.
This has been monitored as a stable
risk.
Regulatory risk Risk–this is a regulatory and legal Mitigation risk Failure to comply with applicable legal, tax and regulatory requirements could lead to suspension of the Company’s share price listing, The Board receives quarterly compliance financial penalties or a qualified reports from the Secretaries to evidence audit report. A breach of Section 1158 compliance with rules and regulations, of the Corporation Tax Act 2010 could together with information on future lead to the Company losing investment developments. This is a stable risk. trust status and, as a consequence, any capital gains would then be subject to capital gains tax.
Going Concern
The Audit Committee has undertaken and documented an assessment of whether the Company is a going concern for the period of at least 12 months from the date of approval of the financial statements. The Committee reported the results of its assessment to the Board.
The Company’s business activities, capital structure and borrowing facilities, together with the factors likely to affect its development and performance, are set out in the Strategic Report. In addition, the 2025 Annual Report includes the Company’s objectives, policies and processes for managing its capital and financial risk, along with details of its financial instruments and its exposures to credit risk and liquidity risk. The Company’s assets comprise mainly readily realisable equity securities and funding flexibility can typically be achieved through the use of the borrowing facilities, which are described in notes 12 and 13 of the 2025 Annual Report. The Company has adequate financial resources to enable it to meet its day-to-day working capital requirements. The triennial continuation vote was considered including the outcome of the last vote in 2023, which was passed overwhelmingly, and the prospects for passing the continuation vote to be held on
In summary and taking into consideration all available information, the Directors have concluded it is appropriate to continue to prepare the financial statements on a going concern basis.
The Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders’ Funds and Cash Flow Statement are set out below.
INCOME STATEMENT
For the year ended
(audited)
For the year ended For the year ended
31 December 2025 31 December 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net gains on investments - 54,778 54,778 - 116,364 116,364
Investment income 58,557 776 59,333 54,506 - 54,506
Other income 66 - 66 118 - 118
Investment management fee (3,691) (6,151) (9,842) (3,708) (6,180) (9,888)
(Note 2)
Portfolio transaction - (2,591) (2,591) - (2,179) (2,179)
costs
Other expenses (980) - (980) (858) - (858)
-------- -------- -------- -------- -------- --------
Net return before finance 53,952 46,812 100,764 50,058 108,005 158,063
costs
and tax
Finance costs (1,698) (2,831) (4,529) (2,427) (4,045) (6,472)
-------- -------- -------- -------- -------- --------
Return on ordinary 52,254 43,981 96,235 47,631 103,960 151,591
activities
before tax
Tax on ordinary activities - - - - - -
-------- -------- -------- -------- -------- --------
Return attributable to
equity shareholders 52,254 43,981 96,235 47,631 103,960 151,591
====== ======= ======= ====== ======= =======
Returns per Ordinary Share 64.02p 53.88p 117.90p 56.59p 123.50p 180.09p
(Note 4)
The Board declared on
The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the year ended
(audited)
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 838 150 30,469 1,262,006 103,854 1,397,317
December 2024
Return on ordinary
activities after - - - 43,981 52,254 96,235
taxation
Equity dividends paid - - - - (41,591) (41,591)
(Note 3)
Purchase of Ordinary (41) 41 (30,469) (29,776) - (60,245)
Shares (Note 7)
-------- -------- -------- -------- -------- --------
Balance as at 31 797 191 - 1,276,211 114,517 1,391,716
December 2025
====== ====== ====== ====== ====== ======
For the year ended
(audited)
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 844 144 38,840 1,158,046 99,353 1,297,227
December 2023
Return on ordinary
activities after - - - 103,960 47,631 151,591
taxation
Equity dividends paid - - - - (43,130) (43,130)
(Note 3)
Purchase of Ordinary (6) 6 (8,371) - - (8,371)
Shares (Note 7)
-------- -------- -------- -------- -------- --------
Balance as at 31 838 150 30,469 1,262,006 103,854 1,397,317
December 2024
====== ====== ====== ====== ====== ======
BALANCE SHEET
As at
(audited)
31 December 31 December
2025 2024
£‘000 £‘000
Fixed assets
Investments at fair value through profit or loss (Note 1,457,871 1,497,304
5)
---------- ----------
Current assets
Debtors 4,010 2,874
Cash at bank 5,141 1,349
---------- ----------
9,151 4,223
Creditors (amounts falling due within one year) (75,306) (302)
---------- ----------
Net current (liabilities)/assets (66,155) 3,921
---------- ----------
Total Assets less Current Liabilities 1,391,716 1,501,225
Creditors (amounts falling due after more than one year) - (103,908)
---------- ----------
Total Net Assets 1,391,716 1,397,317
======= =======
Capital and reserves: equity interests
Called up share capital 797 838
Capital redemption reserve 191 150
Special reserve - 30,469
Capital reserve 1,276,211 1,262,006
Revenue reserve 114,517 103,854
---------- ----------
Total Shareholders’ Funds 1,391,716 1,397,317
======= =======
Net Asset Value per Ordinary Share (Note 6) 1,745.26p 1,666.95p
CASH FLOW STATEMENT
For the year ended
(audited)
2025 2024
£’000 £’000
Operating activities
Net revenue return before finance costs and tax 53,952 50,058
Receipt of special dividends taken to capital 776 -
Investment management fee charged to capital (6,151) (6,180)
(Increase) in debtors (1,136) (213)
Increase in other creditors 10 8
-------- --------
Net cash inflow from operating activities 47,451 43,673
===== =====
Investing activities
Purchases of investments (369,470) (307,701)
Sales of investments 461,056 288,596
-------- --------
Cash inflow/(outflow) from investing activities 91,586 (19,105)
===== =====
Financing activities
Purchases of Ordinary Shares (Note 7) (60,245) (8,371)
Equity dividends paid (Note 3) (41,591) (43,130)
Interest and fees paid (4,409) (6,452)
Gross drawdowns of bank debt facilities (before any 95,000 79,000
costs)
Gross repayments of bank debt facilities (before any (124,000) (47,000)
costs)
-------- --------
Cash (outflow) from financing activities (135,245) (25,953)
===== =====
Change in cash during the period 3,792 (1,385)
===== =====
Cash at the start of the period 1,349 2,734
Cash at the end of the period 5,141 1,349
====== ======
SUMMARY NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been presented under Financial Reporting Standard 102 ("FRS 102") and under the AIC’s Statement of Recommended Practice “Financial Statements of
2. INVESTMENT MANAGEMENT FEE AND
The Managers,
The investment management fee and finance costs of bank borrowings have been allocated 62.5% to capital reserve and 37.5% to revenue reserve, in line with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio of the Company.
