Aberforth Smaller Companies Trust Plc - Final Results

Aberforth Smaller Companies Trust Plc - Final Results

PR Newswire

LONDON, United Kingdom, January 30

Aberforth Smaller Companies Trust plc
Audited Annual Results for the year to 31 December 2024

The following is an extract from the Company's Annual Report and Financial Statements for the year to 31 December 2024. The Annual Report is expected to be posted to shareholders by 7 February 2025. Members of the public may obtain copies from Aberforth Partners LLP, 14 Melville Street, Edinburgh EH3 7NS or from its website: www.aberforth.co.uk. 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 2024
Net Asset Value per Ordinary Share Total Return	12.1%
DNSCI (XIC) Total Return	9.5%
Ordinary Share Price Total Return	10.7%

Total ordinary dividends (excluding special dividend) for the year of 43.60p per share represents growth of 5.1% compared to last year's 41.50p per share. In addition, a special dividend of 6.00p (last year: 9.00p) results in total dividends of 49.60p 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

I am pleased to present ASCoT's annual report and accounts for 2024. The year brought renewed interest in the UK stockmarket and, importantly, a higher share price for the Company as it continued its record of dividend growth.

ASCoT's net asset value total return in the twelve months to 31 December 2024 was +12.1%. The share price total return was +10.7%. The difference between the two numbers reflects a widening of the discount from 10.3% to 11.8% over the year.

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 2024 was +9.5%. A broader perspective is given by the FTSE All-Share, which is representative of larger British companies. Its total return was also +9.5%.

It was a good year for UK equities. This cannot easily be explained by the global investment backdrop since macro economic and geopolitical uncertainty remained elevated. Most major economies, with the notable exception of America's, were in the doldrums. Meanwhile, elections in several countries brought results that will require further elections in the new year to resolve. The Presidential Election in America did produce a clear winner, but the world now waits to see the substance of Donald Trump's policies including the much vaunted trade tariffs.

Amid this, the UK's economic performance was unspectacular as it emerged from the recession in the second half of 2023. However, interest rates started to decline and there have been encouraging signs that activity has started to recover. On the political front, Labour's decisive victory heralded some political stability, though October's Budget was unconvincing and undeniably bad for businesses. Nevertheless, the impression developed through 2024 that the UK is less of an outlier in both political and economic terms than it seemed just over a year ago. This was enough to stimulate interest in UK equities given how depressed sentiment had been. Further impetus came from the persistently high level of M&A activity in the UK stockmarket. Takeovers contributed significantly to ASCoT's performance in 2024, which the Managers' Report examines in detail.

Dividends

The recession in the second half of 2023 meant that we entered 2024 with some apprehension about ASCoT's dividend receipts from its investee companies. In the event, the dividend experience was good. The Revenue Return per Ordinary Share of 56.59p was above the Managers' estimates at the start of the year. The 56.59p was also the second highest in ASCoT's history, bettered only by the 59.79p earned in 2023. Excluding special dividends received in both years, the Revenue Return per Ordinary Share rose by 1% in 2024 compared with 2023.

The Board is pleased to be able to meet its ambition of growing ASCoT's full year ordinary dividend above the year-on-year rate of CPI inflation, which was 2.5% in December 2024. The dividend experience also makes it possible to add to ASCoT's robust revenue reserves. The Board has used these extensively in the past to keep the dividend moving ahead even in difficult circumstances such as the pandemic. Strong revenue reserves also give the Managers investment flexibility, allowing them to deploy ASCoT's capital where they see the best long term total returns.

The Board proposes a final dividend of 30.00p per Ordinary Share, which would represent growth of 5.1% on the previous year's 28.55p. Together with the interim dividend of 13.60p, the full year dividend would be 43.60p. Growth for the full year would also be 5.1%, which would be comfortably above the rate of inflation. On top of the ordinary dividend, we propose a special dividend of 6.00p, which ensures that ASCoT complies with HMRC's minimum retention test for investment trusts. After paying these dividends, ASCoT would be able to retain 6.99p of revenue per Ordinary share. This would increase revenue reserves to 87.89p per Ordinary share to keep the ordinary dividend covered a healthy two times.

Gearing

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.

The Board's gearing policy has been consistent throughout ASCoT's life: gearing is deployed tactically with the aim of taking advantage of periods of stress in equity markets. ASCoT has been geared on four occasions in its 34 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 appropriateness of gearing and judge that current stockmarket valuations merit its continued deployment. At the year end, £104m of the facility was deployed and the gearing ratio, which is defined in the glossary on page 66 of the Annual Report, was 7%.

Beyond the potential to enhance investment returns, the credit facility provides other benefits. It provides the 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.

Share buy-back

The Board believes that buy-backs provide an increase in liquidity at the margin for those Shareholders looking to crystallise their investment and, at the same time, deliver an economic uplift for those Shareholders wishing to remain invested in the Company.

In the year to 31 December 2024, 590,000 shares were bought back and cancelled. The total value of these repurchases was £8.4m, on an average discount of 11.7%. Since 2008, ASCoT's share buy-backs have totalled £166m and added £25m of value to shareholders.

The Company seeks authority to buy back up to 14.99% of its Ordinary Shares at the Annual General Meeting. The authority was renewed in March 2024 and the Board will seek to renew the authority at the Annual General Meeting on 6 March 2025.

Stewardship

The Board is responsible for the effective stewardship of the Company's affairs. These include oversight of the Managers' activities in relation to Environmental, Social and Governance (ESG) matters, which for 2024 are covered on pages 14 to 16 of the Annual Report. They also address the Managers' ESG policies and practices, along with their voting approach and activity during the year. The Board endorses the Managers' stewardship policy, which is set out in their submission as a signatory to the UK Stewardship Code. This, together with examples relating to voting and engagement with investee companies, can be found in the "About Aberforth" section of the Managers' website at www.aberforth.co.uk.

