UK Smaller Companies Investment Trust PLC
(“MUSCIT”)
Annual Report and Accounts 2025
The best way to get to know
a Smaller Company isn’t by
looking at a spreadsheet
Contents
Reasons to Invest 1
Highlights 2
Strategic Report
Chairman’s Statement 3
Manager’s Report 6
Ten Largest Holdings
11
Twenty Largest Holdings 13
Analysis of Investment Portfolio by Industrial or Commercial Sector 14
Business Model and Strategy 15
Principal and Emerging Risks 17
Directors’ Duties 21
Governance
Board of Directors 25
Directors’ Report 27
Corporate Governance Statement 31
Report from the Audit and Management Engagement Committee 35
Directors’ Remuneration Report 38
Statement of Directors’ Responsibilities 41
Financial Report
Independent Auditor’s Report 42
Income Statement 49
Statement of Changes in Equity 50
Balance Sheet 51
Notes to the Financial Statements 52
Other Information
AIFMD Disclosures 63
Alternative Performance Measures 64
Glossary of Terms 66
Shareholder Information 67
Notice of Annual General Meeting 69
Advisers 76
This document is important and refers to certain matters on which voting action
is required. Shareholders who are in any doubt as to what action to take should
consult an appropriate independent adviser.
If any shareholder has sold or transferred their shares in the Company, he or
she should pass this document to the purchaser or transferee or to the person
through whom the transfer or sale was effected for onward transmission to the
transferee or purchaser.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 1
Long track record
Outperformed by 390% since
launch in 1995
Experienced Manager
One of the largest specialist
SmallCap teams in Europe
Discount opportunity
8% discount vs a 3% premium at
end of 2022
Interests aligned
MAM’s biggest investment
Good timing
UK SmallCap has rarely been so
cheap. Quality Growth is attractive
Quarterly Income
Annual yield of c.6% of NAV
(6.5% of Share Price given discount)
The trust is a long-term holder of stocks, with a track record of identifying
multi-baggers*, including:
Held for 20 years Held for 15 years Held for 12 years
443%
total return
559%
total return
533%
total return
While investing in exciting new ideas:
Reasons to Invest
* A multi-bagger is an investment that has increased in value by multiple times its original purchase price.
Total return figures are based on initial purchase price. Data as at 31 March 2025. Figures relate to current
holdings only and exclude any past holdings that may have achieved multi-bagger status.
page 2 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Highlights
for the year ended 31 March 2025
Investment Objective
The investment objective of Montanaro UK Smaller Companies Investment Trust PLC
(the “Company” or “MUSCIT”) is to achieve capital appreciation through investing in
smaller quoted companies listed on the London Stock Exchange or traded on AIM and
to outperform its benchmark, the Deutsche Numis Smaller Companies Index (excluding
investment companies) (“NSCI”).
Performance
Total Returns 1 year 3 year 5 year 10 year Since launch
Share Price¹ 1.0% (10.8%) 20.3% 52.3% 854.0%
Net Asset Value ("NAV") per share¹ (6.9%) (11.4%) 14.3% 30.4% 808.6%
Benchmark² 2.3% 2.7% 68.2% 60.3% 570.6%
Benchmark (including AIM)³ (0.4%) (11.1%) 49.0% 47.7% 477.9%
Sources: Deutsche Numis, Bloomberg, Association of Investment Companies (“AIC”), Montanaro Asset Management Limited (“MAM”).
As at 31 March 2025 2024 % change
Ordinary share price 97.00p 101.00p (4.0)
NAV per Ordinary share
1
105.86p 118.94p (11.0)
Discount to NAV
1
8.4% 15.1%
Gross assets
1
£163.3m £219.1m (25.5)
Net assets £150.8m £199.1m (24.3)
Market Capitalisation £138.2m £169.1m (18.3)
Net gearing employed
1
5.2% 2.7%
Year ended 31 March 2025 2024 % change
Revenue return per Ordinary share 3.3p 3.2p 3.1
Dividends per Ordinary share 5.4p 4.6p 17.4
Ongoing charges
1
0.9% 0.9%
Portfolio turnover
1
45.6% 23.4%
1
Details provided in Alternative Performance Measures on pages 64 to 65.
2
The Benchmark is a composite index with the NSCI used since 1 April 2013.
3
This represents the Benchmark with the NSCI including AIM used since 1 April 2013.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 3
Chairman’s Statement
I am pleased to present the annual report of MUSCIT for the
year ended 31 March 2025. This year also marks MUSCIT’s
30th anniversary.
Results
In the year to 31 March 2025, the Net Asset Value (“NAV”)
total return of MUSCIT decreased by 6.9%. In comparison,
the Numis Smaller Companies Index (excluding investment
companies) (the “NSCI”) gained 2.3% and the NSCI including
AIM decreased by 0.4%.
During the same period, the share price of MUSCIT returned
1.0% as the discount tightened from 15.1% to 8.4%.
Compared with the NSCI including AIM, MUSCIT’s Share Price
outperformed by 1.4%.
Since inception in 1995, the Company has delivered
a cumulative NAV total return of 809%, significantly
outperforming the composite benchmark which delivered a
return of 571%.
Dividends
The Board believes it is important that the Company’s
dividend policy continues to play a key role in attracting new
investors and, in doing so, helps to narrow the discount.
While the Company’s primary investment objective and focus
remain capital growth – and this has not changed – the Board
recognised the evolving interest rate environment.
In December 2024, the quarterly dividend was
increased from 1% to 1.5% of the Company’s
NAV, equivalent to an annual yield of
approximately 6%.
Based on the current discount of 8.4%, this implies a share
price yield of 6.5%. This would place MUSCIT in the top 10
highest-yielding UK equity trusts out of over 400 and one
of only seven strategies offering yields in excess of 6%
(Source: Quoted Data).
Quarterly dividends continue to be calculated on the NAV on
the last business day of the preceding financial quarter, being
the end of March, June, September and December.
During the Financial Year, the Company paid four quarterly
dividends amounting to a total of 5.43p per share, equivalent
to 5.4% of the share price at the start of the year and 5.6% at
the end of the period.
The Company holds substantial reserves which are available
for distribution in future.
Costs
The Board remains highly focused on reviewing and
managing costs. Effective from 31 December 2024, the
investment management fee of 0.50% per annum is now
calculated based on net assets rather than gross assets.
The fee remains one of the most competitive within the UK
SmallCap investment trust sector.
In addition, the Board conducts regular reviews of all service
providers to ensure that fees remain competitive and at least
aligned with market standards.
We are pleased to report that the Company’s Ongoing Charge
has remained stable at 0.9%, despite a decrease in net assets
during the Financial Year.
Share Buybacks
The Board is responsible for share buy-backs which are
undertaken at arms’ length from the Manager. These are
regularly considered by the Board and implemented when
considered to be in the interests of shareholders as a whole.
In recognition of changing market dynamics,
the Board confirmed its commitment to
an active buyback policy, with the view to
maintaining the discount in single digits in
normal market conditions.
page 4 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
The share buyback authority was renewed at a General
Meeting held on 31 March 2025.
During the financial year, the Company bought back
24,927,148 shares (14.9% of outstanding shares) which are
held inTreasury.
In addition, during the life of MUSCIT, the Company has
bought back and cancelled 29% of the shares outstanding.
Discount
Over the last financial year, the discount of MUSCIT’s share
price to NAV, as shown in the graph on page 4, narrowed
from 15.1% to 8.4%.
The Board and the Manager have worked hard to make
MUSCIT attractive to private clients, including implementing a
five-for-one share split in 2018; twice enhancing its dividend
policy; reducing costs and increasing the focus on marketing.
These initiatives are bearing fruit, with a growing number of
retail investors now appearing on the share register. Over
time, this broader ownership base should help to reduce
discount volatility in MUSCIT’s shares.
Gearing
The Board, in consultation with the Manager, regularly reviews
the gearing strategy of the Company and it approves the
arrangement of any gearing facility. The ability to issue debt to
gear the portfolio is a key feature of investment trusts that we
believe offers a strong competitive advantage over open
-ended
investment funds. Gearing can enhance investment returns to
shareholders. The Board strongly encourages the Manager to
actively use the gearing facility while delegating the decision on
optimum levels to their discretion.
On 17 December 2024, the borrowing facilities were renewed
with BNY Mellon for a period of two years. The interest rate
on the £30 million revolving credit facility is calculated as the
prevailing SONIA rate plus 1.3% (the bank margin).
At 31 March 2025, net gearing was 5.2%, a level that the
Manager considered to be appropriate in light of the
macroeconomic uncertainty and volatility in financial markets
at that time.
Environmental, Social and Corporate Governance (“ESG”)
The Board and Montanaro believe there is a strong
correlation between how well a business fares on ESG
grounds and the value it creates for its shareholders. This
is why ESG considerations form an integral part of the
Manager’s assessment of a company’s “Quality” and have
been fully integrated into the investment process for many
years.
The depth of Montanaro’s commitment is perhaps best
exemplified by the fact that they are one of the few UK asset
managers to be a certified B Corporation – a certification
Montanaro have held since 2019. Certified B Corporations
are businesses that meet the highest standards of verified
social and environmental performance, public transparency
and legal accountability to balance profit and purpose. The
certification was renewed for a further three years in 2022.
Montanaro’s score rose from 81.8 to 105.5 (classified as
“outstanding”), demonstrating their commitment to continual
improvement.
An ESG Report is included on pages 7 to 8 of this Annual
Report.
%
Source: Montanaro Asset Management, Bloomberg.* Discount based on NAV over the last ten years.
Mar 15
Mar 16
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
Mar 23
Mar 24
Mar 25
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
Share Price Discount to NAV*
Chairman’s Statement continued
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 5
AGM
The Annual General Meeting will be held on Wednesday,
23 July 2025 at 10 a.m. at the office of Montanaro Asset
Management, 53 Threadneedle Street, London EC2R 8AR.
Shareholders are warmly invited to attend the Meeting where,
after the formal business has been concluded, there will be
an opportunity to meet and ask questions of the Board and
the Manager.
Continuation Vote
The next Continuation Vote is scheduled to be held in 2027.
At the AGM held on 12 August 2021, over 99% of shareholders
voted in favour of continuation of the Company for a further
fiveyears.
Directors’ Fees
In light of the adjustments to the investment management
fee and reduced NAV of the Company, the Board has agreed
to reduce Directors’ remuneration by 10% from 1 April 2025.
This decision reflects the Board’s commitment to managing
the Company’s costs. Directors are encouraged to invest a
proportion of their remuneration in shares of the Company.
We will continue to review remuneration levels to ensure they
remain appropriate and competitive within our peer group.
Outlook
The financial year to 31 March 2025 was shaped by
considerable turbulence, both in international relations
and financial markets. The re-election of Donald Trump
and the announcement of sweeping tariffs – dubbed
“Liberation Day” measures – shocked the global economy,
heightening volatility and damaging investor confidence.
These developments have added considerable uncertainty
to the global outlook and are reshaping established trading
relationships in ways that are still unfolding.
Closer to home, the UK faced its own challenges. The
Budget announcements in November 2024 and again in
March 2025 were generally poorly received by the business
community, with tax and minimum wage increases viewed
as disappointing. These measures weighed on domestic
sentiment and contributed to a difficult environment for UK
smaller companies in particular. Growth companies faced the
additional headwind of rising bond yields.
Nonetheless, as we look ahead, there are reasons for
cautious optimism. Recent data show that UK GDP growth
in Q1 2025 outperformed expectations, while inflation has
come in below forecast. As a result, investor sentiment
towards UK equities is perhaps beginning to improve from
deeply depressed levels.
Furthermore, early signs suggest that a potential ‘brain
drain’ from US universities – as international academics and
students look elsewhere – could benefit the UK’s world-
leading higher education sector and, over time, the broader
economy. UK equity valuations – particularly among smaller
companies – are close to generational lows compared to
other major markets, while global investor allocations to UK
equities remain exceptionally low. A combination of attractive
valuations and improving sentiment could set the stage for a
meaningful reappraisal of UK equities in the years ahead.
Against this backdrop, we remain confident that our portfolio
of high-quality, resilient smaller companies – of which the
overwhelming majority are unaffected by trade tariffs – offers
attractive opportunities for long-term investors.
The Board and the Manager remain focused on delivering
strong, sustainable returns while managing risk carefully
in what continues to be an evolving and unpredictable
environment.
ARTHUR COPPLE
Chairman
16 June 2025
page 6 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Manager’s Report
The Attractions of Quoted UK Smaller Companies (“UK SmallCap”)
The key attraction of investing in quoted smaller companies
is their long-term record of delivering higher returns to
investors than large companies. In the UK, over the last
70years, this has amounted to an average of 3.1% per
annum (the “SmallCapEffect”).
£1 invested in UK large companies in 1954
would now be worth £1,530 whereas the same
£1 invested in UK smaller companies would
now be worth £10,040 – almost seven times
more (see chartbelow).
Cumulative Nominal Return of £1 invested on 1 January 1955 (to 31 December 2024)
55
Numis Small Cap ex-IC Numis Small Cap (ex-IC): +14.1% p.a.
Numis Large Cap: +11.0% p.a.
Small Cap Effect = 3.1% p.a.
£10,040
£1,530
Numis Large Cap
20 2256 58 60 62 64 66
68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
24
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
0
The market for UK smaller companies is inefficient. While
some large companies are analysed by more than 50 brokers,
many smaller companies have little or no coverage. We
believe that this makes it easier for those with a high level
of internal resources to identify attractive, undervalued and
overlooked investment opportunities. This in turn makes it
possible to deliver long-term performance over and above
that of the benchmark.
Montanaro Asset Management
Montanaro was established in 1991. We have one of the
largest and most experienced specialist teams in the UK
dedicated exclusively to researching and investing in quoted
smaller companies. Our team of 37 includes 11 nationalities
and 16 Analysts and Portfolio Managers, which gives us the
breadth of resources to conduct thorough in-house research.
At 31 March 2025, we were looking after around £3 billion of
client assets.
Investment Philosophy and Approach
We specialise in researching and investing in quoted smaller
companies.
We have a disciplined, two-stage investment process. Firstly,
we identify “good businesses” within our investable universe.
In the second stage, we determine the intrinsic value of each
company to ensure they will make a “good investment” (the
two are not always the same).
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 7
When we consider that we have identified a potentially
“good” company, it must pass our stringent Quality and ESG
Checklists and be approved by our Investment Committee
before it can be added to our “Approved List”. ESG has been
integrated within our disciplined investment process for
almost three decades. Only the most attractive companies
make it on to the Approved List and it is from these that we
construct your portfolio.
Our in-house team of Analysts are sector specialists and one
of the largest specialist teams in the country. Utilising their
industry knowledge and a range of proprietary screens, they
are continually searching for new ideas. With around 1,600
quoted companies in the UK to choose from, we are spoiled
for choice.
We look for high quality companies in markets that are
structurally growing and simple to understand. They must
be profitable; have good and experienced management;
deliver sustainably high returns on capital employed; enjoy
high and ideally growing profit margins reflecting pricing
power and a strong market position; and provide goods and
services that are in demand and likely to remain so. We like
focused companies that are well-established with a long
history so that we can see how they perform over different
cycles. Ideally, they should deliver self-funded organic
growth rather than rely on acquisitions and stick firmly to
their core areas of expertise.
Conversely, we avoid those with stretched balance sheets;
poor free cash flow generation; incomprehensible or heavily
adjusted accounts; unproven or unreliable management;
structurally challenged business models with stiff
competition; and “special situations” or recovery companies.
We believe that a deep understanding of a company’s
business model and the way it is managed are essential. We
meet or speak to our investee companies on a regular basis,
typically after they announce their semi-annual or annual
figures. Site visits are particularly useful. They allow us to
meet management in situ when they can give us more time
and we can talk to more people. Investing in small companies
is all about meeting the executive team. It is a privilege for us
and where we can add most value.
Management’s past track record is examined in detail as we
seek to understand their goals and aspirations. In smaller
companies, the decisions of management can make or break
a company (which is why meeting them is so important).
We look closely at the board structure; the level of insider
ownership; and carefully examine remuneration and
corporate governance policies.
Once a company has been added to the portfolio, our
Analysts conduct ongoing reviews. We will sell a holding if we
believe that the company’s underlying quality is deteriorating
or if there has been a fundamental change to the investment
case or indeed management. We will get things wrong and
make mistakes, but we try to learn from them.
In summary, we invest in well managed,
focused, high quality, growing companies
bought at sensible valuations.
We keep turnover and transaction costs low and follow our
companies closely over many years. We would rather pay more
for a higher quality, more predictable company that can be
valued with greater certainty.
Environmental, Social and Governance (“ESG”)
Montanaro became a certified B Corporation in 2019,
placing sustainability at its core. This was achieved by
meeting verified standards of social and environmental
performance, transparency and accountability. It is regarded
as one of the toughest sustainability standards to achieve
globally. Montanaro recertified for “B Corp” status in 2022
and achieved a score of 105.5, well above the 81.8 originally
achieved in 2019 and an achievement of which we are proud.
Montanaro has a long track record of sustainable investing
which has always been reflected in the way the portfolio has
been managed. Ethical restrictions mean that we do not
invest in companies that generate a significant proportion
of sales from products with negative societal impact such
as tobacco, gambling, alcohol, high-interest-rate lending
and fossil fuels. Similarly, we do not invest in companies
that conduct animal testing, unless it is required by law for
healthcare or regulatory purposes.
The analysis of ESG factors has long formed part of our
definition of a company’s “Quality”. The analysis of such
information allows us to better understand the risks – and
opportunities – that our companies may be exposed to, from
factors such as climate change, supply chain risks and the
structure of company boards.
MUSCIT was awarded an ‘AA’ rating for its ESG credentials
by MSCI – the second best rating out of a possible seven –
placing it among the highest-rated funds in its category.
In March 2022, Montanaro won “the Best Small & Mid-Cap
Sustainable Investment Boutique” award from Ethical Finance.
This recognised Montanaro’s continuing commitment to
sustainable investing within its own business, across the
investment industry and in our investment process. We were
delighted to receive this award again in 2024.
page 8 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Manager’s Report continued
Examples of Recent Investee Company Engagement
We continued our active engagement with portfolio
companies over the past year, focusing on areas such
as environmental transparency, executive pay, and
sustainability reporting.
As part of the 2024 CDP Non-Disclosure Campaign, we
engaged with Hilton Foods to discuss how they could
improve their environmental reporting. In previous years, the
company had not responded to CDP requests for disclosure.
Our discussions were constructive as always. Subsequently,
they completed all three CDP questionnaires covering climate
change, water security and deforestation. This marks a
significant step forward and shows the company’s growing
commitment to sustainability and investor transparency.
We took part in a shareholder consultation with discoverIE
regarding proposed changes to its executive pay structure,
including increases to performance-based long-term
incentives. Our engagement focused on ensuring a clear link
between reward and long-term value creation. The company
provided reassurance on how performance metrics were being
designed to align with shareholder interests. After a thorough
review, we voted in favour of the proposals at the AGM.
How to Invest
We have dedicated a great deal of time to make MUSCIT
readily available to all investors. We have continued to grow
our presence across the UK’s investment platforms and are
delighted to see a steady increase, year after year, in MUSCIT’s
retail following.
Together with the Board, we have appointed Marten & Co
to provide sponsored research. The latest report published
in May 2025 is available here: https://quoteddata.com/
research/montanaro-uk-smaller-companies-high-growth-
bigger-yield-mc/
For further details about how to invest, please refer to the
following website: https://montanaro.co.uk/trust/montanaro-
uk-smaller-companies-investment-trust/
The Portfolio
On 31 March 2025, the portfolio consisted of 40 companies
of which the top ten holdings represented 41% (2024: 46%)
of the portfolio by value. MUSCIT held 8 companies traded on
AIM representing 16% of the Portfolio by value (2024: 21%).
Sector distribution within the portfolio is driven by stock
selection. Although weightings relative to the market are
monitored, overweight and underweight positions are held
based on where the greatest value and upside are perceived
to be.
Gearing
The Board is responsible for setting the Company’s gearing
strategy and approves the arrangement of any borrowing
facilities. The Manager is responsible for determining
the gearing level within parameters set by the Board.
On31March 2025, gearing stood at 5.2%.
Performance Review
In the year ended 31 March 2025, the NAV decreased by
6.9% in comparison with the benchmark gain of 2.3%.
Including AIM, the benchmark was flat. Style proved a
headwind: Growth underperformed Value by 8% last year,
accounting for the underperformance.
During this period, the share price of MUSCIT returned
1.0% as the discount narrowed from 15.1% to 8.4%.
Compared with the NSCI including AIM, MUSCIT’s share price
outperformed by 1.4%.
Since its launch in March 1995, MUSCIT has delivered an
average annualised NAV return of 7.6% p.a. (including
dividends reinvested), outperforming the composite
benchmark by 1.1% p.a.. This is a cumulative NAV total
return of 809%, significantly outperforming the composite
benchmark return of 571%.
Performance Attribution
The largest positive contributors over the period were:
XPS Pensions, a leading provider of pension administration
and consulting services, continued its strong run. Demand
for expert advice remains high following the LDI crisis caused
by Liz Truss’s mini-budget in September 2022. The group
has been gaining market share through new client wins and
awards. This is the second year in a row that XPS has been
among our top performers.
Games Workshop, the fantasy miniatures company behind
Warhammer, delivered impressive results once again.
Agrowing global fanbase, successful new product launches,
and expanding royalty income from licensing deals – including
with Amazon – all contributed to investor enthusiasm.
The
business remains highly profitable and cash generative
with a strong dividend track record.
Raspberry Pi, a Cambridge-based semiconductor company
and educational computing pioneer, made a successful debut
on the London Stock Exchange. We participated in the IPO
(see below). Early trading has been encouraging and in line
with market expectations.
As ever, the year was not without some disappointments.
Thelargest detractors were:
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 9
Tracsis, a provider of software and services to the transport
industry, saw its shares weaken after failing to secure any
large train orders in America that had been anticipated.
