Aberforth Smaller Companies Trust Plc – Final Results

Aberforth Smaller Companies Trust plc
Audited Annual Results for the year to 31 December 2025

The following is an extract from the Company’s Annual Report and Financial
Statements for the year to 31 December 2025. Page references correspond to the
2025 Annual Report & Financial Statements.  The Annual Report is expected to be
posted to shareholders by 6 February 2026.  Members of the public may obtain
copies from Aberforth Partners LLP, 14 Melville Street, Edinburgh EH3 7NS or
from its website: https://www.aberforth.co.uk/trusts-and-funds/aberforth-smaller
-companies-trust-plc/. A copy will also shortly be available for inspection at
the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

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   10.8%
Return

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 31 December 2025 and
recorded a net asset value total return of 7.9%. The share price total return
was higher at 10.8%, which reflected a narrowing of the discount between the net
asset value and share price. ASCoT’s small company benchmark is the Deutsche
Numis Smaller Companies Index (excluding investment companies), which is
abbreviated throughout this report as DNSCI (XIC). Its total return in 2025 was
12.7%. The positive return from small companies is welcome, but it was eclipsed
in 2025 by that of larger companies: the FTSE All-Share was up by a remarkable
24.0%. I touch on the context for performance in 2025 below, while the Managers’
Report as usual goes into the important influences on absolute and relative
performance in greater depth.

ASCoT’s long term performance record is strong. Since inception in 1990, ASCoT’s
net asset value total return has compounded at an 11.7% annual rate, which
compares with 9.7% for the DNSCI (XIC).

Investment background in 2025

Donald Trump’s second presidency took shape in the opening months of 2025. It
was dominated by the so-called Liberation Day tariffs, which shocked financial
markets and sent share prices around the world lower. The long lasting impact on
businesses is unclear since the measures are subject to legal challenge in the
US itself and negotiations between countries continue. However, after their
initial consternation, markets took confidence from a series of trade deals that
indicate a pragmatism on the part of the US’s trading partners, and that would
seem to reduce the risk of a spiralling trade war. Sentiment also improved as
geopolitical risk eased. The war in Ukraine continues, but the US has worked to
achieve a ceasefire between Israel and Hamas. The recovery in share prices was
further enhanced by what often feels like an obsession with AI. There is growing
excitement that the vast amounts being invested by the large US technology
companies will generate commensurate profits in due course.

However, I would note that the strong returns in 2025 were not the preserve of
the AI leaders, as the performance of larger companies in the UK showed in
shrugging off concerns about the UK’s politics and economy. If the FTSE All
-Share showed what was possible, the valuation of smaller companies continues to
bear the brunt of concerns about the UK’s fiscal position. Their share prices
have struggled as both recent Budgets leaned on the private sector and the
political stability promised by Labour’s decisive majority remained elusive.
Amid this uncertainty, it is important to remember that the market’s
reservations about smaller companies contrasted with another year of dividend
growth and share buy-backs, funded by the strong free cash flow and balance
sheets that characterise the DNSCI (XIC) and ASCoT’s portfolio. These qualities
are not lost on overseas companies or private equity as takeovers of small
companies carry on at an unusually high rate. ASCoT’s performance continued to
benefit from this takeover interest as recommended bids for eight of the
investee companies were received in 2025.

Dividends

Despite the caution about the state of the UK’s politics and economy, the
Investment Income from Revenue that ASCoT received from its investee companies
grew by 7% in 2025. This outcome was better than the Managers’ estimates at the
start of the year and surpassed the previous high point in 2023. The Revenue
Return per Ordinary Share was 64.0p. Excluding special dividends received in
both years, the Revenue Return per Ordinary Share rose by 13% in 2025 compared
with 2024. This good rate of progress was helped by the year’s share buy-back
activity, which is described below.

The Board’s ambition is to grow ASCoT’s full year ordinary dividend above the
year-on-year rate of CPI inflation, which was 3.4% in December 2025. Our
dividend deliberations are also influenced by ASCoT’s dividend experience over
the year and on the Managers’ forecasts for coming years. We are conscious that
the dividends paid by ASCoT are an output of the Managers’ investment process
and that they should not lead that process. With this in mind, we take comfort
from ASCoT’s healthy revenue reserves, which afford the Managers investment
flexibility and allow dividends to move ahead even in testing times, most
recently during the pandemic.

The Board proposes a final dividend of 32.5p per Ordinary Share, which compares
with the previous year’s 30.0p. Together with the interim dividend of 14.3p, the
full year dividend would be 46.8p. Growth for the full year dividend would be
7.3%, which would be comfortably above the rate of inflation. On top of the
ordinary dividend, we propose a special dividend of 12.0p, which brings the
total dividend to 58.8p per share and ensures that ASCoT complies with HMRC’s
minimum retention test for investment trusts. The total of these means that
ASCoT would distribute c.£47m in the form of dividends to its Shareholders in
respect of 2025. Even after these payments, ASCoT would be able to retain 5.2p
of revenue per Ordinary Share. This would increase revenue reserves to 99.1p per
Ordinary Share to keep the ordinary dividend covered close to a healthy two
times.

Share buy-backs

The Board and Managers have two aims for ASCoT’s share buy-backs. First, when
conducted at a discount to net asset value, they deliver an economic uplift for
those Shareholders wishing to remain invested in the Company. Second, they
provide additional liquidity at the margin for those Shareholders looking to
crystallise their investment. An additional benefit is that consistently applied
share buy-backs may bring additional tension to the share price of an investment
trust when the market loses sight of the portfolio’s value. This last point is
less certain since the discount depends on many factors that the Board and
Managers cannot influence. Nevertheless, the reasons for buy-backs are
convincing and ASCoT was active in 2025.