Annual General Meeting ("AGM")

The AGM will be held at 14 Melville Street, Edinburgh EH3 7NS at 10.30 am on 6 March 2025. Details of the resolutions to be considered by Shareholders are set out in the Notice of the Meeting on page 62 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.

Conclusion

When writing last year's statement, I was struck by the pessimism surrounding the UK's economy, its politics and its stockmarket. This was clear in the valuations that the market was then placing on the stocks held by ASCoT. But there was hope in the gloom. Stockmarkets crave a theme but have a habit of overdoing it when they find one. The unusually low valuations in October 2023 were themselves the seeds of improved investment returns. All that appeared to be lacking was a catalyst. This was duly forthcoming with a better economic performance, some political clarity and M&A activity.

This does not mean that it is now plain sailing for the UK. I would note that companies and the gilt market are wrestling with the consequences of what was an unconvincing Budget. However, a useful indication that there remains too much pessimism about small UK quoted companies is the frequency of takeovers - the acquirers clearly see value even as stockmarket investors remain sceptical. ASCoT has consistently benefited from M&A over the years and the Board supports the Managers' purposeful and discreet engagement in bid situations, and elsewhere, to improve investment returns.

In contrast to the gloom surrounding the UK, there is exuberance today about the prospects for the American economy and its stockmarket. Donald Trump's victory and the broad enthusiasm for artificial intelligence have together driven US equities to new heights. The US market would appear extended on several measures, including the cyclically adjusted price earnings ratio and stockmarket concentration. There is therefore a lot resting on what policies the new president does implement. It is not clear to me that the consequences of some of his mooted initiatives would be entirely good for stockmarket valuations, even in America itself. What happens across the Atlantic will likely be an important influence on ASCoT's investment returns in the coming year. Interest rates in America affect monetary policy in other countries. Many of ASCoT's investee companies do business in the US. The stockmarket leadership of the "Magnificent Seven" has rekindled an investment style environment that is more helpful for the growth investor.

Amid today's top-down uncertainties, it is important not to lose sight of the opportunities that come with change. Small companies are well placed to take advantage by virtue of their scale and flexibility. Additionally, their records of coping with the likes of the pandemic and their strong balance sheets give confidence in their resilience. Nevertheless, risks continue to influence valuations of small companies more than do the opportunities.

The Board believes that the Managers' value investment philosophy can take advantage of this situation and sees further upside from these valuations over the medium term. A further re-rating would enhance the return from the companies' underlying progress, which can be gauged over time by the dividend growth consistently delivered by ASCoT to its shareholders. Finally, the Board believes that tactical gearing and share buy-backs can enhance investment returns from ASCoT, particularly when stockmarket valuations are as attractive as they are at present.

My fellow Directors and I always welcome the views of Shareholders. Please contact me at my e-mail address, which is noted below.

Richard Davidson

Chairman

30 January 2025

[e-mail]

MANAGERS' REPORT

Introduction

As they did in 2023, UK equities made progress in the year to 31 December 2024. ASCoT's net asset value total return in the period was +12.1%. The DNSCI (XIC), which is ASCoT's benchmark, recorded a total return of 9.5%, while that of large companies, in the form of the FTSE All-Share, was also 9.5%.

Investment Background

The top-down backdrop for stockmarkets was inauspicious in 2024. The war in Ukraine rumbled on, as did the conflict between Israel and Hamas. The risk of escalation buffeted oil prices and equity valuations. Political uncertainty was an additional challenge. The results of the elections in the UK and the US were broadly as expected, though the markets are now digesting the implications of policy change under the new regimes. Politics are more unclear elsewhere. An election looms in Japan, while South Korea has seen its president attempt to impose martial law. In Europe, June's election for the European parliament was the catalyst for a snap election in France, where a stable government has yet to be established. Meanwhile, Germany is also facing elections early in 2025 following the collapse of the ruling coalition.

On the economic front, the UK pulled out of the recession in the second half of 2023. The recovery has been tentative so far, but prospects for wage growth above the rate of inflation, lower mortgage rates and high household savings offer encouragement for the coming year. In Europe, Germany continues to struggle to escape recessionary conditions. Its export reliant industrial economy is contending with Chinese and Japanese competition, while demand for its products from China and elsewhere is depressed. The bright spot has remained the US, though even here recent macro-economic data have been patchy and hint at slowing growth.

Despite these challenges, equities performed well in 2024, even stripping out the boost to the US market from the "Magnificent Seven" and artificial intelligence. The main reason for the broader performance was optimism about the interest rate cycle - for equity markets, the promise of a lower cost of money can overcome a host of other issues. The prospect of lower rates was fuelled by that lacklustre growth environment described above and by improving inflation data, as the pace continued to subside from the very high rates of 2022. Interest rate cuts were duly forthcoming, with the European Central Bank cutting in June, the Bank of England in July and the Federal Reserve in September. Stockmarkets' great hope is that the Federal Reserve can achieve the historically elusive "soft landing" - taming inflation without tipping the US economy into recession.

However, towards the end of the year, politics intruded to unsettle the narrative of disinflation and lower interest rates. The Republican clean sweep in America's Presidential and Congressional elections increased the likelihood of potentially inflationary policies, such as trade tariffs, lower immigration and tax cuts. It remains to be seen whether tariffs are implemented in full force or are more of a negotiation tactic. And it is still unclear whether the new Department of Government Efficiency can mitigate the impact of tax cuts on budget deficits. Therefore, the assumption of a swift return to the lower inflation and interest rate environment of the pre-pandemic era has been undermined. It is notable that US bond yields have risen and that the market now expects a slower pace of interest rate cuts than it did before the elections.