The Company has a three year unsecured £130m Facility Agreement with
3. DIVIDENDS
31 December 2025 31 December 2024
£’000 £’000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December
2024 of 30.00p (2023: 28.55p) paid on 10 March 24,967 24,091
2025
Special dividend for the year ended 31
December 2024 of 6.00p (2023: 9.00p) paid on 4,993 7,595
10 March 2025
Interim dividend for the year ended 31
December 2025 of 14.30p (2024: 13.60p) paid on 11,631 11,444
28 August 2025
------------ ------------
41,591 43,130
------------ ------------
The final dividend of 32.50p (2024: 30.00p) and special dividend of 12.00p (2024: 6.00p) for the year ended
4. RETURNS PER ORDINARY SHARE
Year to 31 December 2025 Year to 31 December 2024
The returns per Ordinary Share
are based on:
£96,235,000 £151,591,000
Returns attributable to
Ordinary Shareholders
Weighted average number of
shares in issue during the 81,626,049 84,175,009
year
Returns per Ordinary Share 117.90p 180.09p
There are no dilutive or potentially dilutive shares in issue.
5. INVESTMENTS AT FAIR VALUE
In accordance with FRS 102 fair value measurements have been classified using the fair value hierarchy:
Level 1 - using unadjusted quoted prices for identical instruments in an active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is unavailable).
Investments held at fair value through profit or loss
Level 1 Level 2 Level 3 Total
As at 31 December 2025
£’000 £’000 £’000 £’000
Listed equities 1,457,871 - - 1,457,871
Unlisted equities - - - -
------------ ------------ ------------ ------------
Total financial asset 1,457,871 - - 1,457,871
investments
------------ ------------ ------------ ------------
Level 1 Level 2 Level 3 Total
As at 31 December 2024
£’000 £’000 £’000 £’000
Listed equities 1,497,304 - - 1,497,304
Unlisted equities - - - -
------------ ------------ ------------ ------------
Total financial asset 1,497,304 - - 1,497,304
investments
------------ ------------ ------------ ------------
6. NET ASSET VALUE PER SHARE
The Net Asset Value per Share and the net assets attributable to the Ordinary Shares at the year end are calculated in accordance with their entitlements in the Articles of Association and were as follows.
31 December 2025 31 December 2024
Net assets attributable £1,391,716,000 £1,397,317,000
Ordinary Shares in issue at the end of the 79,742,605 83,824,605
year
Net Asset Value per Ordinary Share (a) 1,745.26p 1,666.95p
Dividend reinvestment factor* (b) 1.031025 1.033876
Net Asset Value Total Return basis* (a) x (b) 1,799.41p 1,723.42p
*Defined in the glossary of the 2025 Annual Report as an alternative performance measure.
7. SHARE CAPITAL AND RESERVES
During the year, the Company bought back and cancelled 4,082,000 shares (2024: 590,000) at a total cost of £60,245,000 (2024: £8,371,000). During the period 1 January to
During the year to
8. RELATED PARTY TRANSACTIONS
The Directors have been identified as related parties and their fees and shareholdings are detailed in the Directors’ Remuneration Report on pages 41 and 42 of the Annual Report. During the year no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006.
9. ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures ("APMs") are measures that are not defined by FRS 102 and FRS 104. The Company believes that APMs, referred to as ‘Key Performance Indicators’ on page 5 of the Annual Report, provide Shareholders with important information on the Company and are appropriate for an investment trust company. These APMs are also a component of reporting to the Board. A glossary of APMs can be found in the 2025 Annual Report.
10. FURTHER INFORMATION
The foregoing do not constitute statutory accounts (as defined in section 434(3) of the Companies Act 2006) of the Company. The statutory accounts for the year ended
Certain statements in this announcement are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly, undue reliance should not be placed on forward looking statements.
CONTACT:
ANNOUNCEMENT ENDS