In the year to 31 December 2025, 4,082,000 shares were bought back and
cancelled. The total value of these repurchases was £60m, on an average discount
of 11.2%. Since 2008, ASCoT has deployed £226m of its capital on share buy
-backs, which have added £33m of value to Shareholders.

Abnormal market circumstances may influence the pace of buy-backs, but ASCoT can
fund them over time through cash generated from the natural turnover of the
portfolio. This is consistent with the Managers’ value investment philosophy and
has been supported by the high level of M&A activity in recent years. Additional
flexibility is provided by the credit facility with the Royal Bank of Scotland
International.

The Company seeks authority to buy back up to 14.99% of its Ordinary Shares at
each Annual General Meeting. Shareholders voted in favour in March 2025 and the
Board will seek to renew the authority at the Annual General Meeting on 5 March
2026.

Gearing

The ability to gear is an important differentiator for investment trusts. The
Board’s gearing policy has been consistent throughout ASCoT’s life. Gearing is
deployed in a tactical fashion with the aim of taking advantage of periods of
stress in equity markets. ASCoT has been geared on four occasions in its 35
years. The current phase started amid the pandemic in early 2020 and has since
enhanced ASCoT’s net asset value performance. The Board and Managers regularly
review the level of gearing. They judge that it remains appropriate in view of
the attractive stockmarket valuations and the prospects for the profitability of
the underlying companies. At the year end, £75m of gearing was deployed and the
gearing ratio, which is defined in the glossary on page 68 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 The Royal Bank of Scotland International
Limited. This £130m facility runs to June 2026, which is aligned with the three
yearly continuation vote cycle. After the Annual General Meeting on 5 March
2026, and providing that the continuation vote is passed, the Board and Managers
will seek to put in place a new facility.

Annual General Meeting (AGM) and continuation vote

The AGM will be held at 14 Melville Street, Edinburgh EH3 7NS at 10.30 am on 5
March 2026. Details of the resolutions to be considered by Shareholders are set
out in the Notice of the Meeting on page 64 of the Annual Report. Shareholders
are encouraged to submit their vote by proxy in advance of the meeting. In
accordance with normal practice, the results of the AGM will be issued in a
regulatory news announcement and posted on Aberforth’s website. An update on
performance and the portfolio will also be available on the website following
the meeting.

It is the Company’s policy to hold a continuation vote every three years.
March’s Annual General Meeting will include the eleventh such vote in its
history. The Board views the continuation vote as an important shareholder right
and encourages all Shareholders to exercise it.

ASCoT’s performance in the continuation vote period just completed was
frustrating. The difficult conclusion to 2025 meant that ASCoT under-performed
the DNSCI (XIC) over the three years to 31 December 2025. The net asset value
total return was 31.0%, while the share price total return was 32.5%. The
comparable performance of the DNSCI (XIC) was 35.9%. Naturally, the Board has
sought to understand the reasons for this.

Importantly, it is clear to us that there has been no deviation from how the
Managers have always implemented ASCoT’s investment policy. Their value
investment discipline, fundamental analysis of companies and constructive
approach to stewardship are all unchanged. Confidence in this allows us to look
to longer term patterns of performance. A corollary of the Managers’ consistency
is a volatility to ASCoT’s relative performance, even over three year periods,
as the mood of the stockmarket ebbs and flows.

For much of the most recent continuation vote period, the stockmarket’s mood was
one of gloom towards the UK’s politics and economy, with further uncertainty
emanating from the US’s experiment with tariffs. These factors affected
sentiment towards and valuations of many smaller companies. From our
interactions with the Managers, we know that they have confidence in the
resilience of many smaller companies and that they are therefore comfortable
investing in such businesses, notwithstanding their greater sensitivity to
swings in economic activity. We saw this sensitivity in action during the
pandemic in 2020, when ASCoT’s investment performance suffered particularly
badly as economic activity collapsed. Clearly, the reasons for the economic
uncertainty then were different from today’s, but the Managers’ confidence in
the resilience of the portfolio’s businesses was vindicated as the recovery took
hold.

This has not been the first continuation vote period in which ASCoT’s total
return has lagged its benchmark’s. For the Board, the reassuring point is that
the consistency of the investment approach has allowed a rebound in ASCoT’s
fortunes in earlier instances and has underpinned an excellent record of
relative and absolute performance over longer time periods. Three years ago,
following a continuation vote period in which ASCoT out-performed the DNSCI
(XIC), I observed that ASCoT’s differentiated and consistent investment
proposition «does not guarantee superior performance every year, but it does
improve the likelihood of success over time». The relevance of this point
stands, which gives the Board confidence to focus on the investment opportunity
at hand and on ASCoT’s prospective returns.

Conclusion

The Managers’ Report addresses ASCoT’s investment opportunity in detail. I would
draw out the following points as important aspects of what is a positive
outlook.

· Sentiment towards the UK remains downbeat, which is affecting the
stockmarket’s valuations of smaller companies.

· We have a good idea why this pessimism persists. The dominant narrative since
the EU Referendum – almost ten years ago now – has been one of political
dysfunction and economic stagnation in the UK.

· Large companies have shrugged off these concerns – even domestically oriented
companies such as the banks have participated in the FTSE All-Share’s
resurgence. History gives encouragement that where large companies lead small
companies follow.

· My personal suspicion is that the UK gloom has been overdone and that the UK’s
institutional advantages are being overlooked. However, I am more confident in
asserting that the dominant narrative has drowned out recognition of the
underlying progress of smaller companies.

· In recent years, ASCoT’s portfolio holdings have endured a pandemic, a surge
in inflation, higher interest rates and a recession. In the Board’s discussions
with the Managers about the investee companies, we are struck by their
resilience. They have retained strong balance sheets and continued to generate
cash, which is coming back to their shareholders in the form of rising dividends
and share buy-backs.