In the UK, there have been similar developments. Labour's first Budget in nearly 15 years has clouded the outlook for monetary policy and the economy. It seems likely that changes to the National Living Wage and employers' national insurance contributions will be inflationary, as businesses seek to pass on their cost increases. At the same time, higher government spending and borrowing threatens to crowd out the private sector, which must also contemplate further tax increases if the government's growth ambitions do not transpire as intended. Again, fiscal action jeopardises the outlook for monetary policy: expectations today are now for less significant interest rate cuts than was the case before the Budget. As in the US, the point here is not to judge the merits of government policies. Rather, it is to highlight the unintended consequences of governments' plans for what buoyed stockmarket valuations through 2024, namely expectations of lower interest rates.

Turning to the UK stockmarket, its relevance has been widely questioned in recent years against a backdrop of outflows from equity funds and a dearth of IPO activity. The angst has been shared by regulators and successive governments. Several changes have followed, notably to the listing rules, and more are to come with the new prospectus regime in 2025. Other initiatives may follow, but the new Chancellor's commentary thus far has been rather vague and, as the short-lived flirtation with the UK ISA shows, policy change can be abrupt.

Indeed, reliance on government diktat, with all its unintended consequences, is seldom comfortable. Therefore, other signs of life in the UK stockmarket are more encouraging. Valuations were at a particularly low ebb towards the end of 2023, when the UK's economic and political situation appeared particularly uncertain in comparison with those of other countries. A year on, the UK looks less of an outlier. This has helped to bring tension back into the valuation of UK equities and to elicit a welcome re-rating of small and large companies. At the same time, the identity of the marginal buyers of small UK quoted companies is now clear: larger companies and overseas companies through M&A, overseas asset managers, the companies themselves through buy-backs, and, of course, ASCoT.

Analysis of performance and portfolio characteristics

Over the twelve months to 31 December 2024, ASCoT's net asset value total return was +12.1%. The DNSCI (XIC)'s was +9.5%. The table below is an analysis of the difference between the two numbers. The most important influence on ASCoT's return was the total return performance of the companies that make up its portfolio of investments.

For the twelve months ended 31 December 2024		Basis points
Attributable to the portfolio of investments, based on mid prices (after transaction costs of 15 basis points)		355
Movement in mid to bid price spread		3
Cash/gearing		(17)
Purchase of ordinary shares		9
Management fee		(76)
Other expenses		(7)
Total attribution based on bid prices		267
Note: 100 basis points = 1%. Total Attribution is the difference between the total return of the NAV and the Benchmark Index (i.e. NAV = 12.15%; Benchmark Index = 9.48%; difference is 2.67% being 267 basis points).

The next table sets out a series of characteristics of both the portfolio and the DNSCI (XIC). The paragraphs that follow provide context and explanation for these characteristics and for ASCoT's performance in 2024.

Portfolio characteristics	31 December 2024		31 December 2023
	ASCoT	DNSCI (XIC)	ASCoT	DNSCI (XIC)
Number of companies	79	350	78	353
Weighted average market capitalisation	£649m	£1,019m	£591m	£957m
Weighting in "smaller small" companies*	55%	21%	61%	28%
Portfolio turnover	20%	N/A	20%	N/A
Active share	78%	N/A	75%	N/A
Price earnings (PE) ratio (historical)	9.6x	13.0x	7.9x	12.8x
Dividend yield (historical)	4.0%	3.4%	4.2%	3.3%
Dividend cover (historical)	2.6x	2.2x	3.0x	2.3x

*"Smaller small" companies are members of the DNSCI (XIC) that are not also members of the FTSE 250

Style

The Managers invest in accordance with their value investment philosophy. For existing and potential investments, they calculate target valuations. These are influenced by fundamental analysis, judgement informed by experience, and reference to other relevant valuations in equity markets or corporate activity. Growth of profits is an important component of a target valuation, but the Managers find that stockmarket valuations are often too generous in their assumptions of the sustainability and pace of growth.

The value investment philosophy means that ASCoT's returns are influenced by the stockmarket's preference in any period for more expensively priced growth stocks or more modestly rated value stocks. In respect of 2024, analysis by London Business School of the DNSCI (XIC) suggests that the value style performed in line with the growth style, with the latter buoyed in sympathy with America's large technology companies. Style was not, therefore, a significant influence on ASCoT's performance in 2024. Over recent years, however, style has been beneficial. Value stocks have out- performed since the recovery from the pandemic started towards the end of 2020. A further boost came as inflation soared in 2022 and drove bond yields higher. While the rate of inflation has declined, its future path is uncertain. This should help maintain interest in the value style.

Size

The DNSCI (XIC) includes all main listed stocks in the UK with market capitalisations below c.£1.9bn. It therefore includes many mid cap companies. For much of the period since the global financial crisis in 2008, the Managers have found more attractive valuations down the market capitalisation scale. ASCoT has therefore had a relatively high exposure to what might be termed the "smaller small" companies. Since late 2020, as the pandemic recovery commenced, the share prices of "smaller small" companies have performed better than those of the mid caps within the DNSCI (XIC). This was again the case in 2024. ASCoT's returns therefore benefited from its size positioning over the past twelve months. Notwithstanding this improved performance from the "smaller smalls", they continue to exhibit more attractive valuation characteristics, as the section on Valuations below demonstrates.