Atthe time of writing, the shares are trading on c.11x forward
earnings, which suggests to us that the news has been fully
discounted by the market. The share price has been quietly
rallying since the end of the financial year.
4imprint, the direct marketer of promotional products
in the US, gave back some of its previous strong gains. As
most of their products are sourced from China, investors
became concerned about the impact of trade tariffs and the
likelihood of price increases that might result. One of our top
performers last year, 4imprint remains a core holding and
has one of the best management teams we have the privilege
to know.
YouGov, the international market research and data analytics
company, issued a profit warning following operational
missteps, including delayed project delivery and cost
overruns. So soon after a large acquisition, management
credibility was sufficiently in doubt that we sold the holding.
Subsequently, the Chief Executive stood down.
Case Study – Raspberry Pi
This year saw us participate in the IPO of Raspberry Pi –
our first for MUSCIT since Auction Technology Group in
February 2021. IPOs are rare for us. We prefer companies
with a long track record on the public market, not least
because listing is a gruelling process. The obligations once
public are considerable. Add in fund managers like us asking
endless (and probably quite annoying) questions and you can
understand why some founders choose to stay private.
But we do like a good prospectus. The trick, as ever, is to read
it from the back – litigation, accounting adjustments, related
party transactions, etc. are all buried at the end. Most don’t
have the stamina to read every page to the last. We do.
In 2024, just 17 companies came to market in the UK – down
96% from the 2005 peak. But this could not go on. Private
equity needed exits. Bankers needed bonuses. The London
Stock Exchange needed a win. Step forward: Raspberry Pi.
Founded in Cambridge, Raspberry Pi began as an
educational charity to inspire the next generation of
computer programmers. Eben Upton and colleagues
launched the first credit card-sized computer boards in
2012, priced at under £15, hoping schools would use
them to teach coding. They caught on fast: first with kids
and hobbyists; later with engineers and OEMs. Today,
Raspberry Pi is a global business selling into both education
andindustry.
The IPO prospectus was one of the cleanest I have ever
read. It passed the key tests: management were not selling
a single share (always “follow the money”); they retained a
meaningful 5% stake; they had impressive backers such as
ARM and Lansdowne who were cornerstone investors; Sony
Semiconductor was already involved. Most importantly,
the main seller was the Raspberry Pi Foundation – not
private equity – and proceeds would continue to support its
charitable mission.
The company ticked every MUSCIT box: c.£500 million market
cap (too small for the index-huggers and big institutions),
profitable and growing fast. From 2021 to 2023, revenues
rose by over 90% and operating profits had more than
doubled. We had a long meeting with management who are
passionate, open and trustworthy. We felt it would be priced
attractively. There were too many people who had a vested
interest in a successful outcome.
The IPO was around 10 times oversubscribed. Half the
institutions walked away empty handed. Fortunately, we
received an allocation which we quickly increased to our
target weight. Raspberry Pi listed at £2.80 on 10 June 2024
and has since more than doubled. Such successes are rare
but in this instance all the stars were aligned. A founder-led,
mission-driven, profitable UK technology company, backed
by long-term sophisticated investors built for the long
term at a time when the London Stock Exchange needed
something to shout about.
There is a postscript. Whilst reading the prospectus, I spotted
a familiar name: David Braben, one of the co-founders, is also
Chairman of Frontier Developments, a company we’ve known
for many years. I gave him a call. As ever, some of the most
valuable insights come not from broker notes, prospectuses or
roadshows but rather from relationships built over decades.
This is what UK SmallCap is all about.
Raspberry Pi reminds us why it is so exciting
and rewarding.
page 10 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Manager’s Report continued
Outlook
UK equities as a whole are trading at just 12x earnings, one of the cheapest global stock markets. UK SmallCap is even
cheaper, languishing at around 10x depressed profits (see chart below).
SmallCap – 12-month Forward P/E
(Deutsche Numis Smaller Companies ex-IC Index)
10.5x
4
6
8
10
12
14
16
18
20
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
24
For long-term investors, this has the hallmarks of a
generational buying opportunity.
We are not alone in this view. Around the world, the
investment community is reassessing its exposure to Wall
Street. The return of Donald Trump and “Liberation Day”
politics have reignited concerns around deficits, US dollar
stability and the sustainability of the dominance and so called
“excellence” of America. Is it still a reliable trading partner? It
may no longer be the obvious safe haven for investors – Wall
Street underperformed the rest of the world by 10.5% in the
first quarter of 2025, the most in 23 years. This is remarkable
and may signal a change in the world order never seen
before in our lifetime. As the risk premium on US equities
rises, capital is beginning to search for alternative homes. The
UK is on the radar once again.
Consensus earnings for UK SmallCap companies forecast
a rise of over 17% in 2025, outpacing larger peers by some
margin. The combination of a valuation discount and an
improving earnings outlook bodes well. Currently, UK smaller
companies are unloved and under-owned. Over the past
thirty years, we have seen sentiment change dramatically
almost overnight – March 2003 and March 2009 come to
mind – which heralded several years of strong returns. It pays
to remain patient and keep the faith.
CHARLES MONTANARO
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 11
Ten Largest Holdings
as at 31 March 2025
1. discoverIE
A global electronics group designing customised components for industrial
applications. Its high-margin, design-led model and exposure to structural
growth markets such as renewables and automation make it a compelling
long-term compounder.
2. XPS Pensions
A leader in pension consultancy and administration, XPS is well positioned
to grow as regulation drives demand for independent, expert advice. Its
scalable model and market share gains support long-term, structural growth.
XPS won the John Lewis Pension Fund last year with 165,000 members, the
largest in the company’s history.
3. Big Yellow
Big Yellow is the UK’s leading self-storage provider with over 100 stores
nationwide and a focus on London and the South East. Demand is driven by
decluttering, moving, home improvements, student storage, travel, business
needs and life events (“death, divorce and downsizing”). Since listing in 2000,
it has achieved consistent earnings and dividend growth with annualised
total shareholder returns of 13.6%.
4. Hilton Foods
A global food packaging business partnering with leading supermarkets such
as Tesco, Woolworths (Australia) and the Co-op. Innovation in sustainable
packaging and plant-based products, plus geographic expansion such as
in Saudi Arabia, support strong growth. Walmart have just announced a
$6.5 billion landmark investment in Canada where they will be working with
HiltonFoods.
5. Telecom Plus
Trading as Utility Warehouse, TelecomPlus bundles energy, broadband,
mobile and insurance into a one-stop shop proposition. Its unique referral
model fuels customer growth, with rising energy costs enhancing its relative
value proposition. It has over one million customers in the UK.
page 12 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
6. Baltic Classifieds
BCG are the dominant classifieds business in the Baltics, operating 14 online
portals across autos, real estate, jobs, services and generalist verticals. High
margins and pricing power, strong network effects and digital transition
underpin its exceptional profitability and scalability. Each resident in the
Baltics, on average, visits BCG sites 10 times per month.
7. Porvair
Specialising in filtration for environmental and industrial markets, Porvair
benefits from global regulations and decarbonisation trends. Its niche
technologies serve mission-critical applications with high barriers to entry.
8. 4imprint
4imprint is the leading direct marketer of promotional products in the USA,
Canada, the UK and Ireland offering more than 43,000 products. They hold a
2% market share in a highly fragmented market indicating substantial room
for growth to compete successfully with Amazon.
9. Bytes Technology
One of the UK’s largest software resellers, Bytes provides IT solutions
including software licensing, security, cloud services and digital
transformation across public and private sectors. They have strong vendor
relationships including with Microsoft (about half of sales) winning awards
such as “Microsoft Partner of the Year”. High cash generation and increasing
cloud adoption support continued growth.
10. JTC
A global fund and corporate services provider with a strong M&A track
record. Its client-first culture and scalable platform deliver high recurring
revenues and consistent margin expansion.
Ten Largest Holdings continued
as at 31 March 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 13
Holding Sector
Value
£’000
Market cap
£m
% of
portfolio
31 March
2025
% of
portfolio
31 March
2024
discoverIE Electronic and Electrical Equipment 8,160 518 5.2 4.6
XPS Pensions Investment Banking and Brokerage Services 7,500 778 4.8 3.9
Big Yellow Real Estate Investment Trusts 7,456 1,827 4.7 5.2
Hilton Foods Food Producers 7,004 738 4.4 3.1
Telecom Plus Electricity 6,090 1,375 3.9 –
Baltic Classifieds Software and Computer Services 6,010 1,466 3.8 –
Porvair Integrated Engineering 5,780 315 3.7 3.8
4imprint Media 5,550 1,042 3.5 5.4
Bytes Technology Software and Computer Services 5,456 1,165 3.5 3.1
JTC Industrial Support Services 5,448 1,507 3.5 –
MP Evans Food Producers 5,050 538 3.2 2.0
Cranswick Food Producers 4,905 2,644 3.1 4.0
Bloomsbury Media 4,410 480 2.8 –
Gamma Communications Telecommunications Service Providers 4,242 1,161 2.7 –
Games Workshop Leisure Goods 4,197 4,610 2.7 4.9
Integrafin Software and Computer Services 3,825 1,014 2.4 –
Cerillion Investment Banking and Brokerage Services 3,813 450 2.4 1.9
Watches of Switzerland Personal Goods 3,721 990 2.4 1.3
NCC Group Software and Computer Services 3,684
436 2.3 2.1
Marshalls Construction and Materials 3,675 620 2.3 4.7
Twenty Largest Holdings 105,976 67.3
All investments are in ordinary shares.
As at 31 March 2025, the Company did not hold any equity interests in excess of 3% of any investee company’s share capital.
Twenty Largest Holdings
as at 31 March 2025
page 14 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
31 March 2025 31 March 2024
Sector % of portfolio % of NSCI % of portfolio % of NSCI
Software and Computer Services 14.7 5.4 16.6 6.6
Technology Hardware and Equipment 1.8 1.2 – 1.2
Technology 16.5 6.6 16.6 7.8
Telecommunications Equipment – 0.8 1.5 0.8
Telecommunications Service Providers 2.7 0.8 – 2.7
Telecommunications 2.7 1.6 1.5 3.5
Health Care Providers 2.1 0.5 1.8 3.0
Medical Equipment and Services – 0.1 – 0.1
Pharmaceuticals and Biotechnology – 2.6 – 0.7
Health Care 2.1 3.2 1.8 3.8
Banks – 2.4 – 2.9
Finance and Credit Services – 3.0 – 1.7
Investment Banking and Brokerage Services 13.3 8.8 7.0 12.2
Life Insurance – 1.4 – 1.1
Non-life Insurance – 1.6 – 2.0
Financials 13.3 17.2 7.0 19.9
Real Estate Investment and Services Development – 3.9 – 3.0
Real Estate Investment Trusts 8.4 7.1 8.7 5.5
Real Estate 8.4 11.0 8.7 8.5
Automobiles and Parts – 1.7 – 1.3
Consumer Services – 0.1 – 0.1
Household Goods and Home Construction – 1.9 – 0.8
Leisure Goods 4.7 0.6 5.2 0.4
Personal Goods 2.3 1.0 1.2 1.2
Media 6.3 2.3 10.2 2.8
Retailers – 4.5 – 4.0
Travel and Leisure – 6.3 – 7.3
Consumer Discretionary 13.3 18.4 16.6 17.9
Beverages – 0.8 – 0.9
Food Producers 10.8 3.4 9.1 2.6
Personal Care, Drug and Grocery Stores 1.1 0.8 4.6 1.1
Consumer Staples 11.9 5.0 13.7 4.6
Construction and Materials 4.6 6.6 7.4 6.5
Aerospace and Defense 1.2 1.4 – 1.5
Electronic and Electrical Equipment 12.4 2.0 14.2 2.6
General Industrials – 1.3 – 1.3
Industrial Engineering – 1.4 – 2.2
Industrial Support Services 7.8 9.3 7.6 5.1
Industrial Transportation 1.9 2.6 4.9 3.6
Industrials 27.9 24.6 34.1 22.8
Industrial Materials – 0.1 – 0.1
Industrial Metals and Mining – 2.3 – 2.2
Precious Metals and Mining – 1.1 – 1.5
Chemicals – 2.3 – 3.1
Basic Materials – 5.8 – 6.9
Oil, Gas and Coal – 3.9 – 3.7
Alternative Energy – 0.1 – 0.2
Energy – 4.0 – 3.9
Electricity 3.9 1.0 – 0.1
Waste and Disposal Services – 0.5 – 0.1
Gas, Water and Multi-utilities – 1.1 – 0.2
Utilities 3.9 2.6 –
0.4
Total 100.0 100.0 100.0 100.0
The investment portfolio comprises 40 traded or listed UK equity holdings.
Analysis of Investment Portfolio
by Industrial or Commercial Sector
as at 31 March 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 15
The purpose of this report is to provide shareholders with
details of the Company’s strategy, objectives and business
model as well as the principal and emerging risks and
challenges the Company has faced during the year under
review. It should be read in conjunction with the Chairman’s
Statement on pages 3 to 5 and the Manager’s Report on pages
6 to 10, which provide a review of the Company’s investment
activity and a look to the future.
The Board is responsible for the stewardship of the Company,
including overall strategy, investment policy, borrowings,
dividends, corporate governance procedures and risk
management. Biographies of the Directors can be found on
pages 25 and 26.
PRINCIPAL ACTIVITY
The Company carries on business as an investment trust and
its principal activity is portfolio management. Its Ordinary
shares are traded on the Main Market of the London Stock
Exchange.
The Company has no employees but contracts investment
management and administration to appropriate external
service providers, who are subject to oversight by the Board of
Directors. The principal service providers during the year were:
•
Montanaro Asset Management Limited (“Montanaro”
or the “Manager”), which was appointed as Investment
Manager and the Company’s Alternative Investment
Fund Manager (“AIFM”).
•
Juniper Partners Limited (“Juniper”, the “Administrator”
or the “Company Secretary”), which provided company
secretarial and fund administration services.
•
The Bank of New York Mellon (International) Limited which
provided depositary and custodian services.
•
MUFG Corporate Services (formerly Link Group) which
provided registrar services.
STATUS OF THE COMPANY
The Company was incorporated in England and Wales in 1994
under registered number 3004101 and is domiciled in the
United Kingdom and registered as an investment company as
defined in section 833 of the Companies Act 2006.
The Company has been approved by HMRC as an investment
trust under Sections 1158 and 1159 of the Corporation Tax Act
2010, subject to continuing to meet eligibility requirements.
The Directors are of the opinion that the Company has
conducted its affairs in a manner compliant with the conditions
for continued approval and intends to continue to do so.
Asaninvestment company that is managed and marketed in
the United Kingdom, the Company is an Alternative Investment
Fund (“AIF”) falling within the scope of, and subject to, the
requirements of the Alternative Investment Fund Managers
Directive (“AIFMD”). Further details are provided in the AIFMD
Disclosures on page 63.
INVESTMENT OBJECTIVE
MUSCIT’s investment objective is capital appreciation through
investing in smaller quoted companies listed on the London
Stock Exchange or traded on AIM and to outperform its
benchmark, the NSCI.
No unquoted investments are permitted.
INVESTMENT POLICY
The Company seeks to achieve its objective and to manage
risk by investing in a diversified portfolio of quoted UK smaller
companies. At the time of initial investment, a potential
investee company must be profitable and no bigger than the
largest constituent of the NSCI, which represents the smallest
10% of the UK Stock Market by value. At the start of 2025, this
was any company below £1.85 billion in size. The Manager
focuses on the smaller end of this index.
In order to manage risk, the Manager limits any one holding to
a maximum of 4% of the Company’s investments at the time of
initial investment. The portfolio weighting of each investment
is closely monitored to reflect the underlying liquidity of the
particular company. The Company’s AIM exposure is also
closely monitored by the Board and is limited to 40% of total
investments at the time of investment, with Board approval
required for exposure above 35%.
The Manager is focused on identifying high-quality, niche
companies operating in growth markets. This typically leads
the Manager to invest in companies that enjoy high barriers to
entry, pricing power, a sustainable competitive advantage and
strong management teams. The portfolio is constructed on a
“bottom up” basis.
The Board is responsible for setting the Company’s gearing
strategy and approves the arrangement of any gearing facilities.
The Manager is responsible for determining the net gearing
level within the parameters set by the Board. The Company’s
borrowings should be limited to 25% of shareholders’ funds.
Gearing is used to enhance returns when the timing is
considered appropriate.
The Company will not invest more than 10%, in aggregate, of
the value of its total assets at the time of investment in other
investment trusts or investment companies admitted to the
Official List of the UK Listing Authority.
All material changes to the investment policy require approval
from both the Financial Conduct Authority (“FCA”) and
shareholders.
Business Model and Strategy
page 16 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
KEY PERFORMANCE INDICATORS (“KPIs”)
At each Board meeting, the Directors review performance
by reference to a number of KPIs. The KPIs considered most
relevant are those that demonstrate the Company’s success in
achieving its objectives.
The principal KPIs used to measure the progress and
performance of the Company are set out below:
Performance to 31March %
2025 2024
NAV per share total return
1
(6.9) 8.3
Share price total return
1
1.0 0.7
Discount to NAV
1
8.4 15.1
Ongoing charges
1
0.9 0.9
1
Alternative performance measures. Please see pages 64 and 65 for further
information.
Relative performance %
2025 2024
NAV per share total return
vs benchmark (9.2) (0.7)
vs benchmark including AIM (6.5) (2.3)
Share price total return
vs benchmark (1.3) (8.3)
vs benchmark including AIM 1.4 (9.9)
Performance
At each meeting, the Board reviews the performance of the
portfolio as well as the NAV and share price. Performance
is reviewed against the benchmark and compared with the
performance of other companies in the peer group. Information
on the Company’s performance is detailed in the Highlights
section on page 2.
Share price discount or premium to NAV
The Board monitors the level of the Company’s premium or
discount to NAV on an ongoing basis. The share price discount
to NAV as at 31March 2025 was 8.4%. During the year, the
shares traded at an average discount to NAV of 11.9%.
Further details setting out how the discount or premium at
which the Company’s shares trade is calculated is provided in
the Alternative Performance Measures on page 64.
Ongoing charges
The Board reviews the ongoing charges and monitors the
expenses incurred by the Company on an ongoing basis.
Full details of how the ongoing charges ratio is calculated is
included in the Alternative Performance Measures on page 64.
THE MANAGER
Established in 1991, Montanaro is a highly experienced
specialist investor in quoted smaller companies. It has one
of the largest teams in the UK researching and investing
exclusively in quoted smaller companies and currently
manages circa £3 billion, mainly on behalf of leading financial
institutions. Montanaro’s investment philosophy and approach
are set out in the Manager’s Report on pages 6 to 10.
BENCHMARK
The Company’s benchmark is the Deutsche Numis Smaller
Companies Index (excluding investment companies) (‘NSCI’).
As a result of the portfolio’s weighting towards AIM traded
companies, the Deutsche Numis Smaller Companies Index
(excluding investment companies) including AIM is also
referenced throughout the Annual Report for comparison
purposes. However, the Company has not formally adopted
this index as its Benchmark.
DIVIDEND POLICY
The Company’s dividend policy is to pay quarterly dividends of
1.5% of the Company’s NAV, which equates to an approximate
yield of 6% per annum.
DISCOUNT MANAGEMENT
It is the Board’s objective to maintain a stable discount to NAV.
In normal market conditions the Company will buy back its
own shares, as necessary, to maintain a single digit percentage
discount.
THE BOARD
At the date of signing this report, the Company has four
Directors. Two are men and two are women.
Business Model and Strategy continued
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 17
The Board carefully considers the Company’s principal and
emerging risks and seeks to mitigate them through regular
review, policy setting, compliance with and enforcement of
contractual obligations and active communication with the
Manager, the Administrator and other third party service
providers. A core element of this process is the Company’s
risk register which identifies the Company’s key risks, the
likelihood and potential impact of each risk and the tools
formitigation.
During the year under review, the Board carried out a robust
assessment of the principal and emerging risks facing the
Company, including those that would threaten its business
model, future performance, solvency or liquidity.
The Board considers the Company’s risks under four key
areas: (1) Corporate strategy; (2) AIFM/Investment Manager;
(3) Other outsourced service providers; and (4) Breach of
regulation/failure to comply with legal requirements.
A summary of the Company’s risk management and internal
control processes can be found in the Corporate Governance
Statement on pages 31 to 34. Details of the principal and
emerging risks and how these are mitigated are set out
below. The principal financial risks are summarised in Note 15
to the financial statements.
Corporate strategy:
Principal and Emerging Risks Mitigation
Discount Management:
The Company’s share price performance lags the NAV
due to poor performance, or because UK SmallCap is
out of favour.
The Company may be at risk from arbitrageurs or a sale
from a sizeable shareholder.
Share buybacks could cause the Company to become
too small to be viable in terms of ongoing charges, or
for thresholds of institutional investors.
Continued area of Board focus due to persistent
discounts across the investment trust sector and
arbitrage activity
The Board regularly reviews:
•
the relative level of discount against the sector;
•
investment performance
– relative to the competition;
– the benchmark; and
•
the share register.
The Board has taken a number of specific steps to reduce the
Company’s discount, including the introduction of an enhanced
dividend policy and an active share buyback policy, with a target of
maintaining the discount in single digits in normal market conditions.
Please refer to page 24 for further details.
Poor Investment Performance:
Returns achieved are reliant primarily on the
performance of the portfolio. Underperformance
relative to the benchmark and/or peer group may
result in a loss of capital together with dissatisfied
shareholders.
No change in overall risk in the year
To manage the risk, a review is undertaken at each quarterly Board
meeting with the Manager on portfolio performance against the
Company’s benchmark and peer group.
The Board will seek:
•
to understand the reasons for any underperformance; and
•
comfort over the consistency of investment approach and style.
Ultimately, the Board can terminate the Investment Management
Agreement if unsatisfactory performance is considered irreversible and
the causes cannot be rectified.