· The underlying qualities and valuations of these companies are being
recognised, though not yet in a broad fashion. The beneficiaries hitherto have
been overseas companies and private equity who are responsible for the still
high rate of M&A within the small company universe. Another lesson from history
is that when the appetite for small companies improves share prices move rapidly
and substantially.

· The current lack of interest in small UK quoted companies contrasts sharply
with the great confidence that the stockmarket has in the giant technology
companies as they spend their billions on AI development. In my experience of
equity markets, such disparities in sentiment and valuation are not uncommon but
tend to be overdone. As in the past, ASCoT is well positioned to benefit when
fashions do inevitably change.

None of this is to deny the risks confronting smaller companies, from domestic
politics, through the threat of a trade war and actual conflicts, to the
implications of the vast investment in AI. However, investment is always risky.
The returns generated by equities over time have been the rewards for exposing
capital to risk. In my experience, what is crucial is that the capital should be
deployed in assets whose valuations provide a margin of safety and should be
managed in accordance with a tried and tested investment process.

On both counts, ASCoT’s record suggests that it is well positioned. The
Managers’ approach to the asset class sets the portfolio apart from the majority
of small company funds. It has driven good returns to Shareholders over time and
the Board notes that the Managers continue to add to their personal holdings in
ASCoT. We also recognise the advantages of ASCoT’s investment trust status,
particularly when operating in a relatively illiquid and volatile asset class
such as small UK quoted companies. The ability to retain income helps dividends
to grow in real terms even in difficult circumstances and contrasts with the
more volatile capital performance. Meanwhile, share buy-backs and tactical
gearing promise to improve what we expect to be a positive performance from the
portfolio over coming years.

I would also note that ASCoT enjoys significant flexibility in its capital
allocation by virtue of its natural portfolio turnover, ability to gear and
revenue reserves. These features allow meaningful sums to be returned to
Shareholders – dividends and share buy-backs totalled £107m in respect of 2025.
The Board is therefore optimistic about ASCoT’s prospects from here and
recommends that Shareholders vote in favour of the Company’s continuation at
March’s AGM.

Ahead of that event, my fellow Directors and I welcome views and questions from
Shareholders. Please contact me at my e-mail address, which is noted below.

Richard Davidson

Chairman

29 January 2026

[email protected]

MANAGERS’ REPORT

Introduction

Since inception in 1990, ASCoT’s purpose has been to achieve a net asset value
total return greater than that of the DNSCI (XIC) over the long term. To achieve
this objective, the Managers have applied a consistent and differentiated
investment strategy, which has three notable aspects.

· The basis of the investment process is understanding companies within the
DNSCI (XIC). The Managers consider factors such as financial performance,
competitive dynamics and capital allocation priorities, as well as relevant
environmental and social matters. Company analysis is conducted by individual
investment managers, but decisions about which stocks merit a place in the
portfolio are taken by the full investment team. The team is experienced and
well-resourced. It is often the case that it has known investee companies for
longer than the directors running the companies.

· Stock selection is guided by a value investment philosophy. The reason for
this is that there is strong historical evidence that a value premium can be
harvested within equity markets over time. In practice, the Managers seek
companies whose share prices are trading at wide discounts to their true values.
As the gap between the two narrows, positions are reduced, with the proceeds
recycled into other companies with greater upside, a process that the Managers
term the «value roll».

· Consideration of governance issues and engagement with company directors,
especially chairs, is an important element of Aberforth’s investment process.
Throughout ASCoT’s history, the Managers have aimed to engage in a purposeful,
discreet and constructive fashion, both as part of their research and to effect
change if necessary. They engage on any topic that affects a company’s valuation
and are willing to be taken inside for extended periods. In return for this
commitment to responsible stewardship of their clients’ capital, the Managers
expect that consultation will be timely and that they will not be presented with
faits accomplis by the boards of investee companies.

The consistent application of these features does not guarantee strong returns
in each year. However, it does ensure that ASCoT benefits from a differentiated
and relevant investment strategy, which has contributed to a good outcome for
investors over ASCoT’s 35 years.

Performance

ASCoT’s superior total returns since its inception are shown in the table below.
The table also shows performance data for the three year continuation vote
period that ended on 31 December 2025. The three indices provide context and
include the DNSCI (XIC), which is ASCoT’s benchmark of small UK quoted
companies.

Total returns 2023 2024 2025 CAGR to 31 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 MSCI World index. This is dominated by
the US stockmarket and so reflected the incredibly strong returns from the very
large technology companies that are seen to be leading the AI race.

· Perhaps the most notable number in the table is the resurgence of the UK in
2025, with large company share prices rising by even more than world equities.

· The strength of the FTSE All-Share in 2025 meant that smaller companies under
-performed large over the three years. This large cap out-performance is
considered in greater detail below.

· ASCoT’s total return lagged that of the benchmark across the continuation vote
period. This was largely a result of a disappointing outcome for 2025 and so the
performance analysis commentary later in this report focuses on events in 2025.

Over the past three years, the valuations of small UK quoted companies
experienced two challenges, one more relevant to those companies that earn their
profits within the UK economy, and the other to those companies reliant on
overseas markets.

· The former group, the domestics, comprises consumer-oriented companies, such
as retailers, leisure businesses and media companies. It accounts for around 53%
of the revenues of DNSCI (XIC) constituents. These companies were most severely
affected by Brexit and by lockdown during the pandemic. They operated
resiliently in the face of these challenges but were confronted in 2025 by
intensifying concerns about the UK government’s fiscal situation. The Chancellor
has struggled to achieve convincing fiscal headroom as she contends with her own
fiscal rules, manifesto commitments and the internal politics of the Labour
Party. The predicament was encapsulated by the gyrations in gilt yields through
2025 and by the rising cost of government debt here in comparison with the rest
of the world: ten year gilt yields started 2025 in line with those in the US but
ended the year 31 basis points higher. The UK private sector, wary after the
2024 Budget, was naturally cautious ahead of the 2025 Budget. It is likely that
economic activity suffered as, in a classic Ricardian fashion, households and
businesses held back on spending and investment. This was to the disadvantage of
the domestically oriented companies.