Geography

Where a company earns its profits - whether in the domestic UK economy or overseas - can be influential on its share price performance. The EU referendum in 2016 weakened sterling, which helped profits earned in strong currencies overseas. This ushered in a period of share price out-performance for overseas facing companies. Domestic earners took a further hit in 2020 since they were disproportionately affected by lockdown. These events gave the Managers the opportunity to increase ASCoT's weighting to domestic facing companies whose share prices had been disproportionately affected. At the start of 2024, domestic companies accounted for 56% of the portfolio against 50% of the DNSCI (XIC).

Something changed in 2024. The share prices of domestic facing companies out-performed those of the overseas earners by a significant margin. This helped ASCoT's investment return. There were several reasons for the change in sentiment. First, there was growing optimism that interest rates cuts will boost the profitability of domestic businesses, allowing their earnings to recover from the 2023 recession. Second, prospects for overseas facing companies were clouded by subdued demand conditions in much of the world and by the risk of US trade tariffs. Additionally, sterling's recent strength against the euro was negative for profits, reversing some of the advantage gained by overseas earners in the wake of the referendum. Towards the year end, the effects of the Budget were felt on the share prices of domestic businesses and the Managers are seeing investment opportunities in both groups of companies.

Despite their recent challenges, ASCoT's overseas earners remain strong businesses. The engineering sector is a good example of the resilience. Most engineers listed on the UK stockmarket today, including those owned by ASCoT, are truly international businesses. They have grown geographically over the years in response to shifting global demand, locating plants close to those of their customers. Therefore, if the US does impose stringent tariffs on the likes of Mexico, it is probable that these businesses will adapt again, moving capacity from Mexico to their US facilities. Some transitional costs could be incurred to achieve this, but the underlying viability and relevance of the businesses would likely be unaffected.

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 98% by value of the index as a whole and is made up of the 234 companies that the Managers follow closely.

Weight in companies with:	Net cash	Net debt/EBITDA< 2x	Net debt/EBITDA > 2x	Other*
Portfolio 2024	30%	45%	20%	5%
Tracked Universe 2024	30%	41%	23%	7%
*Includes loss-makers and lenders

The profile is familiar. Balance sheets are robust both within the portfolio and among small caps in general. Around one third of both the portfolio and index by value is represented by companies with net cash on their balance sheets. The more highly leveraged companies tend to be those with asset backing, such as pub businesses and property companies. It has been argued that small companies are less securely funded than large companies and that they therefore merit lower valuations. Some also claim that value stocks are less securely funded than growth stocks. Neither of these contentions hold true today, which underscores the attractiveness of ASCoT's current investment opportunity.

The strength of balance sheets naturally makes the question of capital deployment more urgent. The Managers frequently engage on this issue 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. Thereafter, 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. It is notable that numerous small companies bought back shares in 2024, which points to the value that boards of directors see in their companies. Within the portfolio, buy-backs were undertaken by 17 companies. At around one fifth of the portfolio, this is the highest rate in ASCoT's 34 year history.

Income

The table below categorises ASCoT's 79 holdings at 31 December 2024 according to each company's most recent dividend action.

Nil Payer	Cutter	Unchanged Payer	Increased Payer	New/Returner
16	12	15	32	4

The message from the analysis is good, with the most populated category being those companies that most recently increased their dividends. There was further benefit from the four companies recommencing dividends or making payments for the first time. ASCoT also received two special dividends during the year. Less positively, twelve companies cut their dividends. Seven of these were businesses operating in the domestic economy, usually close to the housing market. Their dividend decisions in 2024 were influenced by the impact of the recession towards the end of 2023. Nevertheless, ASCoT's income experience in 2024 was on balance strong. Total income earned in the year was slightly less than in 2023, mainly reflecting fewer special dividends received, but it should be noted that 2023 was ASCoT's best ever year in income terms. The dividend experience of these last two years is a clear illustration of the resilience of small UK quoted companies in the face of often testing trading conditions.

The historical dividend yield of ASCoT's holdings at 31 December 2024 was 4.0%, which was 26% higher than the average over ASCoT's 34 year history. Dividend cover was 2.6x, below the long term average of 2.8x. This reflects a weak earnings performance from small companies through 2024, consistent with the recession impact, along with the resilience of dividends previously described. As profits continue their recovery from the downturn, it is likely that dividend cover will return to its long term average.

Corporate activity

Stockmarket valuations in the UK remain attractive and so M&A activity continues apace. If UK institutions and retail investors are willing sellers of domestic equities, larger overseas companies and private equity are willing buyers. In 2024, the takeovers of 15 companies within the DNSCI (XIC) were completed. As the year ended, there were offers outstanding for three and approaches had been made for another two. Of these 20 deals, the buyers were evenly split between private equity and other companies. Most of the acquirers were overseas based, with domestic buyers in six of the situations. Turning to ASCoT's experience, it had investments in eight of the 20 takeover targets. Over the years, the Managers' value investment style has meant that ASCoT has been a disproportionate beneficiary of M&A activity.

There is nothing wrong with takeovers being the catalyst for the closing of value gaps, but the low valuations that still prevail in the UK stockmarket mean that the risk is high of some takeovers being done on unattractive terms. The risk is exacerbated by boards and other shareholders yielding too quickly to takeover interest, no doubt succumbing to the gloomy sentiment towards the UK. The Managers' approach in such situations is purposeful engagement, as described in the section on Engagement below.

As the attractive valuations of small UK quoted companies draw takeover interest, the corollary is a subdued IPO market. Just two IPOs of a reasonable size and eligible for the DNSCI (XIC) were completed in 2024. The Managers view this dearth of activity as a temporary phenomenon and a function of prevailing valuations. The UK's new listing rules and the imminent changes to the prospectus regime are likely to encourage IPOs once the valuation basis of the UK market recovers.