The Company’s NAV has underperformed relative to the benchmark
during the year, with value shares outperforming growth shares. Given
that Montanaro is a growth manager, an investment style that has
been out of favour, the Board accepts the rationale for this period of
underperformance.
Gearing:
One of the benefits of an investment trust is its
ability to use borrowings, which can enhance returns
to shareholders in a rising stock market. However,
investment returns can worsen in falling markets.
No change in overall risk in the year
The Manager is responsible for determining the net gearing level within
the parameters set by the Board.
Principal and Emerging Risks
page 18 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Principal and Emerging Risks continued
AIFM/Investment Manager:
Principal and Emerging Risks Mitigation
Financial:
The Company’s investment activities expose it to a
variety of financial risks that include those relating to
interest rate and liquidity risk.
No change in overall risk in the year
The liquidity of the portfolio is monitored by the Manager and reported
to the Board, and market conditions and their impacts areconsidered.
Further details on these risks are disclosed in Note 15 to the
financialstatements.
Key Man Risk:
A sudden loss or change in the key investment
management personnel involved in the management of
the portfolio could impact investment performance and
lead to loss of investor confidence.
No change in overall risk in the year
The Manager operates a team approach in the management of the
portfolio which mitigates against the impact of the departure of any
one member of the investment team.
There is an identified lead manager and designated co-manager within
Montanaro, offering continuity of communication with the Company’s
shareholders. The Board is in regular contact with Montanaro and
will be asked for their approval to any proposed change in the lead
manager.
Risk Oversight:
The Manager is taking too much risk in the portfolio
leading to unacceptable volatility in performance or
excessive portfolio turnover.
No change in overall risk in the year
Risk oversight is primarily the responsibility of the AIFM. The Board also
provides additional oversight through portfolio reviews at each Board
meeting. Portfolio turnover is also reviewed at each Board meeting.
No matters of concern have arisen during the year under review.
Environmental, Social and Governance (“ESG”):
ESG in the context of investing continues to gain
prominence, therefore a consideration of ESG factors
when undertaking an investment is vital. Climate
change and other ESG matters have had a significant
impact on the performance of different sectors of the
stock market and there is a risk of being invested in the
wrong sectors.
No change in overall risk in the year
ESG considerations are fully embedded in the investment process and
the Manager takes these into consideration when reviewing current
and potential investee companies.
The Manager is a B Corporation which recognises its high ESG
standards and has been awarded various industry awards recognising
its commitment to ESG.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 19
Other outsourced service providers:
Principal and Emerging Risks Mitigation
Operational Risk:
In common with most other investment trusts, the
Company has no employees and relies on services
provided by third parties. It is therefore dependent on
the control systems of the AIFM, depositary, custodian
and administrator who maintain the Company’s assets,
dealing procedures and accounting records.
Key operational risks include:
•
transactions not subject to best execution;
•
counterparty risk;
•
errors in settlement, title and corporate actions;
•
misstatement of NAV; and
•
breach of the Investment Policy.
No change in overall risk in the year
The Board monitors operational issues and reviews them in detail at
each Board meeting.
All third party service providers are subject to annual review by the
Audit and Management Engagement Committee whereby their internal
control reports are reviewed.
The Company’s assets are subject to a liability regime. Unless the
depositary is able to demonstrate that any loss of financial assets held
in custody was the consequence of an event beyond its reasonable
control, it must return assets of an identical type or the corresponding
amount.
Business continuity plans are in place at all service providers, with
disaster recovery tests taking place regularly.
Cyber Risk:
The threat of cyber attack is regarded as being as
important as more traditional physical threats to
business continuity and security.
The Company has limited direct exposure to cyber
risk. However, the Company’s operations or reputation
could be affected if any of its key service providers
suffered a major cyber security breach.
Increased area of Board focus following recent high-
profile cyber attacks on well-known UK companies
The Board monitors the preparedness of its service providers and is
satisfied that the risk is given due priority and consideration in Board
meetings.
The Manager reports to the Board covering cyber risk. The Company
benefits from the network and information technology controls of the
Manager around the security of data. The Manager has appointed
a specialist IT and cyber monitoring and management provider to
provide continuous monitoring and access to a Cyber Information
SecurityOfficer.
The annual review of service providers includes a consideration of
cyber risk. As part of this review, internal controls reports for each
service provider are reviewed to ensure that suitable cyber security
controls are in place.
Administrator:
Daily NAV incorrectly stated.
No change in overall risk in the year
Daily logic checks of the NAVs are undertaken by the AIFM.
Depositary checks are also undertaken daily.
All financial information is reviewed by the Board at regular meetings.
The AIFM conducts regular visits to the Administrator.
Pandemics and other unforeseeable events:
The AIFM and the Administrator are unable to manage
or administer the portfolio.
No change in overall risk in the year
The AIFM, Investment Manager, and other key service providers, have
appropriate business continuity plans in place in order to continue to
operate effectively during unforeseen events.
page 20 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Breach of regulations/failure to comply with legal requirements:
Principal and Emerging Risks Mitigation
Breach of Regulation:
The Company must comply with the provisions of the
Companies Act 2006, the Listing Rules and Disclosure,
Guidance & Transparency Rules, the UK Market Abuse
Regulation and the Alternative Investment Fund
Manager’s Directive. Any serious breach could result in
the Company and/or the Directors being fined or the
subject of criminal proceedings.
The Company has been accepted by HM Revenue &
Customs as an investment trust, subject to continuing
to meet the relevant eligibility conditions and operates
as an investment trust in accordance with the
Corporation Tax Act 2010. As such, the Company is
exempt from capital gains tax on profits realised from
the sale of investments. Any breach of the relevant
eligibility conditions could lead to the loss of investment
trust status.
No change in overall risk in the year
The Company Secretary and the Company’s professional advisers
provide reports to the Board in respect of compliance with all
applicable rules and regulations.
Compliance with the accounting rules affecting MUSCIT is closely
monitored.
During the year under review, the Company complied with all
applicable rules and regulations including AIFMD and the second
Markets in Financial Instruments Directive.
Principal and Emerging Risks continued
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 21
Directors’ Duties
SECTION 172 OF THE COMPANIES ACT 2006
Section 172 of the Companies Act 2006 (the “Act”) requires
directors to act in good faith and in a way that is most likely to
promote the success of the company. In doing so, Directors
must take into consideration the interests of the various
stakeholders of the Company, the impact the Company has
on the community and the environment, take a long-term view
on the consequences of decisions they make as well as aim to
maintain a reputation for high standards of business conduct
and fair treatment between the members of the Company.
Fulfilling this duty naturally supports the Company in achieving
its Investment Objective and helps to ensure that all decisions
are made in a responsible and sustainable way. Below, the
Board explains how the Directors have individually and
collectively discharged their duties under section 172 of the Act
over the course of the reporting period.
To ensure that the Directors are aware of and understand their
duties, they are provided with details of all relevant regulatory
and legal duties as a Director of a UK public limited company
when they join the Board and continue to receive regular
and ongoing updates and training on relevant legislative and
regulatory developments. They also have continued access
to the advice and services of the Company Secretary and,
when deemed necessary, the Directors can seek independent
professional advice. The schedule of Matters Reserved for the
Board, as well as the Terms of Reference of its Committees,
are reviewed periodically and further describe Directors’
responsibilities and obligations and include any statutory and
regulatory duties.
CULTURE
During the year, the Directors also considered the Company’s
culture and values and have worked to incorporate these
behaviours and processes into the annual review of the
Manager, strategic planning, the annual evaluation of
Board effectiveness and reporting to stakeholders – thus
embedding consideration of stakeholders’ interests, a long-
term perspective, maintaining reputation for fairness and
high standards of governance, corporate reporting and
business conduct more generally in the Company’s culture
and processes. The Company’s culture and values are aligned
with ESG goals with further details outlined in the Manager’s
Report on pages 6 to 10 and Business Model and Strategy on
pages 15 and 16.
DECISION-MAKING
The importance of stakeholder considerations, in particular
in the context of decision-making, is regularly brought to the
Board’s attention by the Company Secretary and taken into
account at every Board meeting.
COMMUNITY AND ENVIRONMENT
Montanaro is a “B Corporation”, abusiness certified for
meeting the highest verified standards of social and
environmental performance, transparency and accountability.
The Board recognises that the Company has certain
responsibilities to its shareholders, stakeholders and wider
society. While the Company itself does not have employees or
offices, the Board endorses the Manager’s policy to invest the
Company’s funds in a socially responsible manner. ESG factors
are an integral part of the investment process. In addition,
the Manager does not invest in companies it deems to be
harmful to society or the environment; this includes companies
involved in; gambling, alcohol, high-interest-rate lending
and fossil fuels. Similarly they do not invest in companies
that conduct animal testing unless it is required by law for
healthcare or regulatory purposes.
The Board monitors investment activity to ensure that it is
compatible with the policy and receives periodic updates from
the Manager on its initiatives and performance against its
ESGgoals.
BUSINESS CONDUCT
The Matters Reserved for the Board, Board Committees’
Terms of Reference, the Share Dealing Code and other Board
policies are all reviewed on at least an annual basis and the
Directors ensure that they appropriately define obligations and
correct procedures. The Report of the Audit and Management
Engagement Committee, which can be found on pages 35 to
37 of this Report, further explains how the Committee reviews
the risk management and internal controls of the Company.
This includes satisfying itself that relevant systems and controls
in place remain effective and appropriate.
page 22 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Directors’ Duties continued
STAKEHOLDERS
The Board seeks to understand the needs and priorities of the Company’s stakeholders and these are taken into account during
all its discussions and as part of its decision-making. While, as an externally managed investment company, the Company does
not have any employees or customers, its key stakeholders include:
Stakeholders Why they are important Board engagement
Shareholders Continued shareholder support
and engagement are critical to the
existence of the business and the
delivery of the long-term strategy of
the business.
The Company has a large and diversified shareholder base. Over
the years, the Company has developed various ways of engaging
with its shareholders in order to gain an understanding of the views
of our shareholders. These include:
•
Annual General Meeting – The Company welcomes
attendance from shareholders at its Annual General Meeting,
which is held at the offices of the Manager. All shareholders
have an opportunity to meet the Directors and put questions
to the Manager. A presentation is shared with investors and
made available on the Company’s website for those who are not
attending. The Board greatly values the feedback and questions
it receives from shareholders and takes action or makes
changes as and when appropriate;
•
Company Information – The annual and interim results, as well
as monthly factsheets, are available on the Company’s website.
Feedback and/or questions the Company receives from
the shareholders help the Company to evolve its reporting,
aiming to make the reports and updates transparent and
understandable; and
•
Investor Relations updates – The Manager’s marketing team
meet and speak to shareholders on a regular basis and from
time to time, the Manager takes part in conferences and other
webinars. At every Board meeting, the Directors receive updates
on the share trading activity, share price performance and any
shareholders’ feedback, as well as any publications or comments
in the press.
SERVICE PROVIDERS:
The Manager
(AIFM)
The Manager’s performance
is critical for the Company to
successfully deliver its investment
strategy and meet its objective.
Maintaining a close and constructive working relationship with the
Manager is crucial as the Board and the Manager collectively aim
to continue to achieve consistent, long-term returns in line with
the Company’s investment objective. Important components in the
collaboration with the Manager, which are representative of the
Board’s culture, are:
•
Encouraging open discussion with the Manager; and
•
Recognising that the interests of shareholders and the Manager
are well aligned, adopting a tone of constructive challenge.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 23
Stakeholders Why they are important Board engagement
Other service
providers
including:
the Company
Secretary and
Administrator,
the Registrar,
theDepositary,
theCustodian
andthe Broker
In order to function as an investment
trust listed on the London Stock
Exchange, the Company relies on a
diverse range of advisers to support
it with meeting all of its relevant
obligations.
The Board maintains regular contact with its key external providers,
both through the Board and Committee meetings, as well as
outside of the regular meeting cycle. Their advice, as well as needs
and views, are routinely taken into account. In addition, the Board
would expect to meet with all service providers on a regular basis
and the Audit and Management Engagement Committee assesses
their performance at least on an annual basis.
Bank Availability of funding and liquidity
may be helpful to the Company’s
ability to take advantage of investment
opportunities as they arise.
Considering how important the availability of funding is, the
Company aims to demonstrate to lenders that it is a well-managed
business. In particular, that the Board focuses regularly and
carefully on the management of risk.
Institutional
Investors and
Proxy Advisers
The evolving practice and support of
the major institutional investors and
proxy adviser agencies are important
to the Directors, as the Company aims
to maintain its reputation and high
standards of corporate governance,
which contributes to the long-term
sustainable success of the Company.
Recognising the principles of stewardship, as promoted by the UK
Stewardship Code, the Board welcomes engagement with all our
investors. The Board recognises that the views, questions from, and
recommendations of many institutional investors and proxy adviser
agencies provide a valuable feedback mechanism and play a part in
highlighting evolving shareholder expectations and concerns.
Regulators The Company can only operate with
the approval of its regulators who
have a legitimate interest in how the
Company operates in the market
and treats its shareholders.
The Company regularly considers how it meets various regulatory
and statutory obligations and follows voluntary and best-practice
guidance. The Company is also mindful of how any governance
decisions it makes can have an impact on its shareholders and
wider stakeholders, in the short and in the longer-term.
Community and
Environment
The Board recognises that it
has a responsibility to the wider
environment and community.
Details of our engagement with the community and the
environment can be found on page 21.
page 24 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Directors’ Duties continued
PRINCIPAL DECISIONS DURING THE YEAR ENDED 31 MARCH 2025
Examples of the Board’s principal decisions during the year, how the Board fulfilled its duties under section 172(1) of the Act and
the related engagement activities are set out below:
Principal decision Stakeholder Considerations and Engagement
Dividend policy The Board updated the Company’s dividend policy in 2018, introducing quarterly dividends amounting
to 1% of NAV. The resulting annual yield of approximately 4% offered investors an attractive way to earn
regular income and helped to broaden the appeal of the Company’s shares.
However, the Board were aware that the interest rate environment had changed considerably since
2018. Atthe time of the introduction in the dividend policy, 10-year Gilt yields stood at around 1.3%,
comparable gilt yields are currently over 4%.
The Board believes that it is important for the Company’s dividend policy to continue to fulfil its role
of attracting new investors and as a result helping to narrow the discount. Consequently, with effect
from 31December 2024, the Company has paid a regular quarterly dividend equivalent to 1.5% of the
Company’s NAV.
The Board believes that the revised dividend policy is in the best interests of the Company and
shareholders as a whole.
Investment
management fee
With effect from 31 December 2024, the investment management fee of 0.50% per annum has been
calculated based on net assets rather than gross assets. This adjustment reflected the Board’s ongoing
commitment to delivering value for the Company’s investors and follows discussions with shareholders
and the Manager.
At 0.50% of net assets, the investment management fee remains among the most competitive in the UK
SmallCap investment trust sector.
Discount control Following discussions with a number of shareholders the Company began actively buying back its own
shares in January 2025. Further to this, the Board announced on 25 February 2025 that it intends to
continue to support shareholders with an active share buyback policy, with a target of maintaining the
discount in single digits in normal market conditions.
In the year to 31 March 2025, the Company bought back 24,927,148 of it’s own Ordinary shares at a total
cost of £25,270,000.
Since the year-end, the Company has bought back a further 13,006,659 shares, at a cost of £13,008,000.
Gearing The Board strongly encourages the Manager to actively use the gearing facility while delegating the
decision on optimum levels to their discretion. On 17 December 2024, the borrowing facilities were
renewed with BNY Mellon for a period of two years. The interest rate on the £30 million revolving credit
facility is calculated as 1.3% (the bank margin) plus the prevailing SONIA rate.
The ability to issue debt to gear the portfolio is a key feature of investment trusts that the Board believes
offers a strong competitive advantage over open-ended investment funds.
On behalf of the Board
ARTHUR COPPLE
Chairman
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 25
Board of Directors
MUSCIT has a highly experienced Board of Directors with extensive knowledge of investment management and investment trusts.
Arthur Copple – Chairman of the Board
Date of Appointment: 1March 2017
Arthur was appointed to the Board as an independent non-executive Director
in 2017 and succeeded Roger Cuming as Chairman on 25July 2019. Arthur has
specialised in the investment company sector for over 30 years. He was a partner
at Kitcat & Aitken, an executive director of Smith New Court PLC and a managing
director of Merrill Lynch.
Relevant skills and experience and reasons for re-election: Arthur served on the
Board of Temple Bar Investment Trust Plc for 12 years and has comprehensive
experience of investment management and the wider investment company sector.
This has provided a strong basis for assessing, and where appropriate challenging,
the Manager on the Company’s performance and in leading the Board in strategic
discussions.
Following a rigorous Board evaluation process, the Board agreed that Arthur
continues to be an effective member of the Board.
Barbara Powley – Senior Independent Director and Chair of the Audit and
Management Engagement Committee
Date of Appointment: 18November 2020
Barbara is a non-executive director of M&G Credit Income Investment Trust plc. She
is a chartered accountant with over 30 years’ experience in the investment trust
industry. Prior to her retirement in March 2018, she was a director in BlackRock’s
closed-end funds team from 2005, with responsibility for the oversight and
administration of BlackRock’s stable of investment trusts. From 1996 to 2005, she
held a similar role at Fidelity.
Relevant skills and experience and reasons for re-election: Barbara has extensive
experience within the investment trust sector, along with significant financial and
accounting experience. Her diverse skill-set facilitates open discussion and allows for
constructive challenge in the boardroom.
Following a rigorous Board evaluation process, the Board agreed that Barbara
continues to be an effective member of the Board.
page 26 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Board of Directors continued
Catriona Hoare – Non-Executive Director
Date of Appointment: 19November 2019
Catriona joined Meridiem Investment Management (formerly Veritas Investment
Partners Limited) in 2013. In her current role as Deputy CIO, she manages client
portfolios and sits on the firm’s research and investment governance committees.
She was appointed as a director of Meridiem Investment Limited in May 2022.
Catriona started her career at Newton Investment Management where she
managed a number of portfolios and private family unit trusts, with a particular
focus on international clients.
She is a CFA Charterholder, a member of the Chartered Institute For Securities and
Investment and holds a BA (Hons) in History from the University of Bristol.
Relevant skills and experience and reasons for re-election: Catriona’s 17 years
of experience as an investment manager brings valuable investment and portfolio
analysis skills to the Board, which enables her to assess and challenge the Manager
on Company strategy and performance.
Following a rigorous Board evaluation process, the Board agreed that Catriona
continues to be an effective member of the Board.
Yuuichiro Nakajima – Chair of the Nomination and Remuneration Committee
Date of Appointment: 1 January 2024
Yuuichiro is founder and managing director of Crimson Phoenix, a specialist cross-
border corporate finance advisory firm, providing advice on Japan-related M&A
transactions and a range of corporate strategy initiatives from offices in Tokyo,
London and Frankfurt. He is a former member of the executive board of the British
Chamber of Commerce in Japan and of the Council of the Japanese Chamber of
Commerce and Industry in the UK. Yuuichiro spent ten years with S.G. Warburg
(later SBC Warburg) and four years with PricewaterhouseCoopers. He is chairman
of Japan H.L. Limited, which operates Japan House London. For nine years until July
2023, Yuuichiro was a non-executive director of JPMorgan Japan Small Cap Growth
& Income plc.
Relevant skills and experience and reasons for election: Yuuichiro has extensive
experience, knowledge and involvement in the investment trust sector.
Following a rigorous Board evaluation process, the Board agreed that Yuuichiro
continues to be an effective member of the Board.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 27
The Directors present the Annual Report and Accounts of the
Company for the year ended 31March 2025.
For the purposes of compliance with Disclosure Guidance and
Transparency Rules (“DTR”) DTR 4.1.5 R (2) and DTR 4.1.8 R, the
required content of the Management Report can be found in
the Strategic Report and this Directors’ Report. The following
disclosures required to be included in this Directors’ Report have
been incorporated by way of reference to other sections of this
report and should be read in conjunction with thisreport:
•
Corporate Governance Statement – refer to pages 31 to
34 of this report;
•
Strategy and relevant future developments – refer to the
Chairman’s Statement on pages 3 to 5, the Manager’s
Report on pages 6 to 10; and
•
Financial risk management objectives and policies. An
analysis of the portfolio along with further information
about financial instruments and capital disclosures is
provided in Note 15 on pages 60 to 62.
The outlook for the Company is set out in the Chairman’s
Statement on page 5. Principal and emerging risks can be found
on pages 17 to 20, with further information on risk management
objectives in Note 15 to the financial statements.
RESULTS AND DIVIDENDS
The results for the Company are set out in the Income
Statement on page 49.
Details of dividends paid and declared in respect of the year,
together with the Company’s dividend policy, are set out in
the Chairman’s Statement on page 3 of the report. Further
details can also be found in Note 7 on page 56.
CONTINUATION OF THE COMPANY
The Company’s Articles of Association (the “Articles”) provide
that shareholders should have the opportunity to consider
the future of the Company at regular intervals.
The next general meeting for the purpose of considering a
voluntary winding up of the Company must be held on or
before 16July 2027. However, an Ordinary Resolution may
be passed to release the Directors from the obligation to
convene the general meeting and this meeting must be held
not more than eighteen months before 16July 2027.
DIRECTORS
Biographical details of the Directors, all of whom are
independent and non-executive, can be found on pages 25
and 26. The Directors’ interests in the shares of the Company
are shown on page 40.
DIRECTOR INDEMNIFICATION AND INSURANCE
In addition to Directors’ and Officers’ liability insurance cover,
the Company’s Articles of Association provide, subject to
the provisions of applicable UK legislation, an indemnity
forDirectors.
Indemnities are in force as at the date of this report, and
were in force during the year, between the Company and
each of its Directors under which the Company has agreed
to indemnify each Director, to the extent permitted by law, in
respect of certain liabilities incurred as a result of carrying out
his or her role as a Director of the Company.
CONFLICTS OF INTEREST
The Board has approved a procedure for identifying,
reporting and addressing conflicts of interest, or potential
conflicts, and will regularly review actual or potential conflicts.