· The overseas facing companies tend to be industrial businesses and account for
the other 47% of the DNSCI (XIC)’s total revenues. They were less affected by
the pandemic and their profitability even benefited from the EU referendum as
sterling weakened in its aftermath. The disruption of supply chains in the wake
of the pandemic, along with the conflicts in Ukraine and Gaza, were unhelpful,
but these companies tended to enjoy good trading conditions for much of the
three year period. That changed in April 2025 with Donald Trump’s tariff
announcements. Their longer lasting effects on global trade and broad economic
activity are as yet uncertain, but it is clear that businesses have incurred
near term headwinds in the form of higher costs and working capital
requirements. Consequently, the valuations of overseas facing companies within
the DNSCI (XIC) also came under pressure in 2025.

These twin pressures have hampered the valuation of smaller companies,
particularly those whose profits are perceived to be more sensitive to broader
economic activity. This has affected ASCoT’s performance since many of the most
attractively valued smaller companies today are in the more economically
sensitive sectors of the stockmarket. Indeed, the market’s near term fears of
cyclicality can often be what presents the Managers with investment opportunity
as they take a longer term view of a business’s underlying qualities and profit
potential.

For most of the three year continuation vote period, gloom about the UK’s
politics and economics affected sentiment towards the UK stockmarket in general,
with the valuations of both small and large companies below their long term
averages. That started to change in 2025. The very strong total returns from
large companies took their valuations above the long term average, even as
smaller companies continued to languish. A common explanation for this
performance divergence rests in the different sector profiles of the large and
small company universes. Among the stronger performers in the FTSE All-Share in
2025 were banks, defence, mining, telecoms and life assurance, which are all
sectors with a lower representation in the DNSCI (XIC). However, this
explanation struggles when the banks are considered further. Most of the banks
are heavily reliant on the domestic UK economy. They are literally geared into
the health of British businesses and households, the same sort of exposure that
many smaller companies have.

Smaller companies are being penalised for their very size and relative
illiquidity, rather than for fundamental reasons. This suspicion is backed up by
analysis of the dividend characteristics of the DNSCI (XIC) and the FTSE All
Share. For the first time since the global financial crisis, the dividend yield
of the DNSCI (XIC) is higher than the FTSE All-Share’s. This is despite small
companies’ average dividend cover being above that of large companies and
despite small companies’ balance sheets being stronger than those of large
companies. Moreover, dividend growth of the DNSCI (XIC) has remained superior to
that of the FTSE All-Share. Since 2015 – the year before the EU referendum and
therefore a fair starting point – small company dividend growth has been 63%,
whereas large company dividend growth has been 29%. Since 2019 – the year before
the pandemic – small companies have grown their dividends by 23%, whereas large
companies have seen their aggregate dividends decline by 6%.

The superior dividend growth from smaller companies is evident in almost all
time periods and supports the growing dividends paid by ASCoT to its
Shareholders. These dividends also benefit from how the Managers invest ASCoT’s
capital. An important facet of the process is the «value roll», in which capital
is rotated from companies with low upside to the Managers’ target prices into
companies with high upsides. This rotation implies that capital is moved from
companies with low dividend yields into those with high dividend yields, a
dynamic that enhances the income earned by the portfolio over time. This has
enabled ASCoT’s dividends to grow by 7.1% per annum since inception in 1990,
well ahead of the DNSCI (XIC)’s 4.9%, the FTSE All-Share’s 3.4% and the consumer
price index at 2.4%. The steadiness and consistency of ASCoT’s dividend growth
contrast with the volatility of annual capital performance. They have also
contributed to the good absolute and relative total returns that ASCoT has
achieved over time.

Influences on performance in 2025

In 2025, ASCoT’s NAV total return was 7.9%, which was behind the DNSCI (XIC)’s
12.7%. The table below sets out the contribution of certain factors to ASCoT’s
relative return. As usual, the most important influence was the investment
portfolio. The paragraphs that follow provide context and explanation for the
portfolio’s performance in 2025.

For the twelve months ended 31 Basis points
December 2025
Attributable to the portfolio of (429)
investments, based on mid prices

(after transaction costs of 18
basis points)
  Movement in mid to bid price 12
spread
  Cash/gearing (27)
  Purchase of ordinary shares 54
  Management fee (70)
  Other expenses (12)
Total attribution based on bid (472)
prices

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 London Business School (LBS). This defines value narrowly in terms of low
price to book ratios, rather than in the broader fashion undertaken by the
Managers. Therefore, while useful, the LBS approach is an imperfect measure of
style effects, particularly over short periods. Despite AI leading the way among
global equity markets, the LBS analysis suggests that value stocks within the
DNSCI (XIC) out-performed the index as a whole in 2025. On this basis, style
would have benefited ASCoT’s returns in 2025.

Size, within the DNSCI (XIC)

The DNSCI (XIC) includes all main listed stocks in the UK with market
capitalisations below c.£2.5bn. It therefore has an extensive overlap with the
FTSE 250 and includes many mid caps, which the Managers refer to as «larger
small» companies. However, ASCoT has a relatively high exposure to the DNSCI
(XIC)’s «smaller small» companies and has had for much of the period since the
global financial crisis in 2008. This positioning reflects the more attractive
valuations available down the market capitalisation scale, which are
demonstrated in the Valuations section later in this report. Analysis by LBS
shows that the return from «smaller small» companies was slightly ahead of that
from «larger small» companies in 2025. Accordingly, ASCoT had a modest benefit
from its size positioning over the past twelve months.

Corporate activity

The pattern is a familiar one of recent years – a lot of takeovers targeting
small UK quoted companies, a lot of buy-backs and few IPOs.