Engagement

Since ASCoT's inception in 1990, an integral part of Aberforth's investment process has been engagement with the boards of the investee companies. The approach to engagement is intended to be purposeful, discreet and constructive. Its purpose is to improve investment outcomes for Aberforth's clients and investors. The Managers engage on any topic that they perceive to be affecting the valuation of a company. The most common issue addressed is capital allocation, though M&A terms were an important topic in 2024.

Engagement includes regular updates with executive directors and also encompasses meetings with non executives. There is a particular focus on the chair, which is the most important role in the UK's system of corporate governance. The Managers are prepared to be taken inside for extended periods, which indicates their commitment to responsible stewardship and which can be helpful to investee companies. The Managers' influence is enhanced by their ability to take significant stakes of up to 25% of issued share capital across their client base. At 31 December 2024, ASCoT had five holdings in which Aberforth's clients had a stake of more than 20% in an investee companies and 26 holdings in which the stake exceeded 10%.

The currently high rate of M&A activity within the UK stockmarket makes engagement particularly relevant and explains the recent focus given to it in these reports. The terms of some of the takeovers have been frustrating. Large control premiums have distracted from uninspiring exit valuations and from boards too willing to present faits accomplis to their shareholders. Aberforth has therefore reinforced, in both writing and in meetings, the importance of boards consulting shareholders when they are considering a takeover offer or a significant capital allocation decision. In 2024, there were numerous consultations by companies about M&A. These often involved the Managers going inside. In some cases, the Managers supported the boards in question to reject a takeover approach. In others, they worked with the boards to improve the initial terms offered. This sort of activity can be difficult and time-consuming, but it is important particularly when UK valuations remain at such attractive levels. The Managers are confident that their purposeful, discreet and constructive engagement has enhanced ASCoT's returns over time and will continue to do so.

ASCoT's gearing

ASCoT employs gearing tactically 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, gearing has enhanced ASCoT's returns. Since UK equity valuations continue to be attractive, the Managers believe that it is appropriate that ASCoT remains geared. At 31 December 2024, the gearing ratio was 7%. The ratio varied through the year with moves in the share prices of the investee companies and as proceeds from holdings subject to takeover have been realised.

Active share

Active share is a measure of how different a portfolio is from an index. The ratio is calculated as half of the sum of the absolute differences between each stock's weighting in the index and its weighting in the portfolio. The higher a portfolio's active share, the higher its chance of performing differently from the index, for better or worse. The Managers target an active share ratio of at least 70% for ASCoT's portfolio compared with the DNSCI (XIC). At 31 December 2024, it stood at 78%.

Value roll and portfolio turnover

The main influence on ASCoT's portfolio turnover in any period is usually the stockmarket's appetite for small UK quoted companies. If prices and valuations are rising, the upsides to the Managers' target prices are likely to be narrowing. All else being equal, this would encourage the rotation of ASCoT's capital from companies with lower upsides to those with higher upsides. The Managers' term this dynamic the "value roll" and it has played an important role in ASCoT's capital and income returns over the years. It follows that periods of higher portfolio turnover are often associated with strong returns for ASCoT.

Portfolio turnover is defined as the lower of purchases and sales divided by the average portfolio value. In 2024, turnover was 20%. This is below the long term average of 33%. Notwithstanding ASCoT's positive return in the year, this suggests that there was less opportunity for "value roll" than usual. This is symptomatic of the deep under-valuation of small UK quoted companies - if the stockmarket does not reflect their true value, there is no incentive to reduce the position.

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. In practice, the majority of such engagements remain concerned with governance. This reflects the Managers' firm belief that good governance is a pre-requisite for a good performance in environmental and social terms.

The ESG module in the Managers' investment database is now firmly embedded. It is clear that investee companies are coping well with the ESG expectations of investors and the ESG requirements of regulators. For another year, disclosure has improved and there are demonstrable actions under way to meet net zero commitments. This effort is not costless and the burden on some businesses is considerable. However, once again, the resilience and flexibility of smaller companies is very much in evidence. This extends to the identification of commercial opportunities that can arise from the ESG issues. The products and services of several of ASCoT's industrial holdings bring savings to customers in both monetary and carbon terms. By quantifying avoided emissions, these companies can emphasise their relevance both to the stockmarket and to the real economy.

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 14 to 16 of the Annual Report.

Valuations

Last year's Managers' Report described an unusual triple valuation discount from which ASCoT benefited. This is summarised in the following table.

Price earnings (PE) ratio:	34 year average	At 31 December 2023		At 31 December 2024
World equities*	15.9x		16.0x	17.7x
FTSE All-Share	15.3x		10.3x	14.6x
Smaller companies**	13.6x		10.3x	11.9x
ASCoT's portfolio	12.0x		7.9x	9.6x

*Source: Bloomberg; Panmure Liberum

**DNSCI (XIC) to 2013 then Tracked Universe

Twelve months on, the triple discount remains in place: (1) UK equities have a lower PE than global equities, (2) small UK quoted companies have a lower PE than the UK market as a whole, and (3) ASCoT's portfolio has a lower PE than smaller companies. The table also demonstrates the valuation opportunity in another way. At present, UK equities, smaller companies and the portfolio are each rated on a lower PE than the average over ASCoT's 34 years. Therefore, ASCoT benefits from attractive valuations in comparison both with its own history and with broader equity indices.

The table also reveals some change through 2024: the PEs of all four groups have risen. In the case of world equities, this was principally due to the further share price gains of the "Magnificent Seven" and their ilk. Less appreciated have been the partial re-ratings of the UK equity market, smaller companies and ASCoT's portfolio. A broad re-rating of this sort is welcome but unsurprising given how unusually low PEs were towards the end of 2023. The uncertainty a year ago was when the improvement would come and what would prompt it. In the event, there have been three influences: the improved economic backdrop, a degree of political stability (at least in relative terms), and the continued buying pressure in the form of M&A.