The Directors are aware that there remains a continuing
obligation to notify the Company Secretary of any new conflict
that may arise, or any change to a previously notified conflict.
The Board considers that the procedure has worked
effectively during the year under review and intends to
continue to review all notified conflicts on a regular basis.
DISCLOSURE OF INTERESTS
No Director was a party to, or had an interest in, any contract
or arrangement with the Company. All of the Directors are
non-executive and no Director had a contract of services with
the Company at any time during the year.
INVESTMENT MANAGEMENT AGREEMENT
The Board contractually delegated the management of the
investment portfolio to Montanaro under an Investment
Management Agreement (the “Agreement”) dated 19June
2014. Except in certain circumstances, the Agreement may
only be terminated by the Manager on giving 12 months’
notice in writing to the Company. The Company shall be
entitled to terminate the Agreement by notice in writing
to the Manager forthwith, or as at the date specified in
suchnotice.
On receiving such notice, the Manager will be entitled to a
termination fee of 1% of the gross assets of the Company at
the close of business on the last day of the calendar month
immediately preceding the effective date of termination of
the Agreement.
Directors’ Report
page 28 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Directors’ Report continued
CONTINUING APPOINTMENT OF THE MANAGER
The Board considers arrangements for the provision of
investment management and other services to the Company
on an ongoing basis. A formal annual review is conducted by
the Audit and Management Engagement Committee of all the
Company’s service providers, including the Manager.
During the year, the Board considered the performance
of Montanaro as AIFM and Manager by reference to the
investment process, portfolio performance and how it had
fulfilled its obligations under the terms of the Investment
Management Agreement.
In the opinion of the Board, the continuing appointment of
Montanaro as Manager and AIFM, on the terms referenced
above, is in shareholders’ interests as a whole. The Board is
conscious that the short-term performance of the Company
has been challenging. However, this is primarily as a result of
the Company’s investment style being out of favour with the
market. On a positive note, the Company’s performance is in
line with its peer group and long-term performance relative to
the benchmark has been strong. We remain encouraged by
the depth and experience of the capabilities of Montanaro.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
In order to comply with the Alternative Investment Fund
Managers Directive (“AIFMD”), the Company entered into a
Management Agreement with Montanaro dated 19June 2014
under which the Manager was appointed by the Company to
act as the AIFM. Montanaro receives an ongoing fee of £50,000
per annum to act as the Company’s AIFM.
The AIFMD requires certain information to be made available
to investors in Alternative Investment Funds (“AIFs”) before they
invest. An Investor Disclosure Document, which sets out this
information, is available on the Company’s website. There have
been no material changes (other than those reflected in this
Annual Report) to the information requiring disclosure.
DEPOSITARY AND CUSTODIAN
The Company is required under the AIFMD to appoint an
AIFMD compliant Depositary. The main role of the Depositary is
to act as a central custodian with additional duties to monitor
the operations of the Company, including its cash flows, and
ensuring that the Company’s assets are valued in accordance
with the relevant regulations and guidance. The Depositary is
also responsible for enquiring into the conduct of the AIFM in
each annual accounting period.
BNY Mellon Trust & Depositary (UK) Limited (“BNYMTD”) was
appointed as the Depositary with effect from 22July 2014.
However, with effect from 1November 2017, the role of
Depositary was transferred, by way of a novation agreement,
from BNYMTD to its parent company, The Bank of New York
Mellon (International) Limited (“BNYM” or the “Depositary”). The
annual fee for depositary services is 0.034% per annum where
gross assets are between £0 and £150million and 0.025% per
annum of gross assets above a value of £150million, subject to
a minimum fee of £20,000 per annum.
The Depositary Agreement is subject to 90 days’ written notice.
The Depositary’s responsibilities include cash monitoring,
segregation and safekeeping of the Company’s assets and
monitoring the Company’s compliance with investment limits
and leverage requirements. Under the depositary agreement,
the Depositary has delegated the custodian function to The
Bank of New York Mellon SA/NV (London Branch).
COMPANY SECRETARY AND ADMINISTRATOR
Juniper Partners Limited was appointed as the Company
Secretary and Administrator with effect from 1July 2023. Juniper
Partners Limited receives a base annual fee of £145,000 plus
0.02% per annum on Net Assets of up to £1 billion and 0.01%
per annum on Net Assets over £1billion.
The Company Secretarial and Administration Agreement is
subject to six months’ written notice.
REGISTRAR
MUFG Corporate Markets has been appointed as the Company’s
registrar and receives an annual fee of £36,500. This agreement
is in effect for a period of five years to July 2026 and is based on
an agreed number of shareholders and transfers processed.
The Registry Services Agreement may be terminated on not
less than six months’ notice. The Registrar is also entitled to
reimbursement of all disbursements and out of pocket expenses.
SUBSTANTIAL SHAREHOLDINGS
At 31March 2025, the Directors were aware of the following
substantial shareholdings:
Shareholder:
Ordinary
shares
% of
voting
rights
Clients of Hargreaves Lansdown 15,290,488 10.7%
Derbyshire County Council 11,996,285 8.4%
Montanaro Asset Management 10,340,000 7.3%
Clients of Interactive Investor 9,839,276 6.9%
Clients of A J Bell 9,123,131 6.4%
Clients of Charles Stanley 8,382,647 5.9%
West Yorkshire Pension Fund 8,242,500 5.8%
Clients of Rathbone Investment
Management
6,697,875 4.7%
Charles Montanaro 5,150,000 3.6%
On 2 April 2025, the Company was notified that Clients of
Charles Stanley now hold 5,266,502 (3.7%) shares in the
Company.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 29
GOING CONCERN
The financial statements of the Company have been prepared
on a going concern basis. After reviewing the Company’s
forecast projections and actual performance on a regular
basis throughout the year, the Directors believe that this is the
appropriate basis. The Directors consider that the Company
has adequate resources to continue in existence until at
least 16June 2026 (being 12 months from the date of signing
thisreport).
In performing the assessment of the Company’s ability to
meet its liabilities as they fall due, the Directors took into
consideration the following factors:
•
cash balances and the portfolio of readily realisable
securities which can be used to meet short-term funding
commitments;
•
the ability of the Company to meet all of its liabilities and
ongoing expenses from its assets;
•
revenue, operating and finance cost forecasts for the
forthcoming year;
•
continued adherence to the loan covenants;
•
the ability of third-party service providers to continue to
provide services; and
•
three potential scenarios including stress testing the
Company’s portfolio for a 30% fall in the value of the
investment portfolio; a 50% fall in dividend income; and
maintaining the current dividend and discount policies.
The cumulative impact of these three scenarios would
leave the Company with a negative net cash position,
however would have available liquid investments.
Based on this assessment, the Directors are confident that
the Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements, and therefore have
prepared the financial statements on a going concern basis.
VIABILITY STATEMENT
In accordance with the AIC Code of Corporate Governance, the
Directors have assessed the prospects of the Company over a
period longer than the twelve months required by the ‘Going
Concern’ provision and reviewed the viability of the Company and
its future prospects over the five-year period to 31March 2030.
In the absence of any adverse change to the regulatory
environment and to the treatment of UK investment trusts, the
rolling five-year period was determined by the Directors to:
•
represent the horizon over which they do not expect there
to be any significant change to the Company’s principal risks
or their mitigation; and
•
the period over which they can form a reasonable
expectation of the Company’s prospects.
In its assessment, the Board took into account the Company’s
current financial position, its ability to meet liabilities as they
fall due and the principal risks as set out on pages 17 to 20. In
reviewing the financial position, the following factors were taken
into consideration:
•
the portfolio is comprised solely of cash balances and equity
securities listed or traded on the London Stock Exchange;
•
the current portfolio could be liquidated to the extent of
70% within five trading days and there is no expectation
that the nature of the investments held within the portfolio
will be materially different in future;
•
future revenue and expenditure projections:
– the expenses and interest payments of the Company
are predictable and relatively small; and
– other than share buy backs, there are no expected
capital outlays.
In addition to considering the Company’s principal risks and
the financial position of the Company as referenced above, the
Directors also took account of the following assumptions in
considering the Company’s longer-term viability:
•
the Board and the Manager will continue to adopt a long-
term view when making investments;
•
it is reasonable to believe that the Company will be able to
renew its credit facilities;
•
the Company invests principally in the securities of quoted
UK smaller companies to which investors will wish to
continue to have exposure;
•
the Company has a large margin of safety over the
covenants on its debt;
•
there will continue to be demand for investment trusts;
•
the next continuation vote will be in 2027. Further details
are provided in the Directors’ Report on page 27;
•
regulation will not increase to a level that makes the running
of the Company uneconomic; and
•
the performance of the Company will be satisfactory.
Based on the results of their analysis and in the context of the
consideration given to the Company’s business model, strategy
and operational arrangements, the Directors have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the five-
year period of the assessment.
CAPITAL STRUCTURE
The Company’s Ordinary issued share capital consists of
167,379,790 Ordinary shares, 24,927,148 of these are held
in Treasury, therefore the total voting rights of the Company
is 142,452,642. The Ordinary shares carry the right to receive
dividends and have one voting right per Ordinary share.
page 30 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Directors’ Report continued
There are no restrictions concerning the transfer of securities;
no special rights with regard to control attached to securities; no
restrictions on voting rights; no agreements between holders of
securities regarding their transfer known to the Company; and no
agreements to which the Company is a party which might change
or fall away on a change of control or trigger any compensatory
payments for Directors following a successful takeover bid.
The Company’s current authorities to buyback and sell shares
from Treasury and issue shares will expire at the conclusion of
the 2025 Annual General Meeting. The Directors are proposing
that these authorities be renewed at the forthcoming Annual
General Meeting (see Resolution 13).
GREENHOUSE GAS EMISSIONS
All of the Company’s activities are outsourced to third parties. As
such it does not have any physical assets, property, employees
or operations of its own and does not generate any greenhouse
gas or other emissions or consume any energy reportable
under the Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013 or the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018, implementing the UK Government’s policy on
Streamlined Energy and Carbon Reporting.
CRIMINAL FINANCES ACT 2017
The Board is fully committed to complying with applicable
legislation and statutory guidelines, including the UK’s Criminal
Finances Act 2017, designed to prevent tax evasion in the
jurisdictions in which the Company operates.
DONATIONS
The Company made no political or charitable donations during the
year (2024: nil) to organisations either within or outside of the EU.
UK LISTING RULE 6.6.1 (5)
UK Listing Rule 6.6.1 (5) requires the Company to include
specified information in a single identifiable section of
the Annual Report or a table cross referencing where the
information is set out. With the exception of the item below, no
disclosures are required in relation to UK Listing Rule 6.6.1 (5).
UKLR 6.6.1 (5)
Under the Company’s Remuneration Policy,
the SID is entitled to an additional fee of
£1,250. However, Mrs Powley has waived her
entitlement to the additional £1,250. This
decision will be kept under review and the
Remuneration Policy still allows the flexibility
of this additional fee to be paid to the SID.
FINANCIAL INSTRUMENTS
The Company’s financial instruments comprise its investment
portfolio, cash balances, bank debt and debtors and creditors
that arise directly from its operations, such as sales and
purchases awaiting settlement and accrued income. The
financial risk management objectives and policies arising from
its financial instruments and the exposure of the Company to
risk are disclosed in Note 15 to the accounts.
ANNUAL GENERAL MEETING
The Notice of the Annual General Meeting (“AGM”) to be
held on Wednesday, 23 July 2025 (the “Notice”) is set out on
pages69 to 75.
Resolutions 1 to 11 will be proposed as Ordinary Resolutions
and Resolutions 12 to 14 will be proposed as Special
Resolutions. Please refer to pages 72 and 73 for a full
explanation of all resolutions.
Recommendation
The Directors consider that the passing of each of the
Resolutions to be proposed at the Annual General Meeting is
in the best interests of the Company and its shareholders as a
whole and they unanimously recommend that all shareholders
vote in favour of these Resolutions, as they intend to do in
respect of their own holdings.
INDEPENDENT AUDITOR
BDO LLP (“BDO”) has confirmed its willingness to continue
in office as the Auditor of the Company (the “Auditor”). A
resolution to re-appoint BDO as the Auditor to the Company
and to authorise the Audit and Management Engagement
Committee to determine the Auditor’s remuneration will be
proposed to the forthcoming Annual General Meeting.
DISCLOSURE OF INFORMATION TO AUDITOR
Each of the Directors who held office at the date of approval
of this Directors’ Report confirm that, so far as they are aware,
there is no relevant audit information of which the Company’s
Auditor is unaware; and each Director has taken all the steps
that they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that
the Company’s Auditor is aware of that information.
For and on behalf of the Board
Juniper Partners Limited
Company Secretary
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 31
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
STATEMENT OF COMPLIANCE
The Board has considered the Principles and Provisions of
the AIC Code of Corporate Governance published in February
2019 (“AIC Code”). The AIC Code addresses the Principles and
Provisions set out in the 2018 UK Corporate Governance Code
(the “UK Code”), as well as setting out additional Provisions on
issues that are of specific relevance to the Company.
The Board considers that reporting against the Principles
and Provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council, provides more relevant
information to shareholders.
During the year, the Company has complied with all of the
Principles and Provisions of the AIC Code.
The Company is committed to maintaining the highest
standards of governance and will work to ensure that it
continues to meet all applicable requirements.
The AIC Code is available on the AIC website www.theaic.co.uk.
It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies. The UK Code is available
from the Financial Reporting Council’s website at www.frc.org.uk.
THE BOARD
As Chairman, Arthur Copple is responsible for leading the
Board and ensuring its effectiveness in all aspects of its role. In
line with the requirements of the AIC Code, the responsibilities
of the Chairman and the Senior Independent Director (“SID”)
have been agreed by the Board and are available to view on
the Company’s website: www.montanaro.co.uk/trust/muscit
A revised AIC Code was issued in August 2024 and will come
into effect for accounting periods beginning on or after
1January 2025 (with the exception of Provision 34 which
will come into effect for accounting periods beginning on or
after 1 January 2026). The Board will review the Company’s
governance arrangements to ensure ongoing compliance with
the updated AIC Code.
The Board has formalised the arrangements under which
Directors, in the furtherance of their duties, may take
independent professional advice. The Company also maintains
Directors’ and Officers’ liability insurance. There were no third
party indemnity provisions over the course of the year or since
the year end.
Other than their letters of appointment, none of the Directors
has a contract of service nor have there been any contracts or
arrangements between the Company and any Director at any
time during the year.
The Board has engaged external companies to undertake
the Company’s investment management, administrative
and custodial activities. Clear, documented contractual
arrangements are in place between the Company and its
service providers that define the areas where the Board has
delegated functions to them. Further details of the Investment
Management Agreement are given on page 27. A schedule of
matters specifically reserved to the Board for its decision has
been adopted. These reserved matters include the approval
of annual and half-yearly accounts; the recommendation
of dividends; the approval of press releases and circulars;
Board appointments and resignations; and the membership
of Committees. Decisions regarding the capital structure of
the Company (including share buybacks and Treasury share
transactions) are also taken by the Board, while the day-to-day
investment of the portfolio is delegated to the Manager.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Company holds at least four Board meetings each year at which the Directors review portfolio investments and all other
important issues in relation to the Company’s affairs. The following table sets out the number of scheduled Board and Committee
meetings held during the year ended 31March 2025 and the number of meetings attended by each Director.
Board
Audit and Management
Engagement Committee
Nomination and Remuneration
Number of
meetings held
Number of
meetings
attended
Number of
meetings held
Number of
meetings
attended
Number of
meetings held
Number of
meetings
attended
Arthur Copple 4 4 3 3 1 1
Catriona Hoare 4 3 3 2 1 1
Yuuichiro Nakajima 4 4 3 3 1 1
Barbara Powley 4 4 3 3 1 1
The Board also met informally on a number of occasions during the year.
page 32 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Corporate Governance Statement continued
INDEPENDENCE OF DIRECTORS AND TENURE
The Board has considered the independent status of each
Director under the AIC Code and has determined that all
Directors are independent.
In line with the 2019 AIC Code, the Company has adopted a
formal policy on tenure. The Board does not feel that it would
be appropriate to set a specific tenure limit for individual
Directors or the Chair of the Board or its Committees.
Instead, under normal circumstances, the Board members,
including the Chair, will be expected to serve a tenure of 9
years, thus preserving the cumulative valuable experience
and understanding of the Company, while benefitting from
fresh perspectives and helping to promote diversity. The
Board is of the view that length of service will not necessarily
compromise the independence or contribution of Directors of
an investment trust company where continuity and experience
can significantly add to the strength of the Board.
PERFORMANCE EVALUATION
An annual review of the performance of the Board, its
Committees and individual Directors is undertaken by
the Directors. The Board evaluation process comprises a
detailed questionnaire which assesses the performance
and effectiveness of the Board and each of its Committees.
The objective of the evaluation is to obtain constructive
feedback to improve the Board’s effectiveness by highlighting
individual and collective strengths as well as development
areas. Arthur Copple, as Chairman, takes overall responsibility
for the evaluation process and has selected a questionnaire
methodology to achieve these objectives. This is followed
by a feedback session that assesses the effectiveness of the
process, identifying any areas for improvement. The appraisal
of the Chairman is led by the Senior Independent Director.
Following review of the Directors’ time commitment and
duties, and their contributions and attendance at all Board
and Committee meetings and discussions held outside
these formal meetings, the Board believes that each Director
continues to be effective and demonstrates the necessary
commitment to the role.
The Board considers that outside commitments have not
impacted on their duties as Directors and have enhanced the
knowledge brought to the Board meetings.
The results of the Board evaluation process were reviewed
and discussed by the Board. Following evaluation, the
Board concluded that it had the appropriate balance of
skills, experience, and knowledge and that the Board and its
Committees continued to operate effectively.
No other areas of particular significance or concern were
identified in the performance evaluation. The Board
considered whether an external performance evaluation
should be undertaken in the future and notes that this is
not a requirement under the AIC Code given the Company is
outside of the FTSE 350. The Board has taken into account the
costs and benefits associated with such an exercise and does
not consider the use of external consultants to conduct this
evaluation is likely to provide any meaningful advantage over
the process that has been adopted. However, the option of
doing so will be regularly reviewed.
RE-ELECTION OF DIRECTORS
Under the provisions of the Company’s Articles, the Directors
retire by rotation at least every three years. However, in
accordance with corporate governance best practice as set out
in the AIC Code, all Directors should put themselves forward
for re-election every year. As such, each of the Directors is
subject to annual re-election by the shareholders at the Annual
General Meeting. All Directors have confirmed that they will
be standing for re-election at the forthcoming Annual General
Meeting.
INTERNAL CONTROL AND FINANCIAL REPORTING
The Board has delegated responsibility to the Audit and
Management Engagement Committee for establishing and
maintaining the Company’s risk management and internal
control processes and for monitoring their effectiveness.
Internal control systems are designed to meet the Company’s
particular needs and the risks to which it is exposed and
by their very nature provide reasonable but not absolute
assurance against misstatement or loss. The Directors have
reviewed the effectiveness of the system of internal controls,
including financial, operational and compliance controls and
risk management. The Committee will take actions to remedy
any significant failings or weaknesses identified or make
recommendations to the Board, as appropriate. Information
about the Company’s financial risk management objectives
and policies is set out in Note 15 of the financial statements
on pages 60 to 62. The key procedures that have been
established to provide effective internal controls are as follows:
•
throughout the year under review and up to the date of
this Annual Report, there has been an ongoing process
for identifying, evaluating and managing the principal risks
faced by MUSCIT, which complies with guidance supplied
by the FRC on risk management, internal control and
related financial and business reporting. This is reviewed
on a regular basis by the Audit and Management
Engagement Committee, on behalf of the Board. Details
of the principal and emerging risks are set out on pages
17 to 20. The process involves reports from MUSCIT’s
Company Secretary and Manager as described below.
In addition, the Audit and Management Engagement
Committee receives internal control reports from all the
third parties to which the Company delegates functions;
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 33
•
in accordance with guidance issued to directors of listed
companies, the Board has carried out a review of the
effectiveness of the Company’s risk management and
internal control processes. There were no matters arising
from this review that required further investigation and no
significant failings or weaknesses were identified; and
•
a risk register is maintained against which the risks
identified and the controls in place to mitigate those risks
can be monitored. The risks are assessed on the basis
of the likelihood of them happening, the impact on the
business if they were to occur and the effectiveness of
the controls in place to mitigate them. The risk register is
reviewed at each meeting of the Audit and Management
Engagement Committee, and at other times as necessary.
Given the nature of the Company’s activities and the fact that
most functions are sub-contracted, the Board has concluded
that there is no need for the Company to have an internal audit
function. Instead, the Directors obtain information from key
third party suppliers regarding the controls operated by them.
The key procedures which have been established in relation to
this are as follows:
•
investment management is provided by Montanaro
which is regulated by the FCA. The Board is responsible
for setting the overall investment policy and monitors
the activity of the Manager at regular Board meetings.
Montanaro provides reports at these meetings, which
cover investment performance and compliance matters;
•
Juniper Partners Limited (“Juniper”) is responsible for the
provision of administration duties;
•
company secretarial duties are undertaken by Juniper;
•
depositary services and custody of assets are undertaken
by BNY Mellon;
•
the duties of investment management, accounting and
the custody of assets are segregated;
•
the procedures of the individual parties are designed to
complement one another;
•
the Board clearly defines the duties and responsibilities
of its agents and advisers in the terms of their contracts.
The appointment of agents and advisers is conducted
by the Board after due diligence involving consideration
of the quality of the parties involved and the Audit and
Management Engagement Committee monitors their
ongoing performance and contractual arrangements;
•
mandates for authorisation of investment transactions
and expense payments are set by the Board; and
•
the Board reviews financial information produced by the
Administrator in detail on a regular basis.
RELATIONS WITH SHAREHOLDERS
The Company welcomes the views of shareholders and places
great importance on communication with its shareholders.
Please refer to page 22 for details of engagement activity in the
year to 31 March 2025.