On M&A, the takeovers of eleven companies in the DNSCI (XIC) were completed in
2025. On top of those, there were offers outstanding for another ten companies
at the year end. Of these 21 deals, the bidders were most often trade buyers,
with private equity houses less active than in 2024. The bidders were
overwhelmingly from overseas, attracted by the presently low stockmarket
valuations of small UK quoted companies. The average premium of the bid price to
the undisturbed share price before announcement of the deal was 44%, which is
above the longer term average premium for control of 25-30%. ASCoT had
investments in eleven of the 21 takeover targets. Four of the eleven deals were
announced in 2024, with the deals completing in 2025. The takeover premiums
therefore benefited 2024 returns. Nevertheless, M&A helped ASCoT’s returns in
2025.

Takeovers can be an effective means by which the value in ASCoT’s portfolio is
realised. However, there is an important caveat. The low valuations of smaller
companies mean that takeovers may be proposed on unattractive terms and that
investors’ interests might be better served by rejecting the takeover approach.
The risk is exacerbated by boards and some shareholders yielding too quickly to
takeover interest, no doubt succumbing to the gloomy sentiment towards the UK.
The Managers attempt to mitigate the risk by engaging with boards to support
their independence if the terms of a bid are unattractive or to improve the
terms. This engagement is helped by the often significant stakes that ASCoT and
Aberforth’s other clients hold in investee companies. At 31 December 2025, 15%
of ASCoT’s portfolio was invested in companies that had attracted takeover
interest over the previous 18 months, but where the approaches had not developed
into formal bids. In several of these situations, the Managers were consulted by
the boards of the target companies and, if the standalone option promised
superior returns, supported their independence.

The depressed valuations of small UK quoted companies mean that the IPO market
remains subdued. There were just two IPOs of a reasonable size and eligible for
the DNSCI (XIC) in 2025. The Managers view this dearth of activity as a
temporary phenomenon and a function of prevailing valuations. Recent regulatory
change, to the listing rules and prospectus regime, are likely to encourage IPOs
once the valuation basis of the small UK quoted companies recovers.

While the DNSCI (XIC) has not been refreshed by IPOs, it is experiencing an
influx of companies that are choosing to move from AIM to the Main Market. ASCoT
does not invest in AIM quoted companies except in limited circumstances. These
include when an AIM company makes a public announcement of its intention to move
to the Main List. Over the past 18 months, 15 AIM quoted companies have
announced an intention to relist. Of these, six completed the process in 2025
and were included in the DNSCI (XIC) on its annual rebalancing on 1 January
2026. Of the 15 companies, ASCoT has invested in four. These businesses were
subject to the Managers’ usual investment process of research and engagement.
Their valuations were attractive and consistent with the existing portfolio’s.

Income

The UK’s economic and political uncertainties contributed to a lacklustre
capital performance in 2025, but the dividend performance from small UK quoted
companies remained resilient. ASCoT’s income experience is shown in the
following table, which splits the portfolio’s 78 holdings into categories
determined by the most recent dividend action.

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 31 December 2025 was 4.3%,
which was 31% higher than the average over ASCoT’s 35 year history. Dividend
cover was 2.2x, which is less than the long term average of 2.8x. The lower
dividend cover was due to the effect of macro economic uncertainty on profits,
together with the higher dividends as companies looked through the near term
uncertainty and took confidence from strong balance sheets. The Managers’
forecasts suggest that dividend cover will rise in 2026 and 2027.

Significant stakes

Engagement with the boards of investee companies has always been a crucial
component of the Managers’ investment process. It is particularly relevant at
present in view of the high rate of takeover activity among smaller companies
and of the recent regulatory changes to the listing rules and prospectus regime.
The latter are intended to make the UK stockmarket a more attractive place to
list, but they come at a cost by undermining governance protections for
investors in UK listed companies.

The Managers’ scope to engage effectively is supported by their ability to take
significant stakes of up to 25% in issued share capital across their client
base. At 31 December 2025, ASCoT had six holdings in which Aberforth’s clients
had a stake of more than 20% and 28 holdings in which the stake exceeded 10%.
The 28 holdings had a combined portfolio weight of 32%.

Significant stakes bring increased influence but come with a downside in the
form of illiquidity – reducing these positions by selling into the stockmarket
can be difficult. However, there are compensating factors. First, the increased
influence, coupled with patience and support, has contributed to improved
investment outcomes – significant stakes have enhanced ASCoT’s performance over
time. Second, illiquidity has been manageable. Exiting significant stakes has
been facilitated by M&A or by renewed investor appetite as prospects for the
business improve. Third, ASCoT’s closed-end structure is ideally suited to
holding significant stakes – patient support from investors is often required as
boards work to improve business performance. The Managers are confident that
their approach to engagement and ability to take significant stakes have
enhanced ASCoT’s returns over time and will continue to do so.

ASCoT’s gearing

As an investment trust ASCoT can employ gearing with the aim of enhancing
returns from the portfolio. ASCoT’s approach to gearing is tactical and seeks to
take advantage of periods of stress in economies and financial markets. It is
currently geared for the fourth time in its history, having drawn on its
borrowing facility amid the pandemic in early 2020. Since then, returns from
small UK quoted companies have been positive and gearing has enhanced ASCoT’s
returns, which was also the case in 2025 specifically. Since UK equity
valuations continue to be attractive, the Managers believe that it is
appropriate that ASCoT remains geared. At 31 December 2025, the gearing ratio
was 5%. The realisation of proceeds from takeovers was substantial through 2025,
which meant that the gearing ratio was often below the Managers’ target. Given
the attractiveness of valuations and the profusion of investment opportunities,
it is likely, all else equal, that the gearing ratio will rise from its current
level.

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.