It is worth dwelling on the components of the re-rating. Focusing on smaller companies, the historical PE rose from 10.3x at the end of 2023 to 11.9x at the end of 2024. That is a 16% rise over a period in which the return from the DNSCI (XIC) was 9.5%. From these two numbers it may be inferred that small company profits fell in aggregate, by around 6%. This decline in reported profitability is not news - last year's Managers' Report described the likelihood of such an outturn given the impact of the recession in the second half of 2023. While lower profits are unwelcome, it is clear that they were not inconsistent with positive equity returns as the stockmarket discounted a probable recovery in profits.

There are parallels here with the early 1990s recession, which was caused by inflation and the tighter monetary policy required to address it. The table below gives the macro economic context for the early 1990s downturn, along with how small UK quoted companies performed in the period.

	1990	1991	1992	1993	Cumulative 1991-3
UK economic context
GDP YoY	+0.6%	-1.4%	+0.2%	+2.3%	+1.1%
CPI YoY	+7.0%	+8.5%	+4.2%	+2.5%	+15.9%
Year end base rates	13.9%	10.4%	6.9%	5.4%	-
DNSCI (XIC)* experience
Year end PE ratio	8.2x	11.3x	13.9x	18.6x	-
Implied earnings growth	+1.8%	-13.7%	-13.1%	+6.2%	-20.3%
Total return	-23.5%	+18.3%	+6.4%	+41.6%	+78.2%

*Taken or calculated from London Business School data

The table shows the positive total returns generated by smaller companies in 1991 and 1992 even as the recession hit and profits declined. These returns drove the PE ratio up to 13.9x by the end of 1992. This was, though, only a partial re-rating since the actual recovery in earnings, which started in 1993, prompted a very strong performance from the asset class. Notwithstanding the similarities with today's situation, it would be wrong to anticipate that the market plays out in precisely this way. However, it is clear that the higher PEs seen in 2024 are not in and of themselves a barrier to further gains.

The following table turns to forward 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	7.9x	7.0x	6.1x
Tracked Universe (234 stocks)	10.0x	9.0x	7.8x
- 38 growth stocks	15.9x	14.7x	12.7x
- 196 other stocks	9.3x	8.3x	7.2x
- 102 stocks > £600m market cap	10.5x	9.5x	8.3x
- 132 stocks < £600m market cap	8.8x	7.6x	6.6x

• The ratios are lower in 2025 than in 2024. This reflects the Managers' anticipation of profit growth in 2025, as lower interest rates and real wage growth drive a recovery in the profitability of domestic facing companies.

• 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 7.9x EV/EBITA ratio for 2024 is considerably lower than the average multiple of 13.6x at which takeover offers were made in 2024.

• Each year, the Managers identify a cohort of growth stocks within the DNSCI (XIC). These stocks are on much higher multiples than both the portfolio and the rest of the Tracked Universe.

• Picking up on the size commentary above, the "smaller small" companies within the DNSCI (XIC) remain more attractively valued than do the "larger smalls", despite the former grouping's better share price performance in the year.

Outlook and conclusion

The investment outlook for 2025 is clouded by geopolitics. The war in Ukraine continues, while the situation in the Middle East has recently become more complicated with the overthrow of the Assad regime in Syria. Meanwhile, there are unstable governments or imminent elections in France, Germany, Japan, South Korea and Canada. Despite the conclusive Republican victory in the US, uncertainty lingers. Donald Trump's statements about tariffs and reindustrialisation seem part of a world view that tends to isolationism, though it is unclear how much of this is his well- practised tactics to achieve a deal. To complicate matters, his fiscal actions will affect monetary policy. This in turn will influence the US economy, whose resilience has been welcome as other countries struggle, and the valuation basis of equities and bonds around the world.

Political risk remains elevated too in the UK, despite - or perhaps because of - Labour's decisive election victory. The Budget was uninspiring and impinges upon private sector growth, whatever the government's rhetoric about employers' national insurance contributions. Businesses and consumers can be forgiven for worrying about what might come next should economic growth not pick up as the Chancellor predicts. Some of that scepticism seems shared by bond investors, with gilt yields having risen sharply since the Budget.

However, it is important to put today's big picture concerns and risks in perspective. Macro economic and geopolitical issues are a fact of life. They have beset equity investors over ASCoT's 34 years, and indeed throughout the history of financial markets. Indeed, an element of the superior return achieved by equities over the long term is the reward for taking on those very risks. In their investment discussions, the Managers aim to take into account top down influences but try not to be distracted by them.

What is more certain is the resilience and valuations of the companies in which ASCoT invests. It is worth returning to the way in which small UK quoted companies have dealt so well with recent challenges such as Brexit, the pandemic and supply chain disruption. Even in 2024, when companies reported results affected by recession, many grew their dividends and many were able to enhance shareholder returns with buy-backs. In this, they have been helped by their strong balance sheets and experienced boards of directors. Given their demonstrable flexibility, resilience and adaptability, it is reasonable to expect them to cope well with further change.

It is clear, however, that the stockmarket continues to overlook the resilience and progress of small UK quoted companies. Valuations recovered in 2024 but remain low in comparison with history and with other equity markets. While the US market is priced for perfection, small UK quoted companies are priced for irrelevance. But this tunnel vision on the part of equity markets is part of the present opportunity for investors in ASCoT's asset class. What makes the valuation discrepancies particularly thought-provoking is that there are rational investors - other companies and private equity - who are prepared to pay substantial premiums over stockmarket prices to own small UK quoted companies.