EXERCISE OF VOTING RIGHTS IN INVESTEE COMPANIES
The exercise of voting rights attached to the Company’s
portfolio has been delegated to the Manager.
The Board encourages the Manager to give due consideration
to environmental, social and governance matters whilst
recognising the overall investment policy and objectives of the
Company. Montanaro votes against resolutions it considers
may damage shareholders’ rights or economic interests and
gives due weight to what it considers to be socially responsible
investments when making investment decisions. However, its
overriding objective is to produce good investment returns
forshareholders.
During the year, the Manager on behalf of the Company
exercised its voting authority as follows:
Meetings
Number of meetings voted at: 44
Number of meetings voted against management
orabstained: 8
Resolutions
Number of resolutions where voted with management: 652
Number of resolutions where abstained: 6
Number of resolutions where voted against management: 5
BOARD COMMITTEES
The Chairman of each Board Committee fulfils an important
leadership role similar to that of the Chairman of the Board,
particularly in creating the conditions for overall Committee
and individual Director effectiveness.
Audit and Management Engagement Committee
This Committee comprises all Directors and is chaired by
Barbara Powley, who is a Chartered Accountant. The Board
is satisfied that Mrs Powley has recent and relevant financial
experience to guide the Committee in its deliberations. The
Board is also satisfied that other members of the Audit and
Management Engagement Committee have relevant and
recent financial experience to fulfil their role effectively and
also have sufficient experience relevant to the closed ended
investment company sector and UK listed companies.
The report from this Committee is set out on pages 35 to 37.
page 34 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Corporate Governance Statement continued
Nomination and Remuneration Committee
This Committee is comprised of all Directors and is chaired by
Yuuichiro Nakajima. The Committee meets as required for the
purpose of considering recruitment to, and removals from, the
Board; levels of remuneration paid to the Directors; and reviews
the Directors’ Remuneration Report and Remuneration Policy.
The Committee is a joint Nomination and Remuneration
Committee. It is considered that all Directors offer valuable
contributions to the Committee and therefore all Directors are
members of the Committee.
Further details on performance evaluation, tenure and
independence are provided on page 32.
The Committee considers that the performance of each
of the Directors continues to be effective and that they
each demonstrate commitment to their role, including
commitment of time for Board and Committee meetings and
any other duties.
Each Committee has adopted formal written terms of
reference which are available on the Company’s website www.
montanaro.co.uk/trust/muscit
DIVERSITY AND INCLUSION
The Board’s policy on diversity is to ensure that the Directors
on the Board have a broad range of experience, skills and
knowledge, with diversity of thinking, background and
perspective. Appointments to the Board are made on merit
against objective criteria, having regard to the benefits of
diversity and the current and future needs of the business and
the other factors set out in the AIC Code.
In accordance with UK Listing Rule 6 Annex 1R, the following
tables, in prescribed format, show the gender and ethnic
background of the Directors at the date of this Report. The
Company meets the gender and ethnic minority requirements
of UK Listing Rule 6.
Gender identity
or sex
Number of
Board members
1
Percentage
on the Board
Number of
senior positions
on the Board
Men 2 50% 1
Women 2 50% 1
Not specified/
prefer not to say
– – –
1
The Company does not disclose the number of Directors in executive
management as this is not applicable for an externally managed
investment company.
Ethnic background
Number of
Board members
Percentage
on the Board
Number of
senior positions
on the Board
White British or
other White
(including
minority white
groups)
3 75% 2
Asian / Asian
British
1 25% –
Not specified/
prefer not to say
– – –
The data in the above tables was collected through self-
reporting by the Directors.
MODERN SLAVERY ACT 2015
As an investment trust, the Company does not provide goods
or services in the normal course of business and does not
have customers. Accordingly, the Directors consider that
the Company is not required to make any slavery or human
trafficking statement under the Modern Slavery Act 2015.
RISK MANAGEMENT AND INTERNAL CONTROLS
Details of the principal risks and internal controls applied by
the Board are set out on pages 17 to 20 and pages 32 and
33respectively.
For and on behalf of the Board
ARTHUR COPPLE
Chairman
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 35
As Chair of the Audit and Management Engagement
Committee (the “Committee”), I am pleased to present its
Report to shareholders for the year ended 31 March 2025.
COMPOSITION OF THE COMMITTEE
The Board recognises the requirement for the Committee as a
whole to have competence relevant to the sector in which the
Company operates and at least one member with recent and
relevant experience.
The Committee is chaired by Mrs Powley, a Chartered
Accountant, who has recent and relevant financial experience.
The Committee operates within clearly defined terms of
reference and comprises all the Directors. Given the size of the
Board and Mr Copple’s experience, it is felt appropriate for him
to sit on the Committee. The Directors have a combination of
financial, investment and business experience, specifically with
reference to the investment trust sector.
ROLE OF THE COMMITTEE
The Committee’s duties include considering and
recommending to the Board for approval the contents
of the half yearly and annual financial statements, and
providing an opinion as to whether the Annual Report and
Financial Statements, taken as a whole, are fair, balanced
and understandable and provide the information necessary
for shareholders to assess the Company’s performance,
business model and strategy. The Committee also reviews
the external Auditors’ report on the Annual Report and
Financial Statements and is responsible for reviewing and
forming an opinion on the effectiveness of the external audit
process and audit quality. The Committee is also responsible
for reviewing the performance of the Investment Manager
and other third party service providers, including the terms
of their appointment. Other duties include reviewing the
appropriateness of the Company’s accounting policies and
ensuring the adequacy of the internal control systems and
standards. The Terms of Reference detailing the scope and
duties of the Audit and Management Engagement Committee
are available on the Company’s website.
MATTERS CONSIDERED IN THE YEAR
The Committee meets at least three times a year. At the three
meetings held during the financial year, the Committee has:
•
reviewed the internal controls and risk management
systems of the Company and its third party providers;
•
reviewed the performance of the Company’s third party
service providers and ensured that they complied with
the terms of their agreements and that the terms of their
agreements remain competitive;
•
agreed the audit fee and audit plan with the Auditor,
including the principal areas of focus;
•
received and discussed with the Auditor their report on
the results of the audit;
•
reviewed the Company’s financial statements and advised
the Board accordingly;
•
reviewed the FRC’s audit quality review and discussed the
results with the Audit Partner;
•
reviewed the Manager’s arrangements for its employees
and contractors to raise concerns, in confidence, about
possible wrongdoing in financial reporting or other
matters insofar as they affect the Company (no incidents
were reported during the period);
•
reviewed the Investment Management Agreement to
ensure that the terms remain competitive;
•
reviewed the performance of the Manager;
•
satisfied itself that the continued appointment of the
Manager was in the interests of shareholders as a whole;
•
recommended to the Board that the Manager’s
appointment be continued;
•
reviewed the Company’s policy on the supply of non-audit
services by the Auditor;
•
reviewed and, where appropriate, updated the Company’s
risk register; and
•
reviewed its own performance as a Committee and its
own Terms of Reference.
Report from the Audit and Management
Engagement Committee
page 36 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2025
Subsequent to discussion with the Manager and the Auditor,
the Committee determined the following key areas of risk in
relation to the financial statements of the Company for the
year ended 31 March 2025 and how they were addressed:
Significant issue How the issue was addressed
Valuation and
ownership of
the Company’s
investments
The Board reviews detailed portfolio
valuations at each meeting. It relies on the
Administrator and AIFM to use appropriate
pricing in accordance with the accounting
standards adopted by the Company.
Ownership of listed investments is verified
by reconciliation to the Custodian’s
records. In addition, the Depositary
reports to the Committee in relation to its
monitoring and oversight of the activities
of the AIFM, Administrator and Custodian.
No matters of significance were identified
in their monitoring.
Maintenance of
investment trust
status
The Committee regularly considers the
controls in place to ensure that the
regulations for maintaining investment
trust status are observed at all times and
receives supporting documentation from
the Manager and the Administrator.
Incomplete or
inaccurate
revenue
recognition
Income received is accounted for in
accordance with the Company’s
accounting policies as set out in Note 1
to these accounts. The Board receives
income forecasts, including special
dividends, and receives an explanation
from the Manager for any significant
movements from previous forecasts and
prior year figures.
Ensuring the
Annual Report
and Accounts is
fair, balanced and
understandable
The Committee reviewed and discussed
the Annual Report and Accounts and
advised the Board that it is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Company’s position and
performance, business model and
strategy.
GOING CONCERN AND VIABILITY
The Committee assesses annually whether it is appropriate
to prepare the Company’s financial statements on a going
concern basis and makes a recommendation to the Board.
The Board concluded that the going concern basis continues
to be appropriate and further information regarding the going
concern assessment is set out in the Directors’ Report on
page29.
The Committee conducts an annual assessment to determine
whether the evaluation of the Company’s long-term viability
remains valid.
The Board concluded that the Company continues to remain
viable and further information regarding the Company’s
viability is set out in the Directors’ Report on page 29.
INTERNAL CONTROL & RISK MANAGEMENT
The Committee is responsible for ensuring that suitable
controls are in place to prevent and detect fraud, error and
misstatement of financial information. As the Company
outsources all of its functions to third parties, it requires
these service providers to report on their internal controls.
Further details of the Company’s internal controls and
risk management processes are given in the Corporate
Governance report on pages 31 to 34. There were no
significant matters of concern identified in the Committee’s
review of the internal controls of its third party suppliers.
INTERNAL AUDIT FUNCTION
It is considered that the Company does not require an internal
audit function, principally because the Company delegates its
day-to-day operations to third parties, which are monitored by
the Committee and provide control reports on their operations
at least annually.
EXTERNAL AUDIT, REVIEW AND APPOINTMENT
BDO, first appointed at the Company’s AGM held on 31 July
2020, continues as Auditor. The Audit Committee reviews the
re-appointment of the auditor every year. The Committee
reviewed the effectiveness of the external audit process
following the completion of the annual audit process for the
year ended 31 March 2025, taking into consideration their
standing, skills, experience, performance and objectivity of the
firm and the audit team. The Committee has reviewed and
accepted reports from BDO on its procedures for ensuring that
its independence and objectivity are safeguarded and that it
has complied with relevant auditing standards. The Committee,
from direct observation and enquiry of the Administrator, is
satisfied that BDO provides effective independent challenge
in carrying out its responsibilities. Following this review, the
Committee concluded that the audit process was effective.
Report from the Audit and Management
Engagement Committee continued
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 37
BDO’s fee in respect of the audit for the year ended 31March
2025 is £45,500 (2024: £44,000). Following professional
guidelines, the audit partner rotates after five years. The
year ended 31 March 2025 is Peter Smith’s fifth year as
auditpartner. BDO will present potential audit partners to
the Audit and Management Engagement Committee in 2025,
ahead of the 31 March 2026 year end audit.
POLICY ON NON-AUDIT SERVICES
The Committee regards the continued independence of the
Auditor to be a matter of the highest priority. The Company’s
policy with regard to the provision of non-audit services by
the external Auditor ensures that no engagement will be
permittedif:
•
the provision of the services would contravene any
regulation or ethical standard;
•
the Auditor is not considered to be an expert provider of
the non-audit services;
•
the provision of such services by the Auditor creates a
conflict of interest for either the Board or the Manager;
and
•
the services are considered to be likely to inhibit the
Auditor’s independence or objectivity as Auditor.
As the Company is a Public Interest Entity listed on the London
Stock Exchange, with effect from 1 April 2017, under EU
legislation, a cap on the level of fees incurred for permissible
non-audit services now applies and should not exceed 70% of
the average audit fee for the previous three years.
No non-audit services were provided in the year under review.
CONCLUSION
Following consideration of the above and its detailed review
of the half year and annual reports conducted at its meetings,
the Committee is of the opinion that the Annual Report and
Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary to
assess the Company’s position and performance, business
model and strategy. The Committee reported on these findings
to the Board.
The Statement of Directors’ Responsibilities in respect of the
Annual Report and Financial Statements is on page 41.
By order of the Board
BARBARA POWLEY
Chair, Audit and Management Engagement Committee
16 June 2025
page 38 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
ANNUAL STATEMENT FROM THE CHAIR OF THE NOMINATION
AND REMUNERATION COMMITTEE (THE “COMMITTEE”)
I am pleased to present the Directors’ Remuneration Report
for the year ended 31March 2025.
Having reviewed the current level of remuneration payable
to Directors, in accordance with the Remuneration Policy, the
Committee has determined that with effect from 1 April 2025,
Directors’ Fees would be payable as set out in the Future Policy
Remuneration Table on page 39.
In accordance with the Companies Act 2006, the Company is
required to seek shareholder approval for its remuneration
policy on a triennial basis. The Remuneration Policy was
last approved by shareholders at the 2022 AGM. The Board
has reviewed the Remuneration Policy and believes that it
remains appropriate with no changes required. Accordingly,
aresolution to approve the policy will be put to shareholders
at the AGM on 23 July 2025.
The Committee is chaired by Yuuichiro Nakajima and
comprises all Directors. The Committee meets as required for
the purpose of considering levels of remuneration paid to the
Board and any change in the Directors’ remunerationpolicy.
All Directors are members of the Committee due to their
experience and understanding of the Company. Given the size
of the Board and Mr Copple’s experience and independence
upon appointment as Chairman of the Board, it is considered
appropriate that he sit on this Committee.
REMUNERATION POLICY
The Company’s policy is that remuneration should:
Purpose
and link to
strategy
•
be sufficient to attract and retain individuals
of a high calibre with suitable knowledge
and experience to promote the long-term
success of the Company;
•
reflect the time spent by the Directors on
the Company’s affairs;
•
reflect the responsibilities borne by the
Directors; and
•
recognise the more onerous roles of the
Chairman of the Board and the Chairman
of the Audit and Management Engagement
Committee through the payment of
higherfees.
Directors are remunerated in the form of fees.
The Committee reviews fees on an annual basis
and makes recommendations to the Board.
Reviews will take into account wider factors
such as research carried out on the level of
fees paid to the Directors of the Company’s
peers, the size of the Company, any feedback
from shareholders, the level of inflation and
any change in the complexity of the Directors’
responsibilities.
Fixed fee
element
Directors are not eligible to be compensated
for loss of office, nor are they eligible for
bonuses, pension benefits, share options or
other incentives or benefits. There are no
performance-related elements to the Directors’
fees. None of the Directors has a service
contract with the Company and their terms of
appointment are set out in a letter provided
when they join the Board. These letters are
available for inspection at the Company’s
registered office.
Maximum Total remuneration paid to the non-executive
Directors is subject to an annual aggregate limit
of £200,000 in accordance with the Company’s
Articles of Association. Any changes to this limit
will require shareholder approval by Ordinary
Resolution.
Taxable
benefits
In accordance with the Company’s Articles of
Association, the Directors are also entitled to
be reimbursed for out-of-pocket expenses and
any other reasonable expenses incurred in
the proper performance of their duties. Such
expenses are treated as a benefit in kind and
are subject to tax and national insurance.
Directors’ Remuneration Report
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 39
FUTURE REMUNERATION POLICY TABLE
Directors’ fees for the forthcoming financial year will be as follows:
Fee for year
ending
31March 2026
£
Fee for year
ending
31March 2025
£
Chairman 39,150 43,500
Audit and Management Engagement Chair 31,500 35,000
Director 27,000 30,000
DIRECTORS’ EMOLUMENTS FOR THE YEAR (AUDITED)
The Directors who served in the year received the following emoluments in the form of fees:
Fees
£
Taxable benefits
£
Total
£
Total fixed remuneration
£
Total variable
remuneration
£
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
Arthur Copple 43,500 41,500 – – 43,500 41,500 43,500 41,500 – –
Catriona Hoare 30,000 28,500 – – 30,000 28,500 30,000 28,500 – –
Yuuichiro Nakajima
1
30,000 7,125 81 66 30,081 7,191 30,000 7,125 81 66
Barbara Powley 35,000 31,903 1,974 1,656 36,974 33,559 35,000 31,903 1,974 1,656
James Robinson
2
– 10,738 – – – 10,738 – 10,738 – –
Total 138,500 119,766 2,055 1,722 140,555 121,488 138,500 119,766 2,055 1,722
1
Appointed to the Board on 1 January 2024.
2
Retired from the Board on 27 July 2023.
No sums are paid to any third parties in respect of Directors services and no sums were paid to any third parties in respect of
advice from remuneration advisers. There have been no payments to past Directors during the financial year ended 31March
2025, whether for loss of office or otherwise.
ANNUAL PERCENTAGE CHANGE IN REMUNERATION OF DIRECTORS
Directors’ pay has increased over the last four years, as set out in the table below:
2025
£
Change
%
2024
£
Change
%
2023
£
Change
%
2022
£
Change
%
2021
£
Change
%
2020
£
Chairman 43,500 4.8% 41,500 7.8 38,500 4.8 36,750 5.0 35,000 – 35,000
Audit and Management
Engagement
Committee Chair 35,000 4.5% 33,500 8.1 31,000 5.1 29,500 5.4 28,000 – 28,000
Director 30,000 5.3% 28,500 7.5 26,500 5.0 25,250 5.2 24,000 – 24,000
page 40 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Directors’ Remuneration Report continued
COMPANY’S PERFORMANCE
In accordance with the Companies Act 2006, a graph showing
the Company’s share price total return compared to its
benchmark is set out below. The share price includes all
dividends reinvested.
Share Price and Benchmark* Performance
(rebased to 100 on 31March 2015)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
180
160
140
120
100
0
Share Price Total Return
Benchmark Total Return
* The Company’s Benchmark is the Deutsche Numis Smaller Companies Index
(excluding investment companies).
VOTING AT AGM
The Directors’ Remuneration Report for the year ended
31March 2024 was approved by shareholders at the AGM
held on 25July 2024. The Directors’ Remuneration Policy
was last approved by shareholders at the Company’s Annual
General Meeting, held on 27 July 2022. The proxy voting was
asfollows:
Remuneration Report Remuneration Policy
Number of
votes cast %
Number of
votes cast %
For* 72,136,412 99.70 83,266,732 99.89
Against 215,737 0.30 90,399 0.11
Total votes cast 72,352,149 83,357,131
Number of
voteswithheld 38,153 0.05 22,405 0.03
* including votes granting discretion to the Chairman who voted in favour.
Any views expressed by shareholders on the fees being paid to
Directors will be taken into consideration by the Board when
reviewing the Directors’ Remuneration Policy and in the annual
review of Directors’ fees.
RELATIVE IMPORTANCE OF DIRECTORS’ FEES
The table below sets out, in respect of the financial year ended
31March 2025 and the preceding financial year:
a) the remuneration paid to the Directors;
b) the distributions made to shareholders by way of dividends;
and
c) the cost of Ordinary shares bought back.
Year ended
31March 2025
£
Year ended
31March 2024
£
Change
%
Total remuneration 140,555 121,488 15.7
Dividends paid 9,088,000 7,632,000 19.0
Investment
management fee 1,108,000 1,104,000 0.4
Cost of Ordinary
shares bought back 25,270,000 – –
DIRECTORS’ INTERESTS (AUDITED)
There is no requirement under the Articles of Association for
Directors to hold shares in the Company. The interests of the
current Directors and their families in the voting rights of the
Company are set out below:
As at
31March 2025
Number of
shares
As at
31March 2024
Number of
shares
Arthur Copple 300,000 275,000
Catriona Hoare 18,080 9,039
Yuuichiro Nakajima 10,000 –
Barbara Powley 24,209 13,026
On 14 April 2025, Barbara Powley acquired 13,500 shares and
now holds 37,709 shares in total. There have been no other
changes to the above holdings between 31March 2025 and
the date of this Annual Report. None of the Directors nor any
persons connected with them had a material interest in any
of the Company’s transactions, arrangements or agreements
during the year.
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY
IN RESPECT OF THE FINANCIAL YEAR ENDING 31MARCH 2026
The Committee will, as usual, review Directors’ fees during
2025/26 and consider whether any further changes to
remuneration are required.
On behalf of the Board
YUUICHIRO NAKAJIMA
Chair, Nomination and Remuneration Committee
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 41
The Directors are responsible for preparing the Annual
Report and Accounts in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, they have
elected to prepare the financial statements in accordance with
UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice) including FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic
ofIreland”.
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
•
make judgements and estimates that are reasonable and
prudent;
•
state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements;
•
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business; and
•
prepare a Directors’ report, a strategic report and
Directors’ remuneration report which comply with the
requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities. The Directors are responsible for
ensuring that the Annual Report and Accounts, taken as a
whole, are fair, balanced, and understandable and provides
the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
The Directors are responsible for ensuring the Annual Report
and Accounts are made available on a website. Financial
statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors’ responsibility also
extends to the ongoing integrity of the financial statements
contained therein.
Each of the Directors who are listed on pages 25 and 26
confirm to the best of their knowledge that:
•
the financial statements, prepared in accordance with
UK Accounting Standards, give a true and fair view of
the assets, liabilities, financial position and return of the
Company; and
•
the Strategic Report and the Directors’ Report include a
fair review of the development and performance of the
business and the position of the Company, together with
a description of the principal risks and uncertainties that
it faces.
In the opinion of the Board, the Annual Report and Accounts,
taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess
the Company’s position and performance, business model and
strategy.