Portfolio 31 December 2025 31 December 2024
characteristics
ASCoT DNSCI (XIC) ASCoT DNSCI (XIC)
Number of companies 78 352 79 350
Weighted average £578m £1,225m £649m £1,019m
market
capitalisation
Weighting in 49% 17% 55% 21%
«smaller small»
companies*
Weighting in 39% 26% 29% 30%
companies with net
cash**
Portfolio turnover 34% – 20% –
Active share 80% – 78% –
Price earnings (PE) 10.5x 13.8x 9.6x 13.0x
ratio (historical)
Dividend yield 4.3% 3.4% 4.0% 3.4%
(historical)
Dividend cover 2.2x 2.1x 2.6x 2.2x
(historical)

*»Smaller small» companies are members of the DNSCI (XIC) that are not also
members of the FTSE 250; **Tracked Universe reference explained below.

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 Net Net Net debt/EBITDA           > 2x Other*
companies cash debt/EBITDA
with:      60% revenue within UK 11.5x 11.2x 10.1x
–      113 stocks >60% revenue overseas 10.8x 10.7x 9.2x
–      110 stocks > £600m market cap 12.0x 11.8x 10.4x
–      136 stocks < £600m market cap 9.0x 9.0x 7.8x

· 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 UK.

Despite the tariff shock, equity valuations have recovered well from the
Liberation Day nadir. Returns have been particularly good for the group of
companies seen to be benefiting from AI. As 2025 ended, the hopes and valuations
for the AI leaders were very high, but some caution is merited. The business
models of the US technology giants are no longer capital light since AI
development necessitates significant investment in computing power and
infrastructure. More broadly, the US economy is becoming increasingly reliant on
AI, with growth driven by the investment boom and with buoyant equity prices
supporting the wealth effect. Furthermore, it is not clear what the returns on
the investment will prove to be or who will emerge the eventual winners of the
AI arms race, as the US technology giants compete with each other and with
Chinese rivals. In the meantime, the effects of AI on companies more broadly are
as yet unclear. Some business models will be challenged and it is important for
the Managers to consider where these threats lie. On the other hand, it is also
important to consider the productivity gains that AI promises. Despite what the
relative valuations might suggest, the upside from AI investment is unlikely to
be confined to the companies currently deploying the capital – it is plausible
that ASCoT's portfolio holdings can also benefit.

The more significant near term influence on the fortunes of small UK quoted
companies is likely to be the direction of the UK economy. The immediate
challenges are the government's fiscal position and a set of policies that are
likely to increase costs and the regulatory burden on the private sector. These
problems are well known and have contributed to the gloom surrounding the
valuations of small UK quoted companies. However, there are other more positive
dynamics at work, which tend to be overlooked at present and which suggest that
the often hysterical talk about the UK is overdone.

· The private sector in the UK has deleveraged meaningfully over two decades –
the ratio of private non financial debt to GDP is back to the levels last seen
in 2000. Financial risk today is therefore reduced and there is the potential to
re-leverage in the future. While many companies are choosing to deploy surplus
capital on share buy-backs at present, a pick-up in investment would be good for
growth of profits and the economy in general.

· The recent Budget, while unhelpfully late in the year, was not as threatening
to economic activity as feared. The Chancellor tested her fiscal rules by
deferring most tax increases until later in the parliament. This pragmatism
gives the economy breathing space, especially as government spending does
increase in the near term. One can debate the merits of such policies, but at
the margin they bode well for economic activity.

· Inflation in the UK remains stickier than elsewhere but does seem to be on a
downward path. This has given the Bank of England scope to reduce interest
rates, which again should be supportive of near term economic activity.

So there is good reason to believe that the UK economy may turn out to be
better, or at least less bad, than commonly perceived. This would be significant
for the valuations of small UK quoted companies, especially the more
economically sensitive businesses since so little is expected of them. The
revaluation of larger companies in 2025 – particularly the banks – shows what is
possible when sentiment turns. The opportunity is encapsulated by small
companies' low valuations and high resilience. Self-help, strong balance sheets
and free cash generation are supporting dividend growth and share buybacks as we
await improved trading conditions.

The attractiveness of this combination is being recognised by more than the
Managers. The elevated rate of M&A activity shows that other companies and
private equity, particularly from overseas, understand the value on offer among
the constituents of the DNSCI (XIC). At the same time, traditional holders of UK
equities, such as insurance companies and larger asset managers, are being
replaced on share registers by other sorts of investor. These are typically
smaller institutions or individuals, often again from overseas, who share the
Managers' contrarian approach to investment and, amid a broad opportunity set,
have identified the value on offer among small UK quoted companies.

Over ASCoT's 35 years, the Managers' consistent investment approach has achieved
superior returns for Shareholders. Their value investment philosophy,
understanding of the companies and active engagement are particularly well
suited to the current opportunity in small UK quoted companies and bode well for
future returns.

The Managers' optimism is also rooted in ASCoT's structural advantages. Tactical
gearing and share buy-backs can enhance the investment performance of the
portfolio. They can also benefit 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.

Aberforth Partners LLP

Managers

29 January 2026

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

Richard Davidson

Chairman

29 January 2026

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 Mitigation
a portfolio
management
risk
Investment The Managers regularly assess the exposure to market risk when
performance making investment decisions and the Board monitors the results
is affected via the Managers' quarterly and other reporting. The Board and
by external Managers closely monitor significant economic and political
market risk developments including the potential effects of climate change
factors, (see pages 16 to 18 of the Annual Report). This remained a
including dynamic risk during the year, in which the Managers reported on
those market risks including economic and geopolitical issues as
creating addressed in the Managers' Report.
uncertainty
about future
price
movements of
investments.
The factors
include geo
-political
and economic
conditions.
The Board
delegates
consideration
of market
risk to the
Managers to
be carried
out as part
of the
investment
process.