This takeover activity helped to shine a light on ASCoT's investment opportunity in 2024 by raising general awareness of the attractiveness of valuations. Encouragingly, the Managers' valuation framework suggests further upside from the re- rating of the asset class. While it is not guaranteed that this will come in a prompt and smooth manner, investee companies are likely to continue to make underlying progress and build value for their shareholders. ASCoT is positioned to benefit from this with its diversified portfolio of resilient businesses, which has been constructed through the Managers' consistent investment process and value investment philosophy.

Aberforth Partners

Managers

30 January 2025

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

30 January 2025

PRINCIPAL RISKS

The Board carefully considers the risks faced by the Company and seeks to manage these risks through continual review, evaluation, mitigating controls and action as necessary. A risk matrix for the Company is maintained. It groups risks into the following categories: portfolio management; investor relations; regulatory and legal; and financial reporting. Further information regarding the Board's governance oversight of risk and the context for risks can be found in the Corporate Governance Report on page 35 of the Annual Report. The Audit Committee Report (pages 36 to 38 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 impact on the Company. The Board regularly reviews them and, during the year, it added to the risk matrix the potential risks arising from changes to legal rulings adversely affecting the business models of investee companies and the risk of artificial intelligence affecting investment or operational performance. The Board monitors these risks and how the Managers integrate them into their investment decision making.

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 risk	Mitigation
Investment performance is affected by external market risk factors, including those creating uncertainty about future price movements of investments, geo-political stability and economic conditions. The Board delegates consideration of market risk to the Managers to be carried out as part of the investment process.	The Managers regularly assess the exposure to market risk when making investment decisions and the Board monitors the results via the Managers' quarterly and other reporting. The Board and Managers closely monitor significant economic and political developments including the potential effects of climate change (see pages 14 to 16 of the Annual Report). This remained a dynamic risk during the year, in which the Managers reported on market risks including economic and geopolitical issues as addressed in the Managers' Report.

Investment strategy/performance risk
Risk-this is a portfolio management risk	Mitigation
The Company's investment policy and strategy exposes the portfolio to share price movements. The performance of the investment portfolio typically differs from the performance of the benchmark and is influenced by investment strategy and policy, investment style, stock selection, liquidity and market risk (see Market risk above and Note 19 of the 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.	The Board monitors performance against the investment objective over the long term by ensuring the investment portfolio is managed appropriately, in accordance with the investment policy and strategy. The Board has outsourced portfolio management to experienced investment managers with a clearly defined investment philosophy and investment process. The Board receives regular and detailed reports on investment performance including detailed portfolio analysis, risk profile and attribution analysis. Senior representatives of Aberforth Partners attend each Board meeting. Peer group performance is also regularly monitored by the Board. This remains a dynamic risk, with detailed consideration during the year. The Managers' Report contains information on portfolio investment performance and risk.

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

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

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

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

Going Concern

The Audit Committee has undertaken and documented an assessment of whether the Company is a going concern for the period of at least 12 months from the date of approval of the financial statements. The Committee reported the results of its assessment to the Board.

The Company's business activities, capital structure and borrowing facilities, together with the factors likely to affect its development and performance, are set out in the Strategic Report. In addition, the Annual Report includes the Company's objectives, policies and processes for managing its capital and financial risk, along with details of its financial instruments and its exposures to credit risk and liquidity risk. The Company's assets comprise mainly readily realisable equity securities and funding flexibility can typically be achieved through the use of the borrowing facilities, which are described in notes 12 and 13 to the 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.

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 summary Cash Flow Statement are set out below.

INCOME STATEMENT

For the year ended 31 December 2024

(audited)

	For the year ended			For the year ended
	31 December 2024			31 December 2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Net gains on investments	-	116,364	116,364	-	58,432	58,432
Investment income	54,506	-	54,506	56,423	-	56,423
Other income	118	-	118	91	-	91
Investment management fee	(3,708)	(6,180)	(9,888)	(3,350)	(5,583)	(8,933)
Portfolio transaction costs	-	(2,179)	(2,179)	-	(1,855)	(1,855)
Other expenses	(858)	-	(858)	(823)	-	(823)
	--------	--------	--------	--------	--------	--------
Net return before finance costs	50,058	108,005	158,063	52,341	50,994	103,335
and tax
Finance costs	(2,427)	(4,045)	(6,472)	(1,578)	(2,631)	(4,209)
	--------	--------	--------	--------	--------	--------
Return on ordinary activities	47,631	103,960	151,591	50,763	48,363	99,126
before tax
Tax on ordinary activities	-	-	-	(82)	-	(82)
	--------	--------	--------	--------	--------	--------
Return attributable to
equity shareholders	47,631	103,960	151,591	50,681	48,363	99,044
	======	=======	=======	======	=======	=======
Returns per Ordinary Share (Note 4)	56.59p	123.50p	180.09p	59.79p	57.05p	116.84p

The Board declared on 30 January 2025 a final dividend of 30.00p per Ordinary Share and a special dividend of 6.00p per Ordinary Share. The Board declared on 26 July 2024 an interim dividend of 13.60p 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 2024

(audited)

		Capital
	Share	redemption	Special	Capital	Revenue
	capital	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 31 December 2023	844	144	38,840	1,158,046	99,353	1,297,227
Return on ordinary activities after taxation	-	-	-	103,960	47,631	151,591
Equity dividends paid (Note 3)	-	-	-	-	(43,130)	(43,130)
Purchase of Ordinary Shares	(6)	6	(8,371)	-	-	(8,371)
	--------	--------	--------	--------	--------	--------
Balance as at 31 December 2024	838	150	30,469	1,262,006	103,854	1,397,317
	======	======	======	======	======	======