By order of the Board
ARTHUR COPPLE
Chairman
16 June 2025
Statement of Directors’ Responsibilities
in respect of the Annual Report and Accounts
page 42 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Independent Auditor’s Report
to the Members of Montanaro UK Smaller Companies Investment Trust PLC
OPINION ON THE FINANCIAL STATEMENTS
In our opinion the financial statements:
•
give a true and fair view of the state of the Company’s affairs as at 31 March 2025 and of its loss for the year then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Montanaro UK Smaller Companies Investment Trust plc (the ‘Company’) for the
year ended 31 March 2025 which comprise the Income Statement, the Statement of Changes in Equity, the Balance Sheet and
notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Ourresponsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
abasis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the Audit and Management Engagement Committee, we were appointed by The Board of
Directors on 17 March 2020 and subsequently by the members at the AGM on 31 July 2020 to audit the financial statements
for the year ended 31 March 2021 and subsequent financial periods. The period of total uninterrupted engagement including
retenders and reappointments is five years, covering the years ended 31 March 2021 to 31 March 2025. We remain independent
of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to
the Company.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
•
Evaluating the appropriateness of the Directors’ method of assessing the going concern in light of economic and market
conditions by reviewing the information used by the Directors in completing their assessment;
•
Assessing the appropriateness of the Directors’ assumptions and judgements made in their base case and stress tested
forecasts including consideration of the available cash resources relative to forecast expenditure;
•
Challenging the Directors’ assumptions and judgements made in their forecasts by performing an independent analysis of
the liquidity of the portfolio; and
•
Reviewing the loan agreements to identify the covenants and assessing the likelihood of them being breached based on the
Directors’ forecasts and our sensitivity analyses.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 43
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
OVERVIEW
Key audit matters 2025 2024
•
Valuation and ownership of quoted investments 3 3
Materiality
Company financial statements as a whole
•
£1,500,000 (2024:£1,990,000) based on 1% (2024: 1%) of Net assets
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
page 44 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the
key audit matter
Valuation and ownership of
quoted investments
Notes 1 and 9
The investment portfolio at the year-end comprised of
quoted equity investments held at fair value through
profit or loss.
There is a risk that the prices used for the listed
investments held by the Company are not reflective of
fair value and the risk that errors made in the recording
of investment holdings result in the incorrect reflection
of investments owned by the Company.
Therefore, we considered the valuation and ownership
of quoted investments to be the most significant
audit area as the investments also represent the most
significant balance in the financial statements and
underpin the principal activity of the entity.
For these reasons and the materiality of the balance
in relation to the financial statements as a whole,
weconsidered this to be a key audit matter.
We responded to this matter
by testing the valuation and
ownership of the whole portfolio
of quoted investments. We
performed the following
procedures:
•
Confirmed the year-end
bid or SETS price was used
by agreeing to externally
quotedprices;
•
Assessed if there were
contra indicators, such as
liquidity considerations, to
suggest bid price is not the
most appropriate indication
of fair value by considering
the realisation period for
individual holdings;
•
Recalculated the valuation
by multiplying the number
of shares held per the
statement obtained from the
custodian by the valuation
per share; and
•
Obtained direct confirmation
of the number of shares
held per equity investment
from the custodian regarding
all investments held at the
balance sheet date.
Key observations:
Based on our procedures
performed we did not identify
any matters to suggest the
valuation or ownership of the
quoted equity investments was
not appropriate.
Independent Auditor’s Report continued
to the Members of Montanaro UK Smaller Companies Investment Trust PLC
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 45
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Company financial statements
2025
£
Company financial statements
2024
£
Materiality 1,500,000 1,990,000
Basis for determining materiality 1 % of Net assets 1 % of Net assets
Rationale for the benchmark applied As an investment trust, the net
asset value is the key measure of
performance for users of the financial
statements.
As an investment trust, the net
asset value is the key measure of
performance for users of the financial
statements.
Performance materiality 1,130,000 1,493,000
Basis for determining
performance materiality
75% of materiality 75% of materiality
Rationale for the percentage applied
forperformance materiality
The level of performance materiality
applied was set after having considered
a number of factors including the
expected total value of known and
likely misstatements and the level of
transactions in the year.
The level of performance materiality
applied was set after having considered
a number of factors including the
expected total value of known and
likely misstatements and the level of
transactions in the year.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £75,000
(2024:£99,500). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitativegrounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the
Annual Report & Financial Statements other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
wedo not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
page 46 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Independent Auditor’s Report continued
to the Members of Montanaro UK Smaller Companies Investment Trust PLC
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and longer-term viability
•
The Directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified; and
•
The Directors’ explanation as to their assessment of the Company’s
prospects, the period this assessment covers and why the period
isappropriate.
Other Code provisions
•
Directors’ statement on fair, balanced and understandable;
•
Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks;
•
The section of the Annual Report that describes the review of effectiveness
of risk management and internal control systems; and
•
The section describing the work of the Audit Committee.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
•
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to
report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept, or returns adequate for
our audit have not been received from branches not visited by us; or
•
the financial statements and the part of the Directors’ remuneration report
to be audited are not in agreement with the accounting records and
returns; or
•
certain disclosures of Directors’ remuneration specified by law are not
made; or
•
we have not received all the information and explanations we require for
our audit.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 47
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financialstatements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
•
Our understanding of the Company and the industry in which it operates;
•
Discussion with the Investment Manager and Administrator and those charged with governance; and
•
Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations;
and we considered the significant laws and regulations to be Companies Act 2006, the FCA listing and DTR rules, the
principles of the AIC Code of Corporate Governance, industry practice represented by the AIC SORP, the applicable
accounting framework, and qualification as an Investment Trust under UK tax legislation as any non-compliance of this
would lead to the Company losing various deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
•
Agreement of the financial statement disclosures to underlying supporting documentation;
•
Enquiries of management and those charged with governance relating to the existence of any non-compliance with laws and
regulations;
•
Reviewing minutes of meeting of those charged with governance throughout the period for instances of non-compliance
with laws and regulations; and
•
Reviewing the calculation in relation to Investment Trust compliance to check that the Company was meeting its
requirements to retain their Investment Trust Status. This included a review of other qualititatve factors and ensuring
compliance with these.
page 48 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Independent Auditor’s Report continued
to the Members of Montanaro UK Smaller Companies Investment Trust PLC
Fraud
We assessed the susceptibility of the financial statement to material misstatement including fraud.
Our risk assessment procedures included:
•
Enquiry with the Investment Manager, the Administrator and those charged with governance regarding any known or
suspected instances of fraud;
•
Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud; and
•
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls.
Our procedures in respect of the above included:
•
In addressing the risk of management override of control, we:
•
Performed a review of estimates and judgements applied by management in the financial statements to assess their
appropriateness and the existence of any systematic bias;
•
Considered the opportunity and incentive to manipulate accounting entries and target tested relevant adjustments
made in the period end financial reporting process;
•
Reviewed for significant transactions outside the normal course of business; and
•
Performed a review of unadjusted audit differences, if any, for indications of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members,
who were deemed to have the appropriate competence and capabilities, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
asfraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is
from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Peter Smith
For and on behalf of BDO LLP, Statutory Auditor
London, UK
16 June 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 49
Year to 31March 2025 Year to 31March 2024
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
(Losses)/gains on investments designated at
fair value through profit or loss 9 – (18,007) (18,007) – 11,137 11,137
Investment income 2 6,560 – 6,560 6,347 – 6,347
Investment management fee 3 (277) (831) (1,108) (276) (828) (1,104)
Other expenses 4 (695) – (695) (618) – (618)
Net return before finance costs and taxation 5,588 (18,838) (13,250) 5,453 10,309 15,762
Interest payable and similar charges 5 (169) (508) (677) (175) (522) (697)
Net return before taxation 5,419 (19,346) (13,927) 5,278 9,787 15,065
Taxation 6 – – – – – –
Net return after taxation
5,419 (19,346) (13,927) 5,278 9,787 15,065
Return per Ordinary share 8 3.28p (11.70p) (8.42p) 3.15p 5.85p 9.00p
The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance
with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. The supplementary revenue return
and capital return columns are prepared in accordance with the Statement of Recommended Practice issued by the Association
of Investment Companies (“AIC SORP”).
All revenue and capital items in the above statement derive from continuing operations.
There are no items of other comprehensive income and therefore the net loss after taxation is both the profit/loss and the total
comprehensive income for the year.
No operations were acquired or discontinued in the year.
The notes on pages 52 to 62 form part of these financial statements.
Income Statement
for the year to 31 March 2025
page 50 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Year to 31March 2025 Notes
Called-up
share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Special
reserve*
£’000
Capital
reserve*
£’000
Distributable
revenue
reserve*
£’000
Total equity
shareholders’
funds
£’000
As at 31 March 2024 3,348 19,307 1,362 4,642 170,230 193 199,082
Total comprehensive income:
Fair value movement of
investments 9 – – – – (18,007) – (18,007)
Costs allocated to capital – – – – (1,339) – (1,339)
Net revenue for the year – – – – – 5,419 5,419
– – – – (19,346) 5,419 (13,927)
Share Buybacks 13 – – – (4,642) (20,628) – (25,270)
Dividends paid in the year 7 – – – – (4,033) (5,055) (9,088)
As at 31 March 2025 3,348 19,307 1,362 – 126,223 557 150,797
Year to 31March 2024 Notes
Called-up
share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Special
reserve*
£’000
Capital
reserve*
£’000
Distributable
revenue
reserve*
£’000
Total equity
shareholders’
funds
£’000
As at 31 March 2023 3,348 19,307 1,362 4,642 162,418 572 191,649
Total comprehensive income:
Fair value movement of
investments 9 – – – – 11,137 – 11,137
Costs allocated to capital – – – – (1,350) – (1,350)
Net revenue for the year – – – – – 5,278 5,278
– – – – 9,787 5,278 15,065
Dividends paid in the year 7 – – – – (1,975) (5,657) (7,632)
As at 31 March 2024 3,348 19,307 1,362 4,642 170,230 193 199,082
* These reserves, excluding any unrealised capital reserve are distributable. As at 31March 2025 distributable reserves totalled £136,665,000 (2024: £157,133,000).
The notes on pages 52 to 62 form part of these financial statements.
Statement of Changes in Equity
for the year to 31 March 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 51
31March 2025 31March 2024
Notes £’000 £’000 £’000 £’000
Fixed assets
Investments at fair value 9 157,502 204,694
Currents assets
Debtors 10 2,453 312
Cash at bank 4,684 14,627
7,137 14,939
Creditors: amounts falling due within one year
Other creditors 11 (1,342) (551)
Borrowings 12 (12,500) (20,000)
(13,842) (20,551)
Net current liabilities (6,705) (5,612)
Net assets 150,797 199,082
Share capital and reserves
Called-up share capital 13 3,348 3,348
Share premium account 19,307 19,307
Capital redemption reserve 1,362 1,362
Special reserve – 4,642
Capital reserve 126,223 170,230
Distributable revenue reserve 557 193
Total equity shareholders’ funds 150,797 199,082
Net asset value per Ordinary share: Basic and Diluted 14 105.86p 118.94p
These financial statements were approved and authorised for issue by the Board of Directors on 16 June 2025.
ARTHUR COPPLE
Chairman
Company Registered Number: 3004101
The notes on pages 52 to 62 form part of these financial statements.
Balance Sheet
as at 31 March 2025
page 52 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
1 Accounting Policies
Montanaro UK Smaller Companies Investment Trust PLC (“MUSCIT”) is a company incorporated and registered in England and
Wales. The principal activity of the Company is that of an investment trust company within the meaning of Sections 1158/1159 of
the Corporation Tax Act 2010. The registered office of the Company is 53 Threadneedle Street, London EC2R 8AR.
BASIS OF PREPARATION
The financial statements have been prepared under FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic
of Ireland’ and in accordance with UK applicable accounting standards and the Statement of Recommended Practice issued
by the Association of Investment Companies (“AIC SORP”). The Company meets the requirements of FRS 102 section 7.1.A and
therefore has elected not to present the Statement of Cash Flows for the year ended 31March 2025. The principal accounting
policies adopted in the preparation of these financial statements are set out below.
The financial statements have been presented in sterling, which is the Company’s functional currency as the UK is the primary
environment in which it operates, rounded to the nearest £’000, except where otherwise indicated.
GOING CONCERN
The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust
company will continue to be met.
The Directors have made an assessment of the Company’s ability to continue as a going concern and are satisfied that the
Company has adequate resources to continue in business for the foreseeable future, being until at least 16 June 2026. Please
refer to page 29 for full details of the Directors’ going concern assessment.
The Company’s Articles of Association (“Articles”) contain a requirement for shareholders to vote on the continuation of the
Company at regular intervals. At the Company’s AGM held on 12August 2021, shareholders voted to remove the obligation to
convene a General Meeting during 2023 for the purpose of voluntarily winding up the Company. The next Continuation Vote is
scheduled to be held in 2027.
The Directors are not aware of any material uncertainties that may cast significant doubt on the Company’s ability to continue
as a going concern, having taken into account the liquidity of the Company’s investment portfolio and the Company’s financial
position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance).
Therefore, the financial statements have been prepared on the going concern basis.
SEGMENTAL REPORTING
The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business.
TheCompany primarily invests in listed companies.
INCOME RECOGNITION
Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity
shares where no ex-dividend date is quoted are recognised when the Company’s right to receive payment is established. Fixed
returns on non-equity shares are recognised on a time-apportioned basis.
Dividends from overseas companies are shown gross of any non-recoverable withholding taxes, which are presented separately
in the Income Statement.
Special dividends are taken to revenue or capital account depending on their nature. In deciding whether a dividend should
be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the
dividend on a case-by-case basis against the AIC SORP guidance.
When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the
cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.
Notes to the Financial Statements
at 31 March 2025
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 53
1 Accounting Policies continued
EXPENSES AND FINANCE COSTS
All expenses and finance costs are accounted for on an accruals basis. On the basis of the Board’s expected long-term split of
total returns, the Company charges 75% of its management fee and finance costs to capital.
Expenses directly incurred in relation to arranging debt and loan facilities have been amortised over the term of the finance.
INVESTMENTS
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance
with a documented investment strategy. Information about the portfolio is provided internally on that basis to the Company’s
Board of Directors.
In accordance with FRS 102 sections 11 and 12, all investments held by the Company are classified upon initial recognition as
financial assets at fair value through profit or loss and are measured at subsequent reporting dates at fair value, which is the bid
price or the closing price for the Stock Exchange Electronic Trading Service – quotes and crosses (‘SETSqx’). All transaction costs in
relation to the purchase of an investment are included in the initial book cost. The Company derecognises a financial asset either
when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all
the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between
the asset’s carrying amount and the sum of consideration received and receivable after transaction costs have been deducted,
and the cumulative gain or loss that had been accumulated is recognised in profit or loss.
All investments for which fair value is measured in the financial statements are categorised within the fair value hierarchy in Note 9.
OTHER RECEIVABLES AND PAYABLES
Trade receivables and trade payables are measures at amortised cost.
TAXATION
UK corporation tax payable is provided on taxable profits at the current rate.
Provision is made for deferred taxation, without discounting, on all timing differences and is calculated using substantively
enacted tax rates.
This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable
profits from which the future reversal of the underlying timing differences can be deducted.
DIVIDENDS PAYABLE TO SHAREHOLDERS
Interim dividends are recognised in the period in which they have been paid.
BANK LOANS AND BORROWINGS
All bank loans and borrowings are carried at amortised cost. Costs in relation to arranging debt finance have been amortised
over the term of the instrument.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s financial statements requires the Directors to make judgements, estimates and assumptions
that affect the reported amounts recognised in the financial statements and disclosure of contingent liabilities. However,
uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to
the carrying amount of the asset or liability affected in future periods. The area requiring the most significant judgement is
recognition and classification of unusual or special dividends received as either revenue or capital in nature. The estimates
and underlying assumptions are reviewed on an ongoing basis. There have been no other significant judgements, estimates or
assumptions which have had a significant impact on the financial statements for the current or preceding financial year.
page 54 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notes to the Financial Statements continued
at 31 March 2025
1 Accounting Policies continued
RESERVES
Share premium
The share premium account represents the accumulated premium paid for shares issued in previous periods above their
nominal value less expenses of issuance. This is a reserve forming part of the non-distributable reserves. The following items are
taken to this reserve; costs associated with the issue of equity, the surplus on sale of Ordinary shares from Treasury premium on
the issue of shares.
Capital redemption reserve
The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares.
Special reserve
The special reserve was created by the cancellation of the share premium account by order of the High Court in August 1998.
The costs of buying back Ordinary shares, including related stamp duty and transaction costs, are charged to the special reserve.
This reserve can be distributed.
Revenue reserve
The revenue reserve represents the surplus of accumulated profits from the income derived from holding investment assets less
the costs and interest on cash balances associated with running the Company. This reserve can be distributed.
Capital reserve
The following are accounted for in this reserve:
•
gains and losses on the realisation of investments;
•
net movement arising from changes in the fair value of investments;
•
net movement from changes in the fair value of derivative financial instruments;
•
expenses, together with related taxation effect, charged to this account in accordance with the above policies;
•
cost of purchasing Ordinary shares to be held in Treasury or cancellation;
•
proceeds from the issue of Ordinary shares held in Treasury equivalent to the weighted average cost of the repurchase; and
•
dividends paid from the realised Capital Reserve.
The Company’s Articles of Association permit it to distribute from the Capital Reserve any surplus arising from the realisation of its
investments.
2 Income
Year to
31March 2025
£’000
Year to
31March 2024
£’000
UK dividend income 6,050 5,880
Overseas dividend income 20 36
Income from investments 6,070 5,916
Bank interest 490 431
Total income 6,560 6,347
Total income comprises
Dividends from financial assets designated at fair value through profit or loss 6,070 5,916
Interest received 490 431
Dividends 6,560 6,347
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 55
3 Investment Management Fee
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fee 264 794 1,058 263 791 1,054
AIFMD fee 13 37 50 13 37 50
277 831 1,108 276 828 1,104
Up to 30 September 2024, the Manager received a monthly management fee equivalent to 1/12 of 0.50% of the gross assets of
the Company valued at the close of business on the last business day of each month.
With effect from 31 December 2024, the Manager received a monthly management fee equivalent to 1/12 of 0.50% of the net
assets of the Company valued at the close of business on the last business day of each month.
At 31 March 2025, £234,000 (2024: £275,000) was due for payment to the Manager.
The AIFM receives an annual fee of £50,000 (2024: £50,000).
4 Other Expenses
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Company secretarial fees 167 158
Directors' fees
1
139 120
Depositary fee 56 42
Registrar fee 47 45
Auditor's remuneration for:
– audit 46 44
Custody and other bank charges 21 21
Legal fees 6 14
Other expenses (including VAT) 213 174
695 618
†
A breakdown of the Directors’ remuneration is set out in the Directors’ Remuneration Report on page 39.
The Company has no employees.
5 Interest Payable and Similar Charges
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest payable on loan 163 490 653 167 498 665
Loan commitment fee 6 18 24 8 24 32
169 508 677 175 522 697
page 56 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notes to the Financial Statements continued
at 31 March 2025
6 Taxation
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Current tax:
Withholding tax suffered – – – – – –
– – – – – –
The taxation charge for the year is different from the standard rate of Corporation Tax in the UK of 25% (2024: 25%). The
differences are explained below.
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net return before taxation 5,419 (19,346) (13,927) 5,278 9,787 15,065
Theoretical tax at UK corporation tax rate of 25%
(2024: 25%) 1,355 (4,836) (3,481) 1,319 2,447 3,766
Effect of:
– UK dividends that are not taxable (1,513) – (1,513) (1,314) – (1,314)
– Foreign dividends that are not taxable (5) – (5) (9) – (9)
– Non-taxable investment losses/(gains) – 4,502 4,502 – (2,784) (2,784)
– Unrelieved excess expenses 163 334 497 4 337 341
Current tax charge for the year – – – – – –
Factors that may affect future tax charges
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the
Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust
company. At 31March 2025, based on current estimates and including the accumulation of net allowable losses, the Company
had unrelieved losses of £58,334,000 (2024: £56,346,000) that are available to offset future taxable revenue. The potential
deferred tax asset has been calculated using a corporation tax rate of 25% (2024: 25%). A deferred tax asset of £14,583,000
(2024: £14,086,000) has not been recognised because the Company is not expected to generate sufficient taxable income in
future periods in excess of the available deductible expenses. Accordingly, the Company is unlikely to be able to reduce future tax
liabilities through the use of existing surplus losses.
7 Dividends
Year to
31March 2025
£’000
Year to
31March 2024
£’000
In respect of the previous period:
Paid
2024 fourth quarter dividend of 1.19p (2024: 1.15p) 1,991 1,925
In respect of the year under review:
Paid
2025 first quarter dividend of 1.24p (2024: 1.13p) 2,076 1,891
2025 second quarter dividend of 1.22p (2024: 1.10p) 2,042 1,841
2025 third quarter dividend of 1.78p (2024: 1.18p) 2,979 1,975
Dividends distributed during the year 9,088 7,632
Declared:
2025 fourth quarter dividend of 1.59p (2024: 1.19p)* 2,265 1,991
* The fourth quarter dividend was declared on 8 April 2025. The ex-dividend date was 17 April 2025 and it was paid on 14 May 2025.
The quarters referred to in the table above relate to the Company’s financial year.
Any dividends paid in excess of the Revenue Reserve are paid from the realised Capital Reserve.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 57
8 Return per Ordinary Share
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
Ordinary share 3.28p (11.70)p (8.42)p 3.15p 5.85p 9.00p
Revenue return per Ordinary share is based on the net return after taxation of £5,419,000 (2024: £5,278,000) and 165,391,764
(2024: 167,379,790) Ordinary shares, being the weighted average number of Ordinary shares in issue, excluding any shares held
in Treasury.
Capital return per Ordinary share is based on net capital loss after taxation of £19,346,000 (2024: net capital gain after taxation of
£9,787,000), and on 165,391,764 (2024: 167,379,790) Ordinary shares, being the weighted average number of Ordinary shares in
issue, excluding any shares held in Treasury.
9 Investments
As at
31March 2025
£’000
As at
31March 2024
£’000
Total investments at fair value 157,502 204,694
The investment portfolio comprises 40 (2024: 35) traded and listed UK equity holdings.