Investment
strategy/per
formance
risk
Risk-this Mitigation
is a
portfolio
management
risk
The The Board monitors performance against the investment objective
Company's over the long term by ensuring the investment portfolio is
investment managed appropriately, in accordance with the investment policy
policy and and strategy. The Board has outsourced portfolio management to
strategy experienced investment managers with a clearly defined investment
exposes the philosophy and investment process. The Board receives regular and
portfolio detailed reports on investment performance including detailed
to share portfolio analysis, risk profile and attribution analysis. Senior
price representatives of Aberforth Partners attend each Board meeting.
movements. Peer group performance is also regularly monitored by the Board.
The This remains a dynamic risk, with detailed consideration during
performance the year. The Managers' Report contains information on portfolio
of the investment performance and risks.
investment
portfolio
typically
differs
from the
performance
of the
benchmark
and is
influenced
by
investment
strategy
and policy,
investment
style,
stock
selection,
liquidity
and market
risk
factors
(see Market
risk above
and Note 19
in the 2025
Annual
Report for
further
details).
Investment
in small
companies
is
generally
perceived
to carry
more risk
than
investment
in large
companies.
While this
is
reasonable
when
comparing
individual
companies,
it is much
less so
when
comparing
the risks
inherent in
diversified
portfolios
of small
and large
companies.

Share price
discount
Risk-this is Mitigation
an investor
relations
risk
Investment The Board and the Managers monitor the discount daily, both in
trust shares absolute terms and relative to ASCoT's peers. In this context,
tend to trade the Board intends to continue to use the buy- back authority as
at discounts described in the Directors' Report, in the 2025 Annual Report.
to their This is considered a dynamic risk as the discount moves daily.
underlying
net asset
values, but a
significant
share price
discount,
related
volatility,
or a discount
significantly
beyond
peers', could
reduce
shareholder
returns and
confidence.

Gearing risk
Risk-this is Mitigation
a portfolio
management
risk
Tactical The Board and the Managers have specifically considered the
gearing can gearing strategy and associated risks during the year. At
negatively present this is a dynamic risk as the Company's tactical
affect gearing facility is partially deployed.
investment
performance.
In rising
markets,
gearing
enhances
returns, but
in falling
markets it
reduces
returns to
shareholders.

Reputational
risk
Risk-this is Mitigation
an investor
relations
risk
The risk of The Board and the Managers regularly monitor factors that may
an event affect the reputation of the Company and/or of its main service
damaging the providers and take action if appropriate. The Board reviews
Company's relevant internal control reporting for critical outsourced
reputation service providers. This has been monitored as a stable risk.
and
shareholder
demand. The
reputation of
the Company
is important
in
maintaining
the
confidence of
shareholders.

Regulatory
risk
Risk-this is Mitigation
a regulatory
and legal
risk
Failure to The Board receives quarterly compliance reports from the
comply with Secretaries to evidence compliance with rules and regulations,
applicable together with information on future developments. This is a
legal, tax stable risk.
and
regulatory
requirements
could lead
to
suspension
of the
Company's
share price
listing,
financial
penalties or
a qualified
audit
report. A
breach of
Section 1158
of the
Corporation
Tax Act 2010
could lead
to the
Company
losing
investment
trust status
and, as a
consequence,
any capital
gains would
then be
subject to
capital
gains tax.

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 5 March 2026.

In summary and taking into consideration all available information, the
Directors have concluded it is appropriate to continue to prepare the financial
statements on a going concern basis.

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 31 December 2025

(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 – 54,778 54,778 – 116,364 116,364
investments
Investment income 58,557 776 59,333 54,506 – 54,506
Other income 66 – 66 118 – 118
Investment (3,691) (6,151) (9,842) (3,708) (6,180) (9,888)
management fee
(Note 2)
Portfolio – (2,591) (2,591) – (2,179) (2,179)
transaction costs
Other expenses (980) – (980) (858) – (858)
——– ——– ——– ——– ——– ——–
Net return before 53,952 46,812 100,764 50,058 108,005 158,063
finance costs
and tax
Finance costs (1,698) (2,831) (4,529) (2,427) (4,045) (6,472)
——– ——– ——– ——– ——– ——–

Return on 52,254 43,981 96,235 47,631 103,960 151,591
ordinary
activities
before tax
Tax on ordinary – – – – – –
activities
——– ——– ——– ——– ——– ——–
Return
attributable to
equity 52,254 43,981 96,235 47,631 103,960 151,591
shareholders
====== ======= ======= ====== ======= =======

Returns per 64.02p 53.88p 117.90p 56.59p 123.50p 180.09p
Ordinary Share
(Note 4)

The Board declared on 29 January 2026 a final dividend of 32.50p per Ordinary
Share and a special dividend of 12.00p per Ordinary Share. The Board declared on
29 July 2025 an interim dividend of 14.30p per Ordinary Share.

The total column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the year.
A Statement of Comprehensive Income is not required as all gains and losses of
the Company have been reflected in the above statement.

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 December 2025

(audited)

Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000

Balance as 838 150 30,469 1,262,006 103,854 1,397,317
at 31
December
2024
Return on – – – 43,981 52,254 96,235
ordinary
activities
after
taxation
Equity – – – – (41,591) (41,591)
dividends
paid
(Note 3)
Purchase (41) 41 (30,469) (29,776) – (60,245)
of
Ordinary
Shares
(Note 7)
——- ——– ——– ——– ——– ——–
–
Balance as 797 191 – 1,276,211 114,517 1,391,716
at 31
December
2025
====== ====== ====== ====== ====== ======

For the year ended 31 December 2024

(audited)

Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000

Balance as 844 144 38,840 1,158,046 99,353 1,297,227
at 31
December
2023
Return on – – – 103,960 47,631 151,591
ordinary
activities
after
taxation
Equity – – – – (43,130) (43,130)
dividends
paid
(Note 3)
Purchase (6) 6 (8,371) – – (8,371)
of
Ordinary
Shares
(Note 7)
——- ——– ——- ——– ——– ——–
– –
Balance as 838 150 30,469 1,262,006 103,854 1,397,317
at 31
December
2024
====== ====== ====== ====== ====== ======

BALANCE SHEET

As at 31 December 2025

(audited)

31 December 31 December
2025 2024
£`000 £`000
Fixed assets
Investments at fair value 1,457,871 1,497,304
through profit or loss (Note
5)
———- ———-
Current assets
Debtors 4,010 2,874
Cash at bank 5,141 1,349
———- ———-
9,151 4,223
Creditors (amounts falling (75,306) (302)
due within one year)
———- ———-
Net current (66,155) 3,921
(liabilities)/assets
———- ———-
Total Assets less Current 1,391,716 1,501,225
Liabilities
Creditors (amounts falling – (103,908)
due after more than one
year)
———- ———-
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 1,745.26p 1,666.95p
Share (Note 6)

CASH FLOW STATEMENT

For the year ended 31 December 2025

(audited)

2025 2024
£'000 £'000
Operating activities
Net revenue return before 53,952 50,058
finance costs and tax
Receipt of special dividends 776 –
taken to capital
Investment management fee (6,151) (6,180)
charged to capital
(Increase) in debtors (1,136) (213)
Increase in other creditors 10 8
——– ——–
Net cash inflow from 47,451 43,673
operating activities
===== =====
Investing activities
Purchases of investments (369,470) (307,701)
Sales of investments 461,056 288,596
——– ——–
Cash inflow/(outflow) from 91,586 (19,105)
investing activities
===== =====

Financing activities
Purchases of Ordinary Shares (60,245) (8,371)
(Note 7)
Equity dividends paid (Note (41,591) (43,130)
3)
Interest and fees paid (4,409) (6,452)
Gross drawdowns of bank debt 95,000 79,000
facilities (before any costs)
Gross repayments of bank debt (124,000) (47,000)
facilities (before any costs)
——– ——–
Cash (outflow) from financing (135,245) (25,953)
activities
===== =====

Change in cash during the 3,792 (1,385)
period
===== =====
Cash at the start of the 1,349 2,734
period
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 Investment Trust Companies and Venture Capital Trusts" ("SORP").
The financial statements have been prepared on a going concern basis under the
historical cost convention, modified to include the revaluation of the Company's
investments as described in Note 1 of the 2025 Annual Report. The Directors'
assessment of the basis of going concern is described on page 31 of the 2025
Annual Report. The functional and presentation currency is pounds sterling,
which is the currency of the environment in which the Company operates. The
Board confirms that no critical accounting judgements or significant sources of
estimation uncertainty have been applied to the financial statements and
therefore there is not a significant risk of a material adjustment to the
carrying amounts of assets and liabilities within the next financial year. The
Company's accounting policies are set out in the 2025 Annual Report.

2. INVESTMENT MANAGEMENT FEE AND BANK BORROWINGS

The Managers, Aberforth Partners LLP, receive an annual management fee, payable
quarterly in advance, equal to 0.75% of net assets up to £1 billion, and 0.65%
thereafter.

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 Royal Bank
of Scotland International. This is due to expire on 15 June 2026.

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 24,967 24,091
December 2024 of 30.00p (2023: 28.55p)
paid on 10 March 2025
Special dividend for the year ended 31 4,993 7,595
December 2024 of 6.00p (2023: 9.00p) paid
on 10 March 2025
Interim dividend for the year ended 31 11,631 11,444
December 2025 of 14.30p (2024: 13.60p)
paid on 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 31 December 2025 will be paid, subject to
shareholder approval, on 9 March 2026. The final and special dividends for 2025
and 2024 have not been included as liabilities in the financial statements for
that year.

4. RETURNS PER ORDINARY
SHARE

Year to 31 December Year to 31 December 2024
2025
The returns per Ordinary £96,235,000  £151,591,000
Share are based on:

Returns attributable to
Ordinary Shareholders
Weighted average number of 81,626,049  84,175,009
shares in issue during the
year
Returns per Ordinary 117.90p 180.09p
Share

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

As at 31 Level 1 Level 2 Level 3 Total
December 2025
£'000 £'000 £'000 £'000
Listed equities 1,457,871 – – 1,457,871
Unlisted – – – –
equities
———— ———— ———— ————
Total financial 1,457,871 – – 1,457,871
asset
investments
———— ———— ———— ————

As at 31 Level 1 Level 2 Level 3 Total
December 2024
£'000 £'000 £'000 £'000
Listed equities 1,497,304 – – 1,497,304
Unlisted – – – –
equities
———— ———— ———— ————
Total financial 1,497,304 – – 1,497,304
asset
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 £1,391,716,000 £1,397,317,000
attributable
Ordinary Shares in 79,742,605 83,824,605
issue at the end of the
year
Net Asset Value per 1,745.26p 1,666.95p
Ordinary Share (a)
Dividend reinvestment 1.031025 1.033876
factor* (b)
Net Asset Value Total 1,799.41p 1,723.42p
Return basis* (a) x (b)

*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 29 January 2026, 323,500 shares have been bought back for
cancellation.

During the year to 31 December 2025 the Special Reserve, which was used to
account for the cost of purchasing Ordinary Shares for cancellation, was
exhausted. Following this, the Capital Reserve represented by realised capital
profits, is being used.

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 31 December 2024 which contained an unqualified Report of the Auditors,
have been lodged with the Registrar of Companies and did not contain a statement
required under section 498(2) or (3) of the Companies Act 2006.

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: Euan Macdonald or Jeremy Hall, Aberforth Partners LLP, 0131 220 0733

Aberforth Partners LLP, Secretaries – 29 January 2026

ANNOUNCEMENT ENDS

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