For the year ended 31 December 2023

(audited)

		Capital
	Share	redemption	Special	Capital	Revenue
	capital	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 31 December 2022	853	135	50,481	1,109,683	89,718	1,250,870
Return on ordinary activities after taxation	-	-	-	48,363	50,681	99,044
Equity dividends paid (Note 3)	-	-	-	-	(41,046)	(41,046)
Purchase of Ordinary Shares	(9)	9	(11,641)	-	-	(11,641)
	--------	--------	--------	--------	--------	--------
Balance as at 31 December 2023	844	144	38,840	1,158,046	99,353	1,297,227
	======	======	======	======	======	======

BALANCE SHEET

As at 31 December 2024

(audited)

	31 December	31 December
	2024	2023
	£'000	£'000
Fixed assets
Investments at fair value through profit or loss (Note 5)	1,497,304	1,363,980
	----------	----------
Current assets
Debtors	2,874	2,661
Cash at bank	1,349	2,734
	----------	----------
	4,223	5,395
Creditors (amounts falling due within one year)	(302)	(305)
	----------	----------
Net current assets	3,921	5,090
	----------	----------
Total Assets less Current Liabilities	1,501,225	1,369,070
Creditors (amounts falling due after more than one year)	(103,908)	(71,843)
	----------	----------
Total Net Assets	1,397,317	1,297,227
	=======	=======
Capital and reserves: equity interests
Called up share capital	838	844
Capital redemption reserve	150	144
Special reserve	30,469	38,840
Capital reserve	1,262,006	1,158,046
Revenue reserve	103,854	99,353
	----------	----------
Total Shareholders' Funds	1,397,317	1,297,227
	=======	=======
Net Asset Value per Ordinary Share (Note 6)	1,666.95p	1,536.73p

CASH FLOW STATEMENT

For the year ended 31 December 2024

(audited)

	2024		2023
		£'000		£'000
Operating activities
Net revenue return before finance costs and tax		50,058		52,341
Tax withheld from income		-		(82)
Investment management fee charged to capital		(6,180)		(5,583)
(Increase) in debtors		(213)		(516)
Increase in other creditors		8		-
		--------		--------
Net cash inflow from operating activities		43,673		46,160
		=====		=====
Investing activities
Purchases of investments		(307,701)		(255,193)
Sales of investments		288,596		270,051
		--------		--------
Cash (outflow)/inflow from investing activities		(19,105)		14,858
		=====		=====
Financing activities
Purchases of Ordinary Shares		(8,371)		(11,641)
Equity dividends paid (Note 3)		(43,130)		(41,046)
Interest and fees paid		(6,452)		(4,265)
Gross drawdowns of bank debt facilities (before any costs)		79,000		52,000
Gross repayments of bank debt facilities (before any costs)		(47,000)		(55,000)
		--------		--------
Cash (outflow) from financing activities		(25,953)		(59,952)
		=====		=====
Change in cash during the period		(1,385)		1,066
		=====		=====
Cash at the start of the period		2,734		1,668
Cash at the end of the period		1,349		2,734
		======		======

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 below. The Directors' assessment of the basis of going concern is described on pages 29 to 30 of the 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.

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.

3. DIVIDENDS

	Year to 31 December 2024 £'000	Year to 31 December 2023 £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2023 of 28.55p (2022: 26.95p) paid on 8 March 2024	24,091	23,000
Special dividend for the year ended 31 December 2023 of 9.00p (2022: 8.30p) paid on 8 March 2024	7,595	7,084
Interim dividend for the year ended 31 December 2024 of 13.60p (2023: 12.95p) paid on 29 August 2024	11,444	10,962
	------------	------------
	43,130	41,046
	------------	------------

The final dividend of 30.00p (2023: 28.55p) and special dividend of 6.00p (2023: 9.00p) for the year ended 31 December 2024 will be paid, subject to shareholder approval, on 10 March 2025. The final and special dividends for 2024 and 2023 have not been included as liabilities in the financial statements.

4. RETURNS PER ORDINARY SHARE

	Year to 31 December 2024	Year to 31 December 2023
The returns per Ordinary Share are based on: Returns attributable to Ordinary Shareholders	£151,591,000	£99,044,000
Weighted average number of shares in issue during the year	84,175,009	84,766,084
Returns per Ordinary Share	180.09p	116.84p

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 December 2024	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Listed equities	1,497,304	-	-	1,497,304
Unlisted equities	-	-	-	-
	------------	------------	------------	------------
Total financial asset investments	1,497,304	-	-	1,497,304
	------------	------------	------------	------------

As at 31 December 2023	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Listed equities	1,363,980	-	-	1,363,980
Unlisted equities	-	-	-	-
	------------	------------	------------	------------
Total financial asset investments	1,363,980	-	-	1,363,980
	------------	------------	------------	------------

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 2024	31 December 2023
Net assets attributable	£1,397,317,000	£1,297,227,000
Ordinary Shares in issue at the end of the year	83,824,605	84,414,605
Net Asset Value per Ordinary Share	1,666.95p	1,536.73p

7. SHARE CAPITAL

During the year, the Company bought back and cancelled 590,000 shares (2023: 930,000) at a total cost of £8,371,000 (2023: £11,641,000). During the period 1 January to 30 January 2025, 520,500 shares have been bought back for cancellation.

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 40 and 41 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 4 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 2024 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 2023 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.

The Annual Report is expected to be posted to shareholders by 7 February 2025. Members of the public may obtain copies from Aberforth Partners LLP, 14 Melville Street, Edinburgh EH3 7NS or from its website: www.aberforth.co.uk.

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

Aberforth Partners LLP, Secretaries - 30 January 2025

ANNOUNCEMENT ENDS

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