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Opening book cost 191,404 188,991
Opening unrealised appreciation 13,290 11,786
Opening fair value 204,694 200,777
Movements in the year
Purchases at cost 75,784 40,675
Sales – proceeds (104,969) (47,895)
– realised gains on sales against book cost 5,167 9,633
(Decrease)/increase in investment holding gains (23,174) 1,504
Total movement in the year (47,192) 3,917
Closing book cost 167,386 191,404
Closing unrealised (depreciation)/appreciation (9,884) 13,290
Closing fair value 157,502 204,694
FAIR VALUE HIERARCHY
Financial assets of the Company are carried in the Balance Sheet at their fair value or approximation of fair value. The fair value
is the amount at which the asset could be sold in an ordinary transaction between market participants, at the measurement
date, other than a forced or liquidation sale. The Company measures fair values using the following hierarchy that reflects the
significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value
measurement of the relevant asset as follows:
•
Level 1 – Valued using quoted prices, unadjusted in active markets for identical assets and liabilities.
•
Level 2 – Valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted
prices included in level 1.
•
Level 3 – Valued by reference to valuation techniques using inputs that are not based on observable market data for the
asset or liability. Assessing the significance of a particular input requires judgement, considering factors specific to the asset
or liability.
page 58 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notes to the Financial Statements continued
at 31 March 2025
9 Investments continued
The table below sets out the fair value measurement of financial assets and liabilities in accordance with the fair value hierarchy.
31March 2025 31March 2024
Level 1
£’000
Total
£’000
Level 1
£’000
Total
£’000
Equity investments 157,502 157,502 204,694 204,694
157,502 157,502 204,694 204,694
There were no level 2 or 3 investments.
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Net (losses)/gains on investments at fair value
Gains on sales 5,167 9,633
Changes in fair value (23,174) 1,504
(18,007) 11,137
TRANSACTION COSTS
During the year, the Company incurred transaction costs of £404,000 (2024: £187,000) and £67,000 (2024: £27,000) on
purchases and sales of investments respectively. These amounts are deducted in determining gains on investments at fair value
as disclosed in the Income Statement.
The Company sold investments in the year with proceeds of £104,969,000 (2024: £47,895,000). The book cost of these
investments when purchased was £99,802,000 (2024: £38,262,000). These investments have been revalued over time until they
were sold, any unrealised gains or losses were included in the fair value of the investments.
10 Debtors
As at
31March 2025
£’000
As at
31March 2024
£’000
Prepayments and accrued income 68 87
Dividends receivable 234 225
Sales awaiting settlement 2,151 –
2,453 312
11 Other Creditors
As at
31March 2025
£’000
As at
31March 2024
£’000
Other payables 99 134
Accrued interest 35 142
Management fee payable 234 275
Purchases awaiting settlement 974 –
1,342 551
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 59
12 Fixed Rate Term and Floating Rate Revolving Credit Facilities
As at
31March 2025
£’000
As at
31March 2024
£’000
Falling due in 12 months or less –
Fixed rate term loan – 20,000
Revolving credit facility 12,500 –
In the period to 17 December 2024, the Company had a £20,000,000 Fixed Rate Term Loan and £10,000,000 Revolving Credit
Facility with ING Bank N.V.
Fixed Rate Term Loan: The Fixed Rate Term Loan was available for a three-year term to 17 December 2024. The interest was
payable at a fixed rate of 2.49%.
Revolving Credit Facility: The Revolving Credit Facility was available for a three-year term to 17 December 2024. Interest
chargeable was the RFR plus a margin of 1.55% per annum. Undrawn balances were charged at 0.40% per annum.
Following the expiry of these agreements, the Company entered into a two-year £30,000,000 Revolving Credit Facility with Bank
of New York Mellon. Interest chargeable on this facility is daily SONIA plus a margin of 1.3% per annum. Undrawn balances are
charged at 0.12% per annum.
Under the terms of both agreements, the covenants requires that total borrowing will not at any time exceed 30% of the adjusted
NAV, which itself shall not fall below £80,000,000 in respect of both facilities. The Company remained compliant with these
covenants throughout the year.
13 Called-up Share Capital
Number
of shares
As at
31 March
2025
£’000
Number
of shares
As at
31 March
2024
£’000
Ordinary shares of 2p
Ordinary shares in issue at the beginning of the year 167,379,790 3,348 167,379,790 3,348
Ordinary shares bought back to Treasury during the year (24,927,148) (499) – –
Ordinary shares in issue at the end of the year 142,452,642 2,849 167,379,790 3,348
Treasury shares (ordinary shares 2p)
Treasury shares in issue at the beginning of the year – – – –
Ordinary shares bought back to Treasury during the year 24,927,148 499 – –
Treasury shares in issue at the end of the year 24,927,148 499 – –
Total ordinary shares in issue and in Treasury at the end of the year 167,379,790 3,348 167,379,790 3,348
The Company bought back 24,927,148 Ordinary shares into Treasury at a cost of £25,270,000 (2024: no shares bought back into
Treasury). The cost of shares bought back is included in capital reserve and special reserve.
Treasury shares
At the AGM on 25 July 2024, the Company was granted the authority to purchase 25,090,230 Ordinary shares. Following
commencement of the Company’s active share buyback policy, a large proportion of this authority was used.
A General Meeting was held on 31 March 2025, where shareholders approved the authority for the Company to purchase a
further 21,400,393 Ordinary shares.
14 Net Asset Value per Ordinary Share
The Net Asset Value per share of 105.86p (2024: 118.94p) is based on net assets of £150,797,000 (2024: £199,082,000) and on
142,452,642 (2024: 167,379,790) Ordinary shares, being the number of Ordinary shares in issue at the year end.
page 60 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notes to the Financial Statements continued
at 31 March 2025
15 Analysis of Financial Assets and Liabilities
Investment Objective and Policy
The Company’s investment objective and policy are detailed on page 15.
The Company’s investing activities in pursuit of its investment objective involve certain inherent risks. The Company’s financial
instruments can comprise:
•
shares and debt securities held in accordance with the Company’s investment objective and policies;
•
derivative instruments for efficient portfolio management, gearing and investment purposes; and
•
cash, liquid resources and short-term debtors and creditors that arise from its operations.
The risks identified arising from the Company’s financial instruments are market risk (which comprises market price risk, interest
rate risk and foreign currency exposure risk), liquidity risk and credit and counterparty risk. The Company may enter into derivative
contracts to manage risk. The Board reviews and agrees policies for managing each of these risks, which are summarised below.
These policies have remained unchanged since the beginning of the accounting period.
Market risk
Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business. It represents
the potential loss the Company might suffer through holding market positions by way of price movements, interest rate movements
and exchange rate movements. The Manager assesses the exposure to market risk when making each investment decision and
these risks are monitored by the Manager on a regular basis and the Board at quarterly meetings with the Manager.
Market price risk
Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the
value of investments.
The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant information
from the Manager. Investment performance and exposure are reviewed at each Board meeting.
The maximum exposure to market price risk is the fair value of investments of £157,502,000 (2024: £204,694,000).
If the investment portfolio valuation fell by 10% from the amount detailed in the financial statements as at 31March 2025, it
would have the effect, with all other variables held constant, of reducing the net capital return before taxation by £15,750,000
(2024: £20,469,000). An increase of 10% in the investment portfolio valuation would have an equal and opposite effect on the net
capital return before taxation. The analysis is based on closing balances only and is not representative of the year as a whole.
Foreign currency risk
Any income denominated in a foreign currency is converted into Sterling upon receipt. At the Balance Sheet date, all the
Company’s assets were denominated in Sterling and accordingly the only currency exposure the Company currently has is
through the trading activities of its investee companies.
Interest rate risk
Changes in interest rates may cause fluctuations in the income and expenses of the Company. The Company also has a Floating
Rate Revolving Credit Facility.
The Company received £490,000 interest on cash deposits in the year (2024: £431,000).
If interest rates had reduced by 1% from those paid as at 31March 2025, it would have the effect, with all other variables held
constant, of increasing the net revenue return before taxation on an annualised basis by £16,000 (2024: £4,000). If there was an
increase in interest rates of 1%, the net revenue return before taxation on an annualised basis would have decreased by £16,000
(2024: £4,000).
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 61
15 Analysis of Financial Assets and Liabilities continued
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The
Manager does not invest in unlisted securities on behalf of the Company. The investments consist of UK smaller companies
which, whilst less liquid than quoted large companies, are quoted and tradeable on a recognised stock exchange.
The Company’s liquidity risk is managed on a daily basis by the Manager in accordance with established policies and procedures in
place. The Manager reviews daily forward-looking cash reports which project cash obligations. As the Company is a closed-ended fund
assets do not need to be liquidated to meet redemptions and sufficient liquidity is maintained to meet obligations as they fall due.
Contractual maturities of the financial liabilities at undiscounted amounts at the year end, based on the earliest date on which
payment can be required, are detailed on page 62.
Gearing can have amplified effects on the NAV of the Company. It can have a positive or negative effect depending on portfolio
performance. It is the Company’s policy to determine the level of gearing appropriate to its own risk profile.
The Manager is responsible for determining the net gearing level within the parameters set by the Board, which is disclosed on
page64. The Directors receive financial information on a regular basis which is used to identify and monitor risk.
Credit risk
Credit risk is the risk of financial loss to the Company if the contractual party to a financial instrument fails to meet its contractual
obligations.
The Company’s listed and traded investments and cash balances are held on its behalf by The Bank of New York Mellon, the
Company’s custodian. Bankruptcy or insolvency of the custodian may cause the Company’s rights with respect to securities held
by the custodian to be delayed. The Board monitors the Company’s risk by reviewing the custodian’s internal controls report.
The Board monitors the credit worthiness of Bank of New York, currently rated at Aa3 (Moody’s).
Investment transactions are carried out with a number of brokers whose creditworthiness is reviewed by the Manager.
Transactions are ordinarily undertaken on a delivery versus payment basis within CREST, whereby the transaction will only settle if
the Company and counterparty details are matching.
The maximum exposure to credit risk at 31March 2025 was:
31March 2025
£’000
31March 2024
£’000
Cash at Bank (held at Bank of New York Mellon) 4,684 14,627
Debtors 2,453 312
7,137 14,939
None of the Company’s assets are past due or impaired.
FINANCIAL ASSETS
The Company’s financial assets consist of listed and traded equity shares, which neither pay interest nor have a maturity date,
cash at bank and short-term debtors. All financial assets are in Sterling.
FINANCIAL LIABILITIES
The Company finances its operations through equity, retained profits and bank borrowings (see Note 12).
The interest rate risk profile of the financial liabilities of the Company as at 31March 2025 was as follows:
Total
£’000
Weighted
Average
interest rate
%
Period until
maturity
Years
Amounts drawn down under Fixed Rate Term Loan Facility – – –
Amounts drawn down under Floating Rate Revolving Credit Facility – 5.8 0.1
Financial liabilities upon which no interest is paid 1,342 – –
page 62 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notes to the Financial Statements continued
at 31 March 2025
15 Analysis of Financial Assets and Liabilities continued
The interest rate risk profile of the financial liabilities of the Company as at 31March 2024 was as follows:
Total
£’000
Weighted
average
interest rate
%
Period until
maturity
Years
Amounts drawn down under Fixed Rate Term Loan Facility 20,000 2.5 0.7
Amounts drawn down under Floating Rate Revolving Credit Facility – – –
Financial liabilities upon which no interest is paid 551 – –
The maturity profile of the Company’s financial liabilities at undiscounted amount is as follows:
31March 2025
£’000
31March 2024
£’000
In three months or less 12,688 660
In more than three months but not more than one year – 20,249
In more than one year but not more than three years – –
12,688 20,909
16 Capital Management Policies
The structure of the Company’s capital is described on pages 29 and 30 and details of the Company’s reserves are shown in the
Statement of Changes in Equity.
The Company’s capital management objectives are:
•
to ensure that it will be able to continue as a going concern;
•
to achieve capital growth through a focused portfolio of investments, particularly in UK smaller companies; and
•
to maximise the return to shareholders while maintaining a capital base to allow the Company to operate effectively and
meet obligations as they fall due.
The Board and the AIFM regularly monitor and review the capital on an ongoing basis. These reviews include:
•
the level of gearing, which takes account of the Company’s position and the Manager’s views on the stock market.
The Company’s objectives, policies and processes for managing capital are unchanged from last year.
The Company is subject to externally imposed capital requirements:
•
As a public company, the Company is required to have a minimum share capital of £50,000; and
•
In accordance with the provisions of Sections 832 and 833 of the Companies Act 2006, the Company as an investment
company:
•
is only able to make a dividend distribution to the extent that the assets of the Company are equal to at least one and a
half times its liabilities after the dividend payment has been made; and
•
is required to make a dividend distribution each year such that it does not retain more than 15% of the income that it
derives from shares and securities.
These requirements are unchanged since last year and the Company has complied with them at all times.
17 Related Party Transactions
Under the Listing Rules, the Manager is regarded as a related party, owing to the Manager’s controlling party being Charles
Montanaro. Mr Montanaro is deemed to be Key Management Personnel of the Company. The amounts paid to the Manager are
disclosed in Note 3.
The related party transactions with the Directors are set out in the Directors’ Remuneration Report on pages 38 to 40.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 63
AIFMD Disclosures – unaudited
In accordance with the AIFMD, Montanaro and the Company are required to make certain disclosures available to investors in
relation to the Company’s leverage and the remuneration of the Company’s AIFM. In accordance with the Directive, the AIFM’s
remuneration policy is available from Montanaro on request. The Company’s maximum and average actual leverage levels at
31March 2025 are shown below:
Leverage exposure
Gross
method
Commitment
method
Maximum limit 200% 200%
Actual 104.4% 107.6%
For the purposes of the AIFMD, leverage is any method which increases the Company’s exposure, including the borrowing of
cash and the use of derivatives. It is expressed as a percentage of the Company’s NAV and is calculated on both a gross and
commitment method.
An explanation of the methods used can be found in the glossary of terms on page 66.
The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted
in the Company’s Articles. The Manager is also required to comply with the gearing parameters set by the Board in relation to
borrowings. Detailed regulatory disclosures to investors in accordance with the AIFMD are contained on the Company’s website.
The AIFM has sufficient capital and liquid assets to meet the requirements under AIFMD. In addition, the AIFM has professional
liability insurance cover of £5million.
The periodic disclosures to investors as required under the AIFMD are made below:
•
Note 15 to the financial statements set out the risk profile and risk management systems in place. There have been no
changes to the risk management systems in place in the period under review and no breaches of any of the risk limits set,
with no breach expected;
•
information on the investment strategy, geographic and sector investment focus and stock exposures are included in the
Manager’s Report on pages 6 to 10; and
•
none of the Company’s assets are subject to special arrangements arising from their illiquid nature.
page 64 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Alternative Performance Measures (“APMs”) – unaudited
Discount (or Premium)
If the share price of an Investment Trust is less than its Net
Asset Value (“NAV”) per share, the shares are trading at a
discount. If the share price is greater than the NAV per share,
the shares are trading at a premium.
As at 31March 2025, the NAV per share was 105.86p and the
share price was 97.00p. The Discount is therefore calculated at
8.4% as shown in the highlights on page 2.
Gross Assets
Gross assets are calculated as net assets adding back
borrowings.
31March 2025
£’000
31March 2024
£’000
Net assets 150,797 199,082
Fixed rate term loans – 20,000
Revolving credit facility 12,500 –
Gross assets 163,297 219,082
Ongoing Charges (expressed as a percentage)
All operating costs expected to be incurred in future and that
are payable by the Company expressed as a proportion of the
average net assets of the Company over the reporting year.
The costs of buying and selling investments are excluded, as
are interest costs, taxation, non-recurring costs and the costs
of buying back or issuing Ordinary shares.
31March 2025
£’000
31March 2024
£’000
Total expenditure 2,480 2,419
less finance charges (677) (697)
Total (a) 1,803 1,722
Average net assets (b) 198,155 189,014
Ongoing Charges (a/b) 0.91% 0.91%
Net Gearing
Net gearing is the total debt, net of cash and equivalents, as a
percentage of the total shareholders’ funds.
31March 2025
£’000
31March 2024
£’000
Revolving credit facility 12,500 –
Fixed rate term loans – 20,000
Less: cash at bank (4,684) (14,627)
Net debt (a) 7,816 5,373
Shareholders' funds (b) 150,797 199,082
Net gearing (a/b) 5.2% 2.7%
Portfolio Turnover
Calculated using the total purchases plus the sales proceeds
divided by two as a percentage of the average net assets
during the year.
31March 2025
£’000
31March 2024
£’000
Purchases at cost 75,784 40,675
Sales proceeds 104,969 47,895
Total (a) 180,753 88,570
Average total (b) (b=a/2) 90,377 44,285
Average net assets (c ) 198,155 189,014
Portfolio turnover (b/c) 45.6% 23.4%
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 65
Share Price and NAV per share Returns
Capital Return measures the effect of any rise or fall in the share price or NAV per share, excluding any dividends paid.
Total Return measures the effect of any rise or fall in the share price or NAV per share, plus dividends paid which are reinvested
at the prevailing NAV or share price on the ex- dividend date.
Share Price Capital Return calculation as at 31 March 2025
Share price as at 31 March 2025 97.00 (a)
Share price as at 31 March 2024 101.00 (b)
Share Price Capital Return (3.96%) (c) = (a-b)/(b)
Share Price impact of dividends reinvested
Dividend
Dividend
per share
(pence)
Ex-dividend
date
Share price at
ex-dividend
date
Impact of
dividends
reinvested
Quarter 4
2024
1.19 18 April
2024
105.50 1.13%
Quarter 1
2025
1.24 18 July
2024
111.00 1.12%
Quarter 2
2025
1.22 18 October
2024
105.50 1.15%
Quarter 3
2025
1.78 17 January
2025
100.00 1.78%
5.18% (d)
Pre dividend adjustment factor 0.9604 (e) = 1+(c)
Dividend adjustment factor (1+(d)) 1.0518 (f) = 1+(d)
Share Price total return 1.01% ((e)*(f)-1)
NAV Capital Return calculation as at 31 March 2025
NAV per share as at 31 March 2025 105.86 (a)
NAV per share as at 31 March 2024 118.94 (b)
NAV Capital Return (11.00%) (c) = (a-b)/(b)
NAV impact of dividends reinvested
Dividend
Dividend
per share
(pence)
Ex-dividend
date
NAV per share
at ex-dividend
date
Impact of
dividends
reinvested
Quarter 4
2024
1.19 18 April
2024
116.30 1.02%
Quarter 1
2025
1.24 18 July
2024
127.30 0.97%
Quarter 2
2025
1.22 18 October
2024
121.60 1.00%
Quarter 3
2025
1.78 17 January
2025
114.70 1.56%
4.55% (d)
Pre dividend adjustment factor 0.89 (e) = 1+(c)
Dividend adjustment factor (1+(d)) 1.0455 (f) = 1+(d)
NAV total return (6.95)% ((e)*(f)-1)
page 66 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Alternative Performance Measure (“APM”)
An APM is a numerical measure of the Company’s current,
historical or future financial performance, financial position or
cash flows, other than a financial measure defined or specified
in the applicable financial framework.
Articles
Articles of Association of the Company, being its Constitutional
Document.
Commitment method of calculating leverage
Exposure is calculated without the deduction of cash balances
and after certain hedging and netting positions are offset
against each other.
Gearing
Gearing refers to the ratio of the Company’s net debt to its
equity capital. The Company may borrow money to invest in
additional investments for its portfolio. If the Company’s assets
grow, the shareholders’ assets grow proportionately more
because the debt remains the same.
If the value of the Company’s assets falls, the situation is
reversed. Gearing can therefore enhance performance in
rising markets but can adversely impact performance in
fallingmarkets.
Gross method of calculating leverage
Represents the sum of the Company’s positions after
deduction of cash balances, without taking account of any
hedging or netting arrangements.
Montanaro, AIFM or Manager
Montanaro Asset Management Limited.
MUSCIT
Montanaro UK Smaller Companies Investment Trust PLC.
Net asset value (“NAV”)
The NAV is the shareholders’ funds. Shareholders’ funds are
the total value of all of the Company’s assets, at their current
market value, having deducted all liabilities and prior charges
at their par value, or at their asset value as appropriate. The
NAV per share is calculated by dividing the shareholders’
fundsbythe number of Ordinary shares in issue excluding
Treasury shares.
NSCI
Deutsche Numis Smaller Companies Index (excluding
investment companies).
Relative NAV per share performance vs benchmark
This is the difference between the change in the NAV as a
percentage over the year and the Benchmark as a percentage
over the year.
Glossary of Terms
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 67
Shareholder Information
Sources of further information
Your Board is committed to shareholder engagement. To receive regular email news and updates about the Company please
visit: www.montanaro.co.uk/trust/muscit.
Useful information on the Company, such as investor updates and half year and annual reports can also be found on the website.
Key dates
The timing of the announcement and publication of the Company’s results would normally be expected in the following months:
June Annual results for the year ended 31March announced and the Annual Report and Accounts published
July Annual General Meeting
November Half-yearly results to 30September announced and published on the Company’s website
Quarterly dividend
Period ending Declared Payment date
30June July August
30September October November
31December January February
31March April May
NMPI status
The Company currently conducts its affairs so that the shares it issues can be recommended by financial advisers to retail
investors in accordance with the FCA’s rules in relation to non-mainstream pooled investment products. It is intended to
continueto do so for the foreseeable future. The Company’s securities are excluded from the FCA’s restrictions which apply to
non-mainstream pooled investment products because they are securities in a UK listed investment trust.
Share price and NAV
The Company’s Ordinary shares are listed on the main market of the London Stock Exchange. The market price of these shares
can be found in the London Stock Exchange Daily Official List. The Company’s NAV is published daily and released through the
London Stock Exchange’s Regulatory News Service and is available on the Company’s website.
Registrar enquiries
The register for the Ordinary shares is maintained by MUFG Corporate Markets. In the event of queries regarding your holding,
please contact the registrar. You can contact the Registrar by calling 0371 664 0300. Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are
open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. Or alternatively you may contact
the Registrar at shareholderenquiries@cm.mpms.mufg.com.
Changes of name must be notified in writing to the registrar, whose address is: MUFG Corporate Markets, Central Square,
29Wellington Street, Leeds, LS1 4DL. Change of address can be updated online via www.signalshares.com.
Common Reporting Standard
Under the Common Reporting Standard financial institutions, including investment trust companies, are required to provide
personal information to HMRC on investors who meet certain criteria set out in the legislation. On an annual basis, the Company
will provide information to the local tax authority on the tax residencies of non-UK based certificated shareholders and corporate
entities. The local tax authority may exchange this information with the tax authorities of another country or countries in which
the shareholder may be a tax resident, where those countries, or the tax authorities in those countries, have entered into
agreements to exchange financial account information. New shareholders, excluding those whose shares are held in CREST,
entered on the Company’s share register, will be sent a certification form for the purposes of collecting this information.
Share dealing
Investors wishing to purchase more shares in the Company or to sell all or part of their existing holding may do so through their
financial adviser, stockbroker or, if financial advice is not required, through a fund supermarket or any other execution-only
platform. Further information can be found at: www.montanaro.co.uk/trust/muscit.
page 68 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Data protection
The Company is committed to protecting and respecting the confidentiality, integrity and security of the personal data it holds.
For information on the processing of personal data, please see the privacy policy on the website at www.montanaro.co.uk.
Nominee code
Where shares are held in a nominee company name, the Company undertakes:
•
to provide the nominee company with multiple copies of shareholder communications, so long as an indication of quantities
has been provided in advance; and
•
to allow investors holding shares through a nominee company to attend general meetings, provided the correct authority
from the nominee company is available; and nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company’s general meetings.
AIC
The Company is a member of the Association of Investment Companies.
Stocks and Shares Individual Savings Accounts (ISA)
ISAs are a tax-efficient method of investment and the Company’s shares are eligible investments for inclusion in an ISA.
Warning to shareholders – beware of share fraud
Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to be
worthless or to buy shares at an inflated price in return for an upfront payment.
If you receive unsolicited investment advice or requests:
•
Check the Financial Services Register at www.fca.org.uk to see if the person or firm contacting you is authorised by the
Financial Conduct Authority (‘FCA’).
•
Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date.
•
Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
•
Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman
Service or Financial Services Compensation Scheme.
•
Think about getting independent financial and professional advice.
If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at www.fca.org.uk/scams where
you can find out more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040.
Independent Financial Advisers
The Company conducts its affairs so that its Ordinary shares can be recommended by Independent Financial Advisers (“IFAs”)
to ordinary retail investors in accordance with the FCA’s rules relating to non-mainstream investment products and intends to
continue to do so.
Shareholder Information continued
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 69
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR URGENT ATTENTION. If you are in any doubt about any aspect of the
proposals referred to in this document or about the action which you should take, you should seek your own advice immediately
from a stockbroker, solicitor, accountant or other independent professional adviser authorised under the Financial Services and
Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have
sold or otherwise transferred all of your shares, please pass this document, together with the accompanying documents, to the
purchaser or transferee, or to the person who arranged the sale or transfer, so they can pass these documents to the person
who now holds the shares.
Notice is hereby given that the Annual General Meeting (“AGM”) of Montanaro UK Smaller Companies Investment Trust PLC
(the“Company”) will be held at 53 Threadneedle Street, London EC2R 8AR, on Wednesday, 23 July 2025 at 10 a.m. for the
purposes of considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 11 will be proposed as
Ordinary Resolutions and resolutions 12 to 14 will be proposed as Special Resolutions.
ATTENDANCE AT THE MEETING
Shareholders intending to attend the AGM and are asked to register their intention as soon as practicable by emailing the
Company Secretary at the email address provided below.
SHAREHOLDER ENGAGEMENT
For shareholders unable to attend the AGM who wish to ask the Board or the Investment Manager any questions, we request
that you do so by either email to: cosec@junipartners.com, or by post, by writing to: The Company Secretary, Juniper Partners,
28Walker Street, Edinburgh EH3 7HR. Those questions which are submitted before Monday, 21 July 2025 will be answered ahead
of the AGM and we will endeavour to answer any questions subsequently received as soon as possible. Any presentation given by
the Investment Manager at the AGM will be published on our website: www.montanaro.co.uk/trust/muscit beforehand.
PROXIES
Whether you intend to attend the AGM in person or not we encourage all shareholders to complete and submit a proxy form
appointing “the Chair of the meeting” as their proxy. This will ensure that your vote will be counted if ultimately you (or any
other proxy you might otherwise appoint) are not able to attend the meeting. You may request a hard copy Form of Proxy
from the Company’s registrars, MUFG Corporate Markets (please refer to the notes to the Notice of Meeting). To be valid, the
form of proxy should be completed, signed and returned in accordance with the instructions printed thereon, as soon as
possible, and in any event to reach the Registrar no later than 48 hours before the time of the AGM, or any adjournment of
that meeting.
Notice of Annual General Meeting
page 70 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
ORDINARY RESOLUTIONS
RESOLUTION 1 – ANNUAL REPORT AND ACCOUNTS
To receive and, if thought fit, to accept the Strategic Report, the Directors’ Report, the Independent Auditor’s Report and the
audited accounts of the Company for the year ended 31March 2025.
RESOLUTION 2 – DIRECTORS’ REMUNERATION REPORT
To receive and approve the Directors’ Remuneration Report for the year ended 31March 2025.
RESOLUTION 3 – DIRECTORS’ REMUNERATION POLICY
To approve the Directors’ Remuneration Policy as set out in the Directors’ Remuneration Report on pages 38 to 40.
RESOLUTION 4 – DIVIDEND POLICY
To approve the Company’s Dividend Policy.
RESOLUTION 5 – RE-ELECTION OF DIRECTOR
To re-elect Arthur Copple as a Director of the Company.
RESOLUTION 6 – RE-ELECTION OF DIRECTOR
To re-elect Catriona Hoare as a Director of the Company.
RESOLUTION 7 – RE-ELECTION OF DIRECTOR
To re-elect Yuuichiro Nakajima as a Director of the Company.
RESOLUTION 8 – RE-ELECTION OF DIRECTOR
To re-elect Barbara Powley as a Director of the Company.
RESOLUTION 9 – RE-APPOINTMENT OF AUDITOR
To re-appoint BDO LLP as Independent Auditor to the Company to hold office from the conclusion of this Meeting until the
conclusion of the next Annual General Meeting at which financial statements are laid before the Company.
RESOLUTION 10 – AUDITOR’S REMUNERATION
To authorise the Directors of the Company to determine the remuneration of the Independent Auditor.
RESOLUTION 11 – AUTHORITY TO ALLOT SHARES
THAT the Directors of the Company be and are hereby generally and unconditionally authorised (in substitution for any
authorities previously granted to the Directors to the extent unused) pursuant to Section 551 of the Companies Act 2006 (the
“Act”), to exercise all the powers of the Company to allot shares and to grant rights to subscribe for, or to convert any security
into, shares in the Company (“Rights”) up to an aggregate nominal amount of £258,892 (being approximately 10% of the issued
share capital, excluding Treasury shares, as at 13June 2025) provided that the authorities conferred on the Directors shall, unless
renewed, varied or revoked by the Company in a general meeting, expire at the conclusion of the next Annual General Meeting
of the Company after the passing of this resolution, save that the Company may before such expiry make offers or agreements
which would or might require shares to be allotted or Rights to be granted after such expiry and the Directors may allot shares
or grant Rights in pursuance of such offers or agreements as if the authority conferred hereby had not expired. The Directors will
use this authority when it is in the best interests of the Company to issue Ordinary shares for cash and will only issue new shares
at a price representing a premium to the NAV per share at the time of issuance.
Notice of Annual General Meeting continued
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 71
SPECIAL RESOLUTIONS
RESOLUTION 12 – DISAPPLICATION OF PRE-EMPTION RIGHTS
THAT, subject to the passing of Resolution 11 (and in substitution for all subsisting authorities to the extent unused but without
prejudice to the exercise of any such power prior to the date hereof), the Directors be and are hereby empowered pursuant to
Section 570 and Section 573 of the Companies Act 2006 (the “Act”) to allot equity securities (within the meaning of Section 560
of the Act) and to sell equity securities held by the Company as Treasury shares (as defined in Section 724 of the Act) for cash
pursuant to the authority conferred by Resolution 11 as if Section 561 of the Act did not apply to any such allotment and of sales
of equity securities, provided that this power:
(a) shall expire at the conclusion of the Company’s next Annual General Meeting after the passing of this resolution, save that
the Company may before such expiry make an offer or agreement which would or might require equity securities to be
allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the
power conferred by this resolution had not expired;
(b) shall be limited to the allotment of equity securities and/or sale of equity securities held in Treasury for cash up to an
aggregate nominal amount of £258,892 (being approximately 10% of the issued share capital (excluding Treasury shares) as
at 13June 2025); and
(c) shall authorise the Directors to issue equity securities at such issue price as the Directors may determine (including, without
limitation, where equity securities are being issued from Treasury at a price below the net asset value per Ordinary share
(including income) of the Company at the time of the relevant issue).
RESOLUTION 13 – AUTHORITY TO BUY BACK SHARES
THAT in substitution for the Company’s existing authority to make market purchases of Ordinary shares in the capital of the
Company (“Ordinary shares”), the Company be and is hereby generally and unconditionally authorised in accordance with Section
701 of the Companies Act 2006 (the “Act”) to make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary
shares, provided that:
(i) the maximum number of Ordinary shares hereby authorised to be purchased shall be 19,403,953, or if less, that number of
Ordinary shares which is equal to 14.99% of the number of shares in issue immediately following the passing of this resolution;
(ii) the minimum price (excluding expenses) which may be paid for each Ordinary share is the nominal value of that share;
(iii) the maximum price (excluding expenses) payable by the Company for each Ordinary share is the higher of (i) 105% of the
average closing market value of the Ordinary shares in the Company as derived from the Daily Official List of the London
Stock Exchange, for the five business days prior to the date of the market purchase and (ii) the higher of the price of the last
independent trade and the highest current independent bid on the London Stock Exchange;
(iv) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2026 unless
such authority is renewed prior to such time; and
(v) the Company may make a contract to purchase Ordinary shares under the authority hereby conferred prior to the expiry of
such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase
of Ordinary shares pursuant to any such contract.
All Ordinary shares purchased pursuant to the above authority shall be either:
(i) held, sold, transferred or otherwise dealt with as Treasury shares in accordance with the provisions of the Act; or
(ii) cancelled immediately upon completion of the purchase.
RESOLUTION 14 – GENERAL MEETING NOTICE PERIOD
That the Company be and is hereby generally and unconditionally authorised to hold general meetings (other than annual general
meetings) on 14 clear days’ notice, such authority to expire at the conclusion of the next Annual General Meeting of theCompany.
By order of the Board
JUNIPER PARTNERS LIMITED
Company Secretary
16 June 2025
28 Walker Street
Edinburgh EH3 7HR
page 72 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notice of Annual General Meeting continued
Explanation of Notice of Annual General Meeting
Resolution 1 – To receive the Annual Report and Accounts
The Directors are required to present the annual accounts, Strategic Report, Directors’ Report and Auditor’s Report to the
meeting. These are contained in the Company’s Annual Report and Accounts for the year ended 31March 2025 (the Annual
Report). A resolution to receive the financial statements, together with the Strategic Report, Directors’ Report and the Auditor’s
Report on those accounts is included as an Ordinary Resolution.
Resolutions 2 and 3 – Remuneration
Advisory resolutions to approve the Directors’ Remuneration Report and the Remuneration Policy (as set out in the Annual
Report) are included.
Resolution 4 – Dividend Policy
To approve the Company’s dividend policy to continue to pay four quarterly interim dividends. Further details on the timings of
each quarterly dividend can be found in the Shareholder Information section on pages 67 to 68.
Resolutions 5 to 8 – Re-election of Directors
In line with the recommendations of the 2019 AIC Corporate Governance Code, all Directors of the Company are required to
retire and offer themselves for re-election at each AGM. In accordance with this requirement, Mr Copple, Ms Hoare, Mr Nakajima
and Mrs Powley will retire and offer themselves for re-election as Directors.
All of the Directors seeking re-election are recommended by the Board for re-election. Full biographies of all of the Directors are
set out in the Annual Report on pages 25 and 26 and are also available for viewing on the Company’s website www.montanaro.
co.uk/trust/muscit. The Nomination and Remuneration Committee considered the Directors’ performance and recommended
their re-election and the Board agrees that it is in the best interests of shareholders that each of the Directors be re-elected.
Resolutions 9 and 10 – Re-appointment and remuneration of Auditor
At each meeting at which the Company’s financial statements are presented to its members, the Company is required to appoint
an auditor to serve until the next such meeting. The Board, on the recommendation of the Audit and Management Engagement
Committee, recommends the re-appointment of BDO LLP as Auditor to the Company. The Auditor’s re-appointment will be
proposed to the AGM as Resolution 9. Resolution 10 authorises the Audit and Management Engagement Committee to fix the
Auditor’s remuneration.
Resolution 11 – Authority to allot Ordinary shares
Resolution 11 authorises the Board to allot Ordinary shares generally and unconditionally in accordance with Section 551 of the
Companies Act 2006 (the “Act”) up to an aggregate nominal value of £258,892, representing approximately 10% of the issued
Ordinary share capital at the date of the Notice. This authority shall expire at the next AGM when a resolution will be proposed to
renew the authority.
Resolution 12 – Authority to disapply pre-emption rights
Resolution 12 is a Special Resolution which is being proposed to authorise the Directors to disapply the pre-emption rights of
existing Shareholders in relation to issues of Ordinary shares under Resolution 12 (being in respect of Ordinary shares up to an
aggregate nominal value of £258,892, representing approximately 10% of the Company’s issued Ordinary share capital as at the
date of the Notice). This authority shall expire at the next AGM.
The Directors will only allot new Ordinary shares pursuant to the authorities proposed to be conferred by Resolutions 11 and 12
if they believe it is advantageous to the Company’s shareholders to do so and will only issue new shares at a price representing a
premium to the NAV per share at the time of issuance.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 73
Resolution 13 – Purchase of own shares
Resolution 13 is a Special Resolution which will grant the Company authority to make market purchases of up to 19,403,953
Ordinary shares, representing 14.99% of the Ordinary shares in issue as at the date of the Notice. The Ordinary shares bought
back will either be cancelled or placed into Treasury, at the determination of the Directors. The maximum price which may be
paid for each Ordinary share must not be more than the higher of (i) 105% of the average of the market value of an ordinary
share for the five business days immediately preceding the day on which the purchase is made or (ii) the value of an Ordinary
share calculated on the basis of the higher price quoted for: (a) the last independent trade of; and (b) the highest current
independent bid for any number of Ordinary shares on the trading venue where the purchase is carried out. The minimum price
which may be paid for each Ordinary share is £0.02.
It is the Board’s intention that any shares bought back by the Company will be held in Treasury and will only be re-issued from
Treasury either at a price representing a premium to the NAV per share at the time of re-issue, or at a discount to the NAV
per share, provided that such discount is lower than the weighted average discount to the NAV per share when they were
bought back by the Company. Any Treasury shares re-issued must also be at an absolute profit. The Directors will only consider
repurchasing shares in the market if they believe it to be in shareholders’ interests and as a means of correcting any imbalance
between supply and demand for the Company’s shares. Any decisions regarding placing shares into Treasury, or selling shares
from Treasury, will be taken by the Directors.
This authority shall expire at the next AGM, when a resolution to renew the authority will be proposed.
Resolution 14 – Notice period for general meetings
Resolution 14 is being proposed to enable general meetings to be held on 14 clear days’ notice. The minimum notice period for
listed company general meetings is 21 clear days, but companies have an ability to reduce this period to 14 clear days (otherthan
for annual general meetings), provided that the company offers facilities for shareholders to vote by electronic means and that
there is an annual resolution of shareholders approving the reduction in the minimum period for notice of general meetings
(other than annual general meetings) from 21 clear days to 14 clear days. The Board is therefore proposing Resolution 14 as a
special resolution to ensure that the minimum required period for notice of general meetings of the Company (other than annual
general meetings) is 14 clear days. The Directors believe it is in the best interests of the shareholders of the Company to preserve
the shorter notice period, although it is intended that this flexibility will be used only for non-routine business and where merited
in the interests of shareholders as a whole. The approval will be effective until the Company’s next Annual General Meeting when
it is intended that a similar resolution will be proposed.
page 74 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Notice of Annual General Meeting continued
The following notes explain your general rights as a shareholder and your right to attend and vote at this Meeting or to appoint
someone else to vote on your behalf.
1. To be entitled to vote at the Meeting (and for the purpose of the determination by the Company of the number of votes
they may cast), shareholders must be registered in the Register of Members of the Company at close of trading on Monday,
21July 2025. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights
of any person to attend and vote at the Meeting.
2. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to attend and to speak
and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided
that each proxy is appointed to exercise the rights attached to a different Ordinary share or Ordinary shares held by that
shareholder. A proxy need not be a shareholder of the Company.
3. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint
holders appear in the Company’s Register of Members in respect of the joint holding (the first named being the most senior).
4. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against
the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy
will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
5. You can vote either:
(i) by logging on to www.signalshares.com and following the instructions; or
(ii) you may request a hard copy form of proxy directly from the registrars, MUFG Corporate Markets via email at
shareholderenquiries@cm.mpms.mufg.com or Tel: 0371 664 0300. Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are
open between 09:00 – 17:30, Monday to Friday, excluding public holidays in England and Wales; and
(iii) in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the
procedures set out below. In order for a proxy appointment to be valid a form of proxy must be completed. In each case
the form of proxy must be received by MUFG Corporate Markets at PXS 1, Central Square, 29 Wellington Street, LEEDS,
LS1 4DL by 12 noon on Monday, 21 July 2025.
6. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last
by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and
conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not
be disadvantaged.
7. The return of a completed form of proxy, electronic filing or any CREST Proxy Instruction (as described in Note 8 below) will
not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so.
8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do
so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available
from www.euroclear.com. CREST Personal Members or other CREST sponsored members, and those CREST members who
have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to
take the appropriate action on their behalf.
9. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message
(a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International Limited’s
specifications and must contain the information required for such instructions, as described in the CREST Manual. The
message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 12 noon on Monday, 21 July 2025. For
this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message
by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025 page 75
10. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK
& International Limited does not make available special procedures in CREST for any particular message. Normal system
timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of
the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or
has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred,
in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
11. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the “2006
Act”) to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the member by
whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual
General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to the member as to the exercise of voting rights.
12. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf
all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to
the same shares.
13. As at 13 June 2025 (being the latest practicable business day prior to the publication of this Notice), the Company’s Ordinary
issued share capital consists of 129,445,983 Ordinary shares of 2 pence each, carrying one vote each. Therefore, the total
voting rights in the Company as at 13June 2025 are 129,445,983.
14. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have
the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the
Company’s financial statements (including the Auditor’s Report and the conduct of the audit) that are to be laid before the
Meeting; or (ii) any circumstances connected with an Auditor of the Company ceasing to hold office since the previous meeting
at which annual financial statements and reports were laid in accordance with Section 437 of the Companies Act 2006 (in
each case) that the shareholders propose to raise at the relevant meeting. The Company may not require the shareholders
requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must
forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website.
The business which may be dealt with at the Meeting for the relevant financial year includes any statement that the Company
has been required under Section 527 of the Companies Act 2006 to publish on a website.
15. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to be answered any such
question relating to the business being dealt with at the Meeting but no such answer need be given if: (a) to do so would
interfere unduly with the preparation for the Meeting or involve the disclosure of confidential information; (b) the answer
has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the
Company or the good order of the Meeting that the question be answered.
16. Copies of the Directors’ letters of appointment are available for inspection during normal business hours at the registered
office of the Company on any business day from the date of this Notice until the time of the Meeting and may also be
inspected at the Meeting venue, as specified in this Notice, from 11.45am on the day of the Meeting until the conclusion of
the Meeting.
17. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either
this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes
other than those expressly stated.
18. Personal data provided by shareholders at or in relation to the Meeting will be processed in line with the Company’s privacy
policy.
A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the
Company’s website at www.montanaro.co.uk/trust/muscit.
page 76 Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025
Advisers
AIFM AND INVESTMENT MANAGER
Montanaro Asset Management Limited
53 Threadneedle Street
London EC2R 8AR
Tel: 020 7448 8600
Fax: 020 7448 8601
Website: www.montanaro.co.uk
Email: enquiries@montanaro.co.uk
ADMINISTRATOR
Juniper Partners Limited
28 Walker Street
Edinburgh EH3 7HR
Tel: 0131 378 0500
COMPANY SECRETARY
Juniper Partners Limited
28 Walker Street
Edinburgh EH3 7HR
Tel: 0131 378 0500
Email: cosec@junipartners.com
REGISTERED OFFICE
53 Threadneedle Street
London EC2R 8AR
REGISTRAR
MUFG Corporate Markets
Central Square,
29 Wellington Street,
Leeds LS1 4DL
Tel: 0371 664 0300
Calls are charged at the standard geographic rate
and will vary by provider.
Email: shareholderenquiries@cm.mpms.mufg.com
Website: www.mpms.mufg.com
DEPOSITARY
The Bank of New York Mellon
(International) Limited
160 Queen Victoria Street
London EC4V 4LA
CUSTODIAN
Bank of New York Mellon SA/NV
160 Queen Victoria Street
London EC4V 4LA
BANKER
Bank of New York Mellon (International Limited)
London Branch
160 Queen Victoria Street
London EC4V 4LA
BROKER
Cavendish Financial Plc
One Bartholomew Close
London EC1A 7BL
AUDITOR
BDO LLP
55 Baker Street
London W1U 7EU
LAWYERS
Gowling WLG
4 More London Riverside
London SE1 2AU
Montanaro UK Smaller Companies Investment Trust PLC
Registered in England and Wales No. 3004101
An investment company as defined under Section 833 of the
Companies Act 2006
Montanaro UK Smaller Companies Investment Trust PLC
53 Threadneedle Street
London EC2R 8AR
Tel: 020 7448 8600
Fax: 020 7448 8601
E-mail: enquiries@montanaro.co.uk
Website: www.montanaro.co.